It is reported that Shanxi Economics and Information Committee made a detailed plan to adjust and revitalize its steel industry, which is an important tax payer and job supplier in the province.

Local business newspaper reported the province cap pig iron and crude steel outputs at 45 million tonne and 40 million tonne respectively by 2011.

The Committee said that by 2008, Shanxi has about 78 above designated scale steelmakers, posting sales income of CNY 165.2 billion which have pig iron capacity of 54 million tonne output of 27.82mt; crude steel capacity of 40 million tonne, output of 23.45 million tonne and steel product capacity of 26 million tonne output of 19.76 million tonne.

Next step, the province will move on to expand stainless capacity and quicken development of the product varieties, on the basis of Taigang’s existing stainless capacity. An international stainless production base is targeted to be made. On the meantime, the province purposes to make merger, acquisition, elimination, and upgrading to forge steel bases in Changzhi, Yuncheng, Linfen and Lvliang. It already has big steel complex such as Haixin Steel, Zhongyang Steel, Zhongyu Steel and Changzhi Steel in these places.

By promoting Taigang to take over Antai Steel and other smaller mills, the plan hopes to raise its capacity up to 70% of the province’s total.

It is said that General Steel Holdings Inc. fell in New York trading after the Beijing-based steelmaker would raise about $25 million in a sale of shares and warrants.

General Steel dropped $1.22, or 21 percent, to $4.57 at 1:05 p.m. in New York Stock Exchange trading. The shares have risen 16 percent this year.

The company earlier today announced plans to sell 5.56 million shares and warrants to purchase as many as 2.78 million additional shares. The funds will be used for “general corporate purposes which may include working capital, capital expenditures, acquisitions of new businesses and investments.”

General Steel said in a statement April 8 it was starting discussions with a “potential target.” The company’s goal is to become a major steel producer in China, Amit Dayal, a New- York based analyst with Rodman & Renshaw Inc., said in an April interview.

According to figures from industry consultancy Mysteel, China’s daily crude steel output reached 1.646 million tonnes in the first 10 days of December, down 1.5 percent from the end of November.

While daily output has slowed slightly amid a seasonal lull in end-user demand, the figure remains much higher than the January-November average of 1.55 million tonnes, with mills and steel traders building stocks before a series of price hikes in January.

Total output from January to November reached 518.177 million tonnes, up 12.1 percent compared with the same period last year.

According to Minister of industry and information technology–Li Yizhong, China, as the world’s top steelmaker, closed 16.9 million metric tons of obsolete capacity this year as part of an effort to ease domestic oversupply, .

The nation also shuttered 21.1 million tons of iron-making capacity; 800,000 tons of aluminum capacity; and 74 million tons of cement capacity, Li said today at a conference in remarks broadcast on the Internet. The figures beat targets set by the Ministry of Environmental Protection earlier this year.

China, also the world’s biggest producer of iron, cement and aluminum, is facing a severe oversupply of steel as mills expand faster than outdated plants are closed. The government is studying a “more feasible” plan to tackle steel overcapacity, Li’s ministry said on Dec. 3.

“The 2 percent cut in capacity by the Chinese steel industry is truly a spit in the ocean,” Michelle Applebaum, who runs a steel-research firm in Highland Park, Illinois, wrote in an e-mail. “Many of the country’s high-cost and polluting, older provincial mills continue to run for jobs rather than profitability,” said the analyst at Michelle Applebaum Research.

Steel capacity in China may have reached 700 million tons or more, Xiong Bilin, deputy director at the National Development and Reform Commission’s industry department, said on Dec. 3. The nation may need 549 million tons of the alloy this year, the China Iron and Steel Association said in November.

“Investment has risen too fast in some industries in recent years,” Minister Li said today in the Web cast. “There are blind expansions in steel and cement. A large amount of obsolete capacity needs to be closed.”

