re: wilfs pet hate.china.india iron ore demand....
One Chink(no pun intended) in the Chinese armour is the apparent current glut of steel production as per this article.
--------------------------------------------------China to cut steel, iron-making capacity to ease production glut
2006/7/1 By Xiao Yu BEIJING, Bloomberg
China, producer of one-third of the world's steel, plans to reduce 55 million tons of steel-making capacity by 2007, and 100 million tons of iron-making capacity by 2010, to ease a glut of the alloy and reduce energy use. China's crude steel capacity reached 470 million tons last year, and another 150 million tons of capacity is being built or planned, the National Development and Reform Commission, the nation's top planning body, said today in a statement.
Steel production in China, the world's biggest consumer and producer of the alloy, doubled over the past four years, driving up iron ore and coal prices to records, and fueling inflation. A glut last year caused local prices to fall 31 percent and forced the world's biggest steelmakers to cut prices or output."The supply and demand is far out of balance, even taking into consideration of the growth in steel demand in the coming years," the commission said. Steel consumption was 350 million tons last year, the statement said.
Reduction of capacity may involve closures of more than 360 steel mills, of which 248 are located in the northern provinces of Hebei and Shanxi, the statement said. The central government asked local authorities to stop or restrict supply of water, power, land and bank loans to steel mills that use outdated blast furnaces smaller than 300 cubic meters. It urged the local government to offer tax breaks and policies favoring regional mergers among steelmakers.
China plans to shut small, polluting steel mills and force mergers among bigger rivals such as Baoshan Iron & Steel Co. The country aims to form three groups by 2010, with steel-making capacity each exceeding 30 million tons a year and a few producers of 10 million tons a year each, it has said. China faces a shortage of resources, including iron ore, to feed its economy that expanded 10.3 percent in the first quarter. Iron ore prices rose 19 percent for Chinese steelmakers this year, following a 71.5 percent increase in 2005.
---------------------------------------------------- But then we have little China(India) apparently ramping up to go gangbusters with their steel(and therefore zinc consumption as well)in a few years too.I'll put a disclaimer in here and say that India is still fairly self sufficient in zinc atm.BUT then so was China a year or so ago! ---------------------------------------------------- BHP Billiton eyes India From: By Brian Gomez July 01, 2006 BHP Billiton, which offloaded its steel operations, is poised to re-enter manufacturing through a joint venture in India with South Korea's steel giant, Pohang Iron and Steel Company (POSCO).
If the project in India's Orissa state goes ahead the BHPB-POSCO complex is eventually likely to produce more steel than Australia's output, which last year totalled 7.56 million tonnes. This is forecast to rise to 8.8 million tonnes by 2010. The Australian-South Korean combination has the potential to be a potent industrial force, with BHPB supplying raw material and infrastructure for 10 million tonnes a year.
POSCO, the fourth biggest steel making company in the world, has a reputation as one of the cheapest producers of steel - even though totally reliant on imported iron ore and coking coal supplies from BHPB and other companies.
It operates state-of-the-art blast furnaces with high levels of efficiency and cost savings through maximum use of PCI (pulverised coal injection) coals and semisoft coking coals.
India is on the verge of a major take-off as a steel producing nation and foreign companies have been lining up for a slice of the action following the Government's decision to welcome increasing levels of foreign direct investment.
Advertisement: Several projects have been targeted for Orissa but Australian Mineral Economics, in the May edition of its Global Steel Outlook, noted that Orissa State Government has moved to cancel five memoranda of understanding for separate steel projects, ranging in size from Stat Steel India's 500,000-tonnes-a-year project to Sterlite Iron and Steel's planned 5.1-million-tonnes-a-year project.
In a presentation at last year's global steel conference in Goa, the president for BHP Billiton India, Don Carroll, said the world's biggest resources company was also looking for other opportunities, including potential Indian investments in mines and infrastructure such as high capacity ports and railways.
It has also signed a memorandum of understanding with the Government-owned Steel Authority of India for possible joint development of iron ore mines in India and coking coal mines in other countries.
Although India has the world's third biggest coal reserves, supply of good quality coking coal has become a problem and India is Australia's second biggest customer for coking coal.
Last year India imported 17.7 million tonnes of coking coal from Australia compared with 44.5 million tonnes sent to Japan, the top customer, and 11.8 million tonnes to South Korea, the third biggest.
India also has a looming coal supply problem because of its rapid economic and industrial growth. The country last year produced 400 million tonnes of coal but demand has been forecast to rise more than three-fold to 1300 million tonnes by 2025, resulting in the Indian Government decision to open the sector to FDI.
Rio Tinto, which supplies about half of India's coking coal imports from Australia, has signed a joint venture agreement with the Orissa Government to jointly develop an iron ore project.
On the steel front, India's production is anticipated to increase from 35 million tonnes last year to 60 million tonnes in 2010, requiring huge amounts of investments, including projects such as the BHPB-POSCO deal.
India's largest private sector steel producer, Tata Iron and Steel Co (TISCO), is planning to increase its steel output from five million tonnes a year to between 20 million to 25 million tonnes in 10 years, according to Tata Steel Managing Director B. Muthuraman.
A two-million-tonnes-a-year expansion is underway at its Jamshedpur complex, where output is expected to eventually double to 10 million tonnes annually amid plans for a network of new plants in India, Iran and Bangladesh.
Tata Steel and Australia's Bluescope Steel have formed a joint venture covering the entire South Asian region. It is in the process of building a 250,000-tonnes-a-year zinc/aluminium steel coating line, a 150,000-tonnes-a-year line for painted steel and rollform steel products and a facility for pre-engineered buildings.
Bluescope has 50 roll forming facilities in 13 countries and is the market leader in pre-engineered buildings in China and North America.
Indicative of the potential for new business deals in this market, the First India-Australia Mining Forum in New Delhi attracted a 70-member delegation of Australian industry, research and state and federal government officials.
* A US steel consultancy and information provider, World Dynamics Inc, has picked India's Tata Steel as the best steel company in the world after an exhaustive analysis of 23 world-class steel-makers.
World Dynamics said Tata Steel's strength was due to its proximity to raw material sources and an ability to gain a dominant position in a large and growing market by supplying products geared towards high margins and high-value applications.
It said Tata Steel was one of the most profitable steel companies in the world, a designation that in recent years has generally gone to the import-dependent South Korean company, Pohang Iron and Steel (POSCO). POSCO came out second in the World Dynamics Survey, then Severstal, Baosteel and Mittal Steel.
Companies from North America, Europe, Asia and Australia featured in the survey, including Bluescope Steel from Australia and five companies from China - Baosteel, Anshan Steel, Wuhan, Maanshan and Shangang.
Among 20 parameters considered were cash operating costs, use of technology, profitability in 2000-04, market dominance, competition, product quality and skilled and productive labour force. --------------------------------------------------
d.
AIM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)