US steelmaker shares down on dollar, profit-taking

Friday, Feb 4, 2011 9:47pm GMT
* U.S. steelmakers' shares fall
* Profit-taking, stronger dollar cited
* Little impact seen from proposed Nippon-Sumitomo merger
(Updates with more analyst comments, closing stocks)

NEW YORK, Feb 4 (Reuters) - The shares of U.S. steelmakers fell on Friday and analysts attributed the drop to profit-taking after a recent run-up and a stronger dollar, rather than to news of a major steel merger in Japan.
"When the dollar is up, it usually hurts commodities," said Charles Bradford of Bradford Research. "U.S. steelmakers want to export and it's better if the dollar is weak."
The dollar extended gains against the Japanese yen on Friday, boosted by optimism about the U.S. economic outlook.

Bradford also noted steel stocks had risen recently -- U.S. Steel Corp (X.N: Quote) had risen 6 percent in the week since posting a bigger-than-expected fourth-quarter loss and giving only a modest forecast for improvement in the first quarter.
But he did not think the stock drop was related to plans by Japan's Nippon Steel Corp (5401.T: Quote) and Sumitomo Metal Industries Ltd (5405.T: Quote) to create the world's No. 2 steelmaker.
"I see this as more about Japan being wary of China and other Asian competition. It's not a concern for the U.S.," he said.

Michael Locker, of steel industry consultancy Locker Associates, noted the proposed merger creates a 48-million-ton per-year producer.
"That's a big move, but I don't see a deep ... impact for U.S. steelmakers," he said.
"It will make for tougher competition on world markets, but I don't think it will squeeze U.S. steelmakers though. Japan is more focused on China."
On the New York Stock Exchange, U.S. Steel shares dropped 4 percent to close at $58.17, AK Steel Holding Corp (AKS.N: Quote) dropped 3.0 percent to $15.84 and Nucor Corp (NUE.N: Quote) ended the day 24 cents lower at $47.97. (Reporting by Steve James;editing by Gerald E. McCormick & Andre Grenon, sourced:reuters)

Bhushan Steel Oct-Dec net rises 23.3 pct

Feb 5 (Reuters) - Three months ended Dec. 31
Net profit 2.8 vs 2.27
Net sales 19.43 vs 14.29
NOTE:Bhushan Steel Ltd makes cold-rolled steel strips.
The results are standalone.(Reporting by Aniruddha Basu,MUMBAI;Editing by Robert Birsel, reuters)

EPA rejects EPA air permit for US Steel Granite City Works

Saturday, 05 Feb 2011

The Environmental Protection Agency has rejected parts of an air permit issued by Illinois regulators for US Steel Corporation's Granite City Works and sent the permit back to the state.
The Illinois EPA issued the permit in September 2009. The Interdisciplinary Environmental Clinic at Washington University School of Law filed an appeal with the EPA a month later on behalf of American Bottom Conservancy, a Metro East based environmental group.
The group challenged the permit on dozens of points, including that it excluded the impact of a newly built coke plant and failed to state how the emissions from the plant would be monitored under the federal Clean Air Act.

Ms Kathy Andria executive director of American Bottom Conservancy said that "Consistent monitoring is important to ensure that US Steel Granite City Works is not emitting toxic air pollutants at an unsafe level."
Ms Maggie Carson spokeswoman at Illinois EPA said that the agency plans to reissue the permit but could not discuss specific issues.(sourced:stltoday.com)

EU investigates Brazilian steel imports measures

Saturday, 05 Feb 2011
Bloomberg reported that the European Union is investigating Brazilian measures to limit steel imports because they may break World Trade Organization's rules.

Steelmaker trade association EUROFER said that the EU is Brussels didn't open a formal investigation yet and is talking to the Brazilian government before taking such a decision.

It may be recalled that Brazil's tax agency said in October 2010 that it would seek to combat irregularities in steel imports, applying taxes based on pre determined prices whenever the declared value is lower.(sourced:www.bloomberg.net)

Colombia's Cerrejon, coal workers see progress

Saturday Feb5,2011 12:24am GMT
* No deal reached after mediation, but progress made

* Union expected to decide on Saturday on strike

* Cerrejon, workers have been in talks since early Dec
By Monica Garcia BOGOTA,

Feb 4 (Reuters) - Colombian coal workers and the nation's largest exporter, Cerrejon, failed to reach a deal on Friday but made progress in pay talks after the government scrambled to avoid a looming strike, officials said. Cerrejon produces on average 85,000 tonnes a day of high-quality thermal coal, and any prolonged stoppage at the mine would hurt output at a time when global supplies are tight due to issues in almost all major thermal producers.

Sintracarbon union President Igor Diaz said that the syndicate would present the company's proposals to workers on Saturday. "It's the workers who will decide what will happen next," he told reporters. "There were advances in some areas," he said, adding that the company had increased the salary increment to 6.5 percent for the first year from 6.3 percent previously. The union has a midnight Saturday/Sunday deadline to decidewhether to walkout, accept the deal or workers would have tovote again on a strike, according to Colombian law. "We've made great progress ... now it's in the hands of the union," Cerrejon President Leon Teicher told reporters.

Cerrejon and workers have been in talks since Dec. 9. If workers strike, it will be the first walkout in twenty years, according to the company. Colombian Vice President Angelino Garzon held an hours-longmeeting on Friday with Cerrejon executives and union leaders totry to hash out a compensation deal. "I'm optimistic that due to the willingness of the companyand the union, we're very close to a deal," Garzon said. Cerrejon -- unlike privately owned Drummond and Glencore,Colombia's other top coal producers -- has listed partners, BHPBilliton (BLT.L: Quote), Anglo American (AAL.L: Quote) and Xstrata (XTA.L: Quote),to keep happy as well as its customers. Adding to pressure to reach a deal with workers, itspartners have had lower output from mines in Australia due toflooding and would not want to lose any more production in sucha tightly balanced market set to go higher. Global coal markets have been vulnerable to supplydisruptions in many important exporting countries, such asAustralia, and that has boosted prices.(Additional reporting and writing by Jack Kimball; Editingby Gary Hill, source:Reuters)

China province wise narrow CR strip output in 2010

Saturday, 05 Feb 2011

It is reported that China province wise narrow CR strip output during January to December 2010 total 8.25 million tonnes which Jiangsu topping the table.

Province	Dec'10	Dec'09	Change	Jan-Dec'10	Jan-Dec'09	Change
Total	0.79	0.69	13.7	8.25	6.57	25.5
Jiangsu	0.15	0.12	30.5	1.51	1.12	35.4
Hebei	0.10	0.11	-10.4	1.29	0.89	44.8
Henan	0.11	0.10	9.8	1.19	0.99	20.3
Zhejiang	0.10	0.10	-2.9	1.09	0.91	19.7
Guangdong	0.10	0.05	94.3	0.77	0.57	34.9
Tianjin	0.06	0.03	107.4	0.43	0.27	59.4
Fujian	0.02	0.02	15.0	0.29	0.27	8.9
Shandong	0.02	0.03	-38.2	0.29	0.31	-5.8
Shanghai	0.03	0.03	0.0	0.28	0.22	25.9
Jiangxi	0.02	0.03	-35.3	0.26	0.21	21.6
Sichuan	0.02	0.01	50.0	0.21	0.15	39.5
Anhui	0.02	0.02	17.6	0.20	0.19	5.2
Jilin	0.01	0.01	-27.3	0.10	0.08	23.8
Hubei	0.01	0.01	28.6	0.10	0.08	26.9
Chongqing	0.01	0.01	-36.4	0.09	0.10	-5.2
Heilongjiang	0.01	0.00	100.0	0.06	0.05	25.5
Hunan	0.00	0.00	-33.3	0.03	0.11	-75.2
Liaoning	0.00	0.00	0.0	0.02	0.01	46.2
Inner Mongolia	0.00	0.00	0.0	0.02	0.03	-55.9

In million tonnes



(sourced:mysteel.net)

visit www.mysteel.net for real time access to China steel news

HBIS operation revenue hits CNY 200 billion

Saturday, 05 Feb 2011
It is reported that Hebei Iron & Steel Group was confronted with expenses increase and profit decrease top CNY 10.5 billion due to the cost rise and steel industry profit level decline. However, the HBIS achieved operation revenue of CNY 220 billion with increase of 24.29%YoY through speeding structure adjustment and seizing high end market.

HBIS became the first large enterprise in Hebei history to have achieved operation revenue of over CNY 200 billion. Mr Wang Yifang President of HBIS said “It was the science & technology innovation that laid the foundation for the Group’s profit rise against the tendency.”
In 2010, HBIS broke many records in science & technology innovation area: It explored over 120 new products annually, with sales of new products reaching 2.9 million tonnes and new products contribution rate of 8.5%; It manufactured varietal steel of 20.5 million tonnes accounting for 60%, of which high-strength ocean platform steel, nuclear power steel and many other varieties successfully substituted import and fulfilled domestic market.

