World, North American Steel Output Way Down: It is no surprise, but steel production globally and in North America was down in March compared with the same month last year. The World Steel Association says steel production in March was 23.5% lower than a year ago, and first-quarter production was off 22.8%.

North American production was down 52.4% for the month and 52.1% for the quarter, while steel output in the European Union was down 45.3% for the month, and 43.8% for the quarter.

But not every production area reported declines. Chinese production was 0.3% lower in March than a year ago, but first-quarter steel production in China rose 1.4% from the 2008 quarter. Also reporting higher quarterly output this year are Byelorussia (up 3.4%), Iran ((17.9%) and Cuba (37.6%).

Production Up, but Chinese Profits Down: The China Iron and Steel Association (CISA) says that country’s steel sector recorded losses in the first quarter, with the rate of unprofitability rising sharply in March. Of the 72 largest steelmakers, 20 notched losses, and the group overall lost $484.6 million, compared with substantial profits last year. Exports fell to 50% of volume in the first quarter last year.

Zhang Xiaogang, president of China’s AnSteel and vice chairman of CISA, said all steelmakers began operating at a loss this month, and “it will be even worse from now on.” One big problem, he says, is that iron ore contract prices have not been set for the fiscal year that began April 1. Steelmakers can’t operate profitably at last year’s prices, but no agreement has been reached with the three big iron ore producers, who so far have been willing to sell at 80% of the 2008 price, with the remaining 20% of value to be settled once final contract terms are reached.

China-Australia Mining Deals Percolate, Seethe: It has been a busy, sometimes angry week in the whirl of Chinese investments in Australian iron ore assets.

China’s National Development Reform Commission approved Hunan Valin Iron and Steel Group Company, Ltd.’s planned US$899 million investment in Fortescue Metals Group, Ltd., the third-largest Australian iron miner. The investment gives Hunan Valin a 17.3% stake in Fortescue. Fortescue said earlier this week that it has met with other potential funders, including Chinese banks, seeking another US$1.41 billion to help it build infrastructure. Published reports in Australia say Fortescue is actually most serious about raising the money from China’s sovereign wealth fund, a $200 billion pot of investment money.

Meanwhile, Citigroup issued a research report that examined the benefits of a merger between BHP Billiton, the Australian miner, and Rio Tinto, the Anglo-Australian mining company that has angered some investors with plans to accept a $19.5 billion investment from China’s premier aluminum company, Chinalco. Angry investors say the value of their own holdings was weakened by terms of the Chinalco investment. BHP abandoned a hostile, $66 billion bid for Rio Tinto last November after a year trying to complete the transaction.

In a separate announcement, Rio Tinto said it will sell a 17% stake in Nonfemet International, an aluminum door and window venture involving Chinese, Canadian and Japanese investors, to Shenzhen Zhongjin Lingnan Nonfemet Co. This will raise the Chinese company’s stake in Nonfemet to 72%.

POSCO Opens Processing Centers: Korean steelmaker POSCO has opened two new steel processing centers, one in India and the other in Thailand, to serve automakers and producers of consumer electronics. This gives the company 36 processing centers in 12 countries.

Little Bits: Steel Dynamics, Inc., in its first quarter earnings report, said it expects improved results in the second quarter and second half despite “lackluster demand”; its steel mills, recycling and fabrication units are all operating at capacity utilization rates in the mid-40 percentage range… The Russian steelmaker and miner Mechel OAO has agreed to buy West Virginia’s Bluestone Industries, Inc., and related companies that make coking coal, with plans to increase output to 7 million tons annually… Brazilian miner Companhia Vale do Rio Doce says that in the absence of new contract prices for its iron ore, it is selling ore at 20% off, with the final price to be adjusted after benchmark price negotiations are concluded… United Company RusAl, the big Russian aluminum producer, says its cost reduction program saved the company $554 million in the first quarter and should save $1.1 billion for the whole year… Venezuela’s metals industry is reported in crisis, with iron ore producer Ferrominera Orinoco no longer paying suppliers in a situation described this way by Fernando Goyenechea, a leader of the Ciudad Guayana business alliance: “Edelca (power company) might halt maintenance works and that would cause power chaos in the country. FMO has stopped paying its suppliers, briquette manufacturers have ground to a half with no chance of exports, and Sidor’s (steel) output has plummeted.” A former president of the area’s metallurgical industry association says “there is very little time left; collapse is imminent.”… A.M. Castle & Co. said it is raising its 2009 cost reduction goal to $65 million in operating expenses from the previously announced $45 million… voestalpine, the Austrian steelmaker, says it plans to switch another 2,800 of its 10,000 employees to part-time work from full-time status… National Aluminum Co. of India (NALCO) restarted production at its Damanjodi bauxite mines this week, nine days after a deadly Maoist attack on the facility… Outokumpu Oyj said “exceptionally weak” markets for stainless steel and continued destocking were responsible for its first-quarter loss but added, “The destocking will certainly come to an end at some point.”

Chinese Steelmen Sentenced, Then Released: Dai Guofang, who was chairman of Jiangsu Tieben Iron Co., was sentenced this week to five years in prison for evading taxes of 23.9 million yuan (about US$3.5 million). Then he was released. The reason? Dai has been jailed for five years, since April 2004, while the authorities changed charges, added charges and otherwise slogged through a variety of legal procedures, including what Caijing, the Chinese business magazine, called “a complicated and opaque trial” in 2006. In one respect, Dai was luckier than other officers of the company, who were sentenced to one-to-three year terms, but who also were in jail for five years while the case was sorted out.