ArcelorMittal SA back to profit, sees improvement

Tue Feb 8, 2011 7:57am GMT
JOHANNESBURG (Reuters) - ArcelorMittal South Africa, a unit of the world's biggest steelmaker, on Tuesday posted a return to full-year profit, lifted by stronger sales, and said it expects solid results ahead.
The company said diluted headline earnings per share for the year to end-December totalled 343 cents, compared with a loss of 104 cents a year earlier.
Headline earnings are the main gauge of profit in South Africa and strip out certain one-time items.
Revenue totalled 30.22 billion rand, up from 25.59 billion rand in the previous year.
The company said growing demand for steel and higher global prices would boost its earnings in the first quarter of 2011.
"A significant turnaround in earnings is anticipated for the first quarter 2011 compared to the loss for the last quarter of 2010," it said in a statement.
The company, however, said the earnings would be partially offset by rising prices of raw materials, mainly scrap.
The global steel sector has been caught in a margin squeeze since the middle of 2010, when raw material costs began steadily to increase, but steel prices dropped while the industry as a whole took a breather.
The company also said the arbitration proceedings relating to its stake in Kumba's Sishen mine were in progress and a hearing date was yet to be set.
ArcelorMittal South Africa has been at loggerheads with Kumba, a unit of Anglo American, over iron ore prices.
It is also attempting to buy little-known mining firm Imperial Crown Trading after that company won a prospecting right to a stake in Kumba's Sishen mine.
As part of that deal, ArcelorMittal South Africa has said it would transfer about a quarter of its shares to black investors, including ICT and an investment group led by the son of South African President Jacob Zuma.
The company said issues relating to the black empowerment transaction and acquisition of ICT were still in progress.
Shares in the steelmaker have gained nearly 8 percent so far this year, outperforming a 3.5 percent rise in the Johannesburg's blue-chip Top-40 index.

Essar Steel restarts No 7 blast furnace

Tuesday, 08 Feb 2011
The Canadian Press reported that Essar Steel Algoma announced that it has started its No 7 blast furnace after a lengthy, unplanned shutdown that began in late January.
Essar said “The blast furnace is ramping up smoothly and expects to return to normal operating levels in the next few days.”
It added that meanwhile, coke making operations remain in full effect and limited production continues at select downstream operations.

Mr Pramod Shukla COO of Essar Steel Algoma said “As we look forward to the resumption of full operations, we wish to thank our customers, employees and the community for their patience and understanding during this difficult period.”
The company had said earlier that the outage was caused by a cooling water leak and initial efforts at an expedited startup were unsuccessful due to extreme weather conditions.(sourced:The Canadian Press)

Mining nationalisation "road to ruin" for S.Africa: Anglo boss

Tue Feb 8, 2011 8:24am GMT
CAPE TOWN (Reuters) - South Africa should not heed "false prophets" calling for mining nationalisation because of the damage such a move would do to its economy, the head of global mining giant Anglo American said on Tuesday.
"Mining companies simply will not invest if they cannot be assured that the assets they create will be secure," chief executive Cynthia Carroll said in a speech at a major African mining conference in Cape Town.
"In ignoring this truth, the false prophets who argue for nationalisation are advocating the road to ruin -- a path we must not follow," she said.
In the last year, radical elements within South Africa's ruling African National Congress (ANC) -- most notably its Youth League -- have been calling for nationalisation of the mining industry, sparking concern among domestic and foreign investors.
Senior ANC figures including President Jacob Zuma and mines minister Susan Shabangu have said nationalisation is "not policy", but have stopped short of quashing the idea, suggesting it may have some traction in the corridors of power.
The notion, which was tabled at a major ANC policy meeting last year, is seen as one of the primary reasons for the decline over the last 10 years in the mining sector in South Africa, the world's biggest platinum and number three gold producer.
The industry has also been plagued by a series of controversies in the administering of mining and prospecting licences, although the government says it is overhauling the system to eliminate the possibility of corruption and blunders.
Mining accounts for 8 percent of GDP in Africa's biggest economy, and directly employs more than 500,000 people.
The government has placed it at the heart of plans to tackle 25 percent unemployment over the next five years, although many anlaysts are sceptical about turning the industry round.

Steel merger may not lead to higher prices - Mr Toyoda

Tuesday, 08 Feb 2011

Bloomberg quoted Mr Shuhei Toyoda president of Toyota Boshoku Corporation as saying that the planned merger of Nippon Steel Corporation and Sumitomo Metal Industries Limited may not lead to higher prices.
Mr Toyoda spoke to reporters in Toyota City after a factory tour. Toyota Boshoku, which makes car interior parts, is 39% owned by Toyota Motor Corporation.
On the merger's impact on steel prices, Mr Toyoda said that "I don't think the merger was intended to result in higher prices."
On the need for steelmakers to move production overseas, he added that "Japanese carmakers definitely need high quality steel overseas. Until now, they've had to spend money to ship from Japan or buy cheaper and lower quality steel locally. The Japanese steel industry operates very domestically."(sourced:bloomberg)