HBIS Group put forth effort on promotion of equipment structure adjustment and invested CNY 35.6 billion in the adjustment projects since it was established. Currently, the main equipment has realized large-scaling and modernization which laid firm foundation for product structure adjustment. Handan Steel newly added district 2.15 million tonnes CR project was built and put into production in 2010 which filled Hebei high strength automobile sheet market and domestic widest galvanized automobile sheet market. It revealed that HBIS Group was capable of producing automobile sheet with width, thickness and strength grade over 98% specifications.(sourced:mysteel.net, for real time access to China steel news)

Optimum Coal blames Transnet for low delivery

Five years of decling deliveries to Richards Bay Coal
Terminal but a turnaround last year

Friday, Feb 04 201107:04:48 AM
By Allan Seccombe

OPTIMUM Coal has laid the blame for undelivered export coal squarely on Transnet Freight Rail and doubted the utility’s claims it would shift 70-million tons of coal this year, urging it to appoint a CEO to give it much-needed leadership.

"History shows they’ve never done 70-million tons, but if they do, it will be of great (for) the industry," Optimum CEO Mike Teke said. He wanted Transnet to appoint a CEO as soon as possible.

"I’d like to be able to knock on someone’s door, someone who can make a difference. Transnet needs someone to make decisions," Mr Teke said.

Optimum has 318000 tons of export-grade coal stockpiled at its operations, waiting for it to be delivered by rail to Richards Bay Coal Terminal, where it has an 8,44-million-ton annual allocation.

"Transnet Freight Rail has fallen short of our expectations. If we had received all our trains we would not have these stockpiles," Mr Teke said. "They could have done better."

Transnet Freight Rail has set a target this year to deliver 70-million tons of coal to Richards Bay as it moves towards its target of 81-million tons, Divyesh Kalan, GM of Transnet, said at the McCloskey Coal Exports conference in Cape Town this week.

Last year Transnet Freight Rail missed its 65-million-ton commitment because of a strike that knocked 2-million tons off that target and a derailment that cost it 1-million tons. "We’ve had five years of consistent decline in deliveries to Richards Bay Coal Terminal, but we had our first year of turnaround last year," Mr Kalan said.

Transnet Freight Rail is working closely with its coal customers to match coal production to rail capacity. It has installed about 40% of the jumbo wagons it wants running on the coal line and has taken delivery of 40 of the 110 new locomotives it is dedicating to the coal haul line.

Meanwhile, Optimum yesterday reported a profit in the six months to end-December increasing to R275m from R16m a year earlier. It may have to raise debt in the financial year ending June to complete a R700m capital expansion programme to develop new mines.(sourced:Businessday)

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Australian investments in African resources triple

It took just five years for Australian investments in the Resource sector to triple according to figures released by the Australian

Friday04, 2011

By DES LATHAM

According to the Australian Department of Foreign Affairs and Trade, that country’s commercial interests in the African resources sector are expanding rapidly, nearly tripling in size since 2005.

The Australian High Commissioner to South Africa, Ann Harrap, says there areapproximately 220 Australian mining and oil companies with some 595 projects across 42 countries in Africa.

"As the Australian Foreign Minister Kevin Rudd highlighted during his recent visit to Addis Ababa for the African Union summit, the story of Australian commercial engagement in Africa’s resources sector is a positive and dynamic one. The growth of this presence in the last few years has been extraordinary, with around 48 companies and 143 new projects added in 2010 alone," she said.

"Australia’s mineral and resources companies have more projects in Africa than in any other region of the world, covering all types of mining projects from exploration to smelters and mining services, and all the major minerals", she said.

South Africa, with 134 Australian projects, accounts for the largest amount of new and existing activity in any one country.

Australian delegations will be heavily represented at next week’s Mining Indaba.

For example, Australian company Billiton has invested in aluminium smelters, base metals mines and coal mines in South Africa.

Another example of Australian involvement is Australian Mines which plans to buy out Nigerian operation Nigeria Gold Pty Ltd. (sourced: Businessday)


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Sasol’s China coal-to-liquids plant on hold

No more work to be undertaken before application approved

Friday 04, 2011
By SISEKO NJOBENI

PETROCHEMICALS group Sasol said yesterday it would put on hold new work on a planned coal-to-liquids project in China while it awaited the outcome of the Chinese government’s review of the project application.

Sasol and its partner in the project, Shenua Ningxia Coal Industry Group, submitted a project application last year to the National Development and Reform Commission, a macroeconomic management agency that falls under China’s State Council. The commission lists planning of the layout of key construction projects among its functions.

The application seeks approval from the Chinese government to build the coal-to-liquids plant at the Ningdong energy and chemical base in the northwest autonomous region of Ningxia Hui.

Sasol and Shenua Ningxia Coal Industry Group are 50-50 partners in the mooted 94000 barrels a day plant. The project will use Sasol’s proprietary technology. The companies have completed feasibility studies.

Sasol spokeswoman Jacqui O’Sullivan said yesterday the project would cost $8bn-$10bn. As 50% equity partner, Sasol is liable for half of the costs.

Ms O’Sullivan said Sasol and Shenua Ningxia Coal Industry Group were awaiting the decision of the National Development and Reform Commission.

"The project has reached a key decision point and the partners have decided to delay initiation of any further project activities until the outcome of the decision is known," Ms O’Sullivan said.

The Chinese project is one of several Sasol is pursuing outside SA. According to Sasol, the proposed project would be the largest single-project foreign direct investment in China and its largest coal-to-liquid fuels project yet.

In comments made in Beijing when he was part of President Jacob Zuma ’s delegation to China last year, Sasol CE Pat Davies said Sasol and Shenua Ningxia Coal Industry Group had put together "the best possible commercially proven overall integrated technology package".

Sasol’s decision to halt further work on the project follows last month’s announcement of its decision to can a proposed coal-to-liquids plant in Indonesia.

The project had still been at what was called the "ideas stage" of development.

The canning of the project in Indonesia was regarded as an indication that, for Sasol, new greenfields coal-to-liquid projects will play second fiddle to gas-to-liquids projects.

(sourced:Business Day, news worth knowing)
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Analysis: Eskom pushing for coal price controls, mining regulation

February04, 2011, 12:38:32

South Africa; The adage “taking coals to Newcastle” connotes an exercise in futility – if not downright stupidity. Apparent steps by Eskom and the government to control and regulate the coal mining industry in South Africa exemplify what the adage is about. By CHRIS YELLAND.

In recent months and at various venues Eskom has been punting the view that a new dispensation and enabling environment is required for the utility to secure the cheap and abundant supplies of coal needed for its current and future net of coal-fired power stations.

When pressed for details, Eskom officials become a little coy. But stripping away the euphemisms, what Eskom is saying is that, in the light of higher global demand and world market prices for even the low-grade coal used in Eskom power stations, the utility is having difficulty matching these prices and contracting on a voluntary basis with the coal miners to secure medium and long-term coal supplies.

Eskom is, therefore, seeking heavy-handed new mechanisms to ensure its own coal needs are met, and is suggesting policy options such as price controls, licensing, export quotas and restrictions on the export of the grade of coal it uses, and increased powers for the minister to intervene in the interests of domestic energy security.

In short, instead of pricing based on supply and demand and voluntary long-term contract prices, Eskom is pushing for government-regulated pricing that provides a “fair return for the capital and skills that they [the coal miners] contribute, linked to the cost of capital and the risk that they assume” – a kind of “cost plus” methodology.

Eskom’s suggestions for domestic coal price controls and the regulation of the coal mining industry are based on the premise that abundant, cheap coal for the generation of electricity in South Africa is good for Eskom, for commerce and industry, for the economy and the country and ultimately for the consumer.

Eskom claims increases in the cost of coal will lead to an increased price of electricity, which has a negative impact on GDP and economic growth and, therefore, a negative impact on employment.

Of course, this is simplistic nonsense, as the following two examples illustrate.

Firstly, in the late 1980s, 1990s and early 2000s, when Eskom’s price of electricity was by far the lowest in the world, South Africa’s economic growth rate was low and its rate of unemployment was very high.

Secondly, the artificially low Eskom electricity price enjoyed by BHP Billiton’s Hillside, Bayside and Mozal aluminium smelters in recent years, which was significantly below the cost of electricity production, did not enhance the country’s economic growth or reduce the high rate of unemployment in South Africa.

On the contrary, in response to secret, low electricity price deals with Eskom, BHP Billiton imported bauxite to South Africa by ship, and exported cheap South African electricity around the world in the form of aluminium ingots. The fact that this was done at a time of electricity shortages and load-shedding in South Africa inhibited economic growth and caused job losses.

Don’t blame BHP Billiton though. Blame those whose economic policy it was to drive energy-intensive economic growth by selling a precious and highly-valued energy resource at artificially low prices, while not understanding the long-term consequences.

