WISCO and Century Iron Ore ink mining agreement

Thursday, 01 September 2011

On August 30, Chinese steel producer Wuhan Iron and Steel Co. (WISCO) and Canadian mining company Century Iron Ore Holdings Inc. inked a cooperation agreement to jointly develop iron ore mines in Canada.

Century Iron Ore Holdings owns three iron ore projects in Quebec, Canada. On January 13 this year, the two parties had reached a binding framework agreement on mine development.

Century Iron's three iron ore projects in Quebec will help support Wuhan's strategy of self-sufficiency when it comes to iron ore supplies, reducing its dependence on overseas suppliers. As previously reported by SteelOrbis, Wuhan plans to increase its steel production capacity to 60 million metric tons in the next four years, compared to current levels of 40 million tons.

Tags: iron ore , China , Far East , North America , investments , mining , East Asia and Pacific

China steel mills raise Sept product prices as demand picks up

Tue Aug 16, 2011

* More steel mills follow Baosteel with similar price rises
* Steel demand to stay firm on solid economy growth
* Steel inventories down 3.24 pct in July from June
* Iron ore price up 1.5 pct in July (Adds CISA monthly report)

By Ruby Lian and Jacqueline Wong

SHANGHAI, Aug 16 (Reuters) - More of China's leading steel mills have decided to raise prices of their main products for September bookings, aiming to catch up with rising spot market prices and in anticipation of stronger demand next month.

Two leading mills, Wuhan Iron & Steel Co Ltd and Beijing Shougang Co Ltd , will raise September prices for their main flat steel products in the wake of a similar move by Baoshan Iron & Steel Co Ltd (Baosteel) last Friday to take advantage of growing demand.

"Price rises by steel mills reflect climbing prices in the spot market since the end of July as steel mills received strong bookings in August. Steel prices are expected to increase next month as traders and end users need to build up stocks as demand improves," said Bill Chen, a senior trader with Hong Kong-based Smart Timing Steel Ltd.

Baosteel, the country's biggest-listed steelmaker, said last Friday that it would raise prices for hot-rolled coil by 60 yuan ($9) per tonne and cold-rolled coil prices by 120 yuan per tonne for September, in line with market expectations.

Baosteel usually sets the tone in pricing direction for the domestic steel market, followed by domestic rivals.

Wuhan Steel, the country's third-largest producer, plans to raise hot-rolled coil prices by 100 yuan per tonne and cold-rolled coil prices by 120 yuan per tonne, respectively, in line with Baosteel's increases.

Shougang will lift cold-rolled coil prices by 50 yuan per tonne, but has yet to make a decision on hot-rolled coil.

Another major mill, Angang Steel Co Ltd is expected to announce new prices later this week.

STEEL DEMAND TO REMAIN STRONG

Steel demand in China is expected to remain robust as the world's second-largest economy aims to maintain strong growth boosted by its continued investment in urbanisation and industrialisation, the China Iron & Steel Association (CISA) said on Tuesday.

"The engine driving up China's economic growth will still be powerful due to rapid investment growth, which will support steel demand in the near future," CISA said in a monthly report published on its website.

CISA also expects that China's steel exports will continue to stay relatively high, supporting steel demand.

China's economy would grow 9.2 percent in the third quarter, slightly down from the first two quarters of the year, a think tank under China's National Development and Reform Commission, the economic planning agency, said in a report.

Inventories of five main steel products - hot-rolled coil, cold-rolled coil, plate, wire rod and rebar - fell for the fourth straight month by 3.24 percent to 13.85 million tonnes in 26 major cities by end of July from the previous month.

"Large-scale construction of social housing and water conservancy as well as railway projects will continue to boost demand for construction steel products, while flat steel product mills will face growing competition as its end users including shipbuilding, auto and machinery see slower growth," CISA said.

Data from the report also showed that rebar spot prices rose 0.85 percent at end July from a month ago, wire rod price gained 1.51 percent and hot-rolled coil price rose 0.43 percent during the same period, while almost all other flat steel products fell modestly in July.

