Short news metals
September 26, 2013 Category Automotive Metals & Minerals, Short news metals
- Zhu Hongren, Chief Engineer of the Ministry of Industry and Information Technology (MIIT), said the steel industry faced severe overcapacity. Output of crude steel reached 390 million tons at the end of June, up 7.4% year-on-year, with an average daily production of 2.15 million tons. However, steel prices kept declining so that the price index compiled by the China Iron and Steel Association (CISA) dropped 14.7% from a year ago. The price of iron ore dropped much slower than the price of steel. In June, the iron ore price dipped slightly, by 0.3%, from the beginning of 2013, equating to a drop of about CNY30 per ton, while the average steel price declined about CNY280 per ton, Zhu said.
- China Molybdenum, the nation’s second-biggest producer of the steelmaking material, has agreed to pay USD820 million for Rio Tinto’s Northparkes copper mine in Australia. The sale is expected to be completed by the end of the year. London-based Rio owns 80% of the mine with the balance held by Sumitomo, which has the right to match the offer, but decided not to. It is valued at about USD800 million, Citigroup said in a February report. Buying the stake gives China Molybdenum control of an operation that provided 43,100 tons of mined copper for Rio in 2012 as well as an underground training center. Australia’s Foreign Investment Board has approved China Molybdenum’s purchase of the majority stake.
- Investor Mark Mobius said Aluminum Corp of China (Chalco) is a “good long-term bet” as one of the few producers of the metal set to benefit from the government’s plans to reduce overcapacity. Units of Mobius’ Franklin Resources have a combined stake of about 31% in Chalco. The Ministry of Industry and Information Technology (MIIT) raised the minimum output requirement on alumina projects using imported bauxite to 800,000 tons from 600,000 tons in new industry guidelines. Producers must use their own money to fund at least 40% of their projects.
- China Metal Recycling, now under provisional liquidation, has filed a writ to the Hong Kong High Court to sue founding Chairman Jacky Chun, his wife and 10 companies for damages through “false transactions” and “false trading schemes”. China Metal, the largest scrap metal recycling company in China, suffered losses from sales and purchases related to “purported payments for fictitious transactions” and mounting debt.
- The liquidators of Pioneer Iron and Steel Group have sued Diana Chen, the granddaughter of Lu Dong, former Metallurgy Minister, her mother and other parties for CNY4.12 billion, which they allege was stolen from the bankrupt company Pioneer Metals that Chen previously owned. Chen and her mother Lu Hui are jointly ranked 72nd on the 2010 Hurun China Rich List with an estimated fortune of USD1.7 billion. In 2010, Pioneer Iron and Steel, which traded iron ore, went into provisional liquidation owing more than USD516 million to creditors.
- Zijin Mining has cut its gold output target for the year from 33 tons to 31 tons and warned that prices of its mainstay products, gold and copper, may fall further after it posted a worse-than-expected interim profit, down 54% year-on-year to CNY1.1 billion. Turnover climbed 24% to CNY26 billion on the back of a 32% rise in bullion sales to 56 tons and a 51% jump in copper sales to 157,586 tons. Such growth was partially offset by an 11.5% drop in the gold selling price to CNY292.40 per gram, while the copper selling price fell 0.6%.
- China Aluminum International Engineering Corp (Chalieco) said it is seeking to expand outside its core sector and overseas as it posted a 47% fall in interim profit to CNY281.6 million. The firm attributed the decline to a “structural change” of its operation as orders of the more lucrative plant design business fell while those of less profitable engineering and construction contracting grew. Gross profit margin slid to 14.2% from 18.5% due to higher material and staff costs. Chalieco eked out a 2.6% rise in revenue to CNY7.05 billion as it worked on projects outside the core non-ferrous metals sector, such as municipal facilities, roads and public housing.
- Fortescue Metals Group, Australia’s third-biggest iron-ore exporter, said Formosa Plastics agreed to invest USD1.15 billion in a planned project in Western Australia that includes Baosteel Group. Formosa would acquire a 31% interest in the FMG Iron Bridge joint venture for USD123 million. FMG Iron Bridge, jointly-owned by Fortescue and a unit of China’s Baosteel, owns the North Star and Glacier Valley iron-ore deposits, which have a combined iron-ore resource of 5.2 billion tons. Taiwan’s Formosa agreed to buy as much as 3 million tons a year of iron ore at market prices to supply a steel mill being built at Ha Tinh in Vietnam.
- A consortium of China Metallurgical Group and Jiangxi Copper has demanded a review of a landmark USD3 billion deal to produce copper in Afghanistan. It wants new terms that would cut royalties to the government, release it from building a power plant and copper smelter, and postpone the laying of a railway. An independent anti-corruption monitor, Integrity Watch Afghanistan, said the Chinese venture also wanted to delay the start of production by five years to 2019. The copper deposit is among the world’s largest but is situated in a dangerous province and the site has often come under attack by insurgents.
- China’s steel prices are expected to weaken in the second half of the year as supply continues to outstrip demand, Baoshan Iron & Steel General Manager Dai Zhihao said. The company reported a 61% drop in first-half earnings. With about 300 million tons of surplus steel capacity – equivalent to nearly twice the output of the European Union last year – Beijing is implementing measures to end the glut including curbing the sector’s access to credit.
- CEF Holdings, a venture between Li Ka-shing’s flagship company Cheung Kong (Holdings) and Canadian Imperial Bank of Commerce (CIBC), is looking to invest in gold mining companies after a slump in prices created buying opportunities.
- Jiangxi Copper, China’s largest copper smelter, warns copper faces more downside price pressure, as it posted a 52% year-on-year fall in interim profit to CNY1.28 billion due to lower prices of the metal. Gross profit margin fell to 4% from 6.3%. Apart from a squeeze on profit margin, lower copper prices also saw the company book a CNY572.8 million inventory valuation loss in the first half, up from CNY86.4 million in the year-earlier period. Refined copper output grew 11.7% to 558,800 tons, while that of copper wires surged 75% to 353,000 tons.
- Aluminum Corp of China (Chalco) warned of more tough times for the industry as it said its interim net loss narrowed to CNY596.5 million, largely on the back of one-off gains and government subsidies. First-half turnover grew 6.5% to CNY71.11 billion, due to a rise in external trading sales, and the booking of sales from a newly acquired coal and power business in Ningxia. First-half aluminum output fell 0.49% to 2.03 million tons, while that of the intermediate product alumina grew 1.8% to 6.08 million tons.
- Gold shipments to the mainland from Hong Kong increased in July as importers took advantage of local prices that were an average 2.1% higher than global markets and as mainland investors bought jewelry and coins. Net imports, after deducting flows from the mainland into Hong Kong, were 113 tons, up from 101 tons a month earlier.
- Chongqing Iron and Steel Co and South Korean partner POSCO plan to build a 3-million-ton-a- year plant in Chongqing. The 50-50 venture will use POSCO-developed FINEX technology. The Chinese steel firm said the new plant will mainly supply automakers and home appliance companies. Currently all cars produced in Chongqing, where companies such as Ford and Volvo have plants, use steel sheets made from outside the city. Shanghai’s Baoshan Iron and Steel Co supplies about half of China’s auto sheet market.
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