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| FEBRUARY 2004 | |
| From the CEO's Desk | |
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Till recently, Iron
& steel industry was said to be doing well and with demand as well as
the price curve climbing up, everybody was very happy. This also reflected
in the share markets and the steel company stocks were said to be ‘hot
buys’. It was also argued that this situation will prevail for atleast two
to three years. Today, we are facing a very tricky situation. The prices of
all the items in the supply chain including iron ore, ferro alloys etc. are
soaring and is ultimately getting reflected in the price of finished steel.
Iron ore fines which were around US$25 (63.5 % Fe, FOB Indian port) few
months back is now priced at around US$65. Ferro alloys prices also
witnessed a steap increase which is difficult to explain. But more than all
this it is the price of met coke and coking coal which has a large impact on
steel prices. Flat products and also alloy steel rounds manufacturers have
declared a hefty price increase which is very difficult to get digested in
the user industry. Thus in last one month or so the situation has slowly
slipped out of steel producer’s hands and is now becoming ‘out of
control’ for everybody. My fear is that the immediate effect of this will
be price escalations in the user sectors like auto, white goods etc. which
will ultimately result in a sharp decrease in steel consumption. D.A.Chandekar
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| Headlines | |
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Mine expansion of SAIL plan faces problems The Jharkhand government is draging its feet to renew the mining lease of the Chiria mines. This will stall the expansion of the giant iron ore mines currently under Steel Authority of India Limited (SAIL). The public sector steel enterprise had planned to invest Rs 1,600 crore to modernise and expand the mines, which contain rich iron ore deposits, for its own consumption and for exports. SAIL had decided to upgrade the Chiria mines though these were under its subsidiary corporate entity Indian Iron and Steel Company (IISCO). There has been a steep rise in the demand for iron ore in domestic as well as the international markets. SAIL chairman V C Jain and Iisco chairman B K Pani had met the Jharkhand chief minister Arjun Munda to discuss. But the mining department of Jharkhand government under Munda was reluctant to renew the mining lease of three blocks incorporating the Chiria mines alleging that the virtually closed Iisco, and by implication its parents, had violated mining regulations. Iisco sources said the renewal of the lease for the Sukhil, Dhobil and Ajita zones under the Chiria mines had been awaiting lease renewal since 1979. |
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IBM planning expansion of mines Steel Authority of India Limited has commisioned the Indian Bureau of Mines (IBM) to prepare a blue print for expansion of iron ore mines at Kiriburu and Meghataburu in Jharkhand. The iron ore reserves at Kiriburu and Meghataburu, which supplies the Bokaro steel plant, could be exploited for only 10 more years unless expanded. SAIL plans to explore new areas to boost iron ore production by another 140 million tons per year. IBM has started preliminary work and is expected to submit its report to SAIL within six months. |
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Bottomlines to improve for SAIL & TISCO Like floating interest rates of commercial banks, steel companies like Tata Steel and Steel Authority of India, too, will enjoy a floating rate regime on about Rs 2,000 crore of out-standing loans lying on account of Steel Development Fund (SDF). In a recent decision, the government has pegged interest rates on SDF loans at a 2 percentage points below bank rates and that too with retsrospective effect from April ’98. Effectively, with the Bank Rate prevailing at about 6%, Tata Steel and SAIL will now have to pay interest charges on SDF loans at about 4%, against 8% being paid earlier. The SDF was created prior to steel price decontrol in early 90s by levying a cess on steel sold by SAIL and Tata Steel. Loans worth around Rs 6,000 crore accrued on the books of these two steel companies with the government later shifting to free pricing regime. It is estimated that Tisco may generate extraordinary income of Rs 150-160 crore and about Rs 70 crore in case of SAIL. |
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Steel Minister Visits Rourkela Mr. Braja Kishore Tripathy, Honourable Union Steel Minister visited Rourkela Steel plant recently. He inaugurated a monument based on the credo of Bringing Closeness at the Ispat Chowk, near the Bonai Gate, of Rourkela Steel Plant, built entirely out of inhouse resources. The structure comprises five RSP pipes of heights ranging from 7 feet to 25 feet and 40 inch diameter each. The all steel structure symbolises the movement initiated in RSP by Dr. Sanak Mishra, Managing Director, RSP to reduce the distance between the minds of the employees. Thereafter, Mr. Tripathy inaugurated an international Conference at Gopabandhu Auditorium. |
