TPT November 2011

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20.3 per cent of global demand as compared with 19 per cent for
the US. The International Energy Agency reported in July 2010
that China had become the world’s biggest energy consumer. But
Chinese officials, insisting that their country still lagged behind the
US, fought shy of the honour. Now, apparently, BP has confirmed
China’s lead.
Iron and steel
Bent on greater self-sufficiency in iron
ore, China’s biggest steel makers will
actively acquire or invest in mines
overseas
Last year Australia, Brazil and India accounted for 62.3 per cent of
imports of iron ore by China, the world’s largest steel maker and
iron ore consumer. Now, Chinese steel makers are stepping up their
investments in offshore iron ore projects in the hope of lessening
their reliance on foreign miners. According to Li Xinchuang, deputy
secretary-general of the China Iron & Steel Association (CISA), the
steel industry’s twelfth Five-Year Plan has set a target of dramatically
increasing ore imports from Chinese-invested resources.
Mr Li told China Daily that the country will be able to break the grip
of the three major global miners – Vale SA (Brazilian), BHP Billiton
(Australian), and Rio Tinto (British-Australian) – only if it gets half
of its overseas ore requirements from sources in which it holds an
interest. He said, “China currently owns less than 10 per cent of [its]
imported iron ore. We should seek 50 per cent of ore from Chinese-
invested overseas resources” over the next five to 10 years. (“China
Aims to Increase Ore Imports from Chinese-Invested Resources
During 2011-2015,” 25 July)
The vice-chairman of CISA, Luo Bingsheng, had said earlier that
China’s overseas mining rights would support output of 150 million
tons of ore annually. But, as most of these mines have yet to start
production, China’s strength in ore is more apparent than real. In Mr
Luo’s view, the major global mining companies have taken advantage
of short supply relative to demand to set prices unreasonably high,
squeezing profits from Chinese steel mills.
According to data from the association, the average price of Chinese
steel products rose 14.8 per cent from January through May 2011
compared with the year-before period, while the price of imported ore
surged 47.8 per cent. The average profit ratio of the domestic steel
industry from January through May was given as 2.91 per cent, far
behind the national industrial average rate of 6 per cent. According
to CISA, China imported 334 million tons of iron ore in the first six
months of this year, up 8% over the same period of 2010; the imports
cost $53.78bn, up 54 per cent. Last year, about 60 million tons of
imported iron ore came from mines that had Chinese investment,
the association said.
Elsewhere in steel . . .
› Athens-based S&B Minerals SA said its first-half profit almost
doubled as global demand for steel and industrial production
in Europe and the US boosted sales. The Greek company, which
manufactures and trades industrial minerals and ores for the steel,
metallurgy and construction markets, reported that net income
through June climbed to $14.7mn from about $8mn over the same
span of 2010. Sales rose 13 per cent to $328mn.
Some 60 per cent of S&B operations relate to steel production, which
has “performed very well” in the half-year, CEO Kriton Anavlavis
said in a 5 August telephone interview with Bloomberg News.
While the rising price of raw materials is a concern, the company
expects to pass on the increases to its customers. Mr Anavlavis told
Bloomberg’s Tom Stoukas in Athens, “I believe we are in a good
position to continue doing that even in an adverse environment.”
› Upholding a verdict by a jury in January, on 30 August a US
District Court judge in Delaware ruled that Michigan-based
Severstal Dearborn Inc did not infringe on a patent held by rival
steel maker ArcelorMittal SA. Luxembourg-based ArcelorMittal had
sued Severstal; AK Steel Corp (Wharton, Ohio); and Wheeling-
Nisshin Inc (Follansbee, West Virginia) over specific chemistries in
an ArcelorMittal patent on rolled aluminium-coated boron-bearing
carbon steel. Severstal and other steel makers have challenged
ArcelorMittal’s attempted patent of the chemistries, used mainly in
the production of advanced high-strength steels for the auto industry.
As reported by Dustin Walsh in Crain’s Detroit Business, this year the
US Patent and Trademark Office ruled that many of ArcelorMittal’s
patents are invalid. Severstal recently began a $1bn programme
of improvements at its Dearborn plant, one of two US units of the
Russian conglomerate Severstal OAO. High-strength steel for the
auto industry is at the centre of the project, even as steel makers
continue to battle over formulations for high-strength steel.
› As a group, low-cost steel makers in Russia, the world’s fifth-
largest producer, posted good results in the second quarter; in
the case of Severstal, excellent results. The biggest Russian steel
maker reported that its second-quarter net profit had more than
tripled from the year-earlier period, rising to $602mn from $192mn.
The company benefited from a vertically integrated structure, with
its mining assets realising higher prices for coking coal and iron ore.
› The Canadian steel pipe maker Northwest Pipe Co reported
a profit of $5.4mn for the quarter ended 30 June, compared
with a loss of $1.4mn in the second quarter of 2010. The
Vancouver-based company said it had net sales of $143.8mn for
the quarter, compared with net sales of $96.1mn for the same
period a year before. Second-quarter sales of the company’s
tubular products increased 73 per cent to $69.3mn, driven by
demand for energy pipe attributable to a pickup in natural gas
and oil drilling operations.
› Jindal Steel and Power Ltd, the third-largest Indian steel producer,
is building an integrated steel plant in the state of Orissa with
projected output of 6 million metric tons per year; and another, of
3 million mtpy capacity, in Jharkhand. From Ranchi, the capital of
Jharkhand, Sanjay Ojha reported in the Times of India (7 August) that
both plants will employ the Hismelt (high intensity smelting) method for
direct-smelting iron ore fines using non-coking coal.
The technology, developed by the British-Australian mining and
resources group Rio Tinto, could hold significant economic and
environmental benefits for Indian steel makers now dependent on
high-quality imported coking coal. A source within Jindal told Mr Ojha
that the company considers the Hismelt process to represent the
future of iron making in India.