SBB daily Briefing, Global Edition 
Friday, 5 January 07 
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5 Jan 2007
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Fabricator / End User
  • Arcelor Mittal increases scrap surcharge on sections
  • Anyang starts steel production at new HRC project
  • Tata Steel to supply more to booming Indian auto sector
  • Iran steel production rose 20% in 2006
  • Ryerson takeover attempt not surprising
  • Europe
  • S+B expands Swiss operations in Emmenbrücke
  • Duferdofin to add 700,000 t/y bar/sections mill
  • Arcelor Mittal Ukraine restarts converter
  • Evraz seeks regulatory approval to take control of Highveld
  • Persian Gulf construction boom will keep steel demand high
  • Plantech wins Ilva leveller order
  • Asia
  • Producers hike steel prices in Vietnam
  • Posco to trim HRC exports to Japan
  • Magang joins China's 10m tonnes plus steelmakers
  • Japanese mills raise sections prices
  • MultiServ wins three Saudi mill services deals
  • Xinxing updates converter
  • Maanshan revamps plate mill
  • North America
  • US imports from China top 5m s. tons
  • Nucor picks Danieli for Memphis SBQ mill
  • Latin America
  • CSN silent on Corus strategy
  • Scrap & Raw Materials
  • LKAB follows CVRD's benchmark pellet price increase for 2007
  • Russian scrap exports may fall by half in 2007
  • Wugang signs up for iron ore from new Chilean supplier
  • Australia's Centrex finds high grade hematite at Wilgerup
  • Stainless
  • Allegheny raises duplex stainless price by 4%
  • CVRD's Inco unit cuts nickel output by 9% in Indonesia
  • New stainless melt shop to be built in eastern China

    Arcelor Mittal increases scrap surcharge on sections

    Arcelor Mittal has raised its scrap surcharge for beams and sections for deliveries in northern mainland Europe as from 1 January. Subsidiary company Arcelor Commercial Sections attributes the rise particularly to an increase in price for those scrap grades that are “relevant for beam production”.

    The new rate of €114/tonne ($151/t), up €6/t from December, takes the scrap surcharge to its highest level since last August and is in fact the company’s third highest monthly scrap surcharge during the last 18 months.

    Arcelor Commercial Sections’ size extras price increase has also taken effect from 1 January, having been implemented at the same time as similar increases by several other European mills.

    This, along with anecdotal evidence obtained from the market and recently reported by Steel Business Briefing, is a further sign of the current strength of the sections market in northern Europe.

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    Anyang starts steel production at new HRC project

    Anyang Steel, based in central China's Henan province, recently started the trial production from its latest 150t converter, Steel Business Briefing learns from a company source.

    The new converter has a design capacity of just over 5,000 tonne/day (around 1.75m t/y). The company started production of a 100t converter in 2004, and a 120t converter in 2005. The total number of converters in operation today is not known.

    In 2007, the company plans to link production from its newest converter to a new 1,780mm hot rolling line - as SBB previously reported. It also plans to start construction of a 1,750mm cold rolling line in the next 12 months. The HR line has a capacity of 2.5m t/y, and is thought to be due on stream in the first few months of this year. Details for the CR line are not known.

    Other facilities in the project include a 2800 cu metre blast furnace - also as previously reported; as well as a sinter furnace, and a 6 metre high coking battery. Total investment in the integrated project is said to be about RMB1bn ($120m), SBB learns.

    In 2006, Anyang Steel produced around 6.68m tonnes of iron, 7.02m t of crude steel and 6.05m t of finished products, up by 1.63m t, 1.22m t and 1.06m t respectively from 2005, the company says.

    Flat products made up about 44% of 2006's finished production; this should rise to 70% after the cold rolling line is completed, SBB also learns from the company. last year's export volumes were small, however, at around 115,000t of finished products, and 110,000t of semis.

    The company says its target crude production is 10m t/y, but it does not give a date. In 2003, its target was 7m tonnes, which it has now reached.

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    Tata Steel to supply more to booming Indian auto sector

    The Indian automotive market is expected to grow by 17-18% during the current financial year ending 31 March 2007. "We expect to exceed 10m vehicles this year," Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers, tells Steel Business Briefing.

    Indian steel producer Tata Steel recently announced that it plans to take advantage of this boom by supplying more steel to the auto industry. In terms of sales volume, it plans to increase sales by 29% to approximately 850,000 tonnes during current financial year 2007 compared to 670,000 tonnes in last financial year 2006.

