Kalistani Major History

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Hutori and Kalistan Sell standing deal over Steel
Annual arrangement worth K19 Bn annually
Port Elga, Suldanor
January 1, 4903


First Shipment of 30 million tonnes to travel to Hutori from Port Elga

The Governments of Kalistan and Hutori signed a standing agreement to contract for 30 million tonnes annually from KalNaFerCo, easing pressures on the Nationalized Steel Company, and sending futures prices upward.

"Since the beginning of the Steel Crisis," said Trade Minister Michelle Martinez, "Kalistan has been selling nearly 65 million tonnes directly from Port Elga a year. While this does give Kalistan a bit of an edge on pricing, KNF obviously prefers contracted sales, which go out of Port Elga second, following only production for national consumption, but before Futures Contracts and Direct Sales. That gives us some stability and the ability to project for production in the coming year." The Government of Kalistan has guaranteed a price of K625 per tonne, which is about 27% lower than Yingdala's market price, for 5 years with option to renegotiate held by both Parties. K625 remains about K50 per tonne over what it costs the Republic to make the steel, finish it and store it, and is a further 12 percent discount than Kalistan is averaging in direct sales.

The price of KFN 6 month futures jumped from K634.23 to K690 overnight on the news of the agreement, which represents about a 10 percent increase on the price ahead of supply curtailment due to the Hutori deal. "Since we won't be able to make as many direct sales in Elga any longer, naturally investors anticipate an increase in the value of each tonne on the open market, and this has helped strengthen commodity sales." In addition to the jump in Commodities spots, The Trade Minister also announced easing pressures on the Kalistani Ruble. "Luckily, this also takes a bit of weight off the Ruble in Elga and abroad, and our currency, thank goodness has been able to do most of the work of carrying us through the about two year period mostly unharmed financially."

The news however represents a significant blow to the Yingdalan steel export business. "Hutori, at 30 million tonnes a year was about 10 percent of their business," said Martinez. "We are expecting major retaliation from the Indralan Steel industry for this blow, though we are not sure what form it will come in." The Finance Minister today announced he was preparing legislation for reciprocal action in the National Assembly, matching action for action. "We have also heard concerns coming from other steel producers, like Dolgava, that they are at least considering tariffs against Kalistani goods in retaliation for our actions. As we don't generally have much interaction with them, those tariffs, were they to be emplaced, would hurt Dolgavans by raising prices in their market on what few Kalistani goods they buy, but also on their own, as the market tends to respond to tariffs with increasing prices. We hope that Dolgava considers carefully whether they really need to get involved with this disagreement between the Republic and Yingdala."

As pressure to sell is eased on KNF with the Hutori deal, and rumored other deals in the works, the Premier of the Republic, George Jackson signaled a willingness to discuss outstanding issues with Yingdala over steel exports. "We don't have any details, but of course the Republic would like to speak to representatives of the Indralan Government, should they ever be willing, to perhaps iron out the wrinkles in our relationship." As of this date, of course, no answer has been received from Yingdala, nor has any reaction to this dramatic turn of events been heard in the press.

Meanwhile, Kalistan continues to churn out steel and will continue to sell about 35 million tonnes in direct sales from Port Elga to whoever will buy it. But now, ships will regularly transit from Port Elga to Hutori, and will br bringing cargoes of steel with it going forward.