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Saturday, February 19, 2011

Sri Lanka coal power plant on full load

Feb 19, 2011 (LBO) -

Sri Lanka has run a Chinese built 300 MegaWatt power plant fully on coal with a full load connected to the national power supply on Friday night for the first time as part of its testing regime officials said.
The power plant started tests in September initially using diesel and then gradually moved to coal.

"Today we ran the plant fully on coal," power minister Patali Ranawaka told reporters Friday.

On Friday night the plant had also been successfully connected to the grid at full load for the first time, officials said.

The plant can generate up to 315 MegaWatts of power but can export between 285MW to 300MW the grid after using part of the energy for its own operations such as running a coal crushing plant and its cooling systems.

Ranawaka said coal prices were also rising and at current prices the cost of generating a unit of power from coal was 6.40 rupees.

But diesel prices are also rising and the cost of liquid thermal generation was also rising.

Minister Ranawaka said coal spot prices were spiking faster than normal as many countries had built new coal plants in recent years.

Coal is mostly sold on long term contracts and utilities in many countries usually manage cost rises better than liquid fuels.

Sri Lanka India coal project hit by legal queries: report

Feb 18, 2011 (LBO) - A state joint venture coal power plant between India and Sri Lanka which has been negotiated for several years has been hit by further delays following legal queries from the island nation, a media report said.
India's National Thermal Power Corporation and Sri Lanka's Ceylon Electricity Board has been talking on a 500 MegaWatt 50:50 joint venture coal plant in the Eastern coastal town on Trincomalee from 2006.

The Times of India newspaper quoting an unnamed source said Sri Lanka's attorney general had raised 70 queries "on basic issues at the nick of time" delaying the signing of the deal.

India's foreign ministry had "advised NTPC against responding to the queries for the time being," the report said.

Sri Lanka is building a 900 MegaWatt fully CEB-owned coal plant with Chinese finance in the West coast reducing the urgency for a additional capacity. The first 300 MW stage is almost complete and is being tested now.

The Times of India report said queries on 'basic issues' included Sri Lanka's government budgetary support for CEB's part of the investment, government guarantees, laws governing the joint venture and place of arbitration.

But analysts say power purchase agreements, a key component of power deals in particular are complex documents running into several hundred pages and Sri Lanka's power officials have earlier expressed unhappiness at some of the clauses in earlier deals.

The CEB is running massive losses partly due to its inability to pass on the costs paid to independent power producers.

Sri Lanka's attorney general is also battling two cases of arbitration and court proceedings in three countries relating to a disputed energy deal relating to the island's state run petroleum utility.


China Coal-Prices flat, expected lower in coming weeks

Fri, Feb18, 2011

* Prices flat on sluggish demand, ample stocks

* Traders expect prices to edge lower as supplies improve

* Chinese producers still selling spot cargoes overseas

By Fayen Wong

SHANGHAI, Feb 18 (Reuters) - China's thermal coal prices were stuck at 780 yuan ($118.5) for a fourth week, with traders and buyers expecting prices to fall in coming weeks as heating demand slackens and supply improves.

China's steam coal prices began a downward trend in early December and have shed around 22 yuan per tonne since its 2010 peak struck in November.

Coal with a heating value of 5,500 kcal/kg stood at 775-785 ($118.50-$119.68) on Friday, while inventories at top coal port Qinhuangdao were down about 2 percent at 7.28 million tonnes from a week ago, data from industry website showed.

"There is more supply coming into the market because rail transport is improving on the back of warmer weather," said a coal trader based in Guangzhou. "The general market sentiment seems to be that prices could start moving lower as we enter a seasonal demand low."

A second trader said talks that some carriages on the coal rail network would soon be changed to those with 80 tonnes, from the current 70 tonnes, were also damping market sentiment as that means supplies from northern provinces would significantly increase.

Despite stronger demand during winter months, Chinese coal prices have struggled to move higher, even as sea ice in Bohai slowed imports earlier this month and as international prices spiked.

Domestic traders also blamed soft prices on Beijing's determination to control inflation, as price pressures on goods, excluding food, were at their highest in at least a decade. [ID:nTOE71E06O]

"With inflation the No. 1 focus, the government will continue to keep spot coal prices in check and that doesn't bode well for the market," said a Chinese coal trader.

On imports, Chinese buyers said Australian and South African coal was uncompetitive at current levels and would not price into the domestic market. Although they have been scouting for sub-bituminous material from Indonesia, offer prices were at best just 10 yuan lower than Qinhuangdao rates, giving them little incentive to import.

Analysts and some traders have said the steep discount for Chinese versus international thermal coal prices could persist through the first half of the year, as global values are bolstered by rain-led output disruptions and Chinese demand enters a seasonal lull. [ID:nTOE70J05M]

Australia's thermal coal prices, a benchmark for Asia, climbed above $126 per tonne as news of a force majeure at Xstrata's (XTA.L: Quote) Ulan mine in New South Wales boosted prices. [COAL/ASIA]

With Chinese domestic prices trading at a discount to Australian rates, overseas traders said Chinese producers were still actively offering cargoes to Japanese buyers and were also expected to kick off annual price negotiations with South Korean utilities soon.

Weekly Qinhuangdao prices for (Yuan) PORT STOCKS >6,000 kcal/kg >5,500 Kcal/KG (Mln Tonnes) WEEK TO

825-835 775-785 7.284 Feb 14, 201

825-835 775-785 7.426 Feb 07

825-835 775-785 6.859 Jan 31

825-835 775-785 7.071 Jan 24

835-845 780-790 7.210 Jan 17

835-845 780-790 6.954 Jan 10

835-845 780-790 7.049 Jan 04

835-845 780-790 7.104 Dec 30

835-845 780-790 7.590 Dec 24

840-850 790-800 7.006 Dec 20

845-855 795-805 6.711 Dec 13

845-855 795-805 6.663 Dec 06

860-870 805-815 5.789 Nov 29

850-860 795-805 6.170 Nov 22

840-850 790-800 6.197 Nov 15

840-850 790-800 6.387 Nov 08

825-835 765-775 6.805 Nov 01 ($1=6.610 Yuan)

(Editing by Chris Lewis, Sourced:Reuters)

Tags:demand, supply, raw material, spot cargoes overseas,downward trend,inventories, Qinhuangdao coal port,market analysts,coal traders,weekly Qinhuangdao prices for port stocks in Yuan

January Brazil Steel Output Up 3.8% To 2.8 Million Tons From Year Ago -IABr

Friday,18 February 2011 08:17pm

RIO DE JANEIRO -(Dow Jones)- Brazilian steelmakers produced 2.8 million metric tons of crude steel in January, 3.8% higher than in the same month of 2010, the Brazilian Steel Institute, or IABr, said in a statement Friday. January's output was 16.2% higher than in December, IABr said.

Rolled products steel output rose 0.4% from a year ago to 2.1 million tons. This was 15.4% higher than in December, when some Brazilian steel mills reduced output due to coal supply difficulties and high steel import levels.

Domestic steel product sales rose to 1.7 million tons in January, up 4.5% from the same 2010 period and 11.4% over December levels, IABr said.

Steel products imports fell to 343,600 tons in January, 10.6% lower than in January 2010, as international steel prices rose, boosting the cost of imported products.

Export volumes meanwhile grew to 1.1 million tons, 60% higher than a year ago, IABr said.
(sourced:Dow Jones)

E. Asian mills' offer prices for coils soar, buyers wary

Saturday, Feb19, 2011

Offer prices of cold rolled coil from Taiwanese, Korean and Chinese mills have risen sharply by $50-70/tonne compared to end-January levels. Offers from Taiwan, ahead of the new offer prices from China Steel Corp, have risen to $870/t fob for 1mm base full-hard CRC, for annealed base CRC at $890/t fob and for hot-dip galvanized $1,050/t fob. Read More on this…

ASIC wins FMG appeal

Saturday, 19 Feb 2011

The West Australian reported that the Federal Court agreed with the Australian Securities and Investments Commission's argument that Justice John Gilmour erred in finding Mr Forrest and his Fortescue Metals Group did not act dishonestly when they announced they had signed Chinese partners to build their Pilbara project.

Billionaire Mr Andrew Forrest faces being banned from running the company he turned into the country’s third biggest iron ore producer after the nation's corporate watchdog won its Federal Court appeal.

ASIC successfully argued that Mr Forrest deliberately engaged in misleading and deceptive conduct by making false, misleading and exaggerated statements to the ASX and the media about the nature of framework agreements signed in 2004 with three Chinese companies.

The agreements concerned the construction and financing of a mine, railway and port in the Pilbara. ASIC argued that Fortescue and Mr Forrest falsely portrayed the agreements as binding.

A judge had dismissed the watchdog’s claims in December 2009 following a trial in the Federal Court. But ASIC appealed against the finding in February last year, arguing the case had raised important issues that needed to be heard by an appeals court.

The six day appeal was heard in November last year before the Full Bench of the Federal Court, comprising Chief Justice Patrick Keane, Justice Arthur Emmett and Justice Ray Finkelstein.

Mr Forrest was not in court to hear the decision, which followed an appeal hearing in November after Justice Gilmour's 2009 judgment.

FMG and Mr Forrest have always denied any wrongdoing in the case.


Macarthur Coal cuts output guidance

Saturday, 19 Feb 2011

Macarthur Coal Limited announced a reduction in its 2011 financial year sales production target as a result of extended unseasonal rainfall impacting on production.

The Company’s saleable production target for the 2011 financial year was 5.0 million tonne. Macarthur Coal is decreasing its full year sales forecast to be in the range of 4.1 million tonne to 4.3 million tonne.

On December 3rd 2010, Macarthur Coal declared force majeure to customers as a result of unseasonal heavy rain in the Bowen Basin. Macarthur Coal advises that the declaration of force majeure with customers remains in place. Recovery continues however a return to full production levels has been hampered by additional rainfall received from cyclones Anthony and Yasi.

