India's Steel Price Kerfuffle Continues: Amid signs that some steel companies are backing away from further price increases, India's political leaders continued this week to warn producers about the consequences of rapid price escalation. Tata Steel and JSW Steel both announced on Wednesday that they will not raise prices in the immediate future. JSW's Sajjan Jindal said his company won't raise prices for four months. B. Muthuraman, managing director of Tata Steel, said his company will not raise prices for two to three months. SAIL, the Steel Authority of India, made a similar pledge earlier.

The announcements came after Dr. Manmohan Singh, India's prime minister, visited steel plants and warned the industry about the "temptation of seeking windfall gains from market manipulation in a period of excess demand." The industry, the prime minister said, should "eschew short-term gains that hurt consumers and disrupt the stability of the process of economic growth." Because India's economy is still developing, he said, there is tremendous potential for steel companies to also grow in the coming years.

Muthuraman said the "only sure way to contain steel prices is to urgently create new steel capacities in India matching or even exceeding the fast pace of demand growth unleashed by our liberalized economy."

Nippon Would be White Knight for Sumitomo, Kobe, POSCO: Akio Mimura, chairman of Nippon Steel, says in an interview that his company would "immediately act to block" any attempt by others to take over Sumitomo Metal Industries, Kobe Steel or POSCO, the South Korean steelmaker. "While I personally support the idea that unfriendly takeover bids should be an option open to any company, I also consider (playing the role of a white knight) a reasonable way to prevent a company with important technology and infrastructure from being acquired," Mimura said in an interview with Nikkei Veritas, reprinted by the Japan economic journal. "Particularly when a possible takeover by a foreign entity threatens to hurt the national interest." In the case of POSCO, he said, Nippon would act because "we have deepened our partnership to a degree that is making us indispensible to each other."

Mimura said Nippon Steel's extensive network of stock crossholdings with other Japanese metals companies works in its favor only if the involved companies "enhance corporate value. If a company is involved in negative cross-shareholding practices under which the partners are not putting their money to good use, this could erode the firm's corporate value, putting it in a position to become an easy M&A target." He said that because Nippon's current stock price "is not linked to our business fundamentals and is staying at an unjustifiably low level... we might be facing growing M&A risks... No one knows that will happen next year and the year after that."

Nippon Steel, Mimura said, needs "to have a certain level of output to survive the global competition." So it will expand into foreign markets, with immediate plans to add three production lines outside of Japan for automotive steel plate, and new blast furnaces under consideration in Thailand and Brazil. "We do not rule out the possibility of engaging in M&As if they are friendly deals and offer favorable terms," he said.

Olympic Steel Expands: Olympic Steel, Inc., says it will build a 100,000-square-foot service center in Sumter, South Carolina. Michael Siegal, chairman and CEO, said the new facility will complement the company's North Carolina operations, acquired in 2006, and expand processing capabilities in the southeast. Olympic expects to complete the service center by the end of the year and will employ 65 people there.

Outokumpu Expands Distribution Network: Outokumpu Oyj, the Finnish maker of stainless steel, said it will buy the SoGePar Group, an Italian distributor now owned by the Borromeo family, for US$222.4 million. SoGePar operates stainless steel service centers in Castelleone, Italy, and Rotherham, U.K. It also has distribution operations in Italy, the U.K., Belgium, Finland, France and Ireland. The group's 2007 sales were US$889.5 million. "The acquisition is a determined step towards Outokumpu's strategic ambition of building a more stable and profitable business model for the group," said Karri Kaitue, the company's deputy CEO.

Chalco to Add 900,000 Tons: Aluminum Corporation of China Co. Ltd., also known as Chalco, plans to bring 900,000 tons of annual alumina production capacity on line near the end of May. The startup is part of a continuing project in Pingguo county in Guangxi Province. Total capacity of the alumina plant will be raised to 1.8 million tons annually.

Venezuelans Like Light Metals, Too: State-owned aluminum company Alcasa of Venezuela will proceed with construction of a fifth production line as part of a US$2.7 billion government plan to invest in all four of its aluminum companies. Addition of the new line will increase Alcasa's output to 450,000 tons annually.