    By doing so, this will raise Tata's market share in the Indian domestic automotive segment to 43% in financial year 2007, compared to 41% in FY06. SBB understands these figures refer to cold reduced coil.

    Tata also says that it will sell more galvanized products. Its sales are expected to rise to 43,000 tonnes in the current financial year, compared to 27,000 tonnes in FY06.

    The Indian producer's saleable steel production during April-December 2006 reached 3.66m tonnes, an 11 % increase over the corresponding period of the previous year. Its total sales recorded 3.53m tonnes, up 11.7% in the same comparison.

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    Iran steel production rose 20% in 2006

    Iran's steel output rose by around 20% to more than 10.5m tonnes of liquid steel in 2006, the Association of Iranian Steel Producers tells Steel Business Briefing and production is forecast to rise again in 2007.

    Some of the increased output has come from already established plants in the state sector but more has come from recently established private sector producers, says Seyed Mohammad Goushegir, spokesman for the association.

    Exports comprised 1.6m tonnes, which is around the same as 2005, Goushegir says. “The export of raw steel has gone down, but this has been replaced by more value-added finished steel products, so we are exporting around the same amount overall.”

    Exports were mainly to other Middle Eastern countries, particularly Saudi Arabia and the UAE, with smaller amounts going to Asia and Europe, he tells SBB. Around 6.5m t of steel was imported in 2006.

    In 2007, Goushegir says, existing plants will continue to add production, but looking forward to 2009 he says there will be a much bigger increase as a number of new privately owned mills begin operating.

    At a recent industry conference M.P. Sinha, managing director of Essar Pars Steel Co, Iran, also forecast that Iran’s steel consumption will match any domestic production increases.

    The reasons for this are the accelerated construction of energy pipelines and developments in infrastructure which are expected in Iran over the next decade.

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    Ryerson takeover attempt not surprising

    The move by a New York investment group to gain control of North America’s largest stockist is not surprising given the ongoing consolidation of the industry. However, an industry analyst is not entirely pleased with the candidates the group is putting forward to be on the Ryerson board.

    New York steel analyst Charles Bradford tells Steel Business Briefing that Harbinger Capital Partners’ move to replace a majority of the Ryerson board is driven by the fund’s belief that company management is not turning inventory as quickly as it should. He quickly adds, however, “They’re in an environment where steel prices are falling and that’s always difficult for service centres.”

    On 3 January, Harbinger said it would nominate seven candidates to replace a majority of the Ryerson board, which was faulted for underperformance when measured against what Harbinger says are its key competitors. Those include Reliance Steel & Aluminum, Olympic Steel, Worthington Industries and others. Specifically, Harbinger says Ryerson’s inventory turn average of 3.9 times per year is short of the industry average of 5.1 times per year over the last 10 years.

    Bradford questions whether one of Harbinger’s nominees, Larry Liebovich, retired president of stockist Liebovich Brothers, can help direct a service centre chain the size of Ryerson, which has about $6bn in annual sales. “Having a one-plant operation doesn’t necessarily qualify you to lead a company the size of Ryerson,” he says.

    What effect Harbinger’s newly-initiated proxy battle will have on Ryerson as a takeover target is uncertain, although Bradford says the company is there for the taking should someone want it. “There’s no question the service centre industry is consolidating and I don’t know of anything to block someone from taking Ryerson.”

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    S+B expands Swiss operations in Emmenbrücke

    Swiss engineering steel producer Von Moos Stahl plans to invest in the modernisation and expansion of several production stages at its Emmenbrücke works in the course of the coming year.

    According to Marcel Imhof, chief operating officer of parent Schmolz + Bickenbach group, the works will undergo a “considerable investment programme amounting to CHF60m (€40m) in the liquid steel phase, rolling mill and bright bar mill.”

    The revamp will include an expansion of capacity at the steelmaking facility, where crude steel production will be increased by 19% from 500,000 tonnes/year at present, Imhof tells Steel Business Briefing. At the rolling mill, capabilities for thermo-mechanical rolling will be upgraded, and coil weights will be increased.

    S+B will also modernise its bright bar unit, Steeltec. The installation of new machinery here aims mainly at efficiency improvement, but also at an increase of capacity of drawing facilities, Imhof says.