Ms Nicole Hollows CEO of Macarthur Coal said that “Our operations at both Coppabella and Moorvale have been disrupted by unseasonal heavy rains over the past three months; continuation of excessive wet weather has caused further delays to production through to February. Although we are anticipating more rainfall, should it remain at historical averages we are confident of progressively returning to normal production over the next few weeks. Water diversion structures, pit protection measures, dam levy work and onsite water management initiatives completed prior to the wet season have helped each site manage the impact of unseasonal rainfall on the operations and the environment.”

Chinese buyers expecting lower iron ore prices

Saturday, 19 Feb 2011

Chinese mills and traders, as well as Australian miners expect iron ore prices to fall by at least 10% later in the year as the world biggest steelmaking nation steps up the overhaul of the sector as part of the country new Five Year Plan.

China largest steelmaker, Baosteel lifted its prices this week for the third month in a row even as it continued its acquisition and expansion binge, but authorities signaled that overall output growth in the sector was planned to slow this year. Another top-five Chinese steelmaker, Wuhan Steel and Japan Nippon Steel have also increased their prices in recent days.

Spot prices for high-grade Indian ore hit USD 200 per tonne this week and have already risen more than 12% this year after jumping over 40% last year. The higher prices will feed into the next quarterly contracts which use a weighted average from the previous quarter.

As well as higher iron ore prices, steelmakers have faced higher coking coal costs because of flooding in Queensland. Ironically higher steel prices will feed into Australian inflation as we buy back finished steel products from China, Japan and South Korea. But traders and mill staff predict that while high iron ore prices will continue for several months and they will fall back in the second half of the year.

(Sourced from

Tags:Wuhan Steel Group, Japan, Nippon Steel Corp, Spot iron ore prices, Spot prices for 63.5% Indian fines, raw material,

BHPB H1 metallurgical coal production update

Friday, 18 Feb 2011

BHP Billiton underlying EBIT was USD 1,453 million, an increase of USD 681 million or 88% from the corresponding period. The significant improvement in EBIT margin was largely attributable to higher realized prices.

Hard coking coal, weak coking coal and thermal coal prices increased by 50%, 57% and 43% respectively.

In total, higher prices increased Underlying EBIT by USD 1,147 million, after allowing for the royalty related increase in price linked costs.

Queensland Coal (Australia) production was significantly affected by the persistent rain and flooding that impacted the Bowen Basin in the December 2010 half year. The effect on Queensland Coal sales was minimized by the healthy level of inventory that was held across our supply chain at the commencement of the December 2010 half year. However, weather related disruption and higher labour and contractor rates contributed to an increase in costs for the period. Furthermore, the combined impact of a weaker US dollar and inflation reduced Underlying EBIT by USD 291 million.

BHP Billiton continues to assess the impact of the extreme weather events and confirms that force majeure has been declared for the majority of our Bowen Basin products, including Goonyella Riverside, Peak Downs, Norwich Park, Gregory Crinum, South Walker, Blackwater and Saraji.

The decision to double pumping capacity following severe wet weather in the March 2008 quarter has minimized in-pit water accumulation, although heavy rainfall that persisted for much of the December 2010 half year has significantly restricted overburden removal. When combined with disruptions to external infrastructure, we expect an ongoing impact on production, sales and unit costs for the remainder of the 2011 financial year.

Spot Metallurgical Coal in U.S. Mixed, Energy Publishing Says

By Mario Parker - Feb 18, 2011 9:49 PM GMT+0530

Metallurgical coal prices on the U.S. spot market increased ahead of final negotiations for the quarterly benchmark contract, Energy Publishing Inc. said.

Spot prices for low-volatility coking coal gained $1.25, or 0.4 percent, to $321.25 a ton in the week ended today, according to the Knoxville, Tennessee-based data provider. High-volatility coal was unchanged at $287.50.

Energy Publishing said buyers and sellers of metallurgical coal are anticipating that the benchmark contract between the BHP Billiton-Mitsubishi Alliance and Japanese steelmakers will be announced by March 2.

“U.S. producers continue to be in a bit of a holding pattern as they await news of the quarterly settlement,” Energy Publishing said.

Energy Publishing says it surveys buyers and sellers of coal to determine pricing.

Tags:BHP Billiton-Mitsubishi Alliance, Japanease steelmakers, Energy Industry,

Sims Metal blames US slump for slow recovery

By Greg Roberts,
Feb19,2011 12:00AM

THE world's largest scrap metal recycler, Sims Metal Management, says it is struggling with a sluggish economic recovery in North America and scarcity of scrap despite an increase in overall first half profit.

The company increased first half net profit 23.6 per cent to $49.3 million on

16.6 per cent higher revenues to $3.9 billion and expects a strong ferrous (iron) market-led recovery. Sims shares gained 39c, or 2.06 per cent, to close at $19.34 yesterday.

In North America, earnings before interest and tax (EBIT) fell 5 per cent to $26.6 million, compared to a 57 per cent jump in Australasia to $19.3 million and 67 per cent lift in Europe to $36.4 million.

Clawing back just one million of a lost three million tonnes of scrap metal would "conservatively" improve North American EBIT by $30 million, chief financial officer Rob Larry said.

Scrap intake in North America in the period was 5.1 million tonnes, an increase of 1 per cent on the previous year.

However, that figure was 23 per cent below pre-global financial crisis scrap metal volumes in North America pressuring margins, the Australian company said.

Chief executive Daniel Dienst said he was "disappointed" with margin pressures in North America.

Sims Metal declared an interim dividend of 12c a share, 42 per cent franked 50 per cent of net profit. ((sourced from Herald Sun)

Vale starts trial runs of iron ore palletizing plant in Oman

Saturday, 19 Feb 2011

It is reported that Brazilian miner Vale SA has started test production at a new USD 1.356 billion iron ore palletizing complex in Oman.

Commercial production at the first pellet plant now being started up is due in March and the first product shipment is expected in May.

Vale's Oman industrial complex includes two pelletizing plants each with a capacity of 4.5 million tonnes a year of direct reduction pellets for use in steelmaking, as well as a distribution center with capacity to handle 40 million tonnes a year of pellets and a deep water bulk jetty, which will be used exclusively by Vale.

The company has also signed a long term accord with the Oman Shipping Company for construction of four 400,000 tonne capacity iron ore carriers for Vale's exclusive use.

Egypt unrest hit steel prices - Metalloinvest

Saturday, 19 Feb 2011

Reuters reported that unrest in Egypt has hit construction steel prices with spot rebar in Saudi Arabia's Jeddah now at USD 640 per tonne to USD 650 per tonne as Black Sea mills seek new markets away from the turmoil.

Mr Shukhrat Nishanov GD of Hamriyah said that “It is influencing the market. If that market was traditionally supplied by our colleagues in Turkey and Ukraine, well, they can't sell there so they are going to the Saudi market and this is disrupting our business."

Mr Nishanov said that Metalloinvest's Hamriyah, the only Russian owned steel plant in the United Arab Emirates sold its January rebar production for USD 700 per tonne roughly 8% above the current spot range.

He said that the company, which is also Russia's largest iron miner, opened its steel plant in the UAE last year to tap into the Middle Eastern construction boom. It currently produces 80,000 tonnes of rebar per month or 1 million tonnes per year. This can be ramped up slightly to about 1.2 million tonnes if demand increases.

Metalloinvest, controlled by billionaire Mr Alisher Usmanov may also add a second mill later in the decade, though it has yet to take a final decision. It already operates two major steel plants in Russia.

Mr Nishanov said that Hamriyah does not sell any steel directly to Egyptian buyers. He said “We export 30% to Saudi Arabia, 20% to Iraq and our trading partners sell to other buyers in the Persian Gulf and 10% to 15% is sold to local firms.”

He does not expect the Egyptian market to revive until there is more certainty about the country's future political course.

(Sourced from Reuters)

Russia imposes safeguard duty on imports of steel fasteners

Saturday, 19 Feb 2011

It is reported that Russia has imposed a USD 282.4 per tonne safeguard duty on imports of carbon steel fasteners for a period of three years.

The decision No 68 dated February 12 2011 becomes effective one month after its official publication.

The USD 282.4 per tonne duty will impact steel fasteners under the following HS Codes: 7318 15 810 0, 7318 15 890 0, 7318 15 900 9, 7318 16 910 9, 7318 16 990 0 and 7318 21 000 9.


NLMK to build pelletizing plant at Stoilensky

Saturday, 19 Feb 2011

NLMK has approved the construction of a pelletizing plant at Stoilensky, its fully owned subsidiary with a capacity of 6 million tonnes of iron ore pellets per year.

The project will encompass the construction of the pelletizing plant and the development of a number of infrastructure facilities to supply raw materials for the production of high grade pellets. A 30% increase in iron ore output as compared to 2011 level at Stoilensky operating mine is planned to ensure the required raw material supplies for the pelletizing plant.

The project is part of the Group’s strategy targeted at strengthening vertical integration and is being executed as part of the third stage of NLMK Technical Upgrade Program. Construction is expected to be completed in 2014. The plant will be able to fully cover the Company pellet requirements as early as 2015, even considering the launch of the 3.4 million tonne Blast Furnace 7 at Novolipetsk, the main production facility of the Group located in Lipetsk.

The project will be jointly executed with Siemens VAI/Outotec, a German-Finnish consortium, responsible for supplying the required equipment and technologies, as well as rendering other construction-related services.

Investments into Stoilensky operating and infrastructure facilities over 2011 to 2014 will total some RUB 39 billion.

Starting from 2015, Stoilensky average annual output of saleable iron ore will be as follows:
1. Sintering ore - 2 million tonnes
2. Iron ore concentrate - 11 million tonnes
3. Iron ore pellets - 6 million tonnes
Ensuring NLMK 100% self sufficiency in iron ore raw materials.

