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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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Wednesday, 31 March 10
DRY BULK MARKET STILL MODERATELY FALLING, BUT POSITIVE SIGNS APPEAR ON THE HORIZON - HELLENIC SHIPPING
The irregularities of the current dry bulk market have been more than evident in the fact that panamax vessels today earn more than their larger cap ...
Wednesday, 31 March 10
INDIKA ENERGYS PROFIT HIT BY FOREX LOSS AND CABOTAGE - THE JAKARTA GLOBE
The Jakarta Globe reportd that, PT Indika Energy posted a 30 percent drop in 2009 net profit due to a foreign exchange loss and impairment of intang ...
Wednesday, 31 March 10
ITMG TO UP COAL OUTPUT DESPITE PERMIT PROBLEMS - THE JAKARTA POST
The Jakarta Post reported that, the country’s third largest coal producer PT Indo Tambang Raya Megah (ITMG) said it can raise output although ...
Tuesday, 30 March 10
ANALYST SEES BDI LIFT, SUGGESTS DRY BULK SHORT SQUEEZE
Analysts at Credit Suisse are bullish on Diana and see a potential short squeeze elsewhere in the sector. The Baltic Dry Index (BDI) -- an industry ...
Tuesday, 30 March 10
CHINA'S DROUGHT RAISES COAL PRICES, LOWERS HYDROPOWER
Bloomberg reported that, Benchmark coal prices at Qinhuangdao, China’s largest port handling the fuel, rose for the first time in 10 weeks aft ...
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Showing 5911 to 5915 news of total 6871 |
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- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
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