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    Duferdofin to add 700,000 t/y bar/sections mill

    Italy’s Duferdofin is to install a new bar and sections mill at its Giammoro works in Sicily. Plant supplier Danieli tells Steel Business Briefing that the mill will have a production capacity of 700,000 tonnes/year.

    The mill will be able to produce 8-25mm deformed bars and sections in the smaller size range. It will also allow the company to enlarge the product range of its existing heavy sections/beam mill.

    The 20-stand continuous mill will include a multi-strand QTB line to permit the production of quenched and self-tempered rebar. Plant start-up is scheduled for the end of 2007.

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    Arcelor Mittal Ukraine restarts converter

    Arcelor Mittal Steel Kriviy Rih restarted its No 4 converter on 29 December, after conducting capital repairs, Steel Business Briefing learns from the Ukrainian long steel producer.

    The repairs, which began on 12 November and involved large-scale replacement of equipment, were completed at a cost of over 32m hryvnia ($6.3m). They should allow the converter to increase its productivity and reach its projected capacity of up to 1m tonnes/year of steel.

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    Evraz seeks regulatory approval to take control of Highveld

    Russian integrated steelmaker Evraz Group has applied to the European Commission (EC) and Competition Commission of South Africa for permission to take control of South Africa’s Highveld Steel & Vanadium Corp, Highveld’s CEO Andre de Nysschen confirms to Steel Business Briefing.

    Evraz must seek the competition authorities’ approval if it wishes to obtain shares exceeding 35% of Highveld, De Nysschen explains. He understands that decisions by both anti-monopoly bodies could be made within six months. Increasing its interest in Highveld beyond 35% would also oblige Evraz to make an offer to minority shareholders.

    The EC was notified of the case on 22 December 2006, according to the body’s Competition Directorate General. It has set a provisional deadline of 6 February 2007 for its response. Any cause for concern on competition grounds is likely to centre on the companies’ combined vanadium businesses, the world’s largest supplier of the steel alloying metal.

    Evraz announced its acquisition of a 24.9% stake in Highveld from mining group Anglo American in July 2006. The Russian company has options to purchase Anglo American’s remaining 29.2% stake in Highveld and a 24.9% stake held by Crédit Suisse.

    So far, there has been no discernable change in Highveld’s export policy since Evraz became involved in the company, a market source says. On the steel side, Highveld mainly exports structural sections.

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    Persian Gulf construction boom will keep steel demand high

    Last year’s frenetic construction activity in the Persian Gulf saw around four multi-million dollar projects announced every day, industry sources tell Steel Business Briefing. And they say this boom is set to continue for “at least” another four or five years, securing strong markets for steel for years to come.

    Patrick Michael, editor of Gulf Construction, tells SBB he also thinks projects which break the multi-billion dollar mark will continue to be announced across the six GCC countries during 2007 and beyond. Saudi Arabia and the UAE will continue to lead the way.

    “Currently, in the United Arab Emirates, $35.6bn-worth of projects are under construction and this accounts for 63.7% of the total value of projects under development in the Gulf region,” he said.

    Major projects include: Dubai’s Jebel Ali Airport City which will cover an area over twice the size of Hong Kong Island; the Burj Dubai, a contender for world’s highest building, which is already over 95 storeys high and has used 44,200 tonnes of reinforcing bar to date; and Abu Dhabi’s $27bn Saadiyat Island project.

    Saudi Arabia has earmarked a huge $1,000bn for construction projects over the next few decades, according to deputy minister of commerce Fawaz Al-Alamy, quoted in the Gulf media recently.

    Major projects are also under way in Oman, Qatar, Kuwait and Bahrain.

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    Plantech wins Ilva leveller order

    Japanese plant builder JP Steel Plantech (JSP) has won an ¥2.1bn ($17.7m) order from Ilva of Italy for supply of a high power leveller for heavy plates, Steel Business Briefing has learned.

    Plantech says the leveller will allow real-time in-line monitoring of flatness and other characteristics during heavy plate production, especially of high-tensile plates increasingly in demand for European shipbuilding and energy-related projects. The move should greatly enhancing operational efficiency, it says.

    The leveller should begin operations from July 2008, the Kawasaki-based plantmaker notes. The deal was handled by Japanese trader Sojitz.

