Iran’s cutting steel imports, depressing global steel market

Monday, 13 February 2012

Steel exports to Iran, one of the world's top importers of billet used in construction, are grinding to a halt, traders said. "Iran is the only market in the world that can move billet prices and now trading has basically come to a halt," a steel trader based in Britain said.

"Now you can really feel the effects of the sanctions imposed by the U.S. and Europe...It is very difficult to do any business with Iran at the moment," a steel trader at a Swiss metals trading house said. Thanks to large-scale building programs in the last few years, Iran has become one of the top importers of steel billet, a semi-finished long steel product mainly used for construction.

The country imported over 3 million tons of semi-finished steel products in 2010 and almost 2 million of hot-rolled coil, a steel product used in transport, construction, shipbuilding and energy pipelines, according to data from the International Steel Statistics Bureau. Boris Krasnojenov, an analyst with Moscow-based Renaissance Capital, said monthly Iran imports from Russia were over 300,000 tons for most of last year.

"As far as I know, the situation is much worse. Some say CIS mills cut sales 10 times," he said.
The collapse in Iranian imports is depressing international steel billet prices, which fell by about $50 a ton in a month to $560 a ton fob Russia and Ukraine this week. "All volumes from the Caspian Sea will be redirected to the Black Sea," Krasnojenov said. "That is a major problem for Russian steel plants." Russia sends about 15 percent of its total exports to Iran, making it the largest source of foreign steel, but the sanctions are pushing it out of the market.

"Steel demand is pretty strong, the problem is the banking system," said Dmitry Smolin, metals and mining analyst at URALSIB Capital. "Russian banks do not have trading lines with Iranian banks to facilitate rouble transactions." Iran's envoy to Moscow said late last month that Iran and Russia had started using their domestic rial and rouble currencies in bilateral trade instead of the U.S. dollar. However, market players say the dollar shortage is crippling the steel trade.

(sourced Reuters)

Indian steel minister Mr Verma to visit Russia to attend NMDC Severstal MoU signing ceremony

Sunday, 06 Nov 2011

The Pioneer reported that Indian steel minister Mr Beni Prasad Verma is scheduled to embark on his trip to Russia from November 9 till November 12.

Mr Verma told The Pioneer that he would be going to Russia as scheduled on November 9.

The Minister will attend the MoU signing ceremony between State run iron ore miner NMDC and Russia's Severstal.

(sourced Dailypioneer)

Mongolia needs coal deal in 3 months to ensure IPO goes ahead

Thursday, 27 Oct 2011

Reuters reported that a contentious investment agreement on Mongolia huge Tavan Tolgoi coal deposit needs to be completed within three months to ensure that a much-heralded initial public offering for the project goes ahead on time.

Mr Terbishdagva Dendev a member of Mongolia Grand Khural parliament said on the sidelines of a conference in Hong Kong that discussions on an investment agreement for the western block of the coveted 7.5 billion tonne deposit were expected to get underway in November.

Mongolia plans to open the western block of the vast deposit up to foreign investors while the eastern block will be listed on international stock markets next year. An initial plan to grant 40% of the project to China Shenhua Group, 36% to a Russian-Mongolian consortium and 24% to Peabody Energy Corp of the United States was rejected by the Mongolian Security Council and branded as unfair by bidders from Japan and South Korea.

Mr Graeme Hancock chief operations officer with Erdenes Tavan Tolgoi the state owned entity in charge of the project told the conference that the scale of the IPO for the eastern block would depend on the investment agreement.

He said that "Once the terms of engagement on the west block are clear, that will have an impact on the IPO valuation. I am hoping there will be resolution on this in the very near future so this can be built into our future cash flow."

Mr Terbishdagva said that if an agreement was not signed within three months, the international IPO would have to wait until after Mongolia's parliamentary elections in June.

Analysts have expressed concern that political jockeying ahead of next year's elections was disrupting Mongolia's economy and harming its investment climate.

(sourced from Reuters)

Australia's Tigers Realm Coal slides on debut

Mon Aug 29, 2011

MELBOURNE Aug 29 (Reuters) - Australian coal explorer Tigers Realm Coal had a choppy first day on the Australian bourse on Monday, rising 20 percent then falling as much as 13 percent below its issue price following a poorly timed float.

The company, with stakes in two coking coal projects in Russia and Colombia, raised A$37.5 million ($39.5 million)through its initial public offering.

It launched its offering just as markets plunged in early August, forcing the company to slash its initial target of A$200 million to A$37.5 million.

Tigers Realm Coal shares opened at A$0.505, traded as high as A$0.60 and last traded at A$0.46, 4 cents below its issue price, valuing the group at A$167 million. The broader market was up around 2 percent on Monday.