Ukraine's Metinvest sells $750 mln Eurobond

Tue Feb 8, 2011 8:52am GMT
KIEV Feb 8 (Reuters) - Ukrainian steelmaker Metinvest has placed a $750 million seven-year Eurobond with a yield of 9.0 percent, Thomson Reuters service IFR said on Tuesday.
The bond, arranged by Credit Suisse, Deutsche Bank, ING, RBS and VTB Capital, pays a coupon of 8.75 percent and came at a reoffer price of 98.722 percent of face value, equivalent to 598.8 bp over Treasuries, IFR said. (Writing by Olzhas Auyezov; Editing by Richard Balmforth,sourced:Reuters)

METI and FTC tussle over Nippon Steel and Sumitomo Metal merger

Tuesday, 08 Feb 2011
It is reported that the mega merger between Nippon Steel Corporation and Sumitomo Metal Industries Limited has become the subject of a tug of war between the trade ministry and an antitrust watchdog.
As per report, the Ministry of Economy, Trade and Industry is pushing for a realignment of Japanese businesses that would bolster companies' global competitiveness. The ministry is seeking to influence the Fair Trade Commission, which will scrutinize the planned merger for violations of the Anti Monopoly Law, by revising the Industrial Revitalization Law.

The FTC revised the criteria for examining mergers in 2007 to take into consideration the combined share of companies planning to merge in overseas markets, not just their share of the Japanese market.
The revision followed criticism that the existing criteria, which involve scrutiny of the combined share only in the domestic market, would thwart large scale mergers and realignments comparable to those taking place overseas.
With the revised criteria, the FTC was expected to look into the combined share of each product in the global market. If the share totals roughly 40% in one operation, the FTC would instruct the would be merged company to cede the operation to other companies.
Businesses had expected the Japanese watchdog to be on par with its US or European counterparts in handing down less stringent decisions. But they argue that the FTC is still too conservative about mergers between leading players. Among the limited number of sectors for which the FTC has studied such combined shares in overseas markets are hard disk drives, semiconductors and paraxylene, a chemical material used to make medicine.
One business observer said that "It is hard to determine if a merger plan would cause problems or not because details of only a few precedents were made available by the FTC."

While the EU's antitrust watchdog is legally obliged to disclose results of all cases it studies, it is up to the FTC to decide which cases will be made public.
The industry ministry became convinced that the 2007 criteria revision alone would not facilitate realignment of Japanese industries at the same level of other major economies and would erode Japanese companies' global competitiveness.
The ministry intends to submit a bill during the current Diet session to overhaul the Industrial Revitalization Law that would require the FTC to have a consultation with a minister who oversees the industry in which a merger is planned. But easing the criteria could also backfire, ending up depriving the market of free competition.
Taking precautions against the proposed legislation by the ministry, an FTC senior official says that it will be up to the watchdog how the outcome of the consultation will be incorporated into its antitrust scrutiny.

In fiscal 2009, the production volume of cold rolled steel, which is used to make vehicles and electric appliances, and of hot rolled steel for railway cars and roof materials by Nippon Steel and Sumitomo Metal accounted for about 50%, respectively, of overall production, including exports, by Japanese steelmakers.
The proportion of hot dip galvanized steel plates used for automotive bodies and planks for shipbuilding and bridges came to about 40% each. The two companies hold an overwhelming market share for railway tracks and wheels, while their sheet steel used at construction sites represented about 70%.(sourced:www.asahi.com)

Hebei Steel Group develops over 120 new steel products in 2010

Tuesday, 08 Feb 2011
It is reported that Chinese steelmaking giant Hebei Iron and Steel Group in 2010 developed more than 120 new steel products with its sales volume of such new products during the year reaching 2.9 million tonnes or 8.5% of its total sales volume.
Also in 2010, Hebei Steel produced 20.5 million tonnes of special steel, accounting for 60% of its total output volume, including steel products for offshore platforms and nuclear projects which have been produced for the first time in China. In 2010, Hebei Steel started production at its 2.15 million tonnes capacity cold rolled project which is the first project for the production of high strength cold rolled automotive plate and wide galvanized automotive plate in China Hebei Province.
In 2010, Hebei Steel invested CNY 1.52 billion in a total of 25 programs aimed at saving energy and reducing emissions. In China 11th five year period (2006-10), Hebei Steel invested CNY 5 billion in programs aimed at saving energy and cutting emissions, completing 142 such programs.
(sourced:SteelOrbis)

