China Likely to Launch Steel Product
January 30, 2009
China is likely to launch steel products futures trading this March on the Shanghai Futures Exchange, with linear steel and threaded steel to be the first futures varieties, according to an insider.
The introduction of steels futures will help enterprises prevent price risks through hedging and is helpful to restructuring of the domestic steel industry.
Also, it will help change China’s passive status in international iron ore negotiations. China may gradually gain some pricing power on the international steel market.
The source also said futures products of major building materials such as linear steel and threaded steel surely would come out earlier than rice futures.
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The Steel Revitalization Plans in China
January 29, 2009
It is reported that the State Council has worked out the steel revitalization plans, which focus on controlling the whole volume, washing out the obsolete capacity and encouraging technical innovation and merger & acquisition to bail out the slumping domestic steel industry.
Mr Wang Yifang Board chairman of Hebei Steel Group said even though the released plan has not cover detailed regulations, it will provides timely help for the development of the steel enterprises in Hebei province, the largest steel production base in China. To the large-sized steel mills, the plan means low cost expansion.
As one of the largest steel complexes in China, Hebei Steel Group has enhanced its place in steel industry since it was founded, and became the national major supportive enterprise.
As per local steel assistance plan, total crude steel capacity would be controlled within 80 million tons by 2020. In order to realize the goal, the province has to concentrate the quality steel resources by promoting the progress of M&As. Most experts believe that the steel revitalization policy will lay a solid floor for the further development of Hebei steel industry.
According to the plan special funds will be allocated from the central budget to encourage technological advancement of the sector, readjustment of products mix and improvements of product quality
As one of the pillar industries in Hebei province, the steel industry contributes more than 25% of the provincial total industrial profits in recent years. However, it still lacks of competitiveness since most local produced products are primary one, with few high value-added and high-tech contained products.
The local government should draw some supportive policies in line with the steel revitalization plan to encourage the technologic innovation. Only in this way, can Hebei province form high quality vanadium and titanium, construction steel and slabs production lines with high value added products, and end the extensive develop pattern in local steel industry.
Source: China Steel net.com
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Iron Ore Price May Decline By 50 % in 2009 in China
January 29, 2009
Iron ore contract prices may fall as much as 50 percent this year amid a slowdown in China, the world’s biggest consumer of the raw material, according to Australia’s richest woman and mining magnate Gina Rinehart.
“We’re hearing 30 percent, 40 percent, 50 percent discounts to last year’s contract price,” Rinehart, who controls closely held Hancock Prospecting Pty, said in an interview with Bloomberg Television. That compares with the average forecast of a 30 percent cut in a Bloomberg survey of 11 analysts last week.
Chinese steelmakers are likely to win their first cut in contract prices in seven years as a global recession curbs demand for commodities. Rinehart’s partner, Rio Tinto Group, the world’s second-biggest exporter of the ore, and Baosteel Group Corp. began talks this month to set prices from April 1, according to two company executives who asked not to be identified.
“The economy in China is very sad right now,” Rinehart said. China’s economy may rebound soon and “ultimately, prices will rise,” she said. Hancock isn’t party to the talks.
Hancock Prospecting is partner with Rio in the Hope Downs iron ore project in Western Australia. Hancock is also seeking to develop the Roy Hill iron ore mine in Western Australia.
Rio, BHP Billiton Ltd., and Brazil’s Cia. Vale do Rio Doce, which handle three-quarters of traded iron ore, sell the steelmaking material under long-term contracts to China’s 20 biggest mills and traders at agreed annual prices.
China may be asking for a price cut of between 40 percent and 45 percent, Macquarie Group Ltd. analysts led by London-based Jim Lennon said in a Jan. 12 report. UBS AG analysts have forecast a decline of 40 percent. A 30 percent cut would still be the second- highest price on record.
Source: China Steel Net.com
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Industrial output grows less than 2007
January 25, 2009
CHINA’S industrial output rose 12.9 percent year on year in 2008, or 5.6 percentage points less than the previous year, the National Bureau of Statistics said yesterday.