The reality is that interference with voluntary contracting between users and producers, and with well-established market pricing mechanisms, leads to market distortions with serious unintended consequences. There is indeed adequate competition in the coal mining and supply sector, and even Eskom acknowledges there is a vibrant and diverse coal mining industry in South Africa. A sound basis for coal price regulation, namely to prevent monopoly abuse and price collusion by coal producers, does not exist.

In the current environment, one would argue that price controls with artificially low coal prices are bad for Eskom, industry, the economy and the country. Coal as the primary energy source represents the low-cost, high-CO2 emission, business-as-usual scenario that has led to low economic growth and generation capacity shortages.

Artificially low, regulated coal prices to Eskom will maintain our dependence on a non-renewable, carbon-based energy source, entrench uncompetitive, energy-guzzling smoke-stack industries, encourage high energy-intensity industries when South Africa should be moving towards lower energy-intensity economic activities, discourage energy efficiency, inhibit private investment in power generation when Eskom and the government are cash strapped and establish a time when an inevitable return to real prices will come as a deep shock to the productive economy and the consumer.

In addition, artificially low, regulated coal prices to Eskom will prejudice the emergence of independent power producers, regional power initiatives and cleaner, alternative energy sources, including hydro, nuclear, bio-waste, industrial co-generation, wind and solar, and will perpetuate the uneven playing fields that the coal-dominated monopoly has enjoyed up to now.

Eskom and South Africa’s continued dependency on coal is like an addictive drug that holds us down and will come back to haunt us. I suggest government and Eskom allow coal prices to rise (or fall) to their true values based on supply and demand and voluntary contracts between the buyer and sellers. Rising coal prices will provide just the signals needed to encourage the move to alternative, cleaner energy sources. Government still has the option to impose royalties, levies and taxes on the coal mining companies, and it should use this option in preference to price controls.

The treasury has recently issued a carbon tax discussion paper for comment and response by 28 February. Deloitte has estimated the proposed carbon tax would cost Eskom some R37 billion a year based on a tax rate of R165/ton of CO2 emitted, which is also in line with the tax rate used in the draft integrated resource plan for electricity of 2010. This additional cost would be passed through to Eskom’s customers in the form of increased electricity prices.

It would appear quite illogical and contradictory to effectively subsidise the price of electricity by providing Eskom with artificially low, non-market related coal prices, and then impose a carbon tax on its coal consumption. On the one hand coal price controls would be encouraging coal usage by Eskom, while on the other hand the carbon tax would be discouraging such usage. Economic policies need to be clear, sound and non-contradictory.

The world is moving to reduce tax carbon emissions on the basis that users should pay the full price of burning coal, including the cost of externalities. Regulating the coal price to maintain artificially low coal prices for Eskom is counterproductive, and effectively subsidises and encourages its continued coal usage while prejudicing cleaner energy options – the very opposite of the direction we should be taking
(sourced:The Daily Maverick)

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Sheffield Forgemasters wins American multi-million order

February 3, 2011

Sheffield Forgemasters has won a large American steel castings order, securing re-entry into an existing geographic market and beating off competition from Asia.

The order, for three hot-metal mill-housing castings weighing between 150 and 275 tonnes for the ATI Allegheny Ludlum (an Allegheny Technologies company) advanced hot-rolling and processing facility in Pennsylvania, was awarded by Siemens VAI based on the extremely high quality of the Forgemasters castings, unmatched by Asian competition.

With a £multi-million value, the contract firmly re-establishes Forgemasters in the metal rolling mills market for the USA, a geographic market which it hasn’t operated in for some years.

Mick Holloway, senior sales manager at Sheffield Forgemasters, said: “Securing a foothold into the market for rolling mills within the United States is a key strategic lead for Forgemasters.

“This is an existing market, which the company has supplied to in previous years, but changes in technology and Forgemasters’ development of castings and ultra-large castings through a dedicated research and development programme, enables us to produce components which far exceed the quality offered by competitors.

“The contract was essentially secured on the back of a previous contract, to supply smaller 67 tonne rolling mill castings to Siemens VAI, for the AHMSA steel mill in Mexico and the quality and level of finish for those castings set a standard which impressed the client.”

The new USA mill will be part of an advanced speciality metals hot-rolling and processing facility and will be built at Brackenridge, Pennsylvania for Allegheny Technologies Incorporated. It will be capable of rolling a wide range of stainless steels and other specialty alloys at widths exceeding 2m.

Structural integrity of the castings is critical as the rolling forces applied during the mill’s operation will be among the highest ever to be applied in a hot-strip mill.

The components supplied to the ATI Allegheny Ludlum mill include two roughing mill housings at 275 tonnes each and one edger housing casting at 150 tonnes.

Forgemasters has invested heavily in an ongoing research and development programme since a 2005 management buyout to refine its processes and create highly complex casting solutions for industries ranging from hydro, civil nuclear and thermal power generation, to offshore oil and gas exploration

The company has supplied some of the largest single steel castings in the world and has the capacity to pour up to 600 tonnes of molten steel in a continuous pour.

Allegheny Technologies Incorporated is one of the world's largest producers of speciality metals which are used in the aerospace and defence, oil, gas and chemical process industries, electrical energy, medical, automotive, food equipment and appliance, machine and cutting tools, construction and mining markets.
(sourced:Metal-Supply)
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TATA Steel raised reversing mill plate price by GBP 90 a tonne

Friday, 04 Feb 2011

TATA Steel had raised transaction prices for reversing mill plate by GBP 90 per tonne effective on all orders placed from February 1st 2011. The increase is the result of higher than anticipated international steel demand in 2010 and expected continuing demand growth this year.

Mr Paul Parkins commercial manager Plates for TATA Steel in Europe said that "All plate consuming industrial sectors are showing improvement and lead times from our mills are extending. Global production of steel in 2010 was 1.4 billion tonnes, an increase of 15% YoY, 50 million tonnes more than forecast. Industry analysts expect this growth to continue throughout 2011, with a further 6% increase in demand bringing production to 1.5 billion tonnes."

In addition, the rise in steel consumption and the recent extreme weather conditions in Australia and Brazil have led to higher spot prices for key inputs such as iron ore and coking coal. TATA Steel will continue to monitor the situation as the full impact on raw material availability and prices becomes clear.(sourced:steelguru)

EU manufacturing rebound solidly entrenched - EUROFER

Friday, 04 Feb 2011

EUROFER's Q1 2011 steel market outlook signals that despite slowing growth in the 2nd half of last year, the EU economy is on track for further recovery in 2011-12.

The 2% GDP growth estimated for 2010 masks significant internal divergences in economic performance. While the recovery in Germany and its Northern European trading partners is on solid footing, growth in the peripheral countries is hampered by structural weaknesses in the export sector and the negative impact of austerity measures on domestic demand.

Mr Gordon Moffat director general of EUROFER said that "The good news is coming from the manufacturing sector. Output has been rising faster than foreseen, particularly in Germany but also elsewhere we see a turn for the better. Indicators signal a continuation of this trend. Improving capacity utilisation will trigger investment in machinery and equipment. Also construction investment looks set to stop acting as a drag on domestic demand growth this year. This will broaden the basis for economic growth in the EU."

The manufacturing rebound increasingly has replaced stock replenishment as the key driver of steel consumption growth since mid 2010.

The EU steel market started 2011 on a positive note. Stocks at end-users and distributors are still assessed as low to normal for the current level of downstream activity. The outlook for real and apparent consumption is for further sustainable growth. Imports are still at reduced levels compared to 2006-2008, albeit on a rising trend for most flat products. All in all, the market is expected to remain relatively well balanced for the time being. Real and apparent consumption are seen rising by around 4% per annum in 2011 and 2012.

Mr Gordon Moffat added that "The key uncertainty currently stems from increased volatility in demand due to the continued tightness and rising prices for raw materials. Recently, the market has seen some forward buying in anticipation of steel producers looking to recoup the rising cost of hot metal. This might have an impact on bookings later this quarter."

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POSCO still facing iron ore mine allocation issues

Thursday, 03 Feb 2011

ToI reported that POSCO will have to seek forest and environment clearances for its mining operations once the mines are finally allocated to the Korean steel giant.

The Orissa government had allocated the Khandadhar ore reserves in Sundergarh district to POSCO but another company laid claim to the ore and took the state government to court. The high court stayed the handover and POSCO then moved the Supreme Court in the matter. The case is still pending a decision in the apex court.

But even if the apex court does decide in POSCO's favor, the company will have to come back to the environment ministry to seek clearance under the Environment Protection Act and forest clearance under the Forest Conservation Act. (sourced:The Times of India)

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POSCO and Orissa government yet to renew MoU on steel plant

Friday, 04 Feb 2011

Six months after the expiry of the MoU between POSCO and the Orissa government for setting up a 12 million tonne per annum steel plant, the South Korean major is yet to reply certain queries made by the state government for its renewal.

Mr BK Patnaik state chief secretary told reporters that "Certain queries have been made to POSCO India. But it is yet to respond. Once it is received, there should be no problem in renewing the MoU.”

