High prices af­fect all na­tions

The Weekend Australian - Review - - Steel -

which has oc­curred al­ready has done noth­ing but help tighten world sup­ply of steel and push prices up even fur­ther. Xin­hua re­ported that, in the first four months of 2008, Chi­nese rolled steel ex­ports to the Euro­pean Union fell by 55 per cent on the same pe­riod in 2007 while those to the US were down by 33.1 per cent.

Two of the con­se­quences of this ex­tra­or­di­nary growth in steel de­mand will be, first, that not ev­ery­one can get their hands on steel when they need it and, two, there will be enor­mous in­vest­ment in new ca­pac­ity.

The Wall Street Jour­nal re­ports that a planned new bridge in New Delhi has been on hold be­cause of steel­re­lated cost over­runs and that Venezuela has re­na­tion­alised its largest steel­maker and is lim­it­ing ex­ports. So the deals are on. Tata Steel has en­tered a part­ner­ship with Viet­nam Steel and will in­vest in a new iron ore mine and steel plant there. An­other In­dian com­pany, Es­sar Group, in late May an­nounced a $ US1.65 bil­lion in­vest­ment in a new plant for its US sub­sidiary, Min­nesota Steel.

Rus­sia’s largest do­mes­tic steel­maker, Evraz Group, will spend $ US1.8 bil­lion over the next three years to in­crease ca­pac­ity at its ex­ist­ing mills and build new plants in Siberia and Kaza­khstan. Evraz is also the world’s largest pro­ducer of rail­way track lines.

An­other Rus­sian player, Sev­er­stal, has launched a $ US688 mil­lion bid for all the shares in US steel man­u­fac­turer Es­mark, the par­ent of Wheel­ing- Pitts­burg Steel.

And it is not just steel it­self, but the feed­stock that is see­ing huge in­vest­ment. Chi­nese money is pour­ing into Aus­tralian iron ore com­pa­nies, and now Nip­pon Steel wants to take a stake in a new met­al­lur­gi­cal coal mine be­ing de­vel­oped in Mozam­bique by Brazil’s Vale.

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