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Baosteel,
a new idol in steel world
Earlier every Indian steel executive used to follow Posco model, the South Korean steel-maker, which in a single location at Gwangyang produces 16 million tonnes of metal at costs difficult to match. Now pilgrims are beating a new path to Shanghai Baosteel Group, China’s biggest steel producer with capacity of 20m tonnes. Expansion in hand will propel Baosteel’s production to 23m tonnes next year. By any standards, the progress of Baosteel, founded in 1978, is remarkable. China has nearly 4,000 plants making over 200m tonnes of steel. But unlike on other plants, the state directed from the beginning that Baosteel concentrate on producing high value items like cold rolled steel and hot rolled galvanised sheet. Indian steel experts who visit China say Baosteel has the best steel-making technologies and very efficient management with tight control on costs. It has much to offer Indian plants in systems and technical know-how. |
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Long
products still make most sense for RINL
Robust steel prices since March 2002 have allowed primary Indian steel producers to put their house in order. The steel industry is now high on confidence to plan for major capacity expansion. Such moves are justified as the country will need more capacity to take care of Indian steel demand growing at an annual rate of 1.5 million tonnes to 2m tonnes. Tata Steel with much cash to spare will progressively have more capacity under its belt is taken for granted. The good thing is that Vizag Steel, which recently cleared all debts ahead of schedule, is almost ready with plans to lift the hot metal making capacity in three phases first from 4.1m tonnes to 5.1m tonnes, then to 6.8m tonnes and finally to 10m tonnes. What is spurring Vizag Steel to propose big expansion is the remarkable turnaround in its working in the year March 2003 when it earned a net profit of nearly Rs.521 crores against a loss of Rs.75 crore in 2001-2002. Production exceeded capacity by a good number. The working of the company, which is wholly government owned but does not as yet figure in the disinvestment list, has improved further the current year on the back of higher productivity and price realisation. In the first six months up to September end RINL lifted profits to Rs.460 crore from Rs.74 crore in the corresponding period of 2001-2002. As profits further rose to Rs.562 crore by end-October, the management hopes to end this fiscal with net earnings of at least Rs 1,000 crore. According to B K Panda, (CMD), 'Company’s financial restructuring leading to conversion of government loans of Rs.2,600 crore into equity from the present level of Rs. 7,827 crore created the ideal condition for a turnaround'. |
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Monnet
Ispat & Monnet Power to merge
Monnet Group has decided to merge Monnet Power with Monnet Ispat. Monnet Ispat has a sponge iron capacity of three lakh tonnes and Monnet Power has a 45 MW power plant and 36,000 tpa ferro alloys capacity. The merger comes on the heels of Citi-Group’s decision to invest a total of Rs 45 crore in the two companies. Monnet Ispat has already informed the stock exchanges that CVC International, a unit of CitiGroup Global Investment, is picking up 35 lakh Monnet Ispat equity shares of Rs 10 each, at a premium of Rs 90 per share. The board of directors of Monnet Ispat met on December 29,’03 and approved the Citi Group offer. Sandeep Jajodia, managing director, Monnet Power said, 'CVC International will also buy 97.7 lakh equity shares of Monnet Power with a face value of Rs 10 each. Monnet is planning to expand its sponge iron capacity to about 7.5 lakh tonnes and power generation capacity to 75 MW. |
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SAIL writes off Rs 3,000 crore debt The country’s largest steel maker Steel Authority of India (SAIL) has reduced its debt burden by Rs. 10,000 crore in the first nine months of current fiscal ending December’03. SAIL’s April – December, ’03 steel sales stood at 7.56mt, which marked a 10% growth in volumes, while its nine-month production of saleable steel was at 8.2mt, registering a 8% growth compared to the corresponding period last year. Exports at 8.6 lakh tonnes saw a phenomenal growth of 62%. In the calendar year of ’03, SAIL’s crude steel production was at 12mt and its saleable steel production was at 11mt registering growth of 9% and 8% respectively as compared to ’02. The company has managed to cut interest charges by about Rs 300 crore by swapping high-interest loans with lower ones and with a net reduction of Rs 3,000 crore of loans. SAIL’s overall debt was at Rs 15,082 crore in ‘99-00. At December-end, SAIL’s debt equity ratio has come down to about 2.5:1. |