Mr Raghunath Mohanty steel and mines minister said that "We will renew the MoU with POSCO at appropriate time.”

Official sources said that the tenure of the five year MoU with the South Korean steel major lapsed on June 21, 2010 adding that the proposed project to set up a mega steel plant near Paradip had failed to make much headway.

Sources said POSCO India is reluctant to accept any new clause in the renewed MoU suggested by the state government. It added that the state government, which has decided to reserve jobs for local people in all mega projects, wanted it to be incorporated in the fresh MoU.

According to the government's new job reservation policy, all industries setting up units in the state would provide at least 90% jobs in unskilled category to local people including the families affected by project and up to 60% jobs in semi skilled category. Similarly, 30% of the jobs need to go to local people of the state in supervisor and managerial cadre. However, senior executive posts could be filled from outside the state.

The MoU issue was raised after the Centre on January 31 gave conditional clearance to the POSCO project.(sourced from PTI)

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POSCO selects Halligudi in Karnataka for steel plant

Friday, 04 Feb 2011

Just a day after the environment ministry granted conditional clearance to POSCO for its USD 12 billion Orissa steel project, the South Korean steel major has reaffirmed its India plans with a second proposal.

According to Mr VP Baligar Karnataka principal secretary (commerce and industries), POSCO has selected Halligudi in Gadag district of Karnataka to build its proposed 6 million tonnes plant at an estimated investment of about 32,000 crore.

Mr Baligar said that POSCO has sought 3,000 acres for setting up the plant and has already made the initial deposit with the Karnataka Industrial Development Board towards acquisition of land. The state government will now begin the land acquisition process.

POSCO has already applied for a captive iron ore mining lease with the state government inviting bids for fresh licenses.(sourced:ET)

Japanese Stocks Advance to Two-Week High on Steelmaker Merger, Earnings

Feb 4, 2011 12:51 PM GMT+0530
By Norie Kuboyama

Japanese stocks rose, sending benchmark indexes to their highest levels since Jan. 19, as steelmakers surged on a merger proposal and some company earnings improved.

Nippon Steel Corp., Japan’s largest steelmaker, jumped 9.1 percent after announcing a plan to combine with Sumitomo Metal Industries Ltd., which soared 16 percent. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 publicly traded bank, gained 0.9 percent after profit more than doubled. Sony Corp., Japan’s biggest exporter of consumer electronics, climbed 1.8 percent after reporting profit that exceeded analysts’ estimates.

If the merger proposal triggers further consolidation, that will likely make “a good impact” on investors’ outlook for the Japanese economy, said Ayako Sera, a strategist in Tokyo at Sumitomo Trust & Banking Co., which manages about $331 billion. “Company earnings are improving this year, beating the market consensus.”

The Nikkei 225 Stock Average rose 1.1 percent to 10,543.52 at the close in Tokyo. The broader Topix gained 0.8 percent to 935.36, with more than three times as many shares advancing as declining. For the week, the Nikkei 225 climbed 1.8 percent, while the Topix increased 1.7 percent. Both gauges gained for a second week.


Steelmakers had the biggest increase in the Topix among its 33 industry groups. Nippon Steel jumped 9.1 percent to 313 yen and Sumitomo Metal Industries surged 16 percent to 224 yen. They were the two largest contributors to the Topix’s gain.

Steelmakers’ Merger

Japan’s No. 1 and No. 3 steelmakers plan to combine to cut costs in what may be the country’s biggest non-bank takeover, aimed at gaining leverage over raw-material purchases and pricing of the metal as costs soar.

“Expectations are increasing for improved performance in the steel industry,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “If domestic competition is mitigated, there’s more chance of guaranteeing profit margins.”

The proposed merger between Sumitomo Metal Industries and Nippon Steel will create synergies for both companies as well as benefit “the wider steel industry by helping to increase pricing and margins,” Goldman Sachs Group Inc. analysts Rajeev Das and Nana Hasegawa said in a report dated today.

Mitsubishi UFJ rose 0.9 percent to 440 yen. The lender joined smaller rival Mizuho Financial Group Inc. in posting third-quarter profit that more than doubled as bad-loan costs fell. Mizuho, Japan’s No. 3 publicly traded lender, was unchanged at 162 yen, after rising as much as 2.5 percent earlier today.

U.S. Jobs

The Standard & Poor’s 500 Index climbed 0.2 percent yesterday in New York as retailers gained after sales exceeded projections and U.S. applications for jobless benefits decreased by 42,000 to 415,000 in the week ended Jan. 29. Economists had forecast claims would fall to 420,000, according to the median estimate in a Bloomberg News survey.

The Topix has gained 4.1 percent this year. Stocks in the index were valued at 16 times estimated earnings on average, compared with 13.6 times for the Standard & Poor’s 500 Index and 11.3 times for the Stoxx Europe 600 Index.

This week is the peak for quarterly results in Japan, with more than a third of the Topix index’s 1,668 companies scheduled to report earnings. Of the 803 companies that have posted net income since Jan. 1 for the latest quarter, 117 have exceeded analysts’ estimates, while 88 have missed them, according to data compiled by Bloomberg.

Sony Earnings

Sony, the maker of Bravia televisions, gained 1.8 percent to 2,919 yen. The company reported net income of 72.3 billion yen ($886 million) in the three months ended Dec. 31, beating the 65.9 billion yen average of six analyst estimates compiled by Bloomberg. Hitachi, a maker of products from home appliances to nuclear reactors, advanced 3 percent to 487 yen after raising its full-year net-income forecast 15 percent, citing cost cuts.

Softbank Corp., the exclusive provider of Apple Inc.’s iPhone in Japan, rallied 3.6 percent to 2,976 yen, the single largest contributor to the Nikkei 225, after boosting its annual operating profit forecast 20 percent, citing demand for the touch-screen smartphone. Softbank was the third-most active stock by value in Japan, following Sumitomo Metal Industries and Nippon Steel.

Jtekt Corp., an autoparts maker, soared 7.8 percent to 1,159 yen and had the third-biggest advance in the Nikkei, after CLSA Asia Pacific Markets boosted the stock price estimate to 1,250 yen from 1,100 yen, maintaining the “outperform” rating. Jtekt had a return to a nine-month profit from a year-earlier loss, the company said in a release before the market closed yesterday.

Mazda Motor Corp., Japan’s second-largest car exporter, sank 4.6 percent to 227 yen and had the sharpest fall in the Nikkei, after turning into a loss in the three months ended Dec. 31. Mazda posted a third-quarter net loss of 2.67 billion yen after a stronger yen cut the competitiveness of its exports.
(souced:Bloomberg.com)

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ADARO ENERGY FY10 COAL SALES UP 6 PERCENT TO 43.84 MILLION

Friday, 04 February 11

As reported by insider stories, Indonesian coal miners PT Adaro Energy Tbk has produced 42.20 million tons of coal in 2010, a 4 percent increase compare to 40.59 million tons in the 2009. The 2010's coal production reached 94 percent of its target of 45 million tons despite rainfall and number of rain days.

In an official statement submitted to Indonesia Stock Exchange (IDX), Adaro has reported that, production from the new Wara pit was less affected as it is in the initial stages of development and benefited from a low overburden stripping ratio.

Insider stories further reported that, Adaro's coal sales volume increased 6 percent to 43.84 million tons last year from 41.40 million tons in the previous year. These sales includes the third party coal sales sold by Coaltrade of 1.39 million tons and Envirocoal-Wara of 2.05 million tons.

The miner plans to ramp up production to 46 million tons-48 million tons of coal, including 4 million tons-5 million tons of Envirocoal-Wara in this year. This new product continues to receive strong demand from countries such as India, China, South Korea, and Indonesia.

Coal mining & overburden
PT Pamapersada Nusantara, a wholly owned subsidiary of PT United Tractors Tbk (UNTR), was responsible for 39 percent of Adaro Indonesia’s coal last year. PT Bukit Makmur Mandiri Utama (BUMA), a wholly owned subsidiary of PT Delta Dunia Makmur Tbk (DOID) and PT Rahman Abdijaya (RAJ) were responsible for 19 percent and 14 percent respectively. Slightly less than 2009, Adaro Energy’s subsidiary PT Saptaindra Sejati (SIS) managed 25 percent of the total while Adaro Indonesia itself handled 1%.

PT Rante Mutiara Insani (RMI) assisted in the development of the Envirocoal-Wara pit and contributed 2 percent of Adaro Indonesia’s coal production. In 2010, Pamapersada handled 40 percent of Adaro’s overburden, while BUMA, RAJ, RMI and Adaro Indonesia handled 19%, 8%, 2% and 1% respectively.

SIS handled 30percent, a similar portion as the 31% handled in 2009.

Despite the wet conditions, overburden removal increased 10 percent in 4Q10 to 60.35 million bank cubic meter (bcm). The average overburden removal per day was 710,000 bcm, 616,000 bcm and 648,000 bcm in October, November and December, respectively last year. A new daily production overburden record of 915,000 bcm was set on October 23rd.

