Further to Macarthur Coal’s announcement of May 21st 2008, the company advises that discussions with ArcelorMittal have ended.

Macarthur Coal in a statement to the Australian Securities Exchange, said that “Discussions with ArcelorMittal did not result in any proposal for a transaction being made by ArcelorMittal to the board of Macarthur Coal.”

Mr Keith De Lacy chairman of Macarthur Coal said that the company welcomed ArcelorMittal as a substantial shareholder looked forward to a long relationship with the steel company as a customer. He said that the talks with ArcelorMittal had no impact on the day to day operations of Macarthur Coal. We will continue to focus on running and growing the business and delivering value to our shareholders.”

The Board continues to advise shareholders that they should have no regard to speculation in the media or any other uninformed comment.

Reuters reported that Russia’s government has decided against slapping export duties on steel firms but has asked them to switch to long term contracts with consumers to prevent sharp price rises.

One government source told Reuters that “A decision has been taken not to introduce export duties as people are more inclined toward long-term contracts.”

The comments follow a meeting of major Russia steel companies with Mr Igor Sechin deputy prime minister after oil firms complained about sky high prices for steel products, including pipes needed for building new oil and gas pipelines.

Market analysts have said introduction of export duties would badly affect profitability of the steel industry. Analysts from Deutsche Bank said in written research that “If steel prices continue to increase, taxes for the sector may be raised.”

Analysts from Unicredit said the introduction of long-term contracts would not significantly affect the earnings of steel majors like MMK, NLMK and Severstal as they already have long term contracts with the main domestic consumers.

Unicredit said in a note that “In addition, steel makers will likely attempt to account for possible fluctuations in steel prices for the whole year when contract prices are set.”

South Korea’s POSCO said that it would cut stainless steel output by 25,000 tonnes in July due to inventory build-up as buyers delay purchases on expectations of lower prices.

A POSCO spokeswoman said that “We have decided to cut output in July in an attempt to normalize market conditions and will keep our production schedule flexible.

POSCO produces between 150,000 and 160,000 tonnes of stainless steel per month.

It reported that Baosteel has raised steel price for August recently and the price growth rate is CNY 200 per tonne to CNY 400 per tonne.

Baosteel raised the price of general CR steel products up by CNY 200 per tonne for August and the price of SPCC 1.0×1250 steel coil after the adjustment is CNY 6,496 per tonne. HR steel price increases by CNY 300 per tonne and the price of SS400 5.5×1500 is CNY 5,292 per tonne after the price rise. Meanwhile, the price of pickling steel products rises up by CNY 200 per tonne while wire price comes up by CNY 400 per tonne. All prices above exclude 17% VAT.

An analyst said Baosteel has not reported the information publicly by now, and the price rise was probably made according to the price policy for July. There are two reasons for Baosteel to increase steel prices.

1. The expanding price gap between domestic and international steel market. HRC export price is approaching to USD 1,100 per tonne, but domestic price is USD 860 per tonne which will stimulate the hike of Chinese steel export.
2. The sustaining increase of domestic steel production cost, due to the further increase of coking coal and coke prices.

Analysts believed that Baosteel will raise prices of some steel products again in the future, which may bring effects to domestic steel market.