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Asian steel markets look set to enjoy strong global demand in coming months, particularly from a booming Chinese economy, although higher costs for raw materials and shipping may reduce profit margins. Higher earnings are expected in 2004 for Japan's Nippon Steel Corp and South Korea's POSCO after steel prices rose to near nine-year highs in recent months. Further price rises are likely as Chinese demand booms and the global economic recovery accelerates in Asia, which produces & consumes nearly half the world's crude steel. Many are confident the higher prices would be more than enough to compensate for an expected 6.5 percent rise this year in costs for raw materials - iron ore, nickel and coking coal - and higher freight charges. According to analysts, Nippon Steel's group recurring profit to rise 35 percent to 220 billion yen ($2.08 billion) in the year ending March 2005. POSCO forecasts its operating profit would rise four percent to 3.3 trillion won ($2.73 billion) in 2004 on record high sales of 16.9 trillion won. In line with the global trend, the South Korean steel maker raised hot-rolled coil price by 50,000 won to 405,000 won per tonne this week. It is estimated that POSCO's raw material and shipment prices will increase by about 20,000 won a tonne. Raw material prices are now the major headache for Asian steel makers. But considering steel prices have soared, it may not really hurt earnings of Asian steel makers. China's imports price for hot-rolled coil, the benchmark steel product, recently rose close to their highest since 1995 at $455 a tonne, up 50.4 percent from the beginning of 2003. |
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JSL plans collaboration with Nisshin Steel The demand for stainless steels in the high end products in construction and transport sectors is expected to grow by around 7-8 % in next 3 to 4 years. In view of this, Jindal Stainless Ltd., an O P Jindal company and the country's largest stainless steel maker recently announced a technological collaboration with Nisshin Steel, Japan. Nisshin Steel is the world's ninth largest stainless steel producer. The technology transfer would help JSL to improve its yield and quality of products. At present, JSL produces five lakh tonne of stainless steel per annum. A greenfield project of the company in Sukhinda, Orissa would add to its capacity another 8 lakh tonne by 2006 and further 8 lakh tonnes by 2009. Jindal Stainless has also decided to produce etching stainless steel at its architectural division in Delhi which are used in high-end construction & transport segments like claddings in lifts, airports and metro rail coaches. |
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New order for SMS Demag Xiangtan Iron & Steel is building a new heavy-plate mill Xiangtan Iron & Steel Co. Ltd., China, which belongs to the Hunan Group, has placed an order with SMS Demag AG, Germany, for the supply of mechanical equipment including automation for the new heavy-plate mill. The scope of the order comprises a heavy-plate roughing stand, including the entry-side edging stand and a heavy-plate finishing stand. The spectrum also includes the ACC plate cooling line (Accelerated Cooling) and the hot-plate leveller. For the shearing line area, SMS Demag has received an order for the double-side trimming shear and the dividing shear, both using the rollingcut principle. These shears enable the trimming and cutting of cold plates up to 50 mm in thickness. For all the units of the rolling mill, SMS Demag is supplying the full Level 2 automation with the pass schedule computer and the technological control systems as well as the complete Level 2 material tracking from the slab furnace to the plate piler. SMS Demag is the leader of a consortium in which ABB Automation Technologies, Sweden, is responsible for the drive technology and the basic automation of the integrated plant. The new heavyplate mill is designed for an annual production of up to 1.4 million t/y and is to be built in Xiangtan in the Province of Hunan. Commissioning is scheduled to take place in mid-2005. SMS Demag AG forms part of the Metallurgical Plant and Rolling Mill Technology Business Area of the SMS Group. |
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Morgan Completes Sale of Latest Compactor to Austrian Company Construction Company has received an order for one of its new compactors from Voest-Alpine Draht GmbH, of Donawitz, Austria. Jens Nylander, Sales Manager, Material Handling, who announced the contract, said, "This compactor, which is equipped with our new strapping technology, will be the first installation with this technology in Europe. He explained that the order is for the turnkey installation of a compactor with a coil handling system for heat- and surface-treated coils. "The new equipment replaces a manual machine," he said, adding, "The installation is expected to process 45,000 coils per year, with a maximum coil weight of up to 4500 kg." Morgan is a designer and producer of high-quality rolling mill products and services for the metal industry worldwide. Questions can be e-mailed to morgansales@morganco.com. |
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New
order for SMS Meer