Output climbed 5.7 percent in December, up slightly from the 5.4-percent growth rate in November. However, the December figure was 11.7 percentage points lower than a year earlier, and it was also much lower than any of the first 10 months of 2008.
Output of state-owned enterprises and shareholding companies rose 9.1 percent and 15 percent, respectively. These figures include companies with annual sales of at least 5 million yuan (US$731,283), the point at which companies in China are classified as medium to large-scale.
Output of companies funded by foreign investors or investors from Hong Kong, Macau and Taiwan rose 9.9 percent.
Heavy industrial output rose 13.2 percent, while that of light industry gained 12.3 percent.
The bureau’s data showed aggregate industrial profits hit 2.4 trillion yuan in the first 11 months of last year, up 4.9 percent compared with the same period in 2007. However, the growth rate fell a sharp 31.8 percentage points from a year earlier.
Of 39 industries surveyed, 31 reported year-on-year profit growth. The five fastest growth rates were recorded by petroleum and natural gas extraction, coal mining, transport equipment manufacturing, chemical production and metals processing.
Industrial production growth slowed along with a weakening global economy, which reduced market prices as well as domestic and foreign demand, analysts said.
“Weakening demand, especially overseas, was a major cause of China’s slowdown, as more than 30 percent of GDP comes from trade-related industries,” said Tang Min, deputy secretary of the China Development Research Foundation.
He forecast the economy would begin to improve in the second or third quarter as a national 4-trillion-yuan stimulus package took effect and boosted domestic demand for industrial products.
Ma Jiantang, the bureau’s head, called the December rebound a “positive sign” for China’s industrial production.
“The growth rate of industrial output was 0.3 percentage point higher than November. Small as it is, it’s an important change in industrial activity” and could help China’s economy to rebound, he said.
Ma said 16 of the 39 industries surveyed had shown a month-on-month rise in output growth.
A survey conducted by the bureau earlier this month showed steel, coal, ferrous metal and chemical product prices began to rebound after prolonged declines during the second half of 2008, Ma said.
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Sinosteel Wins Nod for Aussie Merger
January 25, 2009
Sinosteel Corp, China’s second-biggest iron-ore trading company, won Australian government approval to buy as much as 49.9 percent of Murchison Metals Ltd.
The Chinese company had previously sought approval to acquire up to 100 percent of Perth-based Murchison, Australia’s Treasurer Wayne Swan said yesterday. That application was withdrawn, he said, according to Bloomberg News.
A 49.9 percent stake in Murchison would be worth A$251 million (US$202 million) based on the stock’s last traded price.
Sinosteel controls Midwest Corp, a neighboring iron ore producer to Murchison in Western Australia state’s mid-west region. Murchison is seeking to develop a A$3.5 billion port, rail and mine project with Japan’s Mitsubishi Corp at Oakajee in the state.
“Overseas investment develops assets,” Andrew Forrest, chief executive officer of iron-ore miner Fortescue Metals Group Ltd, said in an interview broadcast on Sky Business News before the approval was issued. “I think you will continue to see growth in foreign investment in Australia because we are resource rich and capital poor.”
Murchison climbed 11 percent to A$1.22 on the Australian Stock Exchange on Friday in Sydney.
The shares fell to the lowest in almost two years the previous day amid concerns that the cost of borrowing funds, needed to develop the project, will increase.
An initial study into developing the Oakajee project is scheduled to be completed by the middle of next year and, if approved, the port may open as early as 2012. Murchison and Mitsubishi won a tender to develop the port in July, beating a rival proposal from a China-backed venture.
“In approving Sinosteel’s application, I have determined that a shareholding of up to 49.9 percent in Murchison will maintain diversity of ownership within the mid-west region,” Swan said in an e-mailed statement.
“The development of such potentially significant new resource areas should occur through arrangements that are open to multiple investors.”
Source: Shanghai Daily
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