The funds will be used for drilling work at the Amaam project in far eastern Russia and Landazuri in Colombia.

Drilling to firm up resources at Amaam, the group's biggest project, is expected to run through early 2012, with Tigers Realm Coal aiming to have a feasibility study completed by late 2013.

Chief Executive Martin Grant said the company would look at a wide range of options for future funding, including selling equity stakes to mining companies, steel makers, or trading companies in return for offtake agreements.

Amaam would be well-positioned to supply hard coking coal into China and other Asian markets.

Grant was confident Amaam had an advantage versus coking coal mines being developed in Mongolia and Mozambique which could start producing at the same time.

"Mozambique and Mongolia will continue to be challenged for a long period," he told reporters.

Grant, a geologist, held senior posts in BHP Billiton's coal business, including BHP Billiton Mitsubishi Alliance, the world's top exporter of coking coal, before taking the reins at Tigers Realm Coal. He has also worked as an investment banker at UBS and JBWere.

Tigers Realm is 6.25 percent owned by Tigers Realm Minerals, founded by former chief of Oxiana, Owen Hegarty, after Oxiana merged with Zinifex to form OZ Minerals .

Credit Suisse was lead manager and underwriter for the offering, with co-lead manager Bell Potter Securities.

Japan seeks Russian help to end nuclear crisis

Mon Apr 4, 2011 10:30pm GMT

* Japan seeks Russian radiation treatment ship
* Operators forced to release radioactive water into sea
* Bath salts, sea curtain sought to stop radiation leaks
* Nuclear crisis may weaken yen, economy to be hit
By Chizu Nomiyama and Shinichi Saoshiro

TOKYO, April 5 (Reuters) - Japan has asked nuclear superpower Russia to send a special radiation treatment ship used to decommission nuclear submarines as it fights to contain the world's worst atomic crisis since Chernobyl, Japanese media said late on Monday.

Japanese engineers at the Fukushima Daiichi nuclear plant have been forced to release radioactive waste water into the sea. At the same time they are resorting to desperate measures to contain the damage, such as using bath salts to try to locate the source of leaks at the crippled complex 240 km (150 miles) north of Tokyo.

Three weeks after a 9.0 magnitude earthquake and massive tsunami hit northeast Japan, sending some of Daiichi's reactors into partial meltdown, engineers are no closer to regaining control of the power plant or stopping radioactive leaks.

The quake and tsunami left nearly 28,000 people dead or missing and Japan's northeast coast a wreck.

The world's costliest natural disaster has caused power blackouts and cuts to supply chains and business hours. It is threatening economic growth and the yen, while a recent opinion poll suggested voters want embattled Prime Minister Naoto Kan to form a coalition in order to steer Japan through its worst crisis since World War Two.

Plant operator Tokyo Electric Power Co (TEPCO) was forced on Monday to release low-level radioactive seawater that had been used to cool overheated fuel rods after it ran out of storage capacity for more highly contaminated water.

A TEPCO official was in tears as he told a news conference: "We are very sorry for this region and those involved."

The water, which is being released to free storage capacity for more highly contaminated water, is about 100 times more radioactive than legal limits. Koichi Nakamura, a deputy director-general of Japan's Nuclear Industrial Safety Agency (NISA), told a news conference in Vienna about 11,500 tonnes of water would have to be discharged.

He also said Japan had not ruled out expanding the 20-km evacuation zone around the site.

Engineers planned to build two giant "silt curtains" made of polyester fabric in the sea to hinder the spread of more contamination from the plant.

Japan has also asked Russia for the "Suzuran", a ship which treats radioactive liquids, Kyodo and Jiji news agencies said.

The ship, a joint venture between Japan and Russia, was designed to help decommission nuclear submarines in Russia's Pacific fleet in Vladivostock, ensuring radioactive waste was not dumped into the Sea of Japan, Kyodo said.

It could take months to stem the leaks and longer to regain control of the power station, damaged by the March quake and tsunami, though a U.S. official in Vienna said there was no evidence the spent fuel in the reactors was restarting a nuclear reaction after being shut down.
DISASTER MAY SEE YEN WEAKEN

Japan, the world's third largest economy but also one of its most indebted nations, has estimated the damages bill may top $300 billion.

"The damage from the nuclear crisis and the subsequent power shortage will last for several years," said Eiji Hirano, former assistant governor of the Bank of Japan (BOJ).

"There's a strong chance Japan's economy will contract in the current fiscal year," he told Reuters in an interview.

