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Tuesday, 06 April 10
UAE STEEL TRADERS FEAR LOSSES ON GLOBAL HIKE
 A sudden spurt in the price of iron ore in the international market has caught local steel traders and manufacturers and a host of other steel-dependent industries, off guard. Emirates Business has learnt that the consequent increase in steel prices has singed many traders who were bearish about steel due to the slowdown in the construction sector and the overall economic downturn in the country.
In such a scenario, they are being forced to buy steel at higher prices prevailing abroad and sell it cheaply in the domestic market to honour existing contracts that were finalised a while ago when steel prices were low based on lower global iron ore prices.
Unlike in the past, when steel prices shot up mainly due to demand and supply factors, the reason for the current increase is the high iron ore price demanded by the major ore producers – Vale, the Rio Tinto Group and BHP Billiton – which together control about two-thirds of global trade.
Brazil's Vale, the largest iron ore supplier, last week broke a 40-year custom of selling ore on a yearly contract at a fixed rate and won a 90 per cent price increase from Japanese mills. Analysts are predicting a considerable increase in costs for steel-using industries and the automobile, construction and metals industries.
Rizwan Sajan, Chairman, Danube Building Materials, said the steel price has gone up by almost 30 per cent across the Gulf Co-operation Council (GCC) states over the last couple of weeks and the price per tonne of steel is Dh3,000 in the UAE, RO320 per tonne in Oman and BD300 per tonne in Bahrain.
"Most players in GCC steel markets – the steel mills, traders and the end users – have been caught on the wrong foot as they failed to anticipate that steel prices would gain momentum in this fashion. Since domestic demand was weak, people were under the impression that there was no scope for a surge in steel prices."
Due to depressed market conditions, the domestic steel price in the UAE is even lower than the metal's price in other Middle Eastern markets like Syria, Iran, Libya and Egypt, he added. In the short-term, the high international steel price will adversely affect local contractors, who are trying to stage a comeback after the Dubai World debt settlement.
Sajan expects a price correction within a few months, but says it is impossible to predict by how much. He added that all players in the steel supply chain were working on minimum stocks and now there was a shortage in the market. "There is a general shortage in the market and overall availability is tight. This sudden, unexpected price hike is a further blow to steel traders. On one hand, we have orders from customers at very low rates while on the other, our present procurement rates from steel mills abroad are high. We are taking positions at $720 (Dh2,644) per tonne and we are not sure what domestic steel prices will be when these orders eventually arrive here," he said.
"In the event of a price crash, as in 2008, traders will incur heavy losses. We, at Danube, never speculate and have a scientific replacement model. We try to run parallel and as close as possible to international pricing."
Sajan added that Danube has opened a new office in Saudi Arabia to cater to that market. "Saudi Arabia had a ban in place on the import of steel but leading Saudi steel producers, including Sabic, could not meet ocal demand. Now the ban has been revoked and other regional players are looking at the Saudi market," he said.
A number of steel traders and manufacturers told this newspaper they expect prices to increase further, but many players in the steel supply chain are cautious about the market trend.
A large company facing pressure is RAK Steel, a joint venture of Ras Al Khaimah Investment Authority and the Middle East Traders Group, which is the second largest steel rebar-manufacturing mill in the UAE with a capacity of 500,000 tonnes per year.
Ajay Aggarwal, Chief Executive Officer, RAK Steel, said: "Steel prices have started going up due to high raw material costs and not due to any additional demand for the product. While prices continue rising, traders or manufacturers – the entire supply chain in fact – cannot absorb this price increase. They will have to pass on the high prices to end-users."
Meanwhile, other smaller traders are equally worried, if not more. A steel trader told this newspaper: "Steel prices have gone up by Dh1,000 per metric tonne MT) in a short period – from Dh2,000 to Dh3,000 per MT. The Middle East steel demand seems irrelevant to international steel price movements and, in the region, only the Saudi Arabia market is doing well because there are many new projects [coming up] there."
Scrap prices have shot up by $200 – from $220 per tonne to $420. "Everybody in the steel supply chain is scared to take on more stock. Not just steel traders, even steel mills and contractors have incurred heavy losses in the recent past due to a sudden decline in steel price from record highs because of the economic slowdown.
"Traders are now reluctant to keep huge stocks and people are buying only for a month's requirement. Traders who have taken orders from contractors for delivery in the next three months have to respect these orders and deliver steel at agreed lower prices even though they are now procuring the metal at far higher prices. Those who do not have such orders are playing it safe because there is no actual demand for steel. We don't know how long the current price trend will continue," said the trader, requesting anonymity.
In the present situation however, local manufacturers are gaining an edge over international importers. "The lead time to import from Turkey, India or Brazil is three months, while we can deliver steel within a month. Therefore many traders prefer buying steel from local companies," said Suraj Malhotra, Marketing Manager at Al Ghurair Iron and Steel. The company is a leading cold rolled and galvanised steel manufacturer. It said the current price movement has affected it minimally.
However, Malhotra said various industries using steel will see a 20 per cent increase in prices within the next two months.
