U.S. Economy Worries China: One theory that's been bandied about in recent months is that Asia's economies, including China's, are now so strong that their well being has been "decoupled" from the U.S. economy. Well, throw that theory on the scrap heap.

Chinese Premier Wen Jiabao said that this week that without question, "China's economy is already tied to the globalized economy; all kinds of changes and fluctuations in the international economy will inevitably be reflected on China's own economy." Speaking at a news conference that followed the annual session of the National People's Congress, he said the continuing drop in the value of the U.S. dollar is China's No. 1 concern. No surprise, because much of China's $1.3 trillion in foreign currency holdings is in U.S. dollars.

"What concerns me now is that the U.S. dollar is depreciating continuously," Wen said, "when the U.S. dollar will reach the bottom in this depreciation process, what kind of monetary policy the U.S. government will adopt and where the U.S. economy is heading. I myself watch very closely the development in the world economy and the U.S. economy, and I'm deeply worried."

China already suffers from its worst inflation in the last 11 years, reaching an annualized rate of 8.7% in February. The need, Wen said, is to "find the balance point between economic growth and inflation." Growth is the first priority, he said, because of the need to create jobs. "We have to maintain a certain degree of fast economic growth to provide enough jobs," he said. The need is for 10 million new jobs annually.

One approach to control inflation is to raise the value of the yuan, which remains substantially undervalued. A revalued yuan would make imports less expensive for Chinese companies and consumers to buy, in effect lowering prices and moderating the country's trade surplus.

Baosteel to Acquire Two Steel Groups: Baosteel Group, already China's largest steelmaker, will acquire Shaoguan Iron & Steel Group and Guangzhou Iron & Steel Enterprises Group. Both steelmakers are based in Guangdong Province. Baosteel will establish a new company to oversee operations of both smaller companies, the National Development and Reform Commission says.

Meanwhile, in Seoul: South Korea, meanwhile, is immensely concerned because of the tumbling value of its currency, the won. The won fell this week to a 27-month low against the U.S. dollar. The Korean finance ministry says it will intervene to boost the won's value if "abnormal signs are detected." Vice Finance Minister Choi Joong-kyung said the government and central bank's goal will be "to maintain the stability of the market." However, he said, "the won has remained overvalued for years, and the recent decline is part of its normalization..."

Aussies Deny Chinese Government Iron Ore Pressure: There's more than a bit of commercial hardball over iron ore prices being played this week between Australia and China, with a dabble of distress thrown in over the takeover fight between BHP Billiton and Rio Tinto, Australia's two largest mining companies. Published reports say the Chinese have turned away Australian shipments of iron ore, apparently to apply pressure to BHP and Rio to back down from their extremely aggressive positions on 2008-2009 contract pricing for the commodity. Brazil's Vale, the huge producer of iron ore, has already concluded agreements with China's industry that call for price increases of 65% to 71%, depending upon the quality of the ore.

But BHP and Rio Tinto say they want more than that for their Australian iron ore. They say that their ore is a bargain, compared with Brazil's, because shipping from Australia to China and other Asian ports of call is far less expensive. To achieve parity, they say, their ore should fetch higher prices. Naturally, China and other Asian customers find that reasoning to be ridiculous.

At the same time, of course, BHP Billiton has launched a hostile offer to buy Rio Tinto. As part of that struggle, the state-owned Aluminum Corporation of China, using money from China's largest development bank and in an arrangement with Alcoa, has sided with Rio Tinto and purchased a 12% stake – the start of a potential blocking position – in Rio Tinto. The price was US$14 billion.

Australia's ambassador to China, Geoff Raby, says the Chinese government should stay out of negotiations over iron ore prices. He attributes the latest delays in import licenses for Australian iron ore to efforts by Chinese steelmakers to influence iron ore prices. "We have no evidence that there is direct government guidance on this," Raby said. "We have sought advice and guidance from the Chinese government on what is going on and been given assurances."

Three iron ore spot cargoes from Australia have been stranded after being unloaded at Xingang, reports The Australian, the national newspaper. Licenses to land the ore were delayed by the China Iron & Steel Association and the China Chamber of Commerce of Metal, Minerals and Chemicals, both quasi-governmental bodies, the newspaper reports.

Meanwhile, Chinalco's chairman says his group might increase its stake in Rio Tinto. "The price was not high considering Rio's value...in the current circumstances, the possibility of raising the stake is higher than cutting it," said Xiao Yaqing "This is just the start of our cooperation with Rio Tinto."

Indian Steelmakers Cautioned on Price: Like everywhere else, steel prices are rising in India. But now, Ram Vilas Paswan, the steel minister, says that if prices continue to rise, the government will take steps to counter them. Paswan says the government will create a steel regulatory body, and the steel ministry will recommend to the finance ministry that a 5% duty on imports be removed.

Evraz Wins One, Loses One: In a busy week for Russia's Evraz Group, the company agreed to buy IPSCO's Canadian plate and pipe business from SSAB for a net $2.3 billion, but abandoned plans to merge its coal mining subsidiary, Yuzhkuzbassugol, with Raspadskaya, the nation's second-largest producer of coking coal. The IPSCO deal involves the purchase of IPSCO Tubulars from SSAB for $4.025 billion, followed by the sale of IPSCO's U.S. tubular and seamless business to OAO TMK for $1.7 billion. Evraz said it terminated its deal to merge with Raspadskaya because it decided it could do better by relying, instead, on newly acquired coke production properties in Ukraine.

Malaysia Licenses Major Aluminum Smelter: The Malaysian Industrial Development Authority has granted a manufacturing license to Rio Tinto Alcan and Cahya Mata Sarawak Berhad to build a $2 billion aluminum smelter in Sarawak with an initial annual production capacity of 550,000 tons. Eventually, the partners expect to raise production to 1.5 million tons a year.

Outokumpu Plans Indian Service Center: The Finnish stainless maker Outokumpu plans to establish a service center on the west coast of India, with operations to begin in 2009. The company now operates two sales offices in India and expects to process 50,000 tons of stainless in India annually. The new facility will offer cut to length, slitting, polishing and brushing lines. The exact location has yet to be determined, published reports say.

Zero CO2 Steelworks Planned: Sumitomo Metal Industries of Japan says its new steel plant in Brazil, a joint venture with Vallourec SA of France, will operate with zero net emissions of carbon dioxide. Sumitomo says it will use charcoal made from eucalyptus trees as the reducing agent in its blast furnace, not coke. The new plant, with an annual capacity of a million tons, will produce seamless pipe. Sumitomo says that it will plant eucalyptus trees as a continuing resource to produce charcoal. The Japan economic journal says the company believes its entire requirements will be met by the trees.

SAIL Proposes New Training Program for Archers: The Steel Authority of India says it will open a new training academy in West Bengal, but not for production workers. The new facility will be for archers. SAIL officials say that "several local talents" were seen in Kiriburu during archery events organized by the company as part of its corporate social responsibility program. This led to establishment of the academy, which has a shooting range, daylong training, evening study and more.

SAIL already operates hockey and soccer training academies at Rourkela and Bokaro. But it lags in archery behind the large and well-established Tata Archery Academy, which finds and develops bow sharpshooters in Eastern Singhbhum, its home territory. Tata's academy has accommodations for 32 Cadet archers, a target field with floodlights, a gymnasium, recreation hall, dining hall and a program that includes uniforms and formal dress, schooling, medical treatment, lodging and more. Tata's academy has produced more than 20 national champions over the years. Tata Steel also operates the Tata Football Academy, a major sports complex, the Tata Athletic Academy and other facilities at its home city of Jamshedpur.