During the Stoilensky pellet plant construction, supplies of iron ore pellets to Novolipetsk will be made under long term contracts between NLMK and Metalloinvest Holding.

Tags:Siemens VAI, Outotec,investment, iron ore concentrate, long term agreement, Metalloinvest Holding,

Japan China trade up by 30pct to exceed JPY 25 trillion in 2010

Saturday, 19 Feb 2011

According to the Japan External Trade Organization, trade between Japan and China increased 30% to a record USD 301.85 billion or about JPY 25.2 trillion in 2010.

Both exports and imports marked all time highs, and this was the first time that Japan's trade with any nation surpassed USD 300 billion.

Exports from Japan to China jumped 36% to USD 149.09 billion or JPY 12.4 trillion, with shipments of construction and mining machinery enjoying a 105% spike thanks to China's investment in large infrastructure projects. Exports of automobiles expanded 81%.

Imports rose by 25% to USD 152.75 billion or about JPY 12.7 trillion, with electronics, such as smart phones, other cell phones and LCD televisions, enjoying a 47% jump.

China accounted for a record 20.7% of Japan's total trade, up by 0.2 percentage points from 2009.

Given that export growth outpaced import gains, JETRO says the bilateral trade may swing to a surplus in Japan's favor this year.

(Sourced from Nikkei)

Reliance Steel board announces quarterly cash dividend

Saturday, 19 Feb 2011

On February 16th 2011, the board of directors increased the regular quarterly cash dividend by 20%, to USD 0.12 per share from USD 0.10 per share. The board declared the 2011 first quarter cash dividend of USD 0.12 per share of common stock payable on March 25th 2011 to shareholders of record March 4th 2011.

The company has paid regular quarterly dividends for 51 consecutive years and has increased its dividend 16 times since its 1994 IPO.

TATA Steel expects steel prices to rise in near terms

Saturday, 19 Feb 2011

TATA Steel sees a sure in steel prices on surging prices of raw materials.

Mr B Muthuraman VC of TATA Steel said that global steel prices will likely rise in the near term, driven by both higher costs and a steady improvement in global demand.

He added that "It is difficult to predict steel prices, but the way raw material prices are rising, steel prices are bound to follow."


Nippon Steel Sumitomo merger to curb carbon credit demand

Saturday, 19 Feb 2011

Reuters reported that the merger of Japan's two largest steelmakers will likely cut steel output at home as they look to expand offshore and will further curb demand for UN backed carbon credits beyond 2012.

Steelmakers in resource poor Japan have steadily become more efficient since the 1970s and now use 15% to 20% less energy to produce a tonne of steel than their counterparts in the United States, Germany, India or China. They are also well below self pledged emissions targets linked to the Kyoto Protocol, the UN's main climate change pact that sets targets for about 40 rich nations during the 2008-2012 first phase.

Japanese steel firms could have a competitive advantage by expanding in poorer nations since they will be more efficient and ahead on the emissions reduction curve against rivals. It could also drive greater efficiency in the industry.

Mr Masaki Mita, Japan representative for energy data and pricing service Argus Media, said that "A positive implication of the merger would be the chance they can make their advanced energy saving technology a global standard."

Nippon Steel Corporation and Sumitomo Metal Industries have likely achieved emission goals they set for themselves over the five years to March 2013, helping Japan meet its Kyoto obligations for its 2008-2012 phase.

Once the merger is completed in 2012, the combined firm will be the world's No 2 steel producer behind ArcelorMittal and is expected to lower their emissions further from the combined figure of about 60 million tonnes of CO2 equivalent per year now.

A Tokyo based carbon trader said that "The merger is set to be completed in 2012, so I don't see any big news that would affect demand for Kyoto credits right now. But in the longer term, changes in Japan's industrial structure mean there will be fewer buyers of carbon credits, and that will have an impact on the market."

Similar success by other firms in Japan's steel sector, the country's main CO2 emitter, has seen firms ceasing to buy Kyoto carbon credits, including CERs (certified emissions reductions).

Japan's steel sector as a whole has bought about 50 million CERs or 5% of the total estimated flow of CERs for Kyoto's five year first phase. The credits are generated from UN approved clean energy projects in developing countries.

Each CER represents one tonne of CO2 saved from being emitted, such as using wind power instead of coal to generate electricity. Based on current market prices in Europe, the 50 million credits bought by the steel sector are worth around EUR 570 million, showing how significant the sector is to the international market.

Carbon traders said that steel companies have considered selling their surplus CERs, but are waiting to see projected final emissions balances for 2008-2012.

That is partly because the goal the sector set for itself for 2020 looks easier to meet than the one for 2008-2012. S, Japan is developing an alternative to the U.N. market schemes to promote its energy saving technology such as those used by steelmakers, and can obtain carbon offset certificates via bilateral agreements with poorer countries. This means the steel sector might have another option even if it fails to meet its 2020 goal.

Unlike Japanese firms, ArcelorMittal has had little appetite for Kyoto credits, benefiting from having more than half of its steel production in non EU countries where carbon regulations are looser.

Carbon dioxide from burning fossil fuels is the main greenhouse gas that scientists say is heating up the planet. Growth in steel demand centers on emerging markets, which are the target for Nippon Steel and Sumitomo as well.

Mr Akihiro Sawa executive senior fellow at the 21st Century Public Policy Institute in Tokyo said that the two firms would come up with steps to cut their CO2 emissions worldwide by 10% to 20% below current levels. He added that "I don't think they have agreed to consider a merger in the context of global climate change. Their intention has been driven by rivals like ArcelorMittal and concerns about their purchasing power against resource firms. Having said that, I'm sure their agenda for merger talks will include a strategy to fight climate change."

In 1990, Japan's steel sector as a whole emitted just over 200 million tonnes of CO2. But a peak out in domestic output means the sector is well within the goal of 183 million tonnes a year on average for 2008-2012, which would be down 9 percent from the Kyoto Protocol's base year of 1990.

The steel sector has set its own target for 2020 based on CO2 per unit of output, which does not necessarily cap CO2 in contrast to its 2008-2012 goal. If the sector meets the Japanese government's crude steel output estimate of 119.7 million tonnes for 2020, up 9% from last year, its self pledged target is to cut CO2 by 5 million tonnes from business as usual levels of about 210 million tonnes by 2020.

(Sourced from

Tags:CERs, European market, Carbon traders, Kyoto credits

POSCO to increase cost cutting on ore and coal price surge

Saturday, 19 Feb 2011

POSCO the world’s third biggest steelmaker by output and its units raised their cost cutting target for this year by 20% to sustain profits amid rising iron ore and coal prices.

Mr Chung Jae Woong a spokesman of POSCO said that the group aims to cut overall costs by KRW 2.4 trillion (USD 2.2 billion) this year from a previous target of KRW 2 trillion in an effort to improve competitiveness.

Ms Kim Gyung Jung an analyst with Eugene Investment & Securities Co in Seoul said that “That’s part of POSCO’s efforts to sustain stable profits given that raw material costs are rising, while it’s not easy for them to pass on cost gains to customers.”

POSCO which underperformed the local benchmark stock index last year, in January reported a worse than expected drop in fourth quarter profit after raw material costs gained and demand from builders and home-appliance makers waned. Japan’s Nippon Steel Corp and Sumitomo Metal Industries Ltd said that they plan to combine to cut costs.

HSBC Holdings Plc said that iron ore prices almost doubled from the first quarter to the end of 2010, while coking-coal costs gained 38%. Coal has risen since floods disrupted mining in the northeast of Australia, the biggest exporter.

According to Credit Suisse Group AG on January 7, the price of iron ore will average 21% higher this year and may jump to a record should anticipated supply growth be curbed. Iron ore and coking coal are the two main ingredients for making steel.

(Sourced from Bloomberg)

Tags:steelmakers, steel mills, South Korean

TATA Steel expects to complete TCP sale by March - Mr Muthuraman

Saturday, 19 Feb 2011

It is reported that TATA Steel Limited expects to complete the sale of its Teesside plant in the United Kingdom by the end of March 2011.

Mr B Muthuraman VC of TATA Steel said that "The process is on and we should be able to complete it by March 31st 2011."

It may be noted that TATA Steel recently agreed to sell the Teesside Cast Products plant to Thailand's largest steel group Sahaviriya Steel Industries PLC in a deal valued at USD 500 million.

The plant was partially shut in February 2010 after four steel slab buyers pulled out of a joint 10 year contract.


Metalico buys land at former Bethlehem Steel site to install shredder

Saturday, 19 Feb 2011

Metalico Inc, a leading regional scrap metal recycler in US, has purchased a portion of the former Bethlehem Steel/Mittal complex in Western New York, including the abandoned galvanizing mill, from Great Lakes Industrial Development LLC, a Buffalo based real estate investment group, as the site for a new shredder.

The 44 acre parcel, at the corner of Route 5 and Lake Avenue on the border of the Town of Hamburg and Blasdell, includes a 177,500 square feet building. Metalico plans to install a heavy duty 80104 Metal Shredder inside the building, which will still provide ample additional space for other recycling activity. The location is appropriately zoned for the company's contemplated use and approvals are in place for outdoor storage and processing of scrap metals.

The planned 80" by 104" scrap metal shredder will be powered with a 4,000 HP (2,984 kW) electric motor with an operating speed of 600 RPM, suitable for processing 100 tons to 120 tons per hour of shreddable scrap. The installation will include a new state of the art downstream separation system to maximize the recovery of valuable non ferrous products.

Metalico expects to produce 120,000 tons per year of high quality shredded steel scrap by combining feedstock generated from its own yards and material available for purchase in the region. The company looks to satisfy growing demand for shred from electric arc furnace mills, export markets and other consumers.

Metalico has been operating in Buffalo since 1998 and believes that the market is underserved for shredding capacity. At present more than 2/3 of shreddable scrap regularly leaves the area.