"We export 30 per cent of our products to Saudi Arabia. Local steel manufactures have an edge now because our lead-time is only one month. Importers from India, China or Turkey will take at least three to four months to deliver and we don't know what the price will be after four months. Traders and contractors buying steel from local manufacturers don't have to wait for four months in opening letters of credit, shipping and other delays," he said.
Ramesh Narang from Al Rama International, a leading steel trader, said: "Prices have started going up because of international reasons. Local demand for steel is not great and Saudi Arabia is the only regional market that looks encouraging. As steel traders had a bad year in 2009, they are treading cautiously. The volume of steel trade through the Dubai Gold and Commodities Exchange (DGCX) has been very low recently."
Narang said he was positive about long-term trends in the steel market but payment defaults and liquidity problems continued to haunt steel and commodity traders. He added that banks were still willing to finance genuine steel traders.
Aneesh Saifudeen, Business Development Manager, Rainbow Engineering Industry, a fabrication company in Sharjah, said: "The steel price increase is a major concern for fabrication units because there is cut-throat competition in the sector. Demand is poor in the market and profit margins are between two and five per cent.
"Compared with the boom periods in 2006 or 2007, there are many players in the market now competing for fewer projects. In order to attract the maximum business, we are keeping our margins to the minimum and most clients are demanding lower prices," he added.
Saifudeen said there was an acute shortage of some steel products, like UB beams and gif beams, because steel traders were not keeping enough stocks.
"Some of the beams used in tankers and vehicle parts fabrication are not available in the local market. There is considerable delay in getting these products from abroad. There are no local manufacturers making these specialised steel beams and we have to depend on imports."
Rainbow Engineering Industry manufactures or fabricates all kinds of heavy vehicle bodies such as high-pressure vessels, condensers and storage tanks.
Steep ore forces UAE steel plants to defer expansion
The high cost of iron ore in the international market could adversely affect expansion plans of steel manufacturing units in the country, delivering a double whammy after the deflation in steel prices caused earlier by the global economic downturn.
Expansion plans at two leading steel mills in the UAE are on hold due to the sharp decline in demand for steel on the back of the global economic slowdown.
RAK Steel, a joint venture of Ras Al Khaimah Investment Authority and the Middle East Traders Group, and the second largest steel mill in the UAE, had plans to increase production capacity of deformed steel reinforcement bars by 50 per cent to 750,000 tonnes by the end of 2009. The plant currently has a capacity of 500,000 tonnes of deformed steel reinforcement bars.
Ajay Aggarwal, Chief Executive Officer, RAK Steel, told Emirates Business: "The expansion plan is on hold as of now. We have the machinery in place but it is not been installed as yet."
Earlier, the company had announced plans for a 50 per cent expansion in steel production in view of mounting steel demand in the UAE's construction industry. It had announced a $165 million (Dh606m) investment in production for the domestic market, which is now largely served through imports from Turkey and other steel producing countries.
Al Ghurair Iron and Steel has also scaled back its original expansion plans for hot rolled (HR) steel due to the economic slowdown. Suraj Malhothra, the company's Marketing Manager, told this newspaper that the HR project was part of the original project feasibility studies. "We have a CR and galvanised steel plant. Instead of going in for an HR plant we are doubling our galvanised steel production from the current capacity of 20,000 tonnes per month. Awarding the contract for the plant will now be delayed until the fourth quarter of 2010."
Expansion is to be scaled down from the original plan, which according to some reports was worth $100m. The company's iron and steel complex, located on a one million sq ft plot in Abu Dhabi's Mussafah industrial area, was to produce 350,000 tonnes of HR, pickled and oiled steel products, of which 50,000 tonnes were of saleable cold-rolled full hard steel and 200,000 tonnes were of galvanised material.
Source: Emirates Business / Hellenic Shipping
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Tuesday, 20 July 10
CHURCHILL PLANNING TO PRODUCE 35 MILLION TONNES PER ANNUM FROM ITS EAST KUTAI COAL PROJECT
According to Churchill's website, the East Kutai Coal Project is a world-class thermal coal deposit, with a JORC Mining Reserve of 961 milli ...
Tuesday, 20 July 10
DRY BULK SHIPPING MARKET FINDING SOME SUPPORT, AS OWNERS TAKE CAPE SIZES OFF THE MARKET
With the Baltic Dry Index finally having reached bottom, at least according to market analysts, the dry bulk industry is looking to begin its long r ...
Monday, 19 July 10
INDONESIA EXPORTS 24.49 MILLION TONNES OF COAL IN JUNE 2010
COALspot.com: Indonesia, the world largest coal exporter, exported 141.249 million tons of coal in the first half of this year. In June 2010, Indone ...
Monday, 19 July 10
CHINA ONCE AGAIN DOMINATING SHIPPING FREIGHT RATES, WHILE OVERSUPPLY OF TONNAGE RAISES CONCERN
The ending of the week brought a cheerful note among dry bulk ship owners, as the sinking benchmark of the industry, the Baltic Dry Index (BDI) fina ...
Saturday, 17 July 10
THE DRY BULK MARKET CONTINUED THE DOWNWARD TREND - VISTAAR
COALspot.com: The indices continued the downward trend this week also with BDI at 1,720 points and cape size index at 1676 points and the charter ra ...
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Showing 5716 to 5720 news of total 6871 |
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- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
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