Iron has Luster Too: ALROSA Co., Ltd., the big Russian diamond miner, has received licenses from the Federal Agency for Mineral Use to develop the Taezhnoe, Desovskoe, Tarynnakhskoe and Gorkistoe iron ore deposits for a starting price of $225 million. The company believes it will have to spend $10 billion to create the necessary ore processing facilities. The reserves of the Taezhnoe and Desovskoe deposits, in the Neryungri District, exceed 1.5 billion tons. The Tarynnakhskoe and Gorkistoe deposits are located in the Olekminsk and Kalar Districts and have total reserves of more than 3 billion tons, reported Kommersant, the Russian newspaper. The concentration of iron in the ore is relatively low, it said.

BHP Brags, Rio Responds...Who is More Australian?: In its latest production reports, BHP Billiton believes it has new ammunition in its bid with the United Kingdom takeover panel to force Rio Tinto, its acquisition target, to revise its growth estimates. Rio Tinto has estimated that it will grow at twice the rate of BHP through 2016. But in the latest figures, BHP's output appears to be growing faster than that of Rio Tinto. "On every metric I can envisage, they have been beaten," said Marius Kloppers, BHP's CEO. "It must be terrible (for Rio) that every quarter, BHP outperforms, and that has been the case for seven years." The Australian newspaper reported that Rio Tinto had nothing new to say about its outlook in response to Kloppers.

BHP iron ore production rose 22%, to 28 million tons, for the quarter ended in March, compared with a 16% gain for Rio Tinto. BHP said its petroleum division should grow 10% this year, and record production is forecast for its coal operations.

At Rio Tinto's annual meeting in Brisbane, meanwhile, Chairman Paul Skinner said that portions of Kloppers' comments were "hardly founded in fact." One issue, especially in Australia, is which company should be considered the local player in this huge merger game. BHP, based in Australia, says it certainly must be the local favorite, since it has invested $30 billion in Australian resources since 1998 and employs 17,000 people there. But Rio's Skinner says, in what is perhaps wishful thinking, "I think we are as Australian as any in the corporate scene. A truly global company is one that is a champion everywhere it works, and that is our aspiration." Rio is based in London and has just two Australians on its board.

Gerdau Allies with Central American Producer: The Gerdau Group, parent of Gerdau Ameristeel, has formed a strategic alliance with Corporación Centroamericana del Acero, said to be the largest steelmaker in Central America with capacity to make 500,000 tons of steel annually and to roll 690,000 tons. Gerdau will invest $180 million in CCA. The company operates a steel mill in Guatemala, four rolling mills in Guatemala and Honduras, and distribution centers in Guatemala, Belize, El Salvador, Honduras, and Nicaragua.

Orissa Finds Land for AM: Even as POSCO of South Korea struggles in its efforts to secure land for its planned US$12 billion plant in India's Orissa state, that state has earmarked 7,000 acres of government and private land for an ArcelorMittal steel project. ArcelorMittal is favored in India because it is firmly under the control of the Mittal family and CEO Lakshmi Mittal, originally of India. Ashok Dalwai, industry secretary of Orissa, said the land has been cleared and is ready for construction to begin. ArcelorMittal signed a deal with the state government in December 2007 to build a 12 million ton steel plant and a 750 megawatt power plant. In contrast, POSCO has been trying to secure its land for more than two years.

U.S. Steel to Launch Carbonyx Technology in Alabama: United States Steel says it will invest $150 million in a facility to make Cokonyx, a coke replacement material, using Carbonyx, Inc.'s technology at a plant in Port of Epes, Alabama. The plant will make 250,000 tons annually of Cokonyx, a carbon alloy material. All material produced at the plant will be used by U.S. Steel's Fairfield Works.

Cokonyx uses a process that requires less energy and reduced emissions when compared with traditional coke production processes. "The future of steelmaking requires new thinking and the use of breakthrough technologies to operate in cost-effective and environmentally sensitive ways," said John Surma, chairman and CEO. Fairfield has capacity to make 2.4 million tons of steel annually.