Mr Carlos E Ag├╝ero president & CEO of Metalico said “The Galvanizing Mill site is a perfect location for our expansion of services in Upstate New York. We expect the shredder will also draw feed from our other facilities, consistent with our strategy of penetrating geographically contiguous markets and benefiting from intercompany and operating synergies that are available through consolidation.”

Metalico Inc is a holding company with operations in two principal business segments: ferrous and non ferrous scrap metal recycling and fabrication of lead-based products. Metalico currently operates twenty six recycling facilities in New York, Pennsylvania, Ohio, West Virginia, New Jersey, Texas and Mississippi and four lead fabricating plants in Alabama, Illinois, and California.

Essar Steel opens marketing office in Spain and Italy

Saturday, 19 Feb 2011

Essar Steel announced that it opened its marketing offices in Valencia in Spain and Milan in Italy.

This is part of Essar’s strategy to strengthen its distribution network and be closer to its customers to provide consistent service.

Mr Vikram Amin Executive Director of Essar Steel said “Europe has been an export market for Essar Steel for over 15 years. Having a steel service centre in UK will enable us to provide world class service to our customers, and will give the company access to the quality conscious European Union market.”

Essar Steel already has a steel service centre in West Midlands in UK with an annual capacity of 500,000 tonnes.

Indonesian coal for Haryana Thermal plants

Feb15, 2011

To tide over the recurring coal shortage at thermal plants Haryana Power Generation Corporation Limited (HPGCL) has gone for Indonesian coal for its thermal plants in the state.

Punjab News Line reported that, according to official sources, HPGCL has placed an order for 1.45 million tones MT of imported coal on PEC Limited. The public sector company will supply the Indonesian coal for Khedar, Panipat and Yamunanagar thermal plants.FOB cost of imported coal is between 74.75 $ and 76.75$.The gross calorific value of imported coal will be around 6300. A senior official said that the HPGCL has saved in several crore on this particular imported coal order as other government companies had quoted much higher rate of 92$ per MT. The minimum saving per MT works out to be Rs. 750 (US$ 16.47).

Ministry of Power has given annual target of 1.45 million tons (MT) of coal imports for the current financial year. HPGCL has imported only 0.079 MT during the first five months of the year. According to Central Electricity Report coal shortage at Panipat is due to failure of HPGCL to import coal.

It may be mentioned that thermal plants in Haryana are getting coal ‘F’ grade coal with very high ash content. Due to poor coal quality the units at Khedar thermal plant were not able to achieve full load of 600 MW. To tide over the problem of high ash content HPGCL has place order on four different firms for supplying the washed coal to improve the power generation. These firms will get coal from Mahanadi coal fields and then wash the coal at washries before supplying to thermal plants.

The dwindling coal stock at thermal plants of state is a cause of worry. Today Khedar thermal plant and Panipat thermal plant have 10000 MT and 56000 MT of coal stock which is just sufficient for one and three days respectively. The coal stock comes under super critical position. Similarly Yamuna Nagar thermal has coal stock of 58000 MT just sufficient for six days. As per Central Electricity Authority parameters if coal stock is less than 7 days it comes under critical poison and if coal stock is less than 4 days it becomes super critical. The thermal plants are expected to keep a coal stock of 25 days for smooth running of units. (1 INR = 0.0219708 USD
Source: Punjab News Line

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JSW Steel raises funds for cold rolling mill at Vijaynagar

Saturday, 19 Feb 2011

ET reported that JSW Steel has tied up funds for its 2.3 million tonnes cold rolled mill at its Vijaynagar plant.

As per report, JSW has raised USD 280 million (INR 1280 crores) via external commercial borrowing. The total project cost is INR 4025 crores.

Rest of the debt will be tied up via ECA or external commercial assistance while buying equipments for the plant and JSW Steel will infuse INR 1300 crores of equity funding via internal accruals.

JSW Steel plans to build 1.9 million tonnes of continuous annealing line and 0.9 million tonnes of galvanizing, galvannealing line.

The company aims to finish the first phase by Q1 FY 14 and phase 2 by Q1FY15.

(Sourced from ET)

SAIL plans public issue by March subject to market conditions

Saturday, 19 Feb 2011

Steel Authority of India said that it will attempt to launch the INR 8,000 crore follow on public offer before the fiscal end though submission of prospectus within February seems to be a difficult proposition.

Mr CS Verma chairman of SAIL told PTI that “We will definitely attempt to launch the FPO before the end of the current fiscal. Filing the red herring prospectus, however, within February seems to be a tall target.”

However, he said the attempt to launch the offer would entirely depend upon the market conditions and liquidity situation in the system. Mr Verma added that “We will attempt it depending upon the market condition. We have to see which are other issues that are hitting the market. We have to make assessment of the market conditions.”

Drawn his attention to the forthcoming FPO of State run Oil and Natural Gas Corporation, he said that “We will also have to see when ONGC is entering the market and when the refunds of the ONGC issue will go back to the investors. There has to be enough liquidity.”

ONGC is likely to enter the market with its proposed INR 13,000 crore FPO on March 15.

The SAIL FPO was earlier slated to hit the market in February, but got delayed due to some issue with the book running lead managers which has now been solved. However, fearing a repeat of sorts, the steel major is now keen on taking legally binding undertakings from the four investments bankers SBI Caps, Kotak Mahindra, Deutsche Bank and HSBC. It has though agreed to keep the banks for managing its issue.

Mr Verma said that “There were some conflict with BRLMs. Now, we have taken the legal opinion of the Attorney General of India. We are to take the legally binding undertaking from them. And, then we will decide on the future course of action and about the timing of the FPO.”

The government has so far garnered about INR 23,000 crore by divesting its stakes in Coal India, Engineers India, MOIL and some other PSUs against its target of INR 40,000 crore. It is banking on big ticket FPOs of ONGC and SAIL to meet the target.

(Sourced from PTI)

Steel scrap import at Zhangjiagang Port in January soars by 70pct

Saturday, 19 Feb 2011

According to Zhangjiagang Entry Exit Inspection and Quarantine Bureau, steel scrap imports through Zhangjiagang port in this January soared by 70.1%YoY to 148,000 tonnes and its total value flying 405.1%YoY to USD 140 million.

Analysts attribute the burst increase to four reasons

1. Demand for raw materials rallies as global economy warms up since last year. When US dollar continues to devalue, international scrap price broke USD 400 per tonne CFR last May and hold in a high level. Scrap import via Zhangjiagang Port declined rapidly and almost stopped in Mid September.

2. Scrap recycling slows greatly in China last year, causing scrap inventories to tight especially when mills put over-reliance on scrap to replace some consumption of iron ore at previous month. As a result, scrap inventories at mills side become seriously limited.

3. Spurred by domestic inflation, price of scrap with lower quality than foreign arrivals jumps and almost touches the level of the imported price. Imported scrap is the best choice for domestic steelmakers to make up purchase shortage thus.

4. Steelmakers in China, the world’s largest producer and iron ore importer, have been seeking to diversify raw material sources to reduce the cost of iron ore imports. China has urged state-owned mills to increase use of scrap, making demand for scrap increase.

(Sourced from

CISA sees Chinese steel prices seen rising in near term

Saturday, 19 Feb 2011

Reuters quoted the China Iron & Steel Association as saying that steel prices in the Chinese domestic market will continue rising in the near term due to recovering demand and rising raw materials costs.

CISA said that it expects a gradual pick up in demand at home and abroad with costs of raw materials such as iron ore, coke and scrap likely to keep surging, pushing steel prices upwards.

It said "This year is the opener of the 12th five year plan, so steel demand will remain strong as economic growth is expected to remain healthy."

It added that major steel consuming sectors such as construction, machinery, transportation, home appliances and shipbuilding would continue to grow, lifting steel demand, noting that infrastructure projects would also contribute to rising demand.

The Ministry of Industry and Information Technology forecast earlier this week that China crude steel output would hit a record 660 million tonnes this year with downstream demand providing a boost.

However, CISA also warned that non steel mill steel product inventories had risen sharply and domestic steel production is also on the rise.

CISA data showed that China produced 1.7033 million tonnes of crude steel on a daily basis in January up by 2.5% from December.

Non steel mill inventories of five major steel products in 26 big cities rose 11.2% to 14.72 million tonnes in January from the previous month especially for rebar and wire rod used in the construction sector.

(Sourced from Reuters)

Vietnam: coal export earnings up sharply for 2010

Feb 18,2011

Thanks to higher prices, Vietnam’s coal export earnings surged 22% to US$ 1.6 billion last year despite a 21% drop in export volume to 19.8 million tonnes.

The Ministry of Industry and Trade said the actual export volume exceeded the 19.2 million tonnes earlier projected by the General Statistics Office.

Vietnam’s coal export to China fell 28% to 14.6 million tonnes while shipments to South Korea declined 1.2% to 1.76 million tonnes. Its sales to Japan rose 24.1% to 1.71 million tonnes.

For 2011, state-owned Vietnam Coal and Mineral Industry Group (Vinacomin) expects to export 16.5 million tonnes of coal while supplying 27.5 million tonnes to domestic users. The company is targeting produce over 44 million tonnes of coal this year, unchaged from last year.

(sourced:Energy Asia)

Tags: Vietnam coal export, import/export statics, coal prices,

S.Africa puts Quattro coal in RBCT's hands: sources

Saturday, Feb19,2011

South Africa's Department of Mineral Resources has told junior coal exporter members of the Quattro scheme that its administration will be handled by Richards Bay Coal Terminal (RBCT) instead of current operator Mhlatuze, sources at Mhlatuze and junior exporters said.

A total of 4 million tonnes a year of thermal coal is exported under Quattro through RBCT's facilities, but the administration - including the running of stockpiles, loadings and trains - has been handled by Mhlatuze, which is owned by the Quattro member companies.