In 2010, overburden removal increased 8% to 226 million bcm, however due primarily to the impact of wet weather Adaro’s contractors achieved only 88% of the plan. The rate of increase was well below the 31% increase in 2009, indicating the impact of not having a dry season in 2010. Reported by Insider Stories

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Japanese Steel Takeover Driven by `Radical' Shift as Costs Rise

Feb 4, 2011 2:12 PM GMT+0530
By Masumi Suga and Rebecca Keenan

Nippon Steel Corp. and Sumitomo Metal Industries Ltd.’s plan to create the world’s second-largest steelmaker is aimed at gaining leverage over raw-material purchases and metal pricing as costs soar. Shares in both companies surged the most in more than two years today.

Based on Sumitomo’s market value and net debt, the deal would be worth more than 2 trillion yen ($24.5 billion), according to data compiled by Bloomberg. Yesterday’s announcement of the accord, which may be Japan’s biggest non- bank takeover, said it would be completed by October 2012.

Steelmakers in Japan, the world’s second-biggest producer of the alloy, are seeing profits squeezed while market-leader China encourages consolidation to create globally competitive companies. Rising costs for iron ore and coking coal used to make steel forced Nippon Steel to cut its full-year earnings forecast last week. Sumitomo Metal did the same today.

“The purpose of this merger is to fend off competition from rivals in China, South Korea and India,” said Takashi Murata, an analyst at Daiwa Securities Capital Markets Co. in Tokyo. A bigger company has more clout to negotiate raw-material costs and set steel prices for buyers including automakers, he said.

Share Reaction

Sumitomo Metal Industries rose 16 percent to 224 yen at the close of trading in Tokyo for the biggest advance since Oct. 30, 2008. Nippon Steel ended at 313 yen, up 9.1 percent, after rising as much as 14.3 percent, the most since Oct. 28, 2008.

Before today, Nippon Steel shares had fallen 16 percent in the past year, compared with a 3.2 percent decline for Luxembourg-based ArcelorMittal and a 17 percent drop for South Korea’s Posco, the world’s third-biggest producer. Sumitomo Metal had fallen 26 percent in the year before today.

The proposed merger between Sumitomo Metal Industries and Nippon Steel will create synergies for both companies as well as benefit “the wider steel industry by helping to increase pricing and margins,” Goldman Sachs Group Inc. analysts Rajeev Das and Nana Hasegawa said in a report today.

The merger is positive for Nippon Steel because of benefits arising from the combined size of the two companies, Standard & Poor’s said today in a statement.

‘Radical Change’

A combination of the two producers, which haven’t outlined terms of the transaction, would form the world’s second-largest steelmaker, based on output of 47.8 million metric tons in 2010, Sumitomo Metal Industries President Hiroshi Tomono said at a press briefing yesterday. ArcelorMittal is the biggest producer.

“We see a radical change in the business environment surrounding the Japanese steel industry,” Muneoka told reporters at the briefing.

Nippon Steel, formerly the world’s second-largest steelmaker by production, lost that rank in 2009 after being overtaken by five Chinese mills, according to the American Institute for International Steel.

Meantime, rivals are expanding, with South Korea’s Posco on Jan. 31 winning approval for a $12 billion steel plant in India, the biggest single foreign investment in the country.

“It’s very important Japanese steelmakers be globally competitive,” said Japanese Economy Minister Kaoru Yosano today. The planned merger of Nippon Steel and Sumitomo Metal Industries is “welcomed” he said.

Steel Demand

Steel consumption may rise 5.3 percent this year to a record, according to World Steel Association forecasts. Iron ore prices rose last year after Rio Tinto Group, BHP Billiton Ltd. and Vale SA, the biggest suppliers, shifted away from annual pricing to quarterly agreements.

The price of iron ore will be 21 percent higher on average this year, Credit Suisse Group AG said in a Jan. 7 report. The spot price of ore delivered to China including freight will average $178 a ton, the report forecast. That compares with $147 in 2010, according to The Steel Index.

Floods in Australia’s Queensland state closed mines and further pushed up coking-coal prices. Free-on-board prices may surge to $400 a ton for the three-month contract starting April 1, from $225 this quarter, Bank of America Merrill Lynch said last month.

“It’s all about lowering costs and enhancing margins,” Gavin Wendt, a senior resources analyst at Mine Life Pty in Sydney, said by phone. “While demand for steel is quite strong, one of the problems for steelmakers around the world is rising costs. It may give them more leverage when it comes to dealing with the miners.”
(sourced: bloomberg.com)

Russia coal firm KOKS pospones IPO - source

Friday, Feb 4 2011 7:17am GMT

MOSCOW Feb 4 (Reuters)

Russian coking coal producer KOKS has decided to postpone its IPO due to market conditions, a source on Friday.
The company later confirmed this.

(Reporting by Olga Popova;Writing by Toni Vorobyova;Editing by Gleb Bryanski,sourced:reuters)

Qatar Steel raises steel prices - Report

Friday, 04 Feb 2011
The Peninsula reported that steel is the latest product to be costlier in Qatar, deepening fears of a general price rise.
Qatar Steel raised the prices of its steel in line with the global trend. This was the second time this year that the country's largest and reputable steel maker resorted to a price hike.
The silver lining, though, is that Qatar Steel was among the last steel makers in the region and the rest of the world to effect a price escalation, pressured by the rising rates of key raw materials worldwide.

Current steel prices range up to QAR 2,955 a tonne locally, while the rate was as recently as until the end of last year around QAR 2,600 a tonne, so the price rise works out to more than 10%.
The first time the steel maker raised the rates of its products was a little more than a month ago when the prices were jacked up to QAR 2,780 a tonne. But with the latest raise the rate has reached QAR 2,955 per tonne.
Al Sharq quoted a local authorized dealer of Qatar Steel as saying yesterday that local steel was still cheaper than in other Arab and even GCC states.

And the raise was attributed to rising prices of pellets and scrap. Pellets were available for as much as USD 730 a tonne in the international markets from an earlier USD 580 to USD 600. Similarly, scarp rates have increased up to USD 430 a tonne in the global markets. (sourced:thepeninsulaqatar.com)

ICEX, Iron ore future contract on Friday, 04, Feb 2011 as on 5:18 PM IST

Commodity............................Expirty..................LTP.................% Change

IRONORE62FINES..............29APR 2011........7702.50............ 0.19%
IRONORE62FINES..............31MAR-2011.......8062.50........... 0.58%

Indian iron ore future contract index updated as on :04 Feb 2011 5:18 PM IST

(Know latest updated at :http://www.icexindia.com/)

Iron Ore-Key index at record in thin trade

Thu Feb 3, 2011 7:07am GMT
* Indian exporters see higher prices after China holiday
* Indian futures flat to higher, volumes lean (Adds Indian futures)
By Manolo Serapio Jr

SINGAPORE, Feb 3 (Reuters) - A key iron ore price index edged up to a record although business is expected to remain light on Thursday with top buyer China off the market for the Lunar New Year break.
Platts' 62 percent iron ore index IODBZ00-PLT rose 50 cents to $187.25 a tonne, including freight, on Wednesday. Two similar indexes by Metal Bulletin .IO62-CNO=MB and Steel Index .IO62-CNI=SI were steady at $183.36 and $185.60, respectively.
The indexes, based on spot transactions in China, are used by global miners like Vale and Rio Tinto in deciding rates for quarterly contracts.

"Buying from Chinese players have almost stopped but Indian exporters are bullish and expect prices to open higher post-Chinese New Year holidays," said Dhruv Goel, managing partner at iron ore trader Steelmint in India's eastern state of Orissa.
Chinese markets are shut for the week-long Lunar New Year holiday that began on Wednesday. They will reopen on Feb. 9.
Iron ore forward swaps mostly gained on thin volumes on Wednesday, although prices remained below those of the indexes, pointing to caution among buyers on the near-term direction of spot prices.

The Singapore Exchange-cleared February contract rose 87 cents to $183 a tonne and March added 50 cents to $174. April slipped 50 cents to $165.50.
In India, iron ore futures were flat to firmer although volumes remained lean on the fifth day since two commodity exchanges there launched the world's first futures contract for the steelmaking ingredient.
At 0630 GMT, 62 percent ore for March delivery on the Indian Commodity Exchange rose 1 percent to 8,014 rupees ($176) a tonne, including freight cost to northern China.
On the Multi Commodity Exchange, March 62 percent ore was nearly flat at 7,516 rupees a tonne, free on board.