China had planned to shut 6 million tons of steel-making capacity and 10 million tons of iron-making capacity this year, the Ministry of Environmental Protection said on Jan. 13. The Ministry of Environmental Protection said on Nov. 13 that the government is planning measures to close plants in the steel, aluminum, coke, cement, paper and utility industries.

It is reported from China Securities Journal on Wednesday that China Ministry of Industry and Information Technology (MIIT) is planning to modify the detail policies for eliminating obsolete and inefficient production capacity of the steel industry.

Unveiled on 20 March, the Plan for Reinvigorating the Steel Industry is a document to guide the adjustment of the industry structure and eliminate obsolete and inefficient production capacity, which stated clearly that high furnaces of 300 cubic meters and below, revolving furnaces and electric furnaces of 30 tons and below have to be eliminated by the end of 2010, and high furnaces of 400 cubic meters and below should be eliminated by the end of 2011.

However, Liu Yongchang, director of the Steel Department under the former Ministry of Metallurgical Industry, told China Securities that the enforcing standard of eliminating high furnaces of 400 cubic meters and below is unreasonable to plants that produce long steel  products.

Earlier, Liu and three other department directors of the former Ministry of Metallurgical Industry have submitted suggestions to MIIT, stating that the elimination standards should be adjusted according to enterprises’ actual situations.

MIIT responded to the suggestion proactively, by setting specific research subject on that issue and conducting research in steel mills including large plants and small and midsize ones. The research was completed on 20 September, said an insider with MIIT.

The insider also told China Securities Journal that MIIT would guide enterprises to eliminate the inefficient production capacity in accordance with their own development situation, instead of enforcing the previous stiff standards.

It is reported that Shandong Iron and Steel Group, the world’s eighth largest steel maker, is suffering a setback in its proposed takeover bid for Rizhao Iron and Steel Group over differences in the terms of the deal.

Du Shuanghua, the founder of Rizhao Steel, one of China’s most profitable non-State steel mills, is employing delaying tactics against the purchase of a 67 percent stake in the company, according to people familiar with the situation.

In addition, Du was likely to consider moving to another province to restart his steel empire, according to insiders at the company.

The acquisition, which was expected to be pushed through as early as this week, was still under discussion and would probably be finalized next week or by the beginning of September, a senior executive at Rizhao Steel told China Daily.

Another source said the protracted talks are related to the financial terms of the deal. Shandong Steel’s acquisition is not thought to be all in cash. Instead, the company is expected to inject assets such as modern equipment in return for a controlling stake.

Du tried to protect his interests in the consolidation by handing up to 30 percent of Rizhao’s core assets to Kai Yuan Holdings, a Hong Kong-listed company in January.

Although Rizhao Steel is attempting to fight the acquisition, it has to weigh the repercussions of not cooperating with local authorities.

Officials from the local environment watchdog visited Rizhao Steel recently and asked the company to stop production using two boilers, on the grounds the facilities were not in accord with environmental standards, the source from Rizhao Steel said.

A senior official of neighboring Hebei province talked to Du recently, suggesting he should move back to Hebei, where he was born and started his business making steel tubes, the source said.

The consolidation is part of a plan by the Shandong provincial government to build a quality steel production base in Rizhao city with annual capacity of 20 million tons.

Rizhao and Shandong Iron and Steel signed a letter of intent for consolidation in early November. But the deal broke up after Du moved 30 percent of his stake to Kai Yuan Holdings.

“The Shandong provincial government aims to build a large steel group that can compete on the world stage,” said Yu Liangui, a steel analyst from Mysteel. “The steel industry wants to develop a steel industrial zone along the coastline. Rizhao has an advantage over Laiwu Steel and Jinan, in terms of regional position.

“If Shandong Steel has to establish a new factory in Rizhao in response to the government’s plan to build a quality steel production base in Rizhao, it will be in a disadvantageous position if it is facing competition from Rizhao Steel.”

China, as the world’s largest producer and consumer of steel production, is at a disadvantage in the annual international iron ore negotiations because of its limited presence in the industry.

The government wants the steel industry to consolidate, with large steel mills leading the exercise.