Quattro member companies who attended a regular meeting earlier this week were given a letter from the department (DMR), which explained that the move would take place as soon as possible, sources at the meeting said.

It makes sense for RBCT to be handling Quattro's operations on the terminal side, and Transnet have already offered to arrange trains, etc., said a junior mining source present at the meeting.

Neither the DMR nor RBCT were immediately available for comment.


Tags: South Africa, thermal coal, DMR, RBCT, Transnet,

China port iron ore stocks fall to 79.97 mln Tons this week

Fri, Feb18, 2011

BEIJING Feb 18 (Reuters) - Stockpiles of imported iron ore at major Chinese ports fell 160,000 tonnes this week to 79.97 million tonnes, the first weekly decline since Dec. 17, industry consultancy Mysteel said on Friday.

Brazilian ores stood at 21.65 million tonnes, up fractionally from last week, while ore from India rose 190,000 tonnes to 13.23 million tonnes.

Ore originating in Australia fell 280,000 tonnes to end the week at 29.16 million tonnes, Mysteel said.

Chinese iron ore imports rose 18.8 percent month on month in January to reach 68.97 million tonnes, the highest since September 2009.

(Reporting by David Stanway; Editing by Chris Lewis, sourced:Thomson Reuters)

Tags: Asian iron ore, China iron ore stockpiles at ports

S.China steel mills cuts coke purchase price on high stock

Saturday,Feb 19, 2011

Sanming Steel, based in East China’s Fujian Province, would cut its purchase price for coke, the key steelmaking material, by 100 yuan/t, because of high coke stocks the company presently holds, National Business Day reported.

The purchase price for grade II met coke delivered to the steelmaker would be 2170 yuan/t, the company said on Feb 16.

It is learnt that Sanming Steel purchases 50-60 thousand tonnes coke each month, but presently it already has 100 thousand tonnes of coke stocks. The company would have to pay fee to store coke at ports, if more deliveries reach, one official was cited as said.

Analysts say the move is aimed to relieve cost stress in a short term.

Currently, steel mills in Southern China have already had coke stocks enough for use of more than one and a half months.

Coke enterprises in Shanxi, Hebei, and other provinces all increased their ex-works prices by 50-80 yuan/t. Coke enterprises face higher production costs due to the continuous rise in coking coal price after the Spring Festival.

An insider disclosed the production cost of coke will be 2080 yuan/t, and coke producers still suffer loss of 30 yuan/t, based on the lowest price of blended coking coal was 1600 yuan/t.

Price cuts by steel mills in southern China was only a short-term moves, and coke price will still be on rise in long term due to price surge in domestic steel market.


Tags:fee to store coke at Chinease ports, inventries, deliveries, market analyst, Coke Enterprises, Shanxi, Hebei, supply

North China ports see coal stocks down 0.88 pct

Feb 18,2011

Coal stockpiles at four major loading ports in northern China slightly decreased 0.88 percent in the week from Feb 11 to 17, according to a report published by industry portal

As of Feb 17, a total of 14.74 million tonnes coal was stockpiled in ports of Qinhuangdao, SDIC Caofeidian, Jingtang and Tianjin, dropping 132,000 tonnes from a week ago.

Qinhuangdao, China’s top loading port of the fuel, had 7.38 million tonnes coal in stock on Feb 17, up 2.92 percent or 227,000 tonnes from the previous week, data showed.

Meanwhile, coal stocks at ports of SDIC Caofeidian and Jingtang grew 4.67 percent and 4.93 percent to 2.24 million and 3.19 million tonnes respectively, an increase of 100,000 and 150,000 tonnes, while that at Tianjin port declined 8.02 percent or 155,000 tonnes from a week ago to 1.78 million tonnes, according to statistics.

Coal shippers were active to transport power generating coal to secure power supply in southern China during the Spring Festival

Meanwhile, downstream main power plants sent more vessels to ports to load coal, primarily in-plan power coal, to replenish their stocks.


Shanxi’s raw coal output up 9.4 pct in Jan 2011


Coal produced by coal-rich Shanxi province of North China witnessed a year-on-year increase of 9.4 percent in raw coal output to 57.08 million tonnes in Jan, Shanxi News reported, citing local authorities.

During the month, Shanxi produced 6.56 million tonnes coke, growing 3.5 percent on year, showed data issued by the provincial bureau of statistics on Feb 17.

And, the province produced a total of 2.82 million tonnes pig iron and 2.51 million tonnes crude steel, growing 6.1 percent and 4.6 percent respectively from same period last year, data showed.

Shanxi generated 19.5 billion kWh electricity in Jan, growing 2.7 percent on year, it added.

Iron Ore-Rally stalls as China buying slows; India state seeks ban

Fri Feb 18, 2011 8:44am GMT

* Steel mills and traders cautious

* Indian 63.5 pct ore quoted below $200/tonne

* Iron ore swaps fall for second session

* Another Indian state seeks export ban
(Adds Chhattisgarh seeking ban, comment, updates rebar prices)

By Ruby Lian and Manolo Serapio Jr.

SHANGHAI/SINGAPORE, Feb 18 (Reuters) - Spot iron ore prices eased on Friday, as top buyer China stepped back after a recent surge in raw material costs and steel prices recoiled on slow end-user demand.

Iron ore prices have risen around 13 percent this year, adding to gains of more than 40 percent in 2010, but a decline in price offers from sellers and sharp falls in forward swaps suggest prices may have hit a tentative peak under $200 a tonne.

"Offers have fallen below $200 per tonne by the end of this week after steel mills and traders held back from buying more," said an iron ore trader in China's eastern Shandong province.

"A few steel mills have changed their minds and refused to sign deals after verbally agreeing to buy material from traders earlier."

Offers for Indian ore with 63.5 percent iron content dropped to $196-198 per tonne, including freight, on Friday, from as high as above $200 earlier this week, trading sources said.

Chinese steel prices had risen alongside iron ore, backed by anticipation of a pickup in demand when construction activity resumes. But purchases from end users have remained slow, triggering a correction in prices.

The most active rebar contract for October delivery on the Shanghai Futures Exchange closed at a three-week low of 4,985 yuan a tonne on Friday, down 3.5 percent for the week. The contract touched a series of record highs last week.

Rising iron ore inventories at major ports have also weighed on spot prices. China's iron ore imports reached a record of 68.97 million tonnes in January.


Supply squeeze from India and firm demand from China had spurred the rally in iron ore prices, forcing steelmakers to pass on higher cost to customers.

Another Indian state, Chhattisgarh, is looking at banning iron ore exports, joining top producing state Orissa in considering halting shipments to meet domestic demand.

"There's probably a lot of investors looking for reasons to sell right now, but this news is going to hold that profit-taking for the time being," said Mark Pervan, senior commodity analyst at ANZ Bank in Melbourne.

Iron ore price indexes, which global miners use in setting quarterly supply contracts with mills, stayed near record highs, but forward swaps fell sharply for a second straight session on Thursday. The Steel Index's 62 percent iron ore benchmark .IO62-CNI=SI was steady at $191.90 a tonne, including freight, a record level reached in the previous session. Platts' 62 percent iron ore index IODBZ00-PLT eased 50 cents to $192.50, and Metal Bulletin's 62 percent index .IO62-CNO=MB rose $1.01 to $191.70.

Prices of Singapore Exchange-cleared forward swaps slumped for all 24 months covered by the contracts, with the March-to-August contracts showing the biggest losses, reflecting growing concerns on spot prices in coming months. The March contract slid $6.38 to $175 per tonne and April fell $5.25 to $163.50.

However, some analysts still expect China's iron ore appetite to bounce back with the country looking to produce a record of 660 million tonnes of crude steel this year. "We estimate iron ore spot prices to go higher, propping up contract prices for the second quarter," Le Yukun, an analyst with BOC International Securities said in a research note.

Le also estimated that average import prices would rise 15 percent this year and 5 percent in 2012. The China Iron & Steel Association said steel prices are expected to rise in the near term as raw material will remain costly and steel demand, both at home and abroad, will pick up gradually.
(Reporting by Manolo Serapio Jr.; Editing by Manash Goswami,sourced:Thomson Reuters)

Tags:iron ore top buyer, offers, rebar contract, Shanghai Futures Exchange,steelmakers,ANZ Bank,market analyst, BOC International

China to seek to reduce its external trade surplus

Friday, 18 February 2011

China will increase efforts to boost imports this year as it bids to keep its trade surplus under control, said China's Ministry of Commerce in February 17.

According to Chinese customs figures, China's trade surplus in January decreased by 53.5 percent year on year to $6.46 billion. In the month in question, imports surged by 51 percent year on year to $144.3 billion, while exports rose by 37.7 percent to $150.7 billion.

Yao Jian, a spokesman for the Ministry of Commerce, said the government will take measures to further balance China's external trade. "Recent years have seen the growing importance of China in global trade and economic activity. We have endeavored to maintain stable and balanced trade from 2008 to 2010, and we will continue to do so this year," Mr. Yao said.

Tags: China , Far East , East Asia and Pacific , trading, import export statistics

China Jan'2011 coal exports down 21pct YoY

Saturday Feb 19, 2011

China recorded 1.43 million tonnes coal exports in Jan, plunging 21 percent year on year, showed data issued by General Administration of Customs on Feb 14.

Coal exported in Jan was a decrease of 1.38 percent from 1.45 million tonnes in Dec, 2010, data showed.

The country exported a total of 19.03 million tonnes coal in 2010, falling 15% year on year, it added. (

Tags: China Jan'2011 coal exports, data, General Administration of Customs

WTO issues ruling on China export restraints


* US, EU, Mexico filed case against China in 2009
* Ruling could set precedent for China rare earth curbs
* Decision expected to be made public by early summer (Updates throughout)

WASHINGTON, Feb 18 (Reuters) - The World Trade Organization on Friday issued a confidential preliminary ruling in a landmark case against China's export restrictions on raw materials used to manufacture steel, aluminum and chemical products.