Indian exporters are eyeing a court ruling in mid-February on whether a ban on iron ore exports from the southern Karnataka state will be lifted.
Indian iron ore exports fell for the sixth straight month in December because of the ban.
($1 = 45.57 rupees) (Editing by Ed Lane, sourced:reuters)

ICEX plans overseas delivery as iron ore futures see demand

By Soumik Dey Feb 03 2011 , New Delhi

Within days of its launch, India’s iron ore futures have garnered interest from overseas buyers and sellers of the mineral. India Commodity Exchange (ICEX), one of the first to launch the future delivery contract, said it now aims to settle even overseas delivery obligations through Indian ports.
“We are probably first exchange in the world to introduce iron ore futures. Within three days of launching contracts in the mineral, we are getting enquiries for delivery from abroad,” Rajnikant Patel, whole-time director of ICEX told Financial Chronicle.
Patel was inducted into the exchange’s board after Reliance Exchange Next bought up India Bulls stake in ICEX. He had earlier officiated as managing director and CEO of Bombay Stock Exchange and facilitated the exchange’s de-mutualisation.

“Our prices quoted for delivery to buyers abroad for the commodity is inclusive of cost, insurance and freight and deliveries could be arranged by us through Indian ports,” he said.
Overseas buyers, sellers and physical dealers with hedging interest showed interest in Indian iron ore futures. "Delivery enquiries were from mining firms in China and Australia while hedging interests were shown by some delivery agents of global steel companies. We are considering these enquiries positively as our prices are the most competitive," said Patel.
Four days from its launch, on ICEX, iron ore futures three-months delivery contracts totalled to 115,600 tonne. Iron ore futures prices after Thursday’s trade stood at Rs 7,946 per tonne after it opened on the exchange at Rs 8,036 per tonne on launch.

Meanwhile, Patel said that Reliance Spot Exchange handles ICEX spot deliveries as part of its move to streamline all operations in the exchange business and cut additional costs.
“ICEX is a one year-old exchange and we aim to focus on exchange’s business more on agricultural produce and minerals,” Patel said. Currently the exchange offers future delivery contracts for trade.
The exchange is also seeking to broad base its product range, membership and conduct introductory courses for commodities trading in the coming months. “We are not seeking growth in terms of volume perspective and would like to extend the scope and horizons of the market first instead,” he said.

On future of commodity exchange business, Patel said, that the space is likely to see some consolidation in the near future as str­onger players remain and the remaining becomes insignificant.
“We see the commodity exchange space constricting to just two or three major ones from six now. This would also be affected because of mergers and acquisitions in coming years,” Patel, also a former banker with the Reserve Bank of India said.(sourced:mydigitalfc.com)

Baosteel Huangshi Branch sales reach all time high in 2010

Friday, 04 Feb 2011

Last year lead by the goal of the new production line achieving four results and with flexible operation and accurate market positioning, Baosteel Co Ltd Huangshi Branch had its production and sales exceeding the annual plan and reaching all time high. Meanwhile, sales rate, contract completion rate and capital return rate all reached 100% with sales revenue and profits covering 106% and 124% of the yearly plan respectively.

Huangshi Branch originally had two production lines: galvanizing and color coating. The placodes required in production relied on imports for a long time. To change the passive situation and for new development opportunities, in the past two years, the branch increased investment in equipment and built two new production lines pickling and cold rolling. Last year, the two production lines achieved four results consecutively. On this basis, Huangshi Branch actively adjusts operating strategy, optimizes variety and market development and makes new breakthroughs in production, sales and research and development.

As for new production lines' upgrading and capacity building, by relying on site improvement and stabilizing quality, Huangshi Branch has a number of collaborative research results, for example, improving product quality by way of raw material quality, technology and equipment capability. Through equipment modification and process optimization, scratched products in cold rolling mill decreased by 80%. By optimizing the rolling process and exploring the optimal operation and running model, cold rolling mill production rose month by month from July to November last year. Huangshi Branch allocates resources rationally, trackes the market closely and makes changes in marketing strategy.

In last October, as the sales of hard coils reached standstill while galvanized products had good market situation, Huangshi Branch increased the sales of galvanized sheet and allocated the processing of hard coils to outsiders which expanded the production of galvanized sheets and achieved maximum benefit. In addition, the Branch also has new marketing perspective for new production lines. The cold rolling mill complex, originally designed only for inside use is now put to sales and now has accumulated a number of steady customers.

In research and development of new products, Huangshi Branch insists on seeking breakthrough by differentiating. According to user special needs, the company developed wide galvanized plates, extra-thick galvanized coated plates and modified silicon polyester color coated plates, accelerated the transformation of large scale production and achieved bulk supply. Based on the original products of the new unit complex, it further develops new technology, explores equipment potential and makes trial in ultra-thin specification which broke the limit of unit design.

Currently, the company has formed four major categories of products: pickled, cold rolled, galvanized and color coated products. The market is further expanded, with the sales of key project and stable customer oriented products reaching more than 50%. At the same time, the internal logistics has become balanced, enterprise system operating cost is reduced and the ability to withstand market risks and the comprehensive competitiveness are enhanced.

Xinyu Steel expects net profit for 2010 to double

Friday, 04 Feb 2011
It is reported that Jiangxi Province based Chinese steelmaker Xinyu Iron and Steel Co Ltd expects to see a 100%YoY increase in its net profit in 2010 to approximately CNY 360 million as compared to its net profit of CNY 180 million in 2009.
Xinyu Steel said the increase in its net profit was due to the commissioning of its 1,580 mm hot rolled sheet project, the adjustment of its product mix and the improvement in product profitability.

Xinyu Steel main products include wire rod, hot rolled plate, hot rolled sheet and other metal products.(sourced:steelorbis)

Arcelor, Nunavut closer to control of Baffinland

Thu Feb 3, 2011 11:41am GMT
* Arcelor, Nunavut hold 67 pct shares,
* Represents 64 percent of fully dilutes shares

Feb 3 (Reuters) - ArcelorMittal (ISPA.AS: Quote) and Nunavut Iron Ore inched closer to taking control of Baffinland Iron Mines (BIM.TO: Quote) as they took an additional 6.2 million shares in the junior explorer, raising their ownership to 64 percent.
The world's No. 1 steelmaker and private equity-backed Nunavut, which were earlier locked in a battle to get Baffinland's Mary River project in the Canadian Arctic, made a joint bid of C$1.50 a share for Baffinland last month.

Between them, ArcelorMittal and Nunavut now hold 67 percent of all outstanding shares and 45 percent of outstanding 2007 warrants, representing 64 percent of fully diluted shares.
ArcelorMittal and Nunavut have agreed to split their ownership of Baffinland at 70 percent and 30 percent.
The C$590 million offer is set to expire on Friday.

Shares of Baffinland, which owns nine high-grade deposits that could hold enough iron ore to supply all of Europe for years to come, closed at C$1.50 on Wednesday on the Toronto Stock Exchange. (Reporting by Aftab Ahmed in Bangalore; Editing by Unnikrishnan Nair, aftab.ahmed@thomsonreuters.com; Reuters Messaging: aftab.ahmed.reuters.com@reuters.net)

India SAIL chair:to launch share sale by end-March

Thu Feb 3, 2011 12:36pm GMT

* Decision on banks to be taken early next week
* SAIL expected to retain all banks-sources

MUMBAI Feb 3 (Reuters) - State-run Steel Authority of India's (SAIL.BO: Quote) upto $1.9 billion share sale could be launched by end-March, after the steelmaker takes a final decision early next week on lead managers for the offer, its chairman said.
The government had issued notices last month to some of the shortlisted banks for the SAIL offering, asking if there was any conflict of interest, after they also managed rival Tata Steel's $770 million share sale.

"We discussed the legal position. We will be in a position to take a final decision by early next week," SAIL Chairman C.S. Verma told Reuters, after a meeting with government officials.
"We will still be able to launch the offer within this financial year."
The government will sell 5 percent in India's largest domestic steelmaker, which has an annual capacity of around 15 million tonnes. SAIL will issue new shares equal to 5 percent of its existing share capital, to fund expansions.
The government owns about 86 percent in the firm.
SAIL had earlier selected Deutsche Bank (DBKGn.DE: Quote), JP Morgan (JPM.N: Quote), HSBC (HSBA.L: Quote), SBI Capital, Enam Securities and Kotak Mahindra Capital to manage the share sale.

SBI, HSBC, Deutsche Bank and Kotak were also among the managers for the Tata Steel offer.
The state-run steelmaker is likely to retain all the banks for the share sale, two sources with direct knowledge of the matter told Reuters. (Reporting by Prashant Mehra and Sumeet Chatterjee; editing by Malini Menon, sourced:reuters)

Chinese steel mills diversifying sources for iron ore supply

Friday, 04 Feb 2011
Indian iron ore spot prices in recent days kept surging due to iron ore supply shortage in the market, triggered by the news about Indian government hiking iron ore exports duty, flooding situation in Australia, Iran also contemplating 50% duty tax on iron ore fines and 35% on pellet exports.

With the expectation of housing project, railway project and underground projects undertaking in 2011 and many experts believe the Chinese steel demand will continue to see rapid growth in the next few years. The supply of the main source for steelmaking, iron ore has long been controlled by the three major supplying countries, Brazil, Australia and India. It has become a serious concern that China needs to diversify the sources of iron ore supply in the future in order to secure the necessary resources for the steel industry.

