BRIEFINGS

Short Items of Interest to MSCI Members

PIPE REBATES TO BE ELIMINATED: China says it will remove export tax rebates on more than 500 products, including welded pipe, to reduce its trade surplus and respond to trading partner complaints. Production of all of the involved products consumes large amounts of energy, generates pollution and requires large amounts of resources. The Ministry of Finance and State Administration of Taxation said that as of July 1, they will eliminate the existing 13% export tax rebate on all common carbon welded pipes. Tax rebates for seamless pipes and other products such as angles, shapes, sections, rails and others will be lowered to 5% from 13%.

Separately, a group of 18 Chinese companies that export steel pipe have organized to oppose complaints from U.S. welded pipe producers of Chinese dumping on the U.S. market. Six companies and the United Steelworkers filed a petition on June 7 seeking heavy anti-dumping duties on imported Chinese pipe. The U.S. International Trade Commission has scheduled a vote on the petition for July 20, with its report sent to the Commerce Department at the end of that month.

RELIANCE TO ACQUIRE CLAYTON: Reliance Steel & Aluminum Co. has agreed to buy Clayton Metals, Inc., of Wood Dale, Illinois. Clayton, with four plants, processes aluminum, stainless steel and red metal flat-rolled products and also distributes custom extrusions and aluminum circles. Its sales last year were about $123 million, Reliance says.

SHANGHAI SERVICE PROVIDERS ORGANIZE: A group of 160 companies in the Shanghai, China, area have formed the Shanghai Steel Service Trade Association. The association says that in 2005, there were more than 6,000 companies in the Shanghai area that were engaged in some aspect of steel service, which they define as trading, logistics, engineering, research and consulting.

JSW LOOKING IN EUROPE: JSW Steel of India wants to acquire more service centers in Europe, the Times of India reports. Acquisitions are being considered in France, Italy, Germany, the Netherlands and Spain, the newspaper reports. Sajjan Jindal, a JSW senior executive, told the newspaper that the company is concentrating on smaller acquisitions. JSW purchased Argent Independent Steel, a United Kingdom-based service center operator, in April.

IMF TO STRENGTHEN EXCHANGE RATE ADVICE: The International Monetary Fund says that because of the "large global imbalances and changes in global trading patterns" that have led to new public debates over exchange rates, it will bolster its exchange rate surveillance. Under the plan, the IMF wants to ensure that "exchange rate surveillance is as clear, candid, technically expert and influential as it can be." As outlined by the IMF, its 185 member countries must not adopt exchange rate policies that undermine the international monetary system. Potential problems are signaled by large-scale currency interventions, the accumulation of reserves and fundamental exchange rate misalignment, published reports indicate. The IMF's primary mechanism for exchange rate surveillance is its country reports, conducted annually for most member nations, that analyze economic developments and describe policy discussions under way.

BAOSTEEL CLEARED ON BAYI DEAL: The China Securities Regulatory Commission has approved a plan by Baosteel Group Corp. of China to purchase control of Xinjiang Bayi Iron and Steel Group. Baosteel agreed in January to acquire a 69.6% stake in Bayi Group. Bayi sells more than 90% of its production in China's northwestern area, the Shanghai Daily reports.

SIMEC TO BEGIN TAMAULIPAS PRODUCTION IN 2009: Grupo Simec, a Mexican steelmaker, said it will begin commercial production in mid-2009 at its plant in Tamaulipas state. The plant will have a capacity of 500,000 tons annually of specialty steel for use in the automotive, mining and forging industries, Business News Americas reports. Simec, owned by Industrias CH, operates minimills.

GRUMPY IN ISLAMABAD: Representatives of the steel industry in Pakistan, in a meeting with government officials, asked for an immediate end to the imposition of a 20% sales tax on their products. The steel companies said the tax makes their product uncompetitive in global markets, to the point that shipments have been stalled while the question is negotiated. Jahangir Khan Tareen, Pakistan's minister for industries, production and special initiatives, advised the steel industry to become more efficient to meet global competition, the Pakistan Times reports.

KOBE STEEL PLANS SECOND U.S. VENTURE: Kobe Steel Ltd. said it will produce high-purity iron nuggets in Michigan with U.S. ore processor Cleveland-Cliffs, Inc., beginning in 2010. It will be Kobe's second plant - the first is in Minnesota - to use Kobe's low-cost ITmk3 ironmaking process.

CONTINUOUS TITANIUM REFINING: Two Japanese companies say they have developed the first continuous refining process for recovering titanium from ore. Toho Titanium Co. and Sumitomo Titanium Corp. say their process will reduce costs by 30% compared with the batch processing now generally in use, Nikkei.net reports.

POSCO TO BEGIN VIETNAM WORK: POSCO, the South Korean steelmaker, says it will begin construction of cold rolling mills in Vietnam in August. Plans call for a cold rolling mill with an annual production capacity of 1.2 million tons to be built by 2009. In a second stage, POSCO plans to build a hot rolling mill with an annual production capacity of three million tons by 2012, the Korea Herald reports.

COMPOSITES FOR MITSUBISHI REGIONAL JET: Mitsubishi Heavy Industries says it has developed a carbon fiber composite technology for use in making lighter airframes at lower cost. Plans call for carbon-fiber composites to make up 30% of the Mitsubishi Regional Jet's body, including the wings, leading to a 20% reduction in fuel consumption, Nikkei.net reports. Mitsubishi's technology replaces the existing technique of layering thin sheets of fiber for cooking with a vacuum technology.

FORTESCUE TO ACCELERATE PLANS: Fortescue Metals Group, Ltd., of Australia says that because of unanticipated demand, it will accelerate development of its Pilbara Iron Ore and Infrastructure Project and expects to raise U.S. $1 billion for that purpose. The company has proven reserves of 1.1 billion tons of iron ore out of an indicated 2.4 billion tons in total. Fortescue plans to begin shipping ore in the second quarter of 2008. Among other things, Fortescue says it now wants to increase the capacity of its railroad shipping system and accelerate construction of the project's lump circuit.

INDIA TO NUDGE NICKEL?: The chief financial officer of Companhia Vale do Rio Doce, the Brazilian mining company, says that the outlook for nickel supplies for use in making stainless steel is tight, but demand from India can make them even tighter. Pressure from Indian demand is not yet a factor in CVRD's forecasting, he said. CVRD plans to be the world's largest nickel producer at 500,000 tons annually.

COLLUSION NO PROBLEM IN CHINA: In another demonstration that collusion is perfectly OK in China, six major mills say they will collaborate to reduce their use of resources and their output of pollutants. The six are Baosteel, Anshan Steel, Wuhan Steel, Tangshan Steel, Shougang Group and Jinan Steel. They say they will also collaborate to improve steel product quality and develop more valuable products. The central government plans to chip in $23.6 million to pay for the work, the China Iron & Steel Association says.

[Back to Top]