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Chalco to collect up to $1.5bln in A-share sale |
Jul.2 MetalBiz--Aluminum Corp. of China Ltd, the country's biggest producer of the metal, plans to raise as much as 10bln yuan ($1.46bln) in Shanghai to fund ongoing projects amid a stock market rebound.
Chalco, as the Beijing-based company is known, will sell up to 1bln A shares to domestic institutions and qualified foreign institutional investors, the company noted on July 2 in a statement. The placement needs regulatory and shareholder approval, it said.
The shares will be sold to a maximum of 10 investors and will not be tradable in the first 12 months, Chalco expressed. The price will be based on the average price of the previous 20 trading days before the share placement and the company will use the funds to invest in alumina production and other projects.
"The pricing of the share sale is fair. Whether Chalco can attract investors relies on an outlook for earnings in 2010," Zhu Lida, a Shanghai-based analyst at Northeast Securities Co., said on July 2. He expects Chalco to earn 0.30 yuan a share in 2010.
China's benchmark Shanghai Composite Index has gained 65% this year, making it the world's third-best performer. Chalco, which posted a loss for second straight quarter in April, needs cash to continue expansion.
"We expect aluminum demand to recover further in the second half from auto and real estate industries," Northeast's Zhu said. "Demand needs to grow to ease an aluminum market surplus."
Chalco slid 0.3% to close at 12.14 yuan at 3 p.m. in Shanghai. The stock has gained 97% this year.
The company will break even or make a "small" profit in the second quarter, Zhu said, after it posted a loss in the previous two quarters due to lower metal prices.
Chalco President Luo Jianchuan said in March the company would cut capital expenditure by 34% to 13bln yuan this year. It had 13bln yuan cash equivalent by the end of March, according to its quarterly report. |
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Hyundai Steel to lift debar price by $50 per ton July 2 MetalBiz—The debar export price from S.Korea to Southeast Asia may grow $50 per ton for August. A trader from Seoul said that Hyundai Steel, the leader of S.Korean debar export market plans to increase debar export price for August to $ 520-530 per ton (FOB), while the price in July is $470-480 per ton ( FOB).
After S.Korean debar price experienced four months’drop, it increased $10-20 per ton in May. Hyundai Steel adjusted up debar export price to Southeast Asia for June to $460-470 per ton (FOB) and the price for July to $470-480 per ton.
Hyundai Steel said that it will pay close attention to market tendency, so it can determine whether to increase August price by $50 before mid-July. Traders pointed out that if export market is sluggish, the price increase will be shortened to $30-40 per ton. The 10mm in diameter debar directly sold to contractors with 761,000Won per ton ($596 per ton) currently.
According to data released by S.Korean Steel Association, S.Korean debar export has been increasing monthly this year. The total export in the first five months increased nearly nine times over the last year’s 29,300 tons, reached 290,000tons.
S.Korean debar export to Singapore, Hong Kong and Myanmar accounted for 48% of total export (229,800 tons). It is learned that debar accumulative export was only 200,000 tons last year, in which mostly were supplied by Hyundai Steel and Dongkuk Steel.
Japan, S.Korea, Taiwan and other S.Korean debar importers are likely to adjust down import in summer. The import volume of 70,700 tons in May is the highest record, but affected by seasonal demand decline, the import of June-August will drop to 60,000tons, even less than this number.
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Rio-BHP confirm: China-Australia iron ore is in talk |
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July 2 MetalBiz—Rio Tinto and BHP Billiton confirmed on July 1 that they are negotiating iron ore price with Chinese steel enterprises, additionally, they proofed China Iron & Steel Association (CISA) statement that “June 30 is not the deadline of negotiation.”
Sam Walsh, iron ore business chief executive in Rio Tinto, said that the company’s most contracts expired at June 30, if the contract could not be reached, it may be invalid, therefore, steel enterprises had to purchase iron ore from spot market.
As for whether the contracts is invalid or relevant steel producers has transferred to spot market, the spokesman of Rio Tinto refused to comment on July 1.
According to the Australian Financial comments in Review reported on July 1, although pricing debate continues, BHP Billiton allows most of Chinese steel manufactures to purchase iron ore with index price in accordance with new benchmark. However, the spokesman of BHP Billiton rejected to make any comment on this report, but he confirmed that price negotiation is in process.
On July 1, foreign media still disclosed that a well-informed personnel close to insiders of CISA revealed that CISA can accept the price lower than Japanese price in this year’s negotiation, that is, slightly exceeds a 33% cut, it will not adhere previous 40% reduction and hopes to end negotiation as soon as possible.
However, this statement is not confirmed by CISA. Tian Zhiping, deputy general manager of Hebei Steel said in a telephone interview that to purchase iron ore with discount price advance payment was carried out from July 1. China side still required reduction higher than the price cut accepted by Japanese steel companies. Iron ore giants Rio-BHP concluded 33%-44% price cut agreement with Nippon Steel and other Asian steel manufacturers. |
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CISA may relax iron ore price to 33%-40% in the negotiation |
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July 1 MetalBiz—The insiders disclosed that China Iron & Steel Association (CISA) will relent in iron ore price reduction, loosened to 33%-40% from the original over 40%.
According tot the report, the insiders of CISA held a small decision-making meeting, provided to reduce the requirement to price cut, but still expected the reduction is higher than the initial price reached by Rio Tinto and Nippon Steel. Analysts believe that even if lower offer, China’s requirement will also face with great obstacle from miners.