Tata Abandons Titanium Venture: Tata Steel has abandoned effort to build a titanium dioxide facility in Tamil Nadu, a state in the extreme southeast of India. The company estimated that it needed nearly 9,900 acres of land to build the plant, but after a year, was able to purchase only 25 acres. Roadblocks included huge increases in land prices by speculators, imprecise legal documents, and an inability to trace absentee landlords. Tata was willing to pay the market value fixed by the government of US$1,00 an acre.

Meanwhile, violence continues near the site of Posco's proposed new plant in Orissa. Statesman News Service reported that senor police officers were held hostage for 12 hours and were released only after they agreed to withdraw police patrols in the Gobindpur village area. Several people were reported hospitalized after a bomb attack by groups opposed to the plant on a pro-project group.

Krakatau to Build Integrated Plant: As the debate in Indonesia continues over privatization of state-owned PT Krakatau Steel, the company said it plans to build a small integrated steel plant in South Kalimantan. The proposed facility will make billets and have a production capacity of about a million tons annually. "Today, the domestic ingot steel, reinforced steel, and wire steel plants are operating at less than 60% of their production capacity due to the lack of billets," said Fazwar Bujang, the company's president.

Meanwhile, warnings about the plan to privatize Krakatau continued. Mutammimul Ula, a member of Indonesia's House of Representatives and its Commission on Defense Affairs, said privatization should be avoided if it might in any way reduce the nation's defense capabilities. "We should not lose our strength as a state by letting foreigners take over all of our assets," he said. State Enterprises Watch said that the only good route to privatize Krakatau is a public offering of its stock to prevent foreign control of the enterprise. The company should not be sold to ArcelorMittal, the group said.

Eurofer Optimistic: Eurofer, the European steel confederation, says the European Union's economy will grow 1.9% this year and in 2009, with steel consumption to rise 0.8% this year, and a little below 2% next year. Steel output this year will grow 2.6%, or at a rate slightly below that forecast earlier, Eurofer said.

Finns to Expand in Russia: Rautaruukki, a supplier of metal-based components, systems and integrated systems to the construction and engineering industries, says it will add to its distribution network in Russia with a new steel service center in Obninsk, southwest of Moscow. The service center is to begin operations in 2009 and will provide laser and plasma cutting and edging services for engineering industry customers in Central Russia, Moscow and the Kaluga region. Rautaruukki purchased Ventall, a supplier of steel frames and sandwich panels, to enter the Russian market in 2006.

RusAl buys 25% of Norilsk Nickel: The 25% stake in Norilsk Nickel held by Russian metals billionaire Mikhail Prokhorov has been sold to UC RusAL, the Russian aluminum company. Prokhorov, former CEO of Norilsk, the world's largest producer of nickel and palladium, retains 14% of the company's shares and was paid US$6 billion.

Small to No Comfort: Here's a news story from China that will be of little comfort to anyone who has to travel there, or to anyone who might be a pilot there. A court in Yunnan Province has ordered a former China Eastern Airlines pilot, Zheng Zhihong, to pay the airline the equivalent of $200,000 in compensation simply for resigning as a captain of the carrier. The airline had asked for eight times as much compensation for training it provided to Zheng. The Chinese press identifies Zheng as one of the most skillful pilots employed by China Eastern's Yunnan subsidiary, and the company asked that he be banned from working for another airline because he had learned "secret skills" as part of his employment with China Eastern. No word on what those secret skills might be, of course, since they are secret.

The Shanghai Daily newspaper reports that disputes between airline pilots and their companies are on the rise. More than 40 captains with Shanghai Airlines took sick leave together in March, and two weeks later, 11 captains from East Star Airlines suddenly took leave, forcing cancellation of flights. Last August, 13 China Eastern Wuhan Airlines pilots who resigned were required to compensate the airline. Part of the problem are new civil aviation rules that stipulate that an airline cannot lose more than 1% of its pilots annually. Airlines have attempted to introduce lifetime contracts with pilots as a consequence.