A former senior finance ministry official, Eisuke Sakakibara, said the yen would weaken in the coming months, possibly beyond 90 to the dollar, underlining expectations a near four-year rally in the currency may be over.

The yen traded at 84.05 per dollar early on Tuesday.

The disaster initially saw the yen soar on speculation Japanese would repatriate funds for reconstruction, prompting the G7 intervention to knock it back.

"This atomic power issue is an incident which would result in depreciation of the exchange rate," Sakakibara told reporters in Tokyo.

Unpopular and under pressure to quit or call a snap poll before the disaster, Prime Minister Kan has been criticised for his management of the disaster.

One newspaper poll said nearly two-thirds of voters wanted the government to form a coalition with the major opposition party and work together to recover from the disaster.

BATH SALTS, SEA CURTAIN

In their desperation to stop radioactive leaks, TEPCO engineers have used anything at hand. They have mixed sawdust and newspapers with polymers and cement in an unsuccessful attempt to seal a crack in a concrete pit at reactor No.2.

On Monday, they resorted to powdered bath salts to produce a milky colour in water to help trace the source of the leak.

TEPCO said it was also planning to drape a curtain into the sea off the nuclear plant to try to prevent radioactive silt drifting out into the ocean.

The exact source of the radiation leaks remains unknown. NISA is investigating a damaged embankment near a sluice gate at the No.2 reactor and the possibility it may be seeping through a layer of small stones below a concrete pipe.

TEPCO said it would build tanks to hold contaminated seawater, was towing a floating tank which will arrive next week, and was negotiating the purchase of three more.

"If the current situation continues for a long time, accumulating more radioactive substances, it will have a huge impact on the ocean," Chief Cabinet Secretary Yukio Edano said.

Small levels of radiation from the plant have been detected as far away as Europe and the United States and several countries have banned milk and produce from the vicinity.

Singapore extended a ban on Japanese food imports on Monday after detecting radiation in more fruit and vegetable imports. Kan asked the European Union on Monday for a calm response to Japanese imports. The EU has urged radiation testing of Japanese food and feed imports. (Additional reporting by Yoko Nishikawa, Yoko Kubota, Linda Sieg, Leika Kihara, Tetsushi Kajimoto in Tokyo and Sylvia Westall in Vienna; Writing by Michael Perry; Editing by Daniel Magnowski, sourced Reuters)

Mongolia seeks balanced growth to avoid Dutch disease from mining boom

Monday, 14 Mar 2011

Mongolia needs to look beyond the coal and copper mines that are driving its economic boom to find a more balanced model of growth.

Mr Sukhbaatar Batbold PM of Mongolia said that investment in mining projects and speculation on the wealth they will create in the world’s most sparsely populated nation have made Mongolia’s tugrik the best-performing currency since the beginning of last year. That’s putting exports such as cashmere at a disadvantage and adding costs to newer industries such as tourism, food production and metal processing.

Mr Batbold said that it is important to have a good mining industry. But it is a tool of moving many other things forward. What we want to focus on is creating jobs in many other industries.

Mongolia needs to avoid developing Dutch disease where the financial benefits of a resource boom lead to a hollowing out of other sectors, according to the World Bank. Sandwiched by Russia’s far East to the north and 1.3 billion strong, resource hungry China to the south, the government is looking for ways to lessen its vulnerability to competition from its giant neighbor and reduce its reliance as a customer.

Mr Rogier van den Brink lead economist for Mongolia at the World Bank said that “Mongolia can’t compete with China on wages but it can certainly find areas in the Chinese economy where it could have an edge such as in cashmere meat and services. Diversifying from resources would be a solution similar to what the Dutch found to combat the resource disease.”

The discovery of gas in the Netherlands drove up inflation and damaged manufacturing. In Mongolia, Vale SA and Xstrata Plc are leading six groups bidding for 1 billion tonne concession at the Tavan Tolgoi coal project. Rio Tinto is developing the Oyu Tolgoi copper and gold deposit which it expects will account for 30 percent of Mongolia’s gross domestic product when completed.

The country also holds oil, potash, iron ore, uranium and the rare earth minerals used in Toyota Motor Corporation hybrid cars and Raytheon Company’s Tomahawk cruise missiles. Plans this year to begin mining part of Tavan Tolgoi and preparatory work for the 2012 start up of Oyu Tolgoi may cause the economy to expand 33 percent in dollar terms. That compares with a 10 percent growth in local currency terms. (sourced:bloomberg)

Russia's MMK sees new mill capacity at 1.5 mln T/yr

Wed Feb 9, 2011 11:19am GMT
MOSCOW Feb 9 (Reuters) - Magnitogorsk Iron & Steel Works (MAGN.MM: Quote), Russia's third-largest steelmaker, said on Wednesday its 5,000 mm plate mill has a full order book and that its annual output is about 1.5 million tonnes.
The mill, commissioned in 2009, produced 127,000 tonnes of steel in January, up from 112,000 tonnes in December.