Du established Rizhao Steel in the city of Rizhao in 2003. Now the steel mill produces 8 million tons of crude steel annually and contributes one third of GDP to the city.

The Hurun report listed Du as China’s second-wealthiest person last year, with a 35-billion-yuan fortune.

When most Chinese State-owned steel mills suffered heavy losses, Rizhao reported a net profit of about 1.8 billion yuan in the first half of 2009, while Shandong Steel, which has three times the capacity of Rizhao, reported a loss of 1.3 billion yuan.

It is said from Roger Agnelli (Vale CEO) Wednesday that Brazil’s Vale, the world’s largest iron ore miner, isn’t in talks with Chinese steel mills on benchmark price of iron ore in 2009, but will continue to sell iron ore to China at prices concluded on interim contract.

Earlier, Rio Tinto reached an agreement with Japanese and Korean steel mills on a 33 percent price cut for iron ore and Vale also agreed on a 28 percent price cut for this year. Chinese steel enterprises rejected the above price cuts.

However, Vale is still respecting the interim price agreement it reached with Chinese steel mills, said Roger Agnelli.

Although steel prices in China dropped sharply in August, steel output is still on the rise. The domestic 77 main steel enterprises recorded an operating rate of 90.9 percent this month, compared with 87 percent in July.

According to the latest data from the China Iron and Steel Association, the country’s mid- and large-sized steel companies produced about 1.67 million tons of crude steel per day in the first ten days of August, refreshing the record again.

An analyst with Umetal noted that prices of imported iron ore reached the peak in early August, followed by a 15 percent fall responding to the drop of steel prices.

China’s major steel plants have recently raised their ex-factory prices for September, which foretells that they are still optimistic about the steel market in the following two months.

Market analysts note that China’s iron ore demand will continue rising along with the growing steel output.

It is reported that China’s largest steelmaker – Baosteel Group Corp., agreed to buy a 15 percent stake in Australian iron ore and coal company Aquila Resources Ltd. for A$286 million ($240 million) to secure supplies.

Baosteel will buy 43.95 million new Aquila shares at A$6.50 apiece, the Perth-based company said today in a statement to the Australian stock exchange. That’s 0.8 percent less than Aquila’s last traded price of A$6.55 on Aug. 25.

China, the world’s biggest buyer of iron ore, has invested in $56 billion of projects globally to try to reduce dependence on Vale SA, Rio Tinto Group and BHP Billiton Ltd., the world’s three biggest suppliers that control two-thirds of seaborne supply. Aquila has announced plans to develop a A$4.1 billion iron ore mine, port and rail project in Western Australia.

“This placement will provide the company with significantly greater capacity to accelerate the development of its key, high quality, steel raw materials asset portfolio,” Aquila said in the statement. Baosteel will also assist Aquila in sourcing “low-cost” financing for a number of the company’s projects including the West Pilbara project, the company said.

Aquila shares have jumped 98 percent this year amid a rebound in demand and prices of the steelmaking raw material. The company has a market value of A$1.6 billion.

The agreement was earlier reported by the Australian Financial Review. It is also said from Aquila that Baosteel also nominated Vice President Dai Zhihao to the board.

It is reported on Thursday that global crude steel production reached 103.9 million metric tons in July, the highest monthly level of 2009 but still 11.1 percent lower than a year earlier.

The report of the World Steel Association revealed that the world and China’s crude steel production has been rising steadily since April.

Crude steel production in China, the world’s largest metal producer and consumer, was up 12.6 percent year-on-year to 50.7 million tons in July, almost half of the world crude steel production, the report said.

This was the first time that China produced more than 50 million tons in a single month, according to the report.

Meanwhile, U.S. production was 41.6 percent lower than in July 2008, and EU production was 35.6 percent lower than a year earlier.

It is also reported that total crude steel production in 66 of the world’s main countries was 653 million tons for the first seven months of 2009, a 19.9 percent fall compared with the same period last year.