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    Producers hike steel prices in Vietnam

    Vietnamese producers have hiked the price of their long products prices by around VND 150,000/tonne ($9/t) in last two weeks, according to the Vietnam Steel Association. A senior official of the VSA tells Steel Business Briefing that the price hikes have been implemented in southern Vietnam and are now being implemented in northern Vietnam.

    "The main reason for the price increase is the higher asking price of billet from China," the official tells SBB. He says that rumours of a possible increase in the export tax of billet from 10% to 15% in 2007 have spurred the Chinese to raise their billet prices.

    "Vietnam has a high dependence on Chinese billet," he notes. Up to November last year, Chinese-origin billet accounted for 70-75% of all billet imports into Vietnam.

    Southern Steel Corp, subsidiary of Vietnam Steel Corp, has raised its debar price by around VND 200,000/t and the price of its common sizes are now priced officially at around VND 8.25m/t ($513/t), excluding VAT. "The main reason for the price increase is due to seasonal demand, which rises year-end," an official tells SBB. However, wire rod prices have not been raised.

    SBB understands, though, from these sources that the number of offers of Chinese billet to the country has dipped noticeably since last week. Last heard offers for Q235 120mm billet were around $433-437/t cfr, and $5-7/t more for 20MnSi billet.

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    Posco to trim HRC exports to Japan

    Posco is telling Japanese buyers of its HRC that it will have to trim the volume they receive during the current January-March quarter; this is because maintenance and refurbishment work will cut its ability to supply.

    The Korean mill expects to ship only about 80,000 tonnes of HRC to Japan this quarter, down from about 95,000t during October-December, Steel Business Briefing understands from Japanese sources. This is because of refurbishment work being carried out on the No.2 HSM at its Gwangyang works next month.

    Though Posco was unable to comment on the reduction in shipping volume to Japan, a company official confirmed that the No.2 mill would be stopped for 22 days beginning 1 February. Japanese buyers also anticipate reduced or delayed shipments from Posco continuing into second quarter.

    Tokyo commentators are watching to see whether Hyundai Steel takes advantage of Posco’s reduced export volume to push its Japanese sales. The mini mill recently commissioned its revamped HSM at its Dangjin works and is keen to locate export customers.

    On the latest Japanese customs data, in October Japan’s imports of HRC from Korea surged 14% from September to 74,400t, with Hyundai Steel believed chiefly responsible for the increase.

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    Magang joins China's 10m tonnes plus steelmakers

    Maanshan Iron & Steel (Magang), one of China's major steelmakers, joined the list of the country's 10m tonnes plus steelmakers in 2006, Steel Business Briefing learns from a company source. This is the first time for Magang’s annual output to reach such level.

    In 2005, China had around 8 companies whose steel output exceed 10m t. These include Baosteel, Angang, Tangshan, Wuhan, Shagang, Shougang, Jigang, and Laiwu. Magang produced 9.65m tonnes.

    Magang has produced about 10.03m tonnes of crude steel by end November, of which 94.69m t came from its main plant and 564,000 t from its Hefei plant. Magang took over the latter last May, with 71% stake, SBB learns.

    The company's products include plate, sections, HRC, wire rod, and rail wheels and rims. 90% of its production is sold domestically, with the adjacent provinces of Anhui and Jiangsu taking about 50%.

    Export areas includes the Middle East, Europe and South East Asia, including Vietnam, to which it is a major exporter. The company is estimated to have exported over 920,000t of steel products in 2006, compared with about 560,000 t in 2005.

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    Japanese mills raise sections prices

    Japanese mini mills are raising prices of channels, angles, beams and other general sections by ¥1,000-2,000/tonne ($8.4-16.9/t) for January contracts to offset higher scrap costs, Steel Business Briefing learns from market sources.

    Market leader Tokyo Steel Manufacturing started the trend on 19 December by announcing a ¥1,000/t increase across most of its long products range including channels, I-beams and H-beams.

    Within days, Nippon Steel Group member Osaka Steel announced it was hiking its sections prices by ¥2,000/t for January. Tokyo Kotetsu, JFE Bars & Shapes, Yamaguchi Kyoei Steel and several other EAF producers soon followed, each adding ¥2,000/t and blaming higher scrap prices.

    Commercial construction activity remains strong in ther country, especially in major urban centres such as Tokyo, Osaka and Nagoya, SBB understands. And Tokyo Steel’s Utsunomiya plant in the northern Kanto is currently paying top price for scrap, offering ¥33,000/t ($277.76/t) for H2 delivered to its works. Other EAF mills serving the Kanto are paying ¥31-32,000/t.

