Sourth Africa faces delay threat to projects over shortage of steel rebar

Sunday, 13 Feb 2011

It is reported that large building and construction projects in South Africa could grind to a halt within weeks because of a shortage of rebar. The shortage was caused by a breakdown last month of ArcelorMittal’s main furnace in Newcastle in KwaZulu Natal.

The South African Reinforced Concrete Engineers Association said that the breakdown meant there would not be any rebar available this month, possibly halting building and construction projects in SA, and resulting in delays and additional costs. This comes at a time when the construction industry is reeling from the effects of the global economic recession and the spending hangover after last year’s Soccer World Cup. While there was huge state investment in fixed capital last year, the government has been slow since then to issue new tenders and tardy in paying for work done. The private sector is complaining bitterly.

The association said that the shortage had been made worse by the closure last year of the unprofitable reinforcing steel rolling mill, Cape Town Iron & Steel Works, which had been a large supplier of the steel.

Mr Rod Mountford director of the association said in a statement that "Members of the association are reporting serious shortages of rebar and mesh rod, which has been totally unforeseen and beyond their control."

Mr Mountford said that "The imported product is more expensive than locally sourced reinforcement. Individual importers of rebar will also have to ensure that the quality of the steel complies with South African standards and specifications. Steel mills have already been notified there are price increases due this month and in March 2011."

SA's two remaining suppliers Scaw Metals and the Davsteel division of Cape Gate, were unable to provide construction firms with their required volumes, leaving a two to three month lead time for imported rebar. (sourced:businessday.co.za)

China GengSheng inks supply contract with Fushun New Steel

Thursday, 03 Feb 2011
Industrial materials manufacturer China GengSheng Minerals has signed a two year full service supply contract with Fushun New Steel Corp a deal from which GengSheng expects to make roughly USD 10 million in revenue.

The news sent GengSheng stock price up by more than 17% recently to trade at USD 3.13 as of 11:30am EST. Under the agreement, GengSheng will supply Fushun with refractories, materials that can retain their strength at high temperatures and which are used in linings for furnaces, kilns, reactors and incinerators. Installation and on site support services are also included.
GenhSheng said shipments under the contract began last month and are expected to continue through December 2012. The company expects to begin receiving revenue from its new client in the first quarter of this year. The amount of revenue will depend on Fushun ouput capacity.
GengSheng launched its full-service program for refractory customers, which includes installation, testing, repair and maintenance, in late 2003, as they generate stable and recurring revenue streams and have higher margins than product sales alone.

Mr Shunqing Zhang CEO of China GengSheng Minerals said "Our full service programs are an ideal solution for steel manufacturers who face an increasingly challenging market environment as they are able to adjust purchasing and implementation based on output."(sourced:proactiveinvestors.com)

POSCO takes 24pct equity in IMFA arm for USD 5 million

Sunday, 30 Jan 2011
ET reported that South Korean steelmaker POSCO has taken a 24% equity stake in an arm of India's largest ferrochrome maker IMFA.
POSCO has paid USD 5 million for the stake in a specially created vehicle that has ferrochrome operations.

The annual production of the joint venture furnace located within IMFA's Choudwar unit in Orissa, is 35,000 tonnes.
Under the agreement with IMFA, POSCO will purchase the low cost ferrochrome from the new furnace for 25 years.

Mr Subhrakant Panda MD of MFA said that "It's a three stage transaction where we first transferred a new ferrochrome furnace to a subsidiary, with POSCO taking 24% in the subsidiary. Subsequently, the subsidiary leased the furnace back to IMFA."

The listed parent IMFA, on the other hand, owns chrome ore, coal mines and power generation businesses, which would have commanded a steeper valuation. IMFA operates five furnaces with a total capacity of 150,000 tonnes. POSCO annually buys 480,000 tonnes of ferrochrome and has a similar long term supply contract to buy 35,000 tonne of ferrochrome from South Africa.(sourced:economictimes.com)

Hyundai Steel to build a new furnace by 2013

Sunday, 30 Jan 2011
Reuters reported that South Korea's Hyundai Steel Co will invest more than KRW 3 trillion to build a No 3 furnace with a capacity of 4 million tonnes of steel per year.
Construction will start in the second quarter of 2011 and run through to 2013.

Hyundai Steel completed its first blast furnace in 2010 with an annual production capacity of 4 million tonnes per annum and added a No 2 furnace with the same capacity later in the year.
In April 2010, the steelmaker said its new furnace would specialize in steel plates for Hyundai Motor Group automobiles to strengthen the group's integrated supply chain.

Hyundai Steel provides crude steel and hot rolled plates to Hyundai Hysco Co Limited, which supplies cold rolled plates to the country's top two automakers Hyundai Motor Co and Kia Motors Corporation.
Hyundai Steel used to make mainly rebar and H section for the construction sector and recycling scrap steel at mini mills. (Sourced: reuters.com)