The United States, European Union and Mexico launched the case in 2009, complaining that Chinese export restrictions on minerals such as bauxite and magnesium discriminated against foreign manufacturers and gave an unfair advantage to domestic producers.

Beijing has argued it needed to restrict exports of the raw materials for environmental reasons.

"Under WTO rules, this interim report is confidential and we cannot comment on its contents at this time," said Nefeterius McPherson, a spokeswoman for the U.S. Trade Representative's Office.

"The report will be made public when it is circulated to WTO members. We currently expect the final report to be circulated sometime in late spring or early summer of 2011," McPherson said.

The United States, EU and Mexico argue that China's export curbs violated both general WTO rules and specific commitments that Beijing made when it joined the world trade body in 2001.

The case does not cover China's export restrictions on rare earth minerals used in smart phones, electric car motors and high-tech industrial equipment which have also raised concern in the United States, EU and Japan.

McPherson said there was still a possibility of the United States filing a WTO challenge on that front.

"We have been and remain very concerned about China's systemic use of export restraints," she said.

A former WTO appellate body judge said the ruling will be precedent-setting.

"If the United States prevails in this dispute it would be a very significant ruling related to increasingly widespread phenomenon of export restrictions in world trade," said James Bacchus, now at Greenberg Traurig in Washington.

If China wins, then "other kinds of export restrictions imposed by China and other countries may be protected by environmental defenses as well," Bacchus said.

China argues that it must restrict the production and export of the raw materials in the WTO dispute and rare earths to protect the environment and conserve its own resources.
(Reporting by Doug Palmer; Editing by Vicki Allen,sourced:Thomson Reuters)

S.China ports coal prices remain stable

Saturday,Feb 19,2011

Coal price at ports of South China was unchanged in the week from Feb 12 to 18, according to a report by Qinhuangdao Seaborne Coal Market.

During the week, the prices of premium mix with calorific value of 5000Kcal/kg and 5500Kcal/kg remained at 765 yuan/t and 880 yuan/t at Guangzhou port, showed data issued by the coal portal.

At Ningbo port, Shenmu slack with heating value of 6000 Kcal/kg was priced at 955 yuan/t, and Shenmu lump with energy value of 6500 Kcal/kg was traded at 1200 yuan/t, keeping the same level for six consecutive weeks, the report said.

As of Feb 16, the freight rate for vessels of 20,000 to 30,000 DWT from Qinhuangdao to Guangzhou and Ningbo ports were 66 yuan/t and 35 yuan/t, according to data released by Qinhuangdao Tongying Shipping Co., Ltd.

The freight for vessels of 5,000 DWT from Tianjin to Ningbo ports dropped 2 yuan/t or 4.35 percent to 44 yuan/t, and that of 40,000 to 50,000 DWT from Qinhuangdao to Guangzhou ports fell 4 yuan/t to 45 yuan/t, showed data released by Shanghai Shipping Exchange.


Tags:South China,China ports coal prices, Ningbo Port, Qinhuangdao, Guangzhou,Seaborne Coal Market

ArcelorMittal and Nunavut now own 93 percent of Baffinland, offer expires

Friday,Feb18,2011 16:38:38 (GMT+2)

Luxembourg-based steelmaking goliath ArcelorMittal and Canada-based Nunavut Iron Ore Acquisition Inc. (Nunavut Iron), a subsidiary of US-based Iron Ore Holdings LP, have announced the expiration of their joint offer to takeover Canadian miner Baffinland Iron Mines Corporation (Baffinland) as of February 17. The companies now own 93 percent of Baffinland through their C$590 million ($593 million) joint offer.

The offer sought all shares of the company for C$1.50 (US$1.51) in cash per common share. Under the joint offer, ArcelorMittal and Nunavut Iron would own 70 percent and 30 percent share of Baffinland respectively.

The companies decided to cooperate on January 14, following various rival bids to acquire Baffinland.

C$4 billion project

Baffinland's Mary River project has proven reserves of about 365 million metric tons of ore, grading an average of 65 percent iron, and about 500 million mt of ore resources. For some months now Baffinland has been looking for partners for the C$4 billion (US$4.02 billion) project, which is expected to produce 18 million mt per year.

ArcelorMittal has already received the necessary approvals for acquisition from local authorities, also valid for the joint offer.


Tags: iron ore , raw material , USA , Luxembourg , Canada , Europe , European Union , North America , mining , M&A , ArcelorMittal , Pellets , Lump ore , Fine ore

Fenwei to hold coking coal market seminar in Marh

Feb 18, 2011

China coal & Coke Market Forum in the theme of "Global Coking Coal Resource & Market Seminar", will be held by China Coal Resource (CCR) on Mar 23-25, 2011, at Taiyuan Jinci Hotel, Taiyuan, Shanxi Province, P.R. China.

China's imports of coking coal maintained a fast momentum to reach 47.27 million tonnes in 2010, making China to become the fastest and one of the largest coking coal importers in the world.

The coking coal demand, 2011, in China will continue to keep its strongest absorption. Facing the quick recovery of global economy and the coal production slump from the world's first exporter Australia caused by the flooding, is it possible for China or other steel producing countries to get enough coking coal this year? Can global coking coal production meet the demands? Will the global coking coal price surge or not?

China Coal Resource (CCR) called on the industrial experts, analysts and researchers at home and abroad to gather in Shanxi, the largest coking coal production base of the world, to make further communication and discussions on these hot issues.

Meanwhile, delegates from investment, securities, coking coal producer, steel maker, coal logistics to other related industries will also present at this meeting. Hereby we are delighted to welcome our international partners joining us for this forum.


Friday, February 18, 2011

Wuhan Steel forming Canadian mining JV -source

BEIJING Feb 17 (Reuters)

China's third-largest steelmaker Wuhan Steel Group is looking to form a joint venture to develop mining projects with Canada's Century Iron Mines Corp and Adriana Resources Inc (ADI.V: Quote), a company source said on Thursday.

Wuhan Steel, parent of Shanghai-listed Wuhan Iron & Steel Co Ltd (600005.SS: Quote), has also inked an agreement with Adriana Resources to take a roughly 20 percent stake in Adriana via a private placement.

(Reporting by Coco Li and David Stanway, writing by Ruby Lian, editing by Jason Subler and Chris Lewis, sourced: Thomson Reuters)

Tags: Chinease steel industry news, raw material, steelmakers, steel mills, Wuhan Steel Group, joint venture, JV, develop mining projects, Canada, Century Iron Mines Corp, Adriana Resources, Shanghai, stake, private placement

TATA Steel to raise INR 3000 crore via NCD

Friday, 18 Feb 2011

TATA Steel, after its INR 3,477 crore follow on public offer, has secured commitments from investors to raise another INR 3,000 crore through a private placement of non convertible debentures in two tranches.

A part of this secured commitment had been raised in January for the Jamshedpur project and will continue as and when the need arises.

Mr Koushik Chatterjee Group CFO of TATA Steel told Business Standard that “The interest rate for this INR 3,000 crore NCD will be a ballpark of 9 to 9.75% and it will mature after 20 years.”

He said that “The idea is to move from high cost debt to a low cost one and with a better tenure. The company is now focusing on loan products that would give it a flexibility to repay over a long period of time, preferably 20 years, like in the case of this recent NCD.”

On a further fund raising of USD 500 million through a perpetual bond issue, which ideally is a very long term bond with interest payments that go on forever. Mr Chatterjee said that “Nothing is on the table right now.”

However, sources said that the company is looking to raise this sum through a long term bond placement.

Mr Koushik Chatterjee said that the company may launch the issue in the next three to six months.

Sources said the company was looking to raise the money from international market and will bear an interest rate of around 9%.

Mr Chatterjee made it clear that the INR 3,000 crore NCD will be used entirely for the capital expenditure of Jamshedpur and Orissa. He added that “Immediate focus is Jamshedpur expansion and commissioning and post that, the funding of the Orissa plant.”

(Sourced from BS)

Tags:Tags:TATA Steel, NCD, investors, non convertible debentures,Jamshedpur project,Orissa steel plant, Tata Steel expansion

Budget update - Steel industry wants infrastructure status higher import duty and export tax of iron ore

Friday, 18 Feb 2011

The domestic steel industry, which raised prices in wake of some stimulus measures being withdrawn after the last budget, has warned of another price hike if stimulus is completely withdrawn in Budget 2011-12. An industry official said that “We will have no option but to pass on the burden to the consumers if excise duty concessions are withdrawn.”

1. Infrastructure status to the steel industry
The steel industry has also reiterated its long standing demand of being accorded infrastructure status. Steel firms have asked the finance ministry to grant infrastructure status to the steel industry. Such a move by the finance ministry would ensure long term funds and tax holidays for the steel industry.

A SAIL spokesperson told Business Line that “SAIL has submitted its demands and expectations from Budget 2011-12 to the finance ministry. The crux of it is that we want steel to be given infrastructure status. This would help in securing long term funds for the expansions taking place in the domestic steel industry.”

2. Hike import duty on HR coils
For the growth of industry, steel makers along with Associated Chambers of Commerce and Industry has called on the finance ministry to raise import duty on HR coils to 10% from the current 5%. ASSOCHAM in a statement said that “Pro active policy measures adopted by government of India can help extend HR coil capacity by an additional 8 million tonnes during 2011-12, making India surplus for HR coils by more than 6 million tones.”

3. Export tax on iron ore
Steelmakers have also asked the Finance Ministry to increase the export duty on iron ore. A Jindal Steel and Power Ltd spokesperson said that “Recent hikes in steel prices have been mainly driven by the increasing commodity prices. To contain this, the Government should consider increasing the export duty on iron ore.”