In fact, the recent data from China Custom have revealed the efforts. China imported 617 million tonnes of iron ore in 2010, down 1.4% than the previous year.

However, imports from smaller miners have showed significant growth in the past year. Between January to November in 2010, China imported 6.68 million tonnes of iron ore from Peru up by 22%, 4.41 million tonnes from Venezuela up by 77%, 12.88 million tonnes from Iran, up by 128%, 6.9 million tonnes from Indonesia up by 19%, 1.84 million tonnes from North Korea up by 167%, 1.72 million tonnes from Vietnam up by 10% and 6.10 million tonnes from Chile up by 17%.

Apparently, the surging iron ore spot prices and profitability of iron ore encourage smaller suppliers to jump into the iron ore market, thus pushing the imports from these countries to go up. Meanwhile, the overall decreasing in total imports and increasing amount from non-traditional iron ore suppliers indicated the Brazil, Australia and India market share have dropped in 2010.

Analysts pointed out that their market shares drops might be result from the economic recovery in Europe market and Vale have distributed quite a great deal of stock to the region. Traders revealed that importing iron ore from the major suppliers meant accepting the high cost at the market, and importing from smaller miners could mean the prices could be more flexible and thus more attractive.

The high iron ore spot prices have been pushing the index base quarterly contract prices to go up in the quarter one of 2011 as well. Sensing the huge demand from Chinese steel industry, major supplier like Rio, BHP and Vale have planned to expand production in 2011 and the onwards years.(sourced:mysteel.net, for real time access to China steel news)

Iron in the blood, Rinehart tops rich list Erik Jensen

.

February 4, 2011

It is almost 20 years since the mining magnate Lang Hancock died. Today his daughter, Gina Rinehart, is officially Australia's richest person and the first woman to hold the position.
While James Packer has diminished his father's fortune, she has far eclipsed hers.
The list of the top-20 richest Australians

The Chinese helped, with their appetite for iron ore. The collapse of James Packer's fortune - though still worth $4.4 billion, and ranked third behind Andrew ''Twiggy'' Forrest - did not hurt either.
But nothing can detract from the fact Mrs Rinehart more than trebled her worth in a year. The US magazine Forbes estimates her fortune at $US9 billion. As much as Silvio Berlusconi's, who ranked a louche 74 on last year's list of world billionaires.

The University of Sydney economics student - once divorced, once widowed - made almost $700 million in revenue from the first year of her joint venture with Rio Tinto in the Pilbara. In the 2008-09 financial year, Hancock Prospecting made a record $225 million profit - equal, almost, to her father's entire fortune when he died, even after adjustments for inflation.
Recently she has made headlines for her raids on media companies - including on Fairfax Media, publisher of the Herald. More quiet has been the offensive she has lately begun on her father's legacy.

Most of his iron ore holdings were lost or sold before she took over, her company says. Royalties from his deal with Rio Tinto went on debts and the deposit now making so much money was then a ''few drill holes'' - the man, when he died, was bankrupt, the company says.
''When Mrs Rinehart became chairman it was very difficult to do the investment and work required with substantial debts and liabilities to pay and even the office building mortgaged,'' Hancock Prospecting said in a recent statement. ''There was no 'inherited money' to fund Hope Downs [deposit]; significant moneys had to be borrowed to do so.''
The dispute bubbled over into a open letter late last year, directed at the journalist Tim Treadgold's suggestion she was riding the ''same flatbed truck'' her father drove.
''Silly attacks on people to divert attention from the real world issues,'' she wrote, ''won't help Australia.''
The net worth of Australia's richest 40 people rose by 40 per cent in the past year, to a combined wealth of $68.4 billion.(sourced:www.smh.com.au)

Queensland's floods slash India coal supplies

Ben Doherty, Delhi February 4, 2011

QUEENSLAND'S horrific run of natural disasters has sent Indian coal buyers - dependent particularly on the state's coking coal for steel production - scrambling to find new suppliers.
The price of coking coal in India has spiked because of the collapse in supply from Queensland mines, which were slowed and then shut by last month's floods, and now by cyclone Yasi.
The Queensland Resources Council estimated that 85 per cent of Queensland's coalmines were running at reduced capacity because of inundation following last month's floods.

Production was expected to fall by 25-50 per cent in the March quarter before cyclone Yasi hit.
India's unit of Standard & Poor's said this week the shortage of Australian supply would push up coking coal prices by 15-20 per cent to between $US260 and $US270 a tonne in April, when steel producers renegotiated their contracts with miners.
The spot price of coking coal has already shot up by $US40 to $US50, to $US280 to $US290 a tonne, according to a report by ratings firm Crisil.

Australia is the world's largest coal exporter, accounting for nearly two-thirds of the global coking coal trade. Ninety per cent of that comes from Queensland.
India is Queensland's third-largest coal customer, buying more than 21 million tonnes in 2008-09, more than China.
N. N. Gautam, from the Indian Energy Forum, said the Queensland floods had caused a worldwide shortage of coking coal.
"The difficulty in finding coal … we attribute to reduced production from Queensland, which is a major supplier to India and the rest of the world," Mr Gautam said. The Steel Authority of India is looking to the US to make up supply shortfalls, and has sought bids to supply 600,000 tonnes of coking coal.

The editor of Kolkata-based Core Sector Communique, Suvobrata Ganguly, said Indian steel manufacturers were being hurt by contracts with Australian miners that had been forced to declare force majeure.
"But force majeure is difficult for everybody,'' he said. ''The buyer suffers too because they do not get the coal they have a contract for, and they have to pay [a] higher price elsewhere."
But he said Queensland coal suppliers were regarded as among the most reliable in the world, and customers would return once production restarted.
"Australian coal companies are held in very high regard. They are very reliable, and these natural disasters, they are not the fault of the companies or the people.'' (sourced:www.smh.com.au)

INDONESIA may miss coal export target in 2011

Feb2, 2011
Indonesian Trade ministry has instructed independent surveyors temporarily not to issue pre-shipment survey report (LS) to the companies which were holding Production Operation IUP (special) for hauling and sale vide letter 15/ DAGLU.3.4/1/2011. The companies that were not holding Production Operation IUP (special) for hauling and sale also would not allowed coal sales between provinces or countries.

According to traders, Indonesian coal trading activities have almost entered in to uncertain situation since early January 2011. As per Regulation 23 of 2010 (regarding the Implementation of Mineral and Coal Mining Business Activities) , a party wishing to buy and sell (trade) minerals or coal must be obtained Production Operation IUP for hauling and sale. The specific purpose Production Operation IUPs are granted by application to the relevant authority. In the case of hauling or sale occurs within an inter-Province or countries, then the minister has to sign the license.

However, In an absence of Ministerial decree related to IUP OP KPP, the trade department has instructed surveyors not to conduct LS for the coal shipments except shipments from IUP OP holder (mine owners). Hence Independent surveyors who were authorized to conduct LS, have stopped issuing LS report for the shippers who does not have valid IUP OP KPP as per regulation 23/2010 article 36 and 37 and letter 15/ DAGLU.3.4/1/2011 issued by Trade department. As quoted by the jakarta post last week, Supriatna Suhala, executive director of the Indonesian Coal Mining Association (APBI), has said “It will create a negative impression for coal mining investors in the future”.

Chairman of the Indonesian Coal Mining Association also said to media that, around 70 ocean going vessels are stuck at coal loading ports around Indonesia because surveyors checking shipments won’t allow the exports before traders obtain fresh licenses from the Energy and Mineral Resources Ministry. “More shipments will be halted as a lot more ships are entering the ports.” He further added.

Some traders have already declared force majeure and meantime others just postponed shipments until they obtain IUP OP K PP said a trader from South Kalimantan. Force majeure is a legal clause that allows producers to miss deliveries because of circumstances beyond their control. According to media reports, Indonesian may lose 3.5 million tons of exports in January 2011“Indonesia, the world’s largest thermal coal exporter may miss the export target in 2011 in case the license matter settled soon”, said market players. They further sais that, license application are pending issuance for more than 4-5 months. Department of Mines are still not clear when the Ministry is going to issue this license. Some coal suppliers were saying that, Minister of mines will delegate some of his authority to director general of mines to settle this issue.
Due to Egypt crisis oil prices are expected to rise from current level and coal will also expected to follow oil prices if Egyptian crisis continues as well as a new cyclone thread to coal bearing areas in Australia.

Delay in issuing new trading permits for Indonesian trading companies, export coal prices may pushed up further meantime domestic coal prices might fall significantly due to excess of availability of coal in the domestic market.
State owned electricity company, PLN may be happy to see the falling of domestic coal prices in coming weeks as PLN has requested coal suppliers to supply coal below January 2011 HBA price. January 2011 HBA ( Indonesian coal reference price) has jumped more than 8 percent early January 2011 compare to December 2010 HBA.
As quoted by The Jakarta Globe on 13 January 2011, PLN chairman Dahlan Iskan said, “We are in a dilemma now. The increasing price of coal is a real problem."