"Chinese steel mills will still face high production costs in the near future, narrowing the room for prices to fall in a large way," CISA added.

Prices of spot iron ore gained 1.5 percent in July from June, while coking coal prices jumped 2 percent from a month earlier. ($1 = 6.390 yuan)

(sourced Reuters)

China's Wuhan to explore for iron in Madagascar

Wed Apr 6, 2011 9:13am GMT

* Exploration to take 6-8 months
* WISCO paid $100 million for exploration permit

ANTANANARIVO, April 6 (Reuters) - Wuhan Iron & Steel Co (WISCO), China's third-largest steelmaker, plans to start exploratory drilling for iron ore in Madagascar's Soalala region at the end of May, officials said.

WISCO Madagascar -- one of many foreign firms keen to develop the Indian Ocean island's mineral resources -- paid $100 million for exploration permits in 2010.

"Our investments are made in stages, depending on the results of the survey. The investment decision is expected in six to eight months, then will come the construction phase, which will last four years," said WISCO Madagascar's chief executive, Jun Yuan Lou.

"The actual operation should start in five years," he told a news conference late on Tuesday, when signing an environmental impact study and exploratory drilling agreement with the National Environment Office (ONE).

Exploration in Madagascar, which has oil, cobalt, nickel, gold and uranium deposits, has been hampered by a political crisis since incumbent President Andry Rajoelina seized power in March 2009.

As this project proceeds, "Environmental assessment studies, including the various public consultations will begin this week," said ONE's chief executive, Jean Chrysostome Rakotoary.

An environmental permit will be issued at the conclusion of the studies, which will take at least 45 days, and after the company pays ONE $350,000, he said.

The island's political crisis forced Madagascar Oil last month to declare force majeure on four of its oil blocks to safeguard its exploration rights after failing to reverse a state directive to acquire them. (Reporting by Alain Iloniaina; Editing by Helen Nyambura and Jane Baird)

Wuhan, Angang Turn to Niche Steel, Foreign Plants on China Glut

Thu, Mar10, 2011

Overcapacity and rising costs have depressed the average profit margins of Chinese steelmakers to just 3.5 percent in 2010, the lowest of any industry, according to the government. Photographer: Nelson Ching/Bloomberg

Wuhan Iron & Steel Group, Angang New Co. and rival Chinese mills are expanding overseas and turning to specialty products to battle overcapacity in China, the world's biggest producer of the metal.

Wuhan Steel, the nation's fourth-biggest mill, is in talks to build plants or buy rivals in other countries, General Manager Deng Qilin said in Beijing while at the National People's Congress. Angang may develop its specialty steel product business, General Manager Zhang Xiaogang said.

Overcapacity and rising costs have depressed the average profit margins of Chinese steelmakers to just 3.5 percent in 2010, the lowest of any industry, according to the government. The nation's new five-year building program will need more high- grade alloy for railroads and nuclear power plants, China Iron and Steel Association said.

'Every steelmaker is trying to diversify their business," said Hu Yanping, a Beijing-based analyst with researcher UC361.com. "But they aren't all going to succeed."

Wuhan Iron & Steel Co., the listed unit of Wuhan Steel, has fallen 30 percent in Shanghai trading in the past year, compared with a 1.7 percent drop in the benchmark Shanghai Composite Index. Angang Steel Co., Angang's unit, is down 34 percent in the past year in Shenzhen.

The government plans to invest 800 billion yuan ($121 billion) to build 6,000 kilometers (3,700 miles) of high-speed rail lines by 2012 to carry its industrial expansion inland.

Going Overseas

Magang (Group) Holding Co., China's biggest maker of train wheels, plans to expand its steel cutting and equipment manufacturing business, Chairman Gu Jianguo said in an interview at the congress.

The nation's steel demand may increase 3.5 percent this year, compared with a projected 13.6 percent growth in India and 9.1 percent in the Central and South American regions, according to World Steel Association estimates in October.

"The government is encouraging the shift of surplus steel production capacity overseas," Wuhan General Manager Deng said March 7, without giving details on his overseas expansion plans.

