Chinese steel mills accept 19 percent iron ore price rise

Bloomberg today reports that the Baosteel Group, which represents China's steelmakers in negotiations with iron ore suppliers, has accepted a 19 percent increase in the price of iron ore from BHP Billiton, matching the price rises earlier agreed by European, Japanese and other Asian steelmakers.

For full report, see http://www.bloomberg.com/apps/news?pid=10000081&&sid=a6GC1f78A3ac&&refer=australia.

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Iron ore supply cartel?

Each year BHP Billiton, Rio Tinto and Brazil's CVRD sit down separately with the key steelmakers around the world and negotiate new iron ore prices. Remarkably, they come up with the same price increases, year after year. Last year, the price increase was 71.5 per cent. This year it is 19 per cent.

Australia's ABC Online spoke to the head of CVRD's iron ore division, Jose Carlos Martins, to ask whether there is a cartel now in place for the supply of iron ore. The answer it seems is no: there is not a cartel in place. Rather, annual prices get set through so-called 'benchmark prices'. Read the whole article at http://www.abc.net.au/insidebusiness/content/2006/s1660292.htm.

blogger@steelonthenet.com

Free website content - new plugin tool for steel webmasters

Steel industry portal http://www.steelonthenet.com/index.html has launched a free 'plugin' tool offering webmasters the ability to display international steel sector news on their websites. The steel news plugin is available free from http://www.steelonthenet.com/plugin.html.

Installation involves a simple cut and paste - and can be completed in about 30 seconds. Websites with the plugin tool will display steel sector press releases which are updated automatically.

For more information, or to see the plugin in action, please visit
http://www.steelonthenet.com/plugin.html.

Kind regards.

Andrzej M Kotas
Chief Executive
http://www.steelonthenet.com/

Korea leads the world in steel consumption

South Korea leads the world in steel consumption. According to the Korea Iron and Steel Association, Korea's per-capita steel consumption was at 969 kg in 2005, while Taiwan came second with 944 kg and Japan came third with 613 kg.

All those ships, cars and electrical goods seem to make the difference. For more details, see http://english.chosun.com/w21data/html/news/200606/200606050014.html

blogger@steelonthenet.com

Russia's expansion in steel

Here is a useful overview of Russia's recent involvement in the international consolidation of the steel sector, provided by the Steel Guru. The authors suggest that this Russian expansion is likely to continue...

Russia's steel oligarchs have been quietly shifting across their borders over last few years. Mr Alexey Mordashov of Severstal bought bankrupt US steelmaker Rouge Industries for US 254 million dollars in 2004 and he also acquired Italian steel producer Lucchini for Euro 430 million. Mr Alexander Abramov of Evraz has taken over Italy's Palini e Bertoli and the Czech Republic's Vitkovice mill. Mr Vladimir Lisin of Novolipetsk has bought Dansteel in Denmark. Mr Alisher Usmanov owner of Ural's Steel took a 13.4% stake in Corus.

But the steps have been small as compared to Russia's richest man Mr Roman Abramovich's US 3 billion dollar involvement in Evraz and Mr Alexey Mordashov's Arcelor deal, which shows that Russian steel is going global while the steel industry is consolidating.

Although Russia ranks alongside Brazil and India as the lowest cost steel producer in the world, these moves could be prompted due to quota issues for finished steel from EU. Buying a steel plant in a European country allows Russian producers to export semi finished steel, which has no quota, finishing it off at their own Western and Eastern European plants and escaping quotas while still keeping the bulk of the margins. Russians are also keen to shift their wealth out of Russia, where they are vulnerable to a change in government. Moreover, with the steel industry consolidation almost completed at home, the best growth prospects are international.

blogger@steelonthenet.com