Nigeria finalizes agreement for pipe mill with Jiangsu Yulong

Tuesday, 08 Feb 2011
It is reported that Nigerian Content Development & Monitoring Board and China's major welded line pipe maker Jiangsu Yulong Steel Pipe have agreed to implement a schedule that will lead to the setting up of a 250,000 tonnes per annum longitudinal submerged arc welded pipe mill in Nigeria by September 2012.
The schedule which comprises six key activities and timelines was agreed on during a five day visit to Jiangsu Yulong's facility in China by an NCDMB team led by the executive secretary Mr Ernest Nwapa in January 2011.
The visiting team which included Mr Bola Akano representative of the MD of Addax Petroleum, a member of Sinopec Group, inspected Jiangsu Yulong's Longitudinal Submerged arc welding pipe mill, Helical Submerged Arc welding pipe mill and the High Frequency Resistance Welding Pipe Mill.
The visit was a follow up to the meeting held in September 2010 between NCDMB and representatives of Jiangsu Yulong at the Board’s headquarters in Yenagoa in Bayelsax State.
The Board's efforts are geared towards meeting the targets set for the industry by Ms Diezani Alison Madueke minister of petroleum resources during the inauguration of the Governing Council of the NCDMB by President Mr Goodluck Jonathan in September 2010.
The minister had declared that the steadfast implementation of the Nigerian Content Act will in the next four years lead to the establishment of three to four new pipe mills and other ancillary manufacturing plants to service the demands of the oil and gas industry.
In his remarks during the visit, Mr YongQing Tang the Chairman of Jiangsu Yulong reaffirmed the company’s commitment to set up in Nigeria and confirmed that 80% of the equipment for the production line dedicated to the Nigeria project had been manufactured and is awaiting testing and shipment.
Mr Tang who informed that the basic design of the proposed mill had been completed, added that the visit had demonstrated the commitment of the Nigerian Government to establish pipe mills in Nigeria and develop local steel pipe production.
According to him, Jiangsu Yulong looks forward to partnering with NCDMB, local companies and other Chinese companies like SINOPEC, operating in Nigeria which is familiar with the environment. He however, requested the Board to provide guarantees that the Nigerian National Petroleum Corporation and other major operators will patronize the LSAW mill when operational.
In his comments, Mr Nwapa assured Jiangsu Yulong that the Federal Government is actively promoting foreign direct investments, particularly in the energy sector and will provide all necessary support, approvals and incentives to the company. He said the Federal Government is committed to using locally manufactured pipes in the construction of Nigerian Gas Master Plan infrastructure which involves over 2000 kilometers of large diameter pipeline.
He noted that the Nigerian Content Law protects investors in any facility established in Nigeria to manufacture industry inputs and the NCDMB has demonstrated its ability to enforce this by ensuring that oil majors now source applicable line pipes from SCC Mill, which is the only manufacturer of pipes in Nigeria today.
He further assured Jiangsu Yulong that when the pipe mill becomes operational, NCDMB will not allow any operator in the industry to import longitudinal submerged arc welded pipes until the capacity of its facility and any similar plant is exhausted.
He further assured the company of the Board’s resolve to ensure that the intendments of the Nigerian Content Law as it relates to domiciliation for line pipe procurement is achieved, adding that the law is already being implemented and evidence of local production or concrete plans towards local production is prerequisite for the short listing of companies for contracts.
According to the project implementation schedule, Jiangsu Yulong will work with NCDMB between March and December 2011 to achieve critical milestones including land acquisition, permits, environmental impact assessment, detailed engineering and early site works preparatory to moving the mill. Both parties are also to organize training and attachment of Nigerian operators to ensure that a sizeable workforce is available when the plant is ready for testing.
A Chinese Contractor has already been engaged by Jiangsu Yulong, with the mandate to partner an experienced indigenous construction company in Nigeria for the construction of the plant between November 2011 and August 2012.
The Chinese Contractor and the senior executives of Jiangsu Yulong are expected in Nigeria in May 2011 for preliminary engineering work.
Mr Tang and Mr Nwapa thereafter inaugurated the project team for the Nigeria Pipe Mill which comprises personnel from NCDMB and Jiangsu Yulong as well as a consultant. The project team has since commenced work.
(sourced:vanguardngr.com)

Iron ore trading activity kept prices steady

Tuesday, 08 Feb 2011
Reuters reported that thin spot iron ore trading activity on Monday kept prices steady near record highs with top buyer China off the market for the Lunar New Year holiday.
Prices are expected to resume their rally when the Chinese markets reopen on Wednesday on persistent worries about tight supplies through the first half of 2011.

Macquarie Research said in a note that "There is little expansion potential in the global supply chain while rampant Chinese steel production growth is bolstering demand conditions. We would expect the price to keep edging upwards post Chinese New Year with USD 200 per tonne in sight."
Macquarie said the sharp decline in Brazil iron ore exports last month along with continuously tight cargoes from India suggest that the iron ore market will remain in an extremely tight situation in the first half of the year.
Iron ore exports from Brazil the world No 2 supplier of the steelmaking ingredient fell 29% in January from the previous month as heavy rains disrupted shipments.

Supplies from India, the world No 3 exporter had been tight because of a continuing ban on shipments from its Karnataka state. Macquarie said while a possible lifting of the ban this month could bring some material back to the market, the revamped state rules may make paperwork more rigorous and curb shipments compared to last year.
(sourced:Reuters)