The new mill produces thick steel for industries such as pipe-making and shipbuilding and is part of the company's strategy to increase its value-added production.
The steelmaker, also known as MMK, is in the midst of an aggressive expansion that will see output reach 18.6 million tonnes annually by 2014.
It produced 11.4 million tonnes of crude steel last year and expects 2011 output to increase by 14 percent. (Reporting by Alfred Kueppers, sourced:reuters)

Severstal and AvtoVAZ seal February steel supply deal

Wednesday, 02 Feb 2011

Russian steelmaker Severstal said that it has agreed on rolled stock supplies to Russia’s largest carmaker AvtoVAZ for February.
No information on the value of the deal and the volume of supplies was available.
Severstal said that the companies were continuing negotiations on rolled stock supplies for the rest of the year.
Severstal provides around 60% of AvtoVAZ’ metal needs, while Magnitogorsk Iron and Steel Works provides the remaining 40%.
On December 24, 2010, AvtoVAZ and MMK agreed on prices for rolled stock supplies for January June.(sourced:Prime Tass)

Mr Mordashov foresees 8pct rise in Russian steel demand in 2011

Wednesday, 02 Feb 2011

According to Mr Alexey Mordashov chief executive of the leading Russian steelmaker Severstal at the World Economic Forum in Davos, demand in the Russian steel market could increase by eight percent in 2011, adding that in general the world steel market will be characterized by a rising tendency this year.

Mr Mordashov said "The prospects are good; we see an increasing conjuncture, a growing market both in terms of volume and prices. This is undoubtedly based on growing demand in view of national economic growth in Russia and in the world economy as a whole. Plus, we definitely see rising prices for raw materials, which in turn is also caused by the growth of the world economy, particularly in emerging markets."

Mr Mordashov said that in 2011 steel demand in the European market is unlikely to see much increase while in the US market it will grow insignificantly by just 1.5% to 3%. However, the biggest increase in steel demand is perhaps to be expected in the emerging markets.(sourced:steelorbis)

Russian ministry proposes export duties on flat steel and iron ore

Friday, 28 Jan 2011
It is reported that Russian deputy minister of economic development Mr Andrey Klepach has proposed a 10% export duty for flat rolled steel and iron ore. The move is focused on increasing domestic supply and preventing price rises.
As per reports, the ministry has offered to introduce two export tax schemes proposing 10% export duties for flat rolled steel and 30% for iron ore or an alternative including a progressive tax on steel with lower rates and increasing the mining tax on iron ore from the current 4.8% to 8.8% instead of the export duty.

Mr Marat Gabitov with UniCredit Securities said that a new tax regime could cut steel producers investment plans. He said “We see the news as negative for Severstal and MMK, as the two companies are Russia’s biggest exporters of flat rolled steel, with 45% and 35% shares of exports, respectively. Our rough estimates suggest that, all other things equal, the introduce 10% export duty on steel would result in a 10% to 15% cut to EBITDA for both companies. Mechel could suffer from the export duty on iron ore, as it ships up to 4 million tonnes per year to China. Although, the negative effect may not be significant. In any case, we note that the steel lobby in Russia is quite strong and the introduction of additional duties could result in the scaling back local steelmakers’ investment plans, and there fore we believe the chances that such duties will ultimately be introduced may be quite low.”

Mr Mikhail Pak analyst at IC Aton said that strong pressure from auto producers who are susceptible to sharp price rises also lays behind the proposal. He said “Auto producers accused steel plants for their plans to increase prices for flat rolled steel for 40% which may lead to higher auto industry expenditures and inevitably affect retail car prices. AutoVaz flat rolled steel stocks are almost finished and production is on the edge of material shortage. Export taxes were not applicable to any steel raw material earlier except Non ferrous metals. I think government is trying to equalize both sectors to resolve the dispute and prevent retail price soaring.”

Mr Airat Khalikov metallurgy sector analyst at Veles Capital believes the introduction of a new tax regime is a government response to pricing issues on the domestic market. He said “The decision to introduce export tax regime on iron ore and flat rolled steel major steel plants output products, was driven by auto industry complains and inappropriate price strategy on the local market. So to say Steel giants became too greedy spurred by recent foreign market demand growth and less profits on the local market. With strict government control steel producers forced to focus on local supply offering low prices comparing to export prices.”
(Sourced from rt.com)