Delong Holdings Ltd. (DLNG) a Singapore-listed Chinese steelmaker, is looking to build plants in Mexico and other countries, Chairman Ding Liguo said in an interview while attending the congress. Angang in 2010 signed an agreement to jointly build a $168 million reinforcing bar plant in Mississippi in the U.S.

Building plants overseas is "a way to reduce global steel trade frictions," said Xu Xiangchun, chief analyst with Mysteel Research Institute. Also, it "will be welcomed as a boost to local employment and taxes."

China's steel-product exports gained 73 percent last year to 42.6 million metric tons, customs data show. Apparent steel use in the U.S. will likely advance 9.4 percent this year, the World Steel Association said.

Rising Costs

Asian steelmakers face rising costs. Mills in the region may be forced to pay as much as 44 percent more for hard coking coal in the three months starting April 1 after rain shut mines in Australia, according to the median estimate of 11 analysts surveyed by Bloomberg News. Iron ore prices have jumped 29 percent in the past year, according to the Steel Index.

The nation's largest steelmakers, including Angang and Wuhan Steel, focus primarily on the production of ordinary steel. By moving into specialty products, the larger mills will compete against companies like Xining Special Steel Co. and Shandong Jinling Mining Co.

Xining Special had gross profit margin of 14.65 percent in 2009, compared with 9.68 percent for Baoshan Iron & Steel Co., the biggest-listed Chinese steelmaker, according to data compiled by Bloomberg.

"We're studying to improve our product mix during the 12th Five-Year Plan," which starts this year, Angang's Zhang told reporters on March 5 at the congress. "We have been struggling to make profit at the home market. This five-year period will be our last chance to survive."

(By bloomberg)

WISCO bags order for 6000 tonnes of steel sheets for containers

Sunday, 06 Mar 2011

It is reported that Hubei Province based Chinese steel manufacturer Wuhan Iron and Steel Co has secured an order from an unnamed domestic container producer for 6,000 tonnes of container steel sheet of 2.0 mm and below thickness.

China is the largest container producer in the world. At present, the major domestic suppliers of the product in question are Baosteel Group, Anben Steel Group, WISCO and Taiyuan Iron and Steel Co. However, specifications of 2.0 mm and below, for which domestic demand is greatest, have up to now been mainly supplied by imports. (sourced:steelorbis)

Wuhan Steel to buy more overseas resources - Mr Deng Qilin

Sunday, 06 Mar 2011

Mr Deng Qilin President of Wuhan Iron & Steel Group Corp as saying that the company will continue to acquire iron ore resources overseas in an effort to become self sufficient.

Mr Deng said the Chinese steelmaker which currently imports more than 85% of its iron ore aims to be able to supply all of its own needs in three to five years so that it doesn’t need to buy from foreign monopolies.

He said that “Vale SA, Rio Tinto Group and BHP Billiton Ltd, the world biggest iron ore suppliers abandoned an annual pricing system for Chinese steelmakers last year in favor of quarterly agreements as spot prices for the material rose. Wuhan Steel accelerated its buying of assets during the financial crisis to help reduce its reliance on overseas suppliers and now owns or has stakes in eight iron ore mines abroad.”

He added that “Overseas iron ore companies are a monopoly. They can raise prices as much as they want. There is no room for negotiation.”

Mr Deng said “Foreign suppliers are now planning to establish a base at a Chinese port from which they can sell ore at spot prices. This plan will hurt China’s steelmakers to an extent that is too much to afford.”

Wuhan Steel agreed last month to jointly develop mining projects in Canada with Century Iron Mines Corp after entering into an agreement in January with Adriana Resources Inc to cooperate on developing, constructing and operating the Lac Otelnuk iron ore project in Canada.

Tags: Vale SA, biggest iron ore producer and exporters,

Chinese steel industry gains profit margin of less than 3pct

Thursday,03 Marh2011 | My Steel

According to Mr Deng Qilin GM of Wuhan Iron & Steel Group Co Ltd, steel industry profitability decreased last year and large and medium steel enterprises average sales profit margin witness only 2.91% last year far lower than national industries average profit margin of 6%.