    But whether Japanese building contractors will accept the mills’ arguments about scrap prices and agree to pay higher prices for construction steel remains a moot point. By end December the Kanto scrap market was already showing signs of weakening and some producers were openly talking of cutting scrap buying prices soon after the start of the new year.

    Tokyo Steel’s ¥1,000/t increase for longs for January took its price for large-sized channels to ¥77,000/t on truck, net; that for 400 x 400mm ’senior’ H-beams to ¥75,000/t OT, net; and that for sheet piles to ¥76,000/t OT, net. Its base size rebar price is now ¥59,000/t CIF net, also ¥1,000 up.

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    MultiServ wins three Saudi mill services deals

    US mill services provider MultiServ has three new five-year agreements at two Saudi steelmakers that the company says are valued at more than $34m over their terms.

    Steel Business Briefing learns that MultiServ has a five-year deal with Al-Rajhi Steel to provide scrap management and material processing services to the company’s new melt shop. The new electric furnace is due to be commissioned this quarter and will ultimately produce up to 850,000 short tons of billets annually. Those billets are destined for the company’s downstream rolling mills in Jeddah and Riyadh.

    In addition, MultiServ says it has two separate five-year deals with Hadeed, one for on-site raw material handling and the other for steel plant services. The contracts call for the operation and support of two Hadeed-owned dockside gantry cranes to offload ore as well as the monitoring and maintenance of the works’ eight-mile conveyor system.

    MultiServ also is assuming responsibility for the processing and clean-out of the mill’s steelmaking ladles, tundishes and EF refractories.

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    Xinxing updates converter

    Xinxing Ductile Iron Pipes, based in northern China, plans to invest about RMB 490m ($62m) to update its steelmaking facilities in Wu'an, Hebei province. But the company's steel capacity will not change, Steel Business Briefing learns from a company announcement.

    Xinxing presently owns four 22t converters in Wu'an with a crude steel capacity of 1.6m t/y. As these facilities are old, and use "backward" technology, the company has decides to update them. It believes this should improve the quality and range of its products.

    A company official tells SBB that it has started construction of a new 80t converter with a steel making capacity of 1.6m t/y this month. It is scheduled to come on stream by end-2007. The existing four converters will be closed once the new one unit is put into production.

    After the updating is complete, the company says it will be able to produce new types of steel such as medium-carbon and low-alloy steels. These should help the company raise the added value of its products, SBB is also told.

    Though Xinxing is listed on the Shenzhen stock-exchange, it is also included as a Chinese centrally state-owned company, overseen by SASAC (State Assets Supervision and Administration Commission) in Beijing. It has a number of divisions covering steel-making, machinery, and ductile iron pipes.

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    Maanshan revamps plate mill

    Maanshan Iron & Steel (Magang), located in eastern China’s Anhui Province, has recently started upgrading its plate mill, which it expects to recommissioned by January 2007, Steel Business Briefing learns from the company.

    The upgraded mill will then have a production capacity of 1.2m tonnes/year. The plate width from the revamped mill will be 2500mm, up from 2300mm previously.

    This plate mill was first commissioned in 1975 with a design capacity of 350,000 t/y. Though it acheived a 1m t capacity in 2004 as a result of several small upgrades, the mill's facilities remain a little outdated, according to a Magang executive.

    The current works include reconstruction of a 4-high mill roll changer. This will enable Magang to produce a wide range of plate products, the executive also says.

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    US imports from China top 5m s. tons

    The US likely imported about 5.4m short tons of steel from China last year, a 125% increase over 2005’s total, and the American Iron and Steel Institute says that is too much.

    “The AISI has serious concern over the fact that 2006 total and finished imports appear likely to set all-time records and imports from China - a country that practices mercantilist trade policies - have surged to unprecedented levels,” says AISI president Andrew Sharkey. “The fact that this has occurred in the face of a record buildup of service centre inventories and a slowing demand only exacerbates our concern and gives further cause to the need to defend, enhance and enforce US trade laws.”

    The US is facing increasing challenges to its trade laws on the international scene and has had a series of steel trade case defeats at the US International Trade Commission, as previously reported in Steel Business Briefing.

    On an estimated full-year basis (including November preliminary data December permit data), 2006 US imports will total about 45m s.t, including 36m s.t of finished steel – both records. China led all exporters to the US in each of the last six months of 2006, according to final and preliminary government data.