CISA sources said on June 30 that China will continue annual iron ore negotiation till the publication of official statement.
Rio Tinto and Nippon Steel firstly reached the international iron ore long-term contract price of 2009. The powder ore cut 32.95% from 2008 and lump ore dropped 44.47% at the basis of last year. Followed, POSCO accepted this initial price.
However, CISA said that it will not follow Japanese price, aimed at falling back to the level of 2007, that is, iron ore price dropped more than 40% year on year. |
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CISA: iron ore negotiation to go into “extra time” |
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June 30 MetalBiz—June 30 is the deadline for 2009 iron ore long-term contract to nail the price. The principal of China Iron & Steel Association (CISA) clearly told reporters on June that China side will continue the negotiation and will take measures to the long-term contract privately signed by small and medium steel mills and suppliers. Roger Agneli, CEO of Vale, one of three iron ore suppliers, said last week that if necessary, it is willing to adopt spot price system, but is still loyal to long-term contract price system.
People close to the negotiation told to reporters that according to iron ore long-term contract terms, if both sides can not reach price contract after June 30, they will not fulfill terms and supply with spot price. However, this situation is unprecedented and China will rewrite the history of iron ore negotiation.
After Rio Tinto and Nippon Steel concluded the initial price of 2009 iron ore long-term contract, the domestic traders immediately increased quotation due to positive attitude to later market. Successively, the sport price on China’ ports continuously gone up, thereinto, Australian powder ore climbed to current 630 Yuan per ton from previous 550 Yuan per ton, up 12.7%, moreover, Indian and Brazilian ore also presented different growths. However, the increase of domestic steel price made steel mills on the edge of losses return to profit and steel capacity will greatly release, which can stimulate more iron ore demands.
Because CISA adheres to more 40% cut than Nippon Steel, only China in major steel-made counties still insist on negotiation. People from Development and Reform Commission revealed to reporters last week that Germany largest steel enterprise Thyssen Krupp originally planed to let suppliers reduce 50%, but after ArcelorMittal and Vale determined the price, the price basically fixed in European market.
Roger Agneli, CEO of Vale disclosed that it is difficult for China to fully transfer to spot market to meet iron ore demands and it also an unwise choice, added the company will sell iron ore to China with the provisional price determined in early days (a 20% discount). Insiders of the industry pointed out that it is worth noticing the risks after long-term contract price is invalid.
As for long-term supplying contract between domestic small and medium steel mills and the there miners, the upper management of Shougang believes that these domestic enterprises were never on the side of large and medium enterprises.
The principal of CISA told to reporters that due to significant jump in iron ore price last year, China steel enterprises overpaid 180bln, while the whole industry only profited 80bln. Because of too low concentration ratio in steel industry, the requirement of macro-control can not be used to efficiently shorten production capacity, further weakened the overall negotiation ability of China. Under the premise of this ability enhancement, no matter what behaviors of enterprises should obey national interests.
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Negotiation no outcome, Rio Tinto transfers most contracts to spot pricing from July 1 |
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June 30 MetalBiz—June 30, the deadline for iron ore long-term contract, while the negotiation between China side and the three mining giants has no outcome. Based on China side strong attitude towards more reduction, Rio Tinto, the global second largest iron ore producer, said on June 30 that most supplying contract will be transferred to spot pricing from July 1.
The annual iron ore long-term contract pricing mechanism as conventions has been followed by buyers and sellers for 40 years around. This pricing method has firstly presented crack last year, but this year it is going to disappear. Rio Tinto, as the representative of buyers, firstly has not signed contract with most customers before June 30 for 20 years.
Gervase Greene, the spokesman of Rio Tinto revealed that it has been supporting long-term contract pricing mechanism for long time, but if customers choose to buy iron ore on spot market, it will conform to the requirement of customers.
Jpmorgan published forecast last month that to give up annual long-term contract pricing mechanism will add the fluctuation of benefit for Rio Tinto. However, Rio Tinto disclosed on June 1 that its half iron ore was sold on spot market.
China surpassed Japan in 2003, became the largest iron ore consumer. Prior to this, every year’s iron ore long-term contract price is set by Japan and European steel enterprises. In the fiscal year of 2007, China as the leading buyer firstly conclude a 9.5% cut with the Vale.
Rising prices
After Nippon Steel and Rio Tinto reached the initial price on May 26 this year, the spot price of iron ore to China increased about 20% in a short month, which is close to or exceeds the initial price. However, China steel enterprises still firmly rejected to follow up the initial price and required a 45% reduction.
Sam Walsh, the business principal of Rio Tinto said that its most contracts may transfer to spot market supply after June 30. He added that it was not a good news for both sides, but it was a truth.
Roger Agnelli, CEO of Vale, the world's biggest iron ore producer, said last week that it was waiting its opponent Australian miner firstly nailed down the contract price with China. Prior to this, it had reached a common ground with ArcelorMittal, a 28% cut.
Samantha Evans, spokesman of BHP Billiton, another ore giant, said in a telephone interview that before does not sign supplying contract with most customers, it will not issue any comment to long-term contract price. |
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| Directory |
| Directory of China Metal Companies is an online database designed to provide detailed information on major metal companies in China with their business, products, contacts, as well as links to home pages. With this Directory, you can easily find available partners and new business opportunities in China.
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