Wednesday, January 15, 2014

Tata Steel service centre in UK

Tata Steel opens UK's largest plate service centre

TATA Steel has today opened the UK’s largest profiling centre for steel plate in the West Midlands, increasing its plate processing capacity in the region by up to 50 per cent.

The new Profiling Centre, at Steelpark in Wednesfield, transforms steel plate into a multitude of shaped and machined components, from high-volume production runs for off-road vehicle wheels and booms for earth-moving equipment, to large one-off components for construction projects and specialist engineering applications.

The £3.1 million facility provides a step change in Tata Steel’s capability to supply plate that has been cut and finished to exact size, shape and quality specifications. Steelpark’s profiling capacity will be increased to 47,000 tonnes per annum.

Paul Steele, Managing Director at Tata Steel Distribution UK and Ireland, said: “This investment is one of a series of developments that is strengthening Steelpark’s position as one of the key foundations for UK manufacturing. We are transforming the UK’s largest steel service centre into an operation that is entirely focused on meeting customer requirements and supporting their success.”

The development amalgamates Tata Steel’s plate cutting and machining capability into a single facility able to offer a comprehensive suite of tailored processing services to meet customers’ specific requirements.

The investment will shorten order and delivery times, enabling Tata Steel to offer a range of benefits to customers in the lifting & excavating and construction sectors, including greater consistency of quality and a single point of contact for the purchasing process.


Spot iron ore prices

Spot iron ore holds near 5 month low

Reuters reported that spot iron ore prices stayed near their weakest level in more than five months, reflecting slow demand from top importer China where steel mills are in no rush to snap up cargoes amid a soft market.

Chinese iron ore futures bounced back slightly after plumbing a fresh contract low and Shanghai steel edged up but not far above a record trough reached last week.

According to data compiled by Steel Index, ore with 62% iron content for immediate delivery to China .IO62-CNI=SI was little changed at USD 130.90 a tonne on Monday versus Friday's USD 130.70, its weakest level since August 5.

High stockpiles of iron ore at Chinese ports after recent brisk shipments show there is limited appetite for the raw material among mills. Inventories of imported iron ore at major Chinese ports stood at 91.4 million tonnes last week, up more than 2 million tonnes from the previous week, based on data from industry consultancy Mysteel.

Chinese mills have in past years restocked heavily on iron ore ahead of the week long Lunar New Year break, sending spot prices to near USD 160 in January last year ahead of the holiday that fell in February. But traders say the appetite is more limited this year ahead of the holiday that begins on January 31st 2014.

An iron ore trader in Shanghai said that there is still some restocking going on, but people are buying in small volumes of 5,000 tonnes to 10,000 tonnes. Persistently high borrowing costs, lower winter construction demand, nervousness over property market changes and the upcoming Chinese holidays are reducing demand for steel and iron ore in China, the world's biggest consumer of the commodities.

China's interbank rates have eased from recent highs although banks remain uneasy with the approaching Lunar New Year holiday which puts massive pressure on cash supply.

The most-traded rebar contract for May delivery on the Shanghai Futures Exchange was up 0.5% at CNY 3,487 per tonne by midday. It touched a record low of CNY 3,441 on Friday amid weak demand for the construction steel product.


World's largest steel trader

Lenders extend Stemcor debt standstill to end-Feb

Reuters reported that Lenders to Stemcor, formerly the world's largest steel trader, have extended its debt standstill agreement to the end of February, allowing it more time to restructure a USD 1.25 billion debt.

The private British firm, controlled by members of the Oppenheimer family which includes opposition Labour Party lawmaker Mr Margaret Hodge is under pressure to sell its iron ore assets in India in order to repay its debt.

The assets, which include an iron ore mine and processing facilities in Odisha, have been valued by an industry source at USD 700 to 750 million, though that number is subject to change if the state beefs up its mining laws.

Output from Odisha the largest iron ore-producing state could be affected after a government-appointed panel, the Shah Commission, submitted a report highlighting illegalities in mining.

India's iron ore exports are down by about 85% or 100 million tonne over the past 2 years as the government imposed export bans in Karnataka and Goa in an attempt to clamp down on illegal mining.

India's second largest lender by assets has lent Stemcor INR 5.87 billion, with Stemcor's Indian assets as a collateral and is worried that a sale could jeopardise a payback.

Like many steel companies, Stemcor was hit hard by the global financial crisis. The company failed to refinance an $850 million syndicated loan that was due to mature last May, and has since concluded four standstills. Under a standstill, lenders agree not to ask for repayment and work with the company to restructure the debt. Lenders to Stemcor include ABN AMRO Bank, HSBC, ING, Natixis and Societe Generale.


US challenges China

US challenges China non compliance in WTO CRGO steel dispute

Mr Michael Froman US Trade Representative announced that the United States is requesting that China enter into consultations regarding China's claim that it has brought its duties on US exports of grain oriented flat-rolled electrical steel (GOES) into compliance with WTO rules. AK Steel Corporation, based in Ohio, and Allegheny Ludlum, based in Pennsylvania, manufacture GOES.

China's actions cut off more than USD 250 million in exports of this high tech steel product and in 2012 the United States won a dispute at the WTO that China broke WTO rules with its imposition of antidumping and countervailing duties on GOES. The United States continues to pursue this dispute to ensure that China follows through on its obligations under the ruling and does not further harm US exports and the American workers and firms that make them, by abusing trade remedies. This is the first time the United States has initiated a proceeding in the WTO to challenge a claim by China that it has complied in a WTO dispute.

Ambassador Froman said that "Supporting American jobs is our number one job. And to ensure that Americans see the full benefit of the rules and market access we have negotiated in our international trade agreements, the President put enforcement of America's rights in the global trading system on a par with opening markets for US Exports. The WTO found that China's duties are inconsistent with WTO rules. We were right, and China was wrong. Unfortunately, it appears that China has not corrected those inconsistencies. Today's action shows that when the United States steps up to the plate on trade enforcement, we will follow through."


Thursday, January 9, 2014

Valuation of Indian iron ore

Valuation of Indian iron ore assets of Stemcor falls - Report

Financial Express reported that Stemcor India, which had put up its assets in India for sale since September, has seen its valuations tumble to almost 50% of what was earlier quoted when the asset was first put on the block.

According to sources in companies currently looking at buying the assets, their current value is being pegged at not more than INR 3,500 to 4,000 crore or roughly in the range of USD 600 million, against an earlier estimated figure of USD 1 to 1.2 billion.

This is a downward revision since September 2013 and ushers in better negotiation power for companies like JSW Steel, Jindal Steel and Power, Essel Mining of the Aditya Birla Group, Essar Steel and Visa Steel.

In fact, with the interested bidders now progressing with their due diligence of the 2 main assets of Stemcor India and their accounts, startling revelations have come out forcing the interested companies to look at Stemcor India as not an out an out attractive buyout.

This has been accentuated with the Justice MB Shah Commission’s debilitating report released on December 26th accusing most of the mining companies in Orissa of being involved in illegal mining.

The Commission report had said that all 55 mines around the Baitarni river and its tributaries should not be allowed to operate till the time their environmental approvals are revisited.

A top official in the Orissa government’s mining department, while refusing to divulge any more information said that “Almost all major companies are part of the Baitarni river iron ore belt and Aryan Mining is one of them.”

Aryan Mining, which is the shining jewel in Stemcor India’s crown, is also embroiled in litigations apart from the allegations of the Commission report. In 2012 to 13, the company had to keep its operations shut for almost 7 months as the state government had initiated investigation of various statutory compliance being carried out by the mining department.


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