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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, 03 February 10
RECOVERY IN INDONESIAN MINING SECTOR EXPECTED TO BOOST SALES, UNITED TRACTORS SAYS
PT United Tractors, the country’s biggest supplier of heavy equipment, said on Tuesday that it expected sales to increase 15 percent this year ...
Tuesday, 02 February 10
THAI BANPU SAYS HIGHER COSTS TO HIT COAL PROFITS
Thailand's top coal miner, expects profits from its coal business in 2010 to be lower than last year due to higher costs, but its chief executive i ...
Monday, 01 February 10
CIL PLANS TO INVEST IN OVERSEAS COAL MINES
Over the next 10 years, CIL expects to import from these mines at least 500 million tonnes of thermal coal, a variety used by power plants
The bo ...
Sunday, 31 January 10
AUSTRALIA NEWCASTLE THERMAL COAL FALLS 0.7 PERCENT TO $ 98.53
Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, declined 0.7 percent, falling for the first time in four weeks. ...
Sunday, 31 January 10
NTPC TO IMPORT COAL
NTPC Ltd plans to import coal directly, starting next fiscal.
“We plan to import 15-16 million tonnes of coal directly from next year,&rdqu ...
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- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Planning Commission, India
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
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