As for the decreasing profitability, Mr Deng believed that it is the result of internal causes coupled with external causes
1. China steel supply and demand conflict is prominent due to the large amount. China crude steel output topped 0.63 billion tonnes last year, which surpassed requirement of the national economy. The oversupply in domestic steel market advanced decrease of steel prices

2. The international iron ore prices increase squeezed steel industry profit space. Deng said that procurement costs of imported iron ore, coking coal and other raw materials has been continuously increasing since the beginning of last year. China imported iron ore reached over 0.6 billion tonnes while the prices rise generated loss of several CNY 100 billion in steel industry every year.

Confronted with great pressure of cost increase, Mr Deng said that the national steel industry should seriously put into practice of steel polices including industry revitalization plan and adjust product structure against market fluctuation.

Mr Deng Qilin WISCO GM officially stepped down the position of president of China Iron & Steel Association in February this year. As the president of CISA for two years, Mr Deng led China steel enterprises successfully against international economy crisis.

WISCO raises funds of CNY 10 billion through allotted shares

Sunday, 20 Feb 2011

According to China Finance & Economics news, Wuhan Iron & Steel Company limited allotting shares scheme was approved by China Securities Regulatory Commission recently. WISCO will issue new stocks of CNY 2.351 billion to original shareholders expecting to raise funds of no more than CNY 10.7 billion.

WISCO 10 billion raised funds will be mainly invested in three projects, including purchasing 77.6% shares of WISCO Echeng Steel Co Ltd, 100% shares of WISCO Powder Metallurgy Co Ltd and purchasing WISCO Minerals Co Ltd. pellets manufacturing equipment project as well as supplying circulating fund project.

WISCO stated that, after submitting allotment of shares application materials, according to auditing and advices from NDRC as well as deliberation of the 10th Meeting of the 5th Term of Board, the item about purchasing pellet manufacturing facilities which was planned to use raising funds of CNY 1.216 billion was not approved to be included in the commit money.

Therefore, WISCO reduced funds raise by getting allotment of shares. WISCO announced in October 2010 that it planned to reduce the raised funds from no than CNY 12 billion to no more than CNY 10.7 billion.

After the assets purchasing, WISCO will achieve 4 million tonnes of steel production capacity.

(Sourced from China Finance & Economics news)

Baosteel and Wuhan raise HR prices by USD 45 per tonne

Tuesday, 15 Feb 2011

It is reported that two of Chinese domestic giant steelmakers, Baoshan Iron & Steel and Wuhan Iron & Steel Co will raise EXW prices for HR steel for March bookings by around CNY 300 per tonne (USD 45) per tonne.

Adriana Resources and WISCO ink iron ore deal

Wednesday, 19 Jan 2011
Reuters reported that Adriana Resources reached a joint venture agreement with a unit of China Wuhan Iron and Steel Co Ltd in the latest in a series of deals in Canada's iron mining sector.
WISCO will pay CAD 120 million for a 60% stake in a joint venture company to develop Adriana Lac Orelnuk and December Lake iron ore properties in northern Quebec and help with future financing costs.
WISCO will also receive shares representing a nearly 20% stake in Adriana though a private placement. Although the deal was announced after the close of Canadian markets recently, Adriana shares on the TSX Venture Exchange had jumped more than 17% during the day before they were halted pending a news announcement.
News reports began circulating in November that Adriana and Wuhan, China third largest steel producer were in talks.
Wuhan currently owns a 19.2% stake in Consolidated and has offtake agreements with the miner. Adriana needs about CAD 6 billion to develop its Lac Otelnuk project in the same region.
Mr Peter Campbell Jennings Capital analyst of the project's steep price tag said "Iron ore is all about infrastructure and their deposit is quite a distance away from anything."
Chinese steel mills, consuming around 70 percent of seaborne ore, have been keen to invest in foreign ore resources to better control prices.
Sourced from Reuters