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    Nucor picks Danieli for Memphis SBQ mill

    Danieli says it will supply Nucor with “a complete new 800,000 tpy SBQ mini-mill” at its Memphis plant in the US.

    Nucor picked the idled semis mill site for its SBQ expansion last year, as previously reported by Steel Business Briefing. It was formerly part of Birmingham Steel, which was purchased by Nucor in 2002. Terms of the Nucor-Danieli revamp contract were not disclosed.

    “The new plant will embrace the complete SBQ bars production cycle, from steel melting to secondary refining, round bloom continuous casting, hot rolling, in-line inspection and cold finishing,” Danieli states.

    Mill modifications will transform existing equipment to produce 57-230mm diameter finished rounds and equivalent squares, as well as 305mm and 203mm semi-finished squares for re-rolling, according to Danieli.

    The Memphis mill is expected to start melting in the first quarter of 2008 and rolling in the second quarter of that year. It will produce various engineering and special steels for the automotive and mechanical construction industries.

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    CSN silent on Corus strategy

    Brazilian flat products producer CSN remains silent on the possibility of a new offer to acquire the assets of Corus. The company has until 30 January to improve its offer and will not comment on its intentions, a CSN spokeswomen tells Steel Business Briefing.

    Some Brazil-based analysts say CSN doesnt' need to increase its offer, which currently stands at £5.15 per Corus share -- ahead of a competing offer from Tata Steel at £5.00/share.

    Indian press reports said Tata is likely to increase its bid by between 7% and 10%, however. This would effectively put Tata well ahead of CSN with an offer of £5.35-5.50/share, as reported. Any counter-bid from CSN would probably need to be in a range of £5.65-5.70/share.

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    LKAB follows CVRD's benchmark pellet price increase for 2007

    Swedish iron ore producer LKAB confirms that it is following Brazilian CVRD’s lead in raising its pellet prices for 2007.

    LKAB CEO Martin Ivert tells Steel Business Briefing that his company has followed the global benchmark set by CVRD and raised pellet prices by around 5.28% from 1 January.

    Ivert says he is pleased that the global benchmark for pricing has been set so early this year, following the delayed negotiations of 2006 when prices were not settled till May. The currently higher freight rates will also benefit LKAB in competing against more distant suppliers to its European markets, he adds.

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    Russian scrap exports may fall by half in 2007

    Russia may halve its exports of ferrous scrap in 2007, if domestic scrap demand continues to grow according to current predictions, and new arisings continue to tail off, warns the Russian coordinating council for the scrap processing industry (KSLP).

    Domestic scrap demand has increased by 30% over the last two years to reach 1.8m tonnes/month, as more electric steelmaking capacity has been commissioned, and existing EAFs are being operated flat out. This could rise to a monthly average of around 1.9-2m tonnes in 2007, the KSLP tells Steel Business Briefing.

    Russian scrap demand is expected to continue growing by over 20% this year. Much of the buying is expected to hit the market early on, as several of Russia’s largest steel producers are bringing new EAFs on stream around the same time in late 2006 and early 2007, adds the Moscow-based council.

    For January-November 2006, the council estimates that Russia’s scrap collection of 26.7m tonnes were down 5% compared to the same eleven-month period in 2005. Levels stabilised in December 2006, but only thanks to the “unusually warm weather”, it adds. Russian scrap exports were roughly 15m t in 2005.

    For 2006, total scrap supply is expected to reach 29m t, which is less than last year’s record of 30.1m t. This decline is likely to continue through 2007 because the scrap collection system needs to be more effective, it adds.

    “Without making significant changes to the way scrap is collected, an increase in the buying price of scrap of say $100 would only bring about what we would consider to be an insignificant growth in volumes, of roughly 15%,” the KSLP says.

    Meanwhile, Ukraine’s ferrous scrap exports for 2006 fell to 700,000-800,000 tonnes, or by very roughly 40% compared to 2005, according to preliminary figures from the Ukrainian Metal Scrap Association.

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    Wugang signs up for iron ore from new Chilean supplier

    China’s Wugang (Wuhan Iron and Steel or Wisco) has become the first major steel producer to commit to buying iron ore from Admiralty Resources’ new Santa Barbara mine in Chile. Admiralty says Wugang will take 940,000 tonnes of fine ore to be shipped between February and September 2007, and will negotiate a longer-term contract thereafter.