The government had last year raised export duty on iron ore lumps to 15%. The industry expects at least a 5% increase on the export of iron ore lumps, but it wants duty to be increased on iron ore fines as well.

An industry official that “It is time we start conserving iron ore fines as technology is coming up which will also make domestic steelmakers to use iron ore fines increasingly.”
(Sourced from BL)

Tags:Budget update, Indian steel industry, infrastructure status, higher import duty, export tax of iron ore, steelmakers, raw material, Indian government

Exchanges, brokers eye steel derivatives

Fri Feb 18, 2011 9:59am GMT

LONDON Feb 18 (Reuters) - As interest in steel derivatives grows, exchanges are increasingly looking to launch steel contracts, and brokers have started to offer steel swaps.

Below are details of existing on-exchange and over-the-counter (OTC) contracts.


The Shanghai Futures Exchange trades two construction steel products -- reinforcing steel bar (rebar) and wire rod -- and has been one of the biggest beneficiaries of China's booming steel market.

On the first day of trade, on March 27, 2009, total volumes across Shanghai Future Exchange rebar contracts <0#srb> represented 1.8 million tonnes of steel. Daily trading volume on Feb. 10, 2011 was almost 4 million tonnes.

Annual rebar futures trading volumes rose from 3.23 billion tonnes in 2009 to 4.51 billion in 2010. The SHFE includes both sides of the deal in its volumes count, however.


The LME launched two regional billet futures contracts in April 2008 -- one Mediterranean and one Far East contract. The two contracts subsequently merged under the Mediterranean contract FMD3=LX in July 2008. [ID:LDE66Q26L]

The contracts started open electronic trade in February 2008 and then moved to open outcry trading on the floor of the LME in April of the same year.

Total steel futures trading volumes grew to 12.4 million tonnes in 2010 from 2.0 million in 2009. The LME said it is now considering the launch of other steel contracts, including a hot-rolled-coil contract. [ID:nLDE7181A9]

Through the new global steel contract, participants will have access to warehouses in Malaysia, South Korea, Turkey, Belgium, Netherlands, United Arab Emirates and U.S. locations New Orleans, Chicago and Detroit.


CME Group (CME.O: Quote), the world's largest derivatives exchange following its absorption of the New York Mercantile Exchange, launched its U.S. Midwest Domestic Hot-Rolled Coil (HRC) steel futures contract in October 2008.

It trades electronically with 18 consecutive contract months and settles against an index developed by Commodities Research Unit (CRU).

The contract size is 20 short tons, with a minimum price fluctuation of $5 per short ton. Annual trading volumes grew from 244,831 metric tonnes in 2009 to 392,140 in 2010.

CME Group is currently looking to launch new steel contracts.


The Dubai Gold and Commodity Exchange launched its steel rebar contract in October 2007. Volumes topped 500 lots after six to eight weeks but faded by the end of December 2007.

Since the economic crisis and in particular the slowdown of the construction industry in the last quarter of 2008, there has been no trading activity in the DGCX steel rebar futures contract, the exchange said.

The Dubai steel contract is for rebar, used in construction. Each contract is for 10 tonnes of grade W460 rebar of 12 metres and allows for both cash settlement and physical delivery, the latter at DGCX-approved delivery points in Dubai, which can be used as warehouses for financing under similar terms as per LME warrants.


India's National Commodity & Derivatives Exchange Ltd (NCDEX) launched Mild Steel Ingots futures in 2005 and Sponge Iron futures in 2006. The contracts underwent several changes as the exchange attempted to bring them in line with the market, so that participation could grow. Today only one contract - Steel Long -- trades on the exchange. Traders say the contract is an important benchmark for the secondary steel market.

Delivery - in billets and ingots form - is compulsory and in eight centres across India.


Freight and iron ore derivatives broker FIS launched five steel swaps contract at the end of 2010: three hot rolled coil (HRC) contracts (North Europe, South Europe and China), a China domestic rebar contract and a Turkish scrap import swap.

The European HRC contracts settles against The Steel Index (TSI), while the Chinese HRC contract settles against Cleartrade China Steel Index (CCSI). All five contracts are offered with clearing at LCH.Clearnet.

Bids and offers on the market are averaging at between 1,000 tonnes per month and 25,000 tonnes per month. Fewer than 120 trades were done in the last few months.

(Editing by Jane Baird,sourced:Thomson Reuters)

Tags:Exchanges, brokers,steel derivatives,over-the-counter(OTC)contracts,Shanghai Future Exchange(SHFE) rebar future trading, LME, Mediterranean, Far East contract,CME Group,New York Mercantile Exchange,U.S.Midwest Domestic Hot-Rolled Coil(HRC),steel futures contract,DGCX steel rebar future,NCDEX,Mild Steel Ingots futures, Sponge Iron futures,Freight and iron ore derivatives broker FIS, TSI, CCSI, LCH

Indonesia approves more permits to ease coal, metals ship delays

Fri Feb 18, 2011 9:43am GMT
* Govt approves export permits for another 29 firms
* Backlog on coal shipments remains
* Some traders borrowing permits to ship coal (Adds trader quotes, details)
By Fitri Wulandari

JAKARTA, Feb 18 (Reuters) - Indonesia has approved permits for 29 more firms to resume coal and metals exports, paving the way for traders and producers to begin clearing a backlog of shipments at the country's ports, a trade ministry official said on Friday.

Up to 3.5 million tonnes of coal shipments, destined to fuel power stations in China and India, have been delayed in recent weeks because of changes to coal and mining laws that required cargoes to undergo extra surveys in a bid to stem tax evasion.

With the latest set of approvals, a total of 81 firms are now allowed to resume exports, after 52 companies were given approval earlier this month, said Junaedi, head of the mining exports unit at the ministry.

Indonesia's trade ministry ordered surveyors in January to temporarily halt issuing surveyor reports to coal and mineral traders in the process of reapplying for trading permits under the new coal and mining law.

"The energy ministry notified us that they have issued trading permits for (an additional) 29 mining firms," said Junaedi, who like many Indonesians only has one name.

As part of obtaining export permits, Indonesia has required exports of mining products including coal and tin to be checked by surveyors, as the country seeks to keep illegal mining in check and boost revenue from the sector.

Surveyor reports, required for shipping coal and metals, show the origin of the cargoes and are used to calculate royalties.

Despite the 81 permits that have been issued, a backlog of cargoes still remains, with some shippers still waiting for export permits from the energy ministry, traders and shipping sources said.

Some desperate traders have also borrowed export permits from other shippers who have already obtained them.

"Some traders have submitted requests for the permit two months ago and they haven't got it," a port source said.

"So instead of waiting for the permit to be issued, they just ship the coal under the name of another shipper that already has the permit," the source said.

But traders could not give details how many vessels are still being held up in ports around Indonesia, the world's top thermal coal exporter that is expected to produce 340 million tonnes of coal this year.

Previously, the Indonesian Coal Mining Association said around 60 to 70 vessels or 3.5 million tonnes of coal were backed up in Indonesian ports.

"There is a backlog and vessel waiting times are up to about 20 days, which is pretty high for Indonesia," a trade source in Singapore said.

"From what I hear, there are a couple of ways to get around can just borrow a miner's license and pay him," the source said. (Additional reporting by Yayat Supriatna in JAKARTA, and Rebekah Kebede in PERTH; Editing by Neil Chatterjee, sourced:reuters)

Tags:Indonesia approves exports permits,coal traders,firms,backlog, coal shipment, ship coal,coal and mining laws,cargoes surveys, stem tax,energy ministry,Indonesian Coal Mining Association

Macroeconomic indicators - Caution as economy overtakes Japan

Friday, 18 Feb 2011

China Daily reported that China still has a long way to go to improve its economy despite formally overtaking Japan as the world's second largest economy.

Japan Cabinet Office said Japan gross domestic product reached USD 5.47 trillion last year compared to USD 5.88 trillion for China

Mr Lu Zhengwei senior economist with the Shanghai-based Industrial Bank said "It is not a surprise that China overtook Japan.” However, economists pointed out that China per capita GDP was only about 10% of Japan.

Mr Yi Xianrong economist at the Chinese Academy of Social Sciences a top think tank said "We should not overestimate our GDP figure as China population is 1.3 billion, 10 times bigger than Japan."

Mr Ma Jiantang head of the National Bureau of Statistics said in January that the country has a huge population, a weak economic foundation, few resources and many people are mired in poverty.

He said that "Therefore, while we take note of our expanding economic size and strength, we should also soberly understand that China remains a developing nation."

The China Youth Daily described China expansion as an empty happiness as the country economic development was at the expense of cheap labor and environmental degradation while the quality of life including education, social security and healthcare, still lags far behind developed countries.

Mr Yuan Gangming research fellow at the Center for China in the World Economy at Tsinghua University said that in the next three to five years China is likely to maintain a growth rate between 8% and 10%.

He said that however for an improved quality of life and healthy, sustained growth, the country must invest more in areas such as human resources, the underdeveloped western regions and social security.

Mr Zheng Xinli permanent vice-chairman of China Center for International Economic Exchanges also said the country should continue its reforms and improve its economic structure to avoid the middle-income trap

He said that "In the past 30 years, China developed because of reform and opening-up. In the coming two decades, we need more reforms to further unleash the potential of development. He predicted urbanization will be the biggest driving force for China's economy.”

He added that one person moving into a city can create economic value of CNY 100,000. In the next 10 years, 200 million Chinese people will move into cities and towns with a potential to add CNY 20 trillion to the economy over the decade.

(sourced:China Daily)
Tags:Macroeconomic indicators,economy overtakes Japan,Shanghai, China per capita GDP,Chinese Academy of Social Sciences,National Bureau of Statistics

Chinese steel export facing increasing difficulty

Friday, 18 Feb 2011

It is reported that though the latest statistics showed Chinese steel export turned better in January, the resistance is increasing, for instance, frequent friction on Chinese steel from overseas market, overseas demand tends to weak and weak competitiveness of Chinese products.
Report from CISA showed the export environment in 2011 is not optimistic, with export for Korea, India and ASEAN taking up 48.2% of total export volume. Korea increased steel capacity by 15 million tonnes and estimating to cut import from China.

