CHINA HOLIDAY ROUNDUP: Metals industry news from China didn’t slow at all during the last two holiday weeks. Here’s a quick roundup of the most significant events:
- China raised export duties on steel billets, long and strip products, and welded tubes as of January 1. The move is another in a series of steps to reduce steel exports, which as of the end of November totaled nearly 58 million tons for 2007, up 55%. Total exports for the year are estimated by the China Iron & Steel Association (CISA) at 72 million tons, or about 15% of total Chinese steel production of about 500 million tons. CISA said that the new export duties, slashed rebates on other steel products, and other measures may reduce exports in 2008 by 20 million tons.
- China reduced or eliminated export tax rebates on about 160 steel-product categories in April. Export tariffs were established for 19 categories of steel in June, and rebates remaining for 161 steel products were cut again in July.
- Persistent reports from China say that Chinese companies are studying ways to thwart BHP Billiton’s proposed acquisition of mining rival Rio Tinto. CISA and individual Chinese companies have decried the merger suggestion floated by BHP because it would concentrate control of vast deposits of iron ore in the hands of one company instead of today’s two. The British Takeover Panel has ruled that BHP must make a formal offer for Rio by February 6 or withdraw for at least six months.
- China’s long-stalled drive to eliminate obsolete steel and iron making capacity may finally be gaining traction. The National Development and Reform Commission, the nation’s top planning agency, says that as of the end of November, outdated iron capacity of 29.4 million tons and steel capacity of 15.21 million tons were closed in 2007, with more to come in December.
- Construction began at the very end of December for a 1.8 million ton project in Guangdong to make cold-rolled steel plate. Guangzhou JFE Steel Plate Co., a joint venture between Guangzhou Steelworks and JFE Steel of Japan, is building the plant.
- Jilin Tonghua Iron and Steel Mining, a unit of Jianlong Steel Holdings, a privately owned Chinese steel company, said it would purchase all iron and copper ore from the Cairn Hill mine of IMX Resources for three years.
- And, finally, in an announcement that could come only from China and its communist, non-market, command-and-control political system, Ai Baojun, chairman of Baoshan Iron and Steel Co., was named vice mayor of Shanghai by the Standing Committee of the Shanghai People’s Congress, a promotion for the 47-year-old cadre. “I’ll try my best to make a blameless administration work,” Ai said. Replacing Ai at publicly traded Baoshan Steel was former Chairman Xu Lejiang, who is chairman of Baoshan’s parent, Baosteel.
POSCO BUYS INTO MALAYSIA: South Korean steelmaker POSCO agreed to purchase a controlling interest in MEGS Industries, a Malaysian steel company. MEGS, based in Klang, west of the nation’s capital of Kuala Lumpur, MEGS is the only Malaysian maker of electro-galvanized steel products. Its annual capacity is just 120,000 tons.
TATA BREAK GROUND ON PROJECT: Tata Steel has broken ground on a project to expand production capacity of its Jamshedpur plant by 10 million tons of steel a year. Completion is expected by December 2010.
SEVERSTAL REPLACES SEVERCORR MANAGEMENT: Severstal, the Russian steel company, says it has appointed James Hrusovsky, formerly chief operating officer of Severstal North America, Inc., as the new CEO of SeverCorr, the new steel mill in Columbus, Mississippi. He replaces John Correnti, who led the management group that established the mill. Severstal also named Sergei Kuznetsov, chief financial officer of the North American business, as CFO of Severcorr. “John Correnti and his team have been tremendous partners and we wish them the very best in the future,” said Alexey Mordashov, Severstal’s chief executive officer.
WARRAMBOO MINE TO BE DEVELOPED: Rio Tinto and its three Japanese joint venture partners—Mitsui & Co., Nippon Steel Corp., and Sumitomo Metal Industries—say they will develop Mesa A Warramboo iron ore mine in Western Australia’s Pilbara region. High-grade reserves are estimated at 250 million tons. Rio controls 53% of the project.
AM ACQUIRES AUSTRIAN DISTRIBUTOR: ArcelorMittal has agreed to buy Elsen Wagner GmbH, an Austrian steel distributor. Eisen Wagner sold 140,000 tons of steel products in the year ended February 28, with sales of about $186.5 million.
ArcelorMittal also said that it has purchased Cinter SA, a Uruguyan stainless steel tube maker.
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