    In a stock exchange announcement obtained by Steel Business Briefing, Admiralty said the initial contract will be worth US$45-65m, depending on the final volume shipped.

    The ore will be shipped on Handymax vessels from the port of Caleta, Caldera. After September, a larger port able to handle Panamax vessels should be available, and Admiralty says the deal with Wugang sets out the terms and conditions for negotiating a longer-term contract.

    The deal with Wugang was negotiated by Itochu, the Japanese trading company. It is one of three distributors that Santa Barbara signed up last year to sell its ore.

    The Chilean company reported its first shipment in July 2006. When in full operation it aims to export 1.5m tonnes/year.

    Admiralty says Santa Barbara has applied for an environmental permit to produce as much as 3.6m t/y of iron ore fines grading 63.5% Fe from its Japonesa, Japonesita and Mirador tenements. It expects the permit to be issued by mid-2007.

    In 2006, Laiwu signed a 1m t/y ore supply contract with Chile's CMP, SBB reported in November. This takes effect from April 2008.

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    Australia's Centrex finds high grade hematite at Wilgerup

    Centrex Metals says it has found hematite intercepts grading up to 65.6% Fe at its Wilgerup deposit, located 30 kilometres southeast of Lock on the Eyre Peninsula, South Australia.

    The company has already signed offtake agreements with two Chinese steelmakers, as Steel Business Briefing has reported previously. Shenyang Orient Iron & Steel and Baotou Iron & Steel are both set to receive 1m tonnes/year of hematite ore over a period of five years under these agreements. Baotou also has an option for another 1m t/y over five years from the Wilgerup deposit, subject to there being sufficient reserves.

    Wilgerup has an inferred resource of 7.9m tonnes, but works to explore the resource have been hindered due to ground instability caused by mixed wet clay and fine, dense hematite. Centrex says the new results indicate high-grade hematite extends much deeper than previously indicated. Work to confirm an indicated resource is expected to be completed by the end of January 2007.

    Centrex has another 30 targets under consideration in the region from Port Lincoln to Whyalla, but these are all magnetite. The deal brokered with the Chinese companies does not extend to any ore found at these sites.

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    Allegheny raises duplex stainless price by 4%

    Allegheny Ludlum of Pittsburgh is hiking the price of one of its duplex stainless steel products by 4%, effective with new orders immediately, Steel Business Briefing learns.

    The special steels producer says it is raising the price on its proprietary AL 2205 grade by 4% across all of its product forms, including sheet, narrow strip, coiled plate and discrete plate.

    In a letter to customers disclosing the increase, the company says the price rise is neeed to “support continued growth and investment in our business.”

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    CVRD's Inco unit cuts nickel output by 9% in Indonesia

    Canada-based Inco has cut nickel production at its Indonesian operations by approximately 9% or 560 tonnes/month due to reduced power availability, Steel Business Briefing understands.

    The company says insufficient rainfall caused reservoir levels to fall below the minimum needed for full hydro-electric power production. Routine maintenance activities originally scheduled at the end of the first quarter are expected to be moved forward to minimise the impact on production. The company indicates that it also has an unspecified amount of stockpiled ore on hand.

    Inco's Indonesian subsidiary has a production capacity of 71,000 t/y of nickel-in-matte. Inco first warned of a possible production cutback in mid-December, as reported. The company was recently acquired by Brazil's CVRD.

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    New stainless melt shop to be built in eastern China

    Jiangsu Hongtai Steel, based in eastern China’s Jiangsu province, is constructing a new stainless melting shop, with a capacity of 100,000 tonnes/year, Steel Business Briefing learns from company officials. It is expected to start commercial production by mid-2007.

    Hongtai says the new plant will be designed to produce both 200 and 300 series slab, and one company official adds that the company is thinking of expanding into stainless HRC, but has not yet finalized its plans. It is, at this stage, planning to sell only semis when the melt shop is complete, SBB understands.

    The steelmaker currently has a 600,000 t/y carbon steel melting capacity from two 60t electric furnaces and a rebar rolling capacity of 800,000 t/y. The rebar is 10mm-32mm in diameter.

    Hongtai is not an exporter, selling its rebar domestically instead. Because it has a 200,000 t/y deficit in terms of crude steel, it sources some billet from local steel mills to make up for the shortage of internal feed for its rolling operations.

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