PLN’s director of primary energy, Nur Pamudji also said, PLN would demand producers honor the coal price stated in an Energy Ministry decree. “The decree says that the price of coal in 2011 depends on 2010’s fourth-quarter average,” according to paper report.
However at that time, Supriatna Suhala, APBI’s executive director was said that, the average price in December was $103.4 per metric ton, but coal companies had no choice but to increase their prices. “International coal prices keep increasing, so we have to sell according to global prices”

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Mercator Lines To Invest RS 200-250 Crore on Coal Mine in INDONESIA

Thursday, 03 February 11
Economic Times reported that Mercator Lines, the HK Mittal-controlled shipping-to-mines major, will invest about 200-250 crore (US$ 43.825 - 54.781 million) in developing a coal mine in the Batuah region of Kalimantan province in Indonesia as part of its strategy to increase its presence in the high-margin mining industry.

The Mumbai-based company will invest via a JV with an Indonesian firm PT United Coal to develop the infrastructure for the mining project, while the ownership of the mine will continue to remain with the Indonesian company, said people familiar with the development.
When contacted, chairman H K Mittal said: "We already own four coal mines in Indonesia and are keen to build our ownership here." Total reserves in the Indonesian mines owned by Mercator Lines is about 70 million tonnes and the company plans to raise the total deposits to 100 million tonnes.

Ownership of coal mines in Indonesia and Australia has become a popular trend among the Indian and Chinese companies as they make a beeline to own these resources to feed an ever-growing demand for electricity in their domestic markets.
(1 INR = 0.0219129 USD http://www.xe.com) Source:Economic Times

Nippon, Sumitomo Metal merging to create No.2 steelmaker

Thu Feb 3, 2011 10:35am GMT

* Merged company would trail only ArcelorMittal in global steel output
* Nippon Steel, Sumitomo Metal aim to merge in Oct 2012
* Japan steelmakers face stiff competition from Asian rivals
* Merged company would have unmatched product lineup - analysts
By Junko Fujita

TOKYO, Feb 3 (Reuters) - Japan's Nippon Steel Corp and Sumitomo Metal Industries plan to merge to create the world's second-largest steelmaker in an effort to fend off tough competition from Asian rivals and offset shrinking demand from domestic automakers.
The deal, which would likely see Japan's top steelmaker Nippon Steel acquiring Sumitomo Metal, comes as the industry grapples with surging raw materials prices, exacerbated recently by floods in Australia.

Japanese steelmakers have been particularly hard hit as domestic automakers such as Toyota Motor Corp and Nissan Motor Co build fewer cars at home and expand in emerging markets such as India using products from local steelmakers.
They also face cut-throat competition from South Korea's POSCO and Baoshan Iron & Steel Co , China's biggest listed steelmaker, as Japanese automakers seek lower prices to weather an unfavorably strong yen.

Analysts, as well as Japanese government officials and politicians, welcomed the plans for the merger, which is subject to approval from Japan's Fair Trade Commission (FTC).
"The new group has a chance to become very competitive in Asia," said CLSA analyst Jeremie Capron, adding there was room for Sumitomo Metal to cut costs with the help of Nippon Steel.
"The merged company will have the best product line-up in the industry ranging from construction steel, auto steel sheets, thick plates to seamless pipes. That's quite unique, and the No.1 company, ArcelorMittal , does not have such a product line-up."
Nippon Steel, whose main customers include Japanese automakers, and Sumitomo Metal Industries, which is strong in seamless pipes used in the energy, construction and machinery sectors, said they aimed to merge in October 2012.
Nippon Steel and Japan's No.2 JFE Holdings last week cuts their outlooks for the year to March, citing rising costs of coking coal and iron ore.

"INDUSTRY GOLIATHS"
Nippon Steel executives had said the company was looking to deepen cooperation with Sumitomo Metal and Kobe Steel Ltd , with which it has some operational partnerships, but had cited objection from the FTC for its inability to do so.
The merged company would rank No.2 in the world, with a combined crude steel output of 47.8 million tonnes last year, Sumitomo Metal Industries President Hiroshi Tomono said at a news conference in Tokyo. It will employ more than 75,000 people.

That would still be about half the production of top-ranked ArcelorMittal but place the group ahead of Baosteel. Based on 2009 crude steel production, Nippon Steel ranked fourth in the world and Sumitomo Metal placed 19th, according to the World Steel Association.
"These are two industry goliaths. The merger of these two titans of industry looks designed to exceed anything the Chinese can do," said John Meyer, a London-based analyst at investment bank Fairfax.

"The integration...combines the production and technical skills of both companies to produce better-quality products more efficiently and more effectively. Other steel producers will struggle to compete with the new efficiencies of scale and services being offered by the joining of these titans," he added.
Nippon Steel, with a market capitalisation $24 billion, and Sumitomo Metal, valued at $11 billion, already hold minority stakes in each other.
They have not yet decided the merger ratio.
Nippon Steel President Shoji Muneoka told a news conference that he expected the FTC to approve the merger, given that the two firms have different product strengths.
Muneoka also said the relationship with Kobe Steel, in which Nippon Steel holds a stake of 3.4 percent, would be maintained.

Rival JFE said it supported the merger and Japanese Trade Minister Banri Kaieda said it had his blessing.
"The merger aims to strengthen global competitiveness through reorganisations of operations as global competition heats up in the steel industry," he said.
"I value such a move highly because it is line with our 'new growth strategy' aimed at realising a strong economy."
JFE unit JFE Steel was the last major merger in the Japanese steel industry, when Kawasaki Steel and NKK combined in 2002 to form what is now the world's fifth biggest steelmaker. (Additional reporting by Chang-Ran Kim, Yuko Inoue, Chikako Mogi, Nathan Layne in TOKYO, Nick Trevethan in SINGAPORE, Ploy Ten Kate in BANGKOK; Editing by Edwina Gibbs and Lincoln Feast)

Russia's Evraz sees '11 EBITDA $3.0-$3.6 bln

Thu Feb 3, 2011 11:00 am GMT
MOSCOW(Reuters)

Evraz (HK1q.L: Quote), Russia's second largest steelmaker, expects its core earnings to reach $3.0-$3.6 billion this year, chief financial officer Giacomo Baizini said on Thursday.
"Analysts forecast our EBITDA between $3.0-$3.6 billion in 2011, and I have no reason to say that we will not achieve this," Baizini said at the Troika Dialog forum in Moscow.
Evraz, part-owned by billionaire Roman Abramovich, has not released earnings before interest, taxation, depreciation and amortisation (EBITDA) for 2010.
It is scheduled to report its 2010 results on March 31.
The executive also said 2011 capital expenditures will reach about $1.2 billion compared to $950 million last year.
(Reporting by Anastasia Teterevleva, writing by Alfred Kueppers, sourced: reuters)

Optimum Coal posts sharply higher H1 earnings

Thu Feb 3, 2011 9:31am GMT, By Agnieszka Flak

JOHANNESBURG (Reuters) - South African miner Optimum Coal Holdings reported a surge in first-half earnings, boosted by higher production and output from the Koornfontein mine it bought last year.
Optimum Coal, one of South Africa's largest producers, said outlook for thermal coal remained robust, as global supply was constrained due to severe weather in other regions.
While many South African coal mines were hit by heavy rains in January, Optimum said its operations were stable after investing in pumps and other measures to control water.
"Our production, it might have suffered a bit, but the impact is lower than the previous year," chief executive Mike Teke said, adding he expected rainfall to continue through February.
Coal prices have been rising on fears that further disruption from cyclones would hit production of coking and thermal coal in Queensland, Australia, forcing buyers into the spot market for replacement cargoes.

While transport remains a challenge for Optimum and other South African coal miners, Teke said he was optimistic that logistics group Transnet would be able to transport more coal this year after derailments affected shipments in 2010.
Transnet has said it expects to transport 70 million tonnes to South Africa's Richards Bay Coal Terminal, one of the world's largest coal export terminals, up from the 63 million tonnes it managed to transport last year.
Optimum, one of the largest shareholders in the Richards Bay terminal, said headline earnings per share for the six months to end-December totalled 139.22 cents, compared with 6.59 cents a year earlier.
The company also said first-half group production rose by about 40 percent to 7.03 million tonnes of saleable coal, while export coal production rose by the same percentage to 3.6 million tonnes.
For the year to the end of June, Optimum said it expected export coal production of between 7.2-7.6 million tonnes.
Teke said the company, which listed in March, was evaluating potential acquisitions, though it had no concrete plans yet.
Optimum shares were up 1.8 percent at 33.60 as of 0857 GMT, outperforming a flat Johannesburg All-share index.
Shares of the company are up nearly 15 percent so far this year, while the All-share index is flat.(sourced:Thomson Reuters)