The latest analysis report from China Customs pointed out that international demand for steel may remain sluggish due to slow pace of European and American recovery. Data issued by US Department of Commerce showed the importing volume of America in 2010 once kept decreasing for consecutive three months.

Furthermore, trade barriers from overseas market came one after another, causing heavier obstacles on Chinese steel export. A US trade panel on February 7th approved combined final duties ranging up to nearly 450% on steel drill pipe from China used in oil production.

Customs report also listed other trade remedy cases on Chinese steel products, for instance, Russia on November 23rd 2010 decided to impose 29.9% to 39.1% anti dumping duties on Ni containing stainless steel, earlier in Sep. Chinese steel products suffered trade remedy investigations from Canada and EU. (

Tags:Chinese steel export, facing difficulty,CISA, Korea, India, ASEAN, European, American, US Department of Commerce,Canada, EU,steelmills

Cliffs bullish on iron ore prices, ups U.S. exports

Thu Feb 17, 2011 7:26pm GMT

* CEO bullish on iron ore pricing

* Cliffs boosting iron ore pellet exports

* Stock rises 8 percent (Adds more CEO, CFO comments)

By Steve James

NEW YORK, Feb 17 (Reuters) - Cliffs Natural Resources Inc (CLF.N: Quote) is boosting its U.S. exports of iron ore pellets by up to five times this year to take advantage of "exceptionally high" global prices driven by growing demand from steelmakers, its chief executive said on Thursday.

"Although the exceptionally high spot prices experienced in recent weeks are most likely not sustainable in perpetuity, I do believe there are a number of factors that support high pricing over the near term," Joseph Carrabba told Wall Street analysts.

He noted recent cutbacks on exports by India, a supplier of about 100 million tons of iron ore into the seaborne market. Also, higher labor, energy and material costs are likely to affect China's marginal cost producers, potentially raising the floor in spot market pricing.

"These points, coupled with the increasing steel production capacity in emerging economies, will likely bode well for seaborne iron ore pricing,

"This would naturally have a positive impact on our realized revenue in the near future," Carrabba said on a conference call.

Cliffs sold pellets last year at around $150 per ton, and officials said for 2011 it is assuming a 35-percent increase, putting the price at around $200 a ton.

Carrabba said Cliffs sold nearly 400,000 tons of pellets from its Minnesota and Michigan operations into the seaborne market last year. "Given the current demand for iron ore products around the world, we expect to place approximately 1 to 2 million tons of pellets from these same U.S. operations into the seaborne market in 2011."

Total North American iron ore sales volume is expected to be about 28 million tons in 2011 -- up from 26.2 million last year, Chief Financial Officer Laurie Brlas said, citing improved market conditions.

She also said Cliffs expected to generate more than $2.7 billion in cash from operations in 2011, more than double last year's. Capital expenditure would be about $700 million.

Their comments came a day after the Cleveland-based company reported fourth-quarter earnings that easily beat Wall Street expectations. The growth stemmed from Cliffs' move to increase exposure to global pricing, which was a big part of the strategy behind its pending $4 billion acquisition of Canada's Consolidated Thompson Iron Mines Ltd (CLM.TO: Quote).

Cliffs stock was 8 percent higher at $100.30 in afternoon trading on the New York Stock Exchange on Thursday,

Asked about the global outlook for iron ore, which is a key ingredient in steelmaking, Carrabba said the company saw very strong sales in China, where most of its ore pellets went into steel mills that make infrastructure-type products.

"We believe, with the government funding, they will continue on with the infrastructure build-out in China.

"We still feel very confident that our continued sales at 9 million tons coming out of Australia are going to continue throughout 2011."

On North America, he said he was a little more bullish than last year since steel mill utilization rates were rising.

"So with a rising economy in the U.S. it only bodes well for the volumes of sales to come forward for Cliffs," he said.

(Reporting by Steve James, editing by Gerald E.McCormick,Phil Berlowitz, Sourced:Thomson Reuters)

Tags:Cliffs Natural Resourced Inc, iron ore prices, U.S.exports, raw material, steelmakers, steelmills,seaborne market, China, iron ore pellet exports,North America, Canada's Consolidated Thompson Iron Mines Ltd, acquisition,Carrabba,Australia

Chinese plan for steel super firms seen floundering

Friday, 18 Feb 2011

Reuters reported that China is likely to fail in its drive for state owned steel giants to swallow small mills and create iron ore super buyers to wring better prices from leading sellers Vale, Rio Tinto and BHP Billiton as failure to get the three major iron ore suppliers to agree to price cuts in 2009 was blamed on small mills breaking ranks.

China latest five year plan aims to fix by bringing more than 60% of national steel capacity under the control of its top ten producers by 2015.

Cutting total steel capacity in China, variously estimated at 720 million to 750 million tonnes a year roughly more than 100 million tonnes over 2010 output of 626.6 million tonnes, by forcing mergers and shutdowns may not work as well as market forces.

China industry ministry last month said the top ten steel mills produced 48.1% of national output last year up by 3.6 percentage points from 2009 and close to its original target of 50%.

But analysts say that up to now, many of the consolidations have been cosmetic gestures to appease regulators.

Mr Henry Liu head of commodity research at Mirae Assets Securities in Hong Kong said "The government led administrative push will not work and the best way is to allow the market to play a major role in mergers and acquisitions"

Mr Du Hui with China Qilu Securities said "The majority of mergers and acquisitions have been sought to create a simple sum of output and haven't met the real target of regrouping assets and jointly utilizing resources."

Tags: Chinese plan for steel super firms, BHP Billiton, Rio Tinto, iron ore suppliers, Vale, iron ore suppliers, small steel mills, China steel industry,China Qilu Securities, Mirae Assets Securities,Hong Kong

BHP seeks to set met coal prices monthly - Nikkei

Thu Feb 17, 2011 7:44p

Feb 18 - BHP Billiton , the world's biggest miner, has notified major Japanese steelmakers that from April it wants to replace quarterly pricing of metallurgical coal with monthly pricing, the Nikkei daily said, citing unnamed sources.

The Anglo-Australian company wants to benefit from higher prices for steel-making coal, the business daily said, adding steelmakers oppose the switch, fearing frequent price changes would make production costs more volatile.

Nikkei said BHP requested prices be set monthly for most of the coking coal that Japanese companies buy, with explanations about price levels, calculation methods and other details expected to be provided later.

Continued strong demand in Asia plus unresolved logistical bottlenecks due to production disruptions in Australia caused coal prices to rise by more than 30 percent last year.
(Created by Krishna N Das,sourced:Thomson Reuters)

Tags:BHP, set metallurgical coal prices monthly, Nikkei, coking coal, Japanese steelmakers, raw material, replace quarterly coal pricing

Thursday, February 17, 2011

Japanese 2011 coal contract seen climbing to record level

Wed Feb 16, 2011 5:21am EST

By Rebekah Kebede and Osamu Tsukimori

PERTH/TOKYO, Feb 16 (Reuters) - Annual negotiations between Australian coal producers and Japanese utilities for thermal coal contracts starting April 1 are underway with the prices
expected to meet or exceed record levels seen in 2008.

Prices are widely expected to match or exceed the 2008 record price of $125 per tonne due to upward pressure from floods in Australia's Queensland state as well as production disruptions elsewhere.

Trade sources said that the price is likely to settle between $125 and $130 per tonne. A new contract at $125 per tonne would represent an almost 30 percent increase from last
year's contract.

"We think there are enough reasons (for a higher coal contract settlement) -- Queensland, of course, the disruptions in South Africa and export issues in Indonesia," said David Brennan, an analyst with Daiwa Securities.

Flooding in Queensland lifted thermal coal prices to a high over $140 per tonne earlier this year and the globalCOAL index for Newcastle coal is still hovering around $125 per tonne,
about 35 percent higher than this time last year.

Rain-related disruptions during the last months in other coal producing countries have also contributed to global supply tightness.

The annual contract prices are set by mining major Xstrata Coal , the world's largest exporter of power-station coal and large Japanese utilities including Tokyo Electric Power Co (TEPCO), Tohoku Electric Power Co Inc and Chubu Electric .

Forecasts for the contract price among coal analysts have varied widely, with Macquarie Research putting its forecast at $145 per tonne, while others put the price around the 2008
record of $125 per tonne.

The contracts, which represent the majority of coal imported into Japan are generally around spot price levels, often with a supply security premium.

Some contracts, typically smaller volumes, are signed in July and October. Japanese utilities use about 50 million of thermal coal annually, with Australia supplying about 60 percent of its imports.

Japanese utilities may accept a price of $125 per tonne, but there's a feeling they do not want to pay higher than that, according to one Japanese coal trader.

"There's a sense of resistance to ($125 per tonne) level for the buyers," one Japanese utility source said. "Of course, we aim to keep it below that."

Some market sources said the Queensland floods and recent market tightness would bolster Xstrata's hand in the negotiations.

"This is coming at a very good time from Xstrata's point of view," said one Sydney-based trader, indicating that Xstrata may use some of its recent mine disruptions to negotiate for a
higher price.

Xstrata recently declared force majeure on one of its thermal coal mines in Australia due to heavy rains; another of its thermal coal mines has been shut for weeks due to a fire.

"In the end, whoever holds the tonnage will have the final say," the Sydney based trader said.

(sourced:Thomson Reuters)
Tags: Japanese 2011 coal contract,coal contract on record level high,thermal coal contracts, prices,coal traders, Queensland,South Africa, Indonesia,forecasts by coal analysts,Macquarie Research,Xstrata,