New large-diameter pipe mill for ZAO
Izhorsky Trubny Zavod
ZAO Izhorsky Trubny Zavod (a joint project between Severstal and Eurazholding), Russia, has placed an order with SMS Meer GmbH, Mönchengladbach/ Germany, to supply machines and equipment for a new large-diameter pipe mill. The pipe mill is designed for an annual capacity of around 450,000 t and will be erected in Kolpino, St. Petersburg. Erection and commissioning of the whole plant are scheduled for 2005. After completion, this pipe mill will be internationally one of the most modern of its kind. The technical configuration of this latest order is based on the orders successfully completed in the past few years or recently received by SMS Meer for large-diameter pipe plants of similar design for Welspun, India, Julong Steel Pipe and Shashi Steel Pipe, PR China, Sadid Industrial Group, Iran, and JSC Vyksa Steel Works, Russia. Longitudinal SAW pipes with diameters from 610 to 1422 mm, wall thicknesses up to 40 mm and lengths up to max. 18.3 m will be produced in the new pipe mill. The use of 18.3 m long pipes reduces the laying costs in the field, as roughly 35 % less connecting welds have to be made by comparison with the pipe lengths of 12 m generally employed. The pipes manufactured in grades up to X80 far surpass not only the demands of the API 5L standard, but also meet all other international standards. SMS Meer is to supply all the machines and equipment for the new large-diameter pipe mill. These include i. a. a plate edge milling machine, plate edge crimping press, pipe forming press, tackwelding machine, mechanical expander, hydrostatic pipe tester and facing and chamfering machines, as well as all the transport facilities and the installations for comprehensive quality control. All machines and equipment are linked by interconnecting longitudinal and cross-transfer conveyors that have been optimized to prevent damage to the pipes and to reduce noise. The key technology in a large-diameter pipe mill is the forming process that essentially dictates the product mix that can be manufactured with respect to the material grades, dimensions and production capacity. The JCOE forming process developed by SMS Meer using the forming press as main forming aggregate has been able to establish itself on the market in recent years against the UOE process and the 3-roll bending process due its greater flexibility, highest quality and lower investment costs. In the JCOE process the plate, milled and crimped at the edges, is fed step-by-step using manipulators to the forming tool in the pipe forming press where it is formed over the whole plate length. This results in an open-seam pipe with plane-parallel plate edges ready for welding. The pipe forming press operates with a press force of 100 MN. The JCOE pipe forming process is the most suitable process for being able to also produce smalldiameter pipes with large wall thickneses. This will enable the market segment for offshore pipelines to be served, too, such as e.g. for the planned pipelines under the Baltic Sea to Germany. Apart from the forming process and the pipe welding, the mechanical expander also has a crucial influence on the pipe quality. The mechanical expander serves to straighten and size the pipes. By gradually cold forming the pipes over an expanding head inserted into the pipe, resulting in a plastic deformation of between 1.0 and 1.5 %, the pipes are sized from the inside after final welding and straightened over their entire length. This inside sizing facilitates the later laying of the pipes as the cross-sections are optimally matched. This aspect is particularly important when pipe sections have to be cut in the field, as the pipes are sized over their whole length. The deformation of the pipe to beyond its yield strength subjects pipe body and weld seam to an extreme load above that to be expected later in the laid pipeline. Furthermore, this deformation also compensates the internal stresses created during forming of the pipe. In addition to the hydrostatic test, extensive nondestructive tests are also performed to check the quality of the pipe. The hydrostatic pipe tester subjects the pipes to an internal pressure load close to the yield strength and well above the later operating pressure of the pipeline. The whole weld seam is tested ultrasonically and X-rays are taken of all weld seam ends. The automation of the whole pipe mill is based on a decentralized control concept that guarantees independence of the individual systems, and hence ensures high plant availability. Integration of the individual systems into a complete interconnected operation is ensured by networking within the control level. Quality-relevant data recorded within the individual production and test processes are stored redundantly in a higher-ranking computer system. This data storage offers the possibility of certification for each individual pipe according to the requirements of the respective standards. |
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This is a
compilation of news from various dailies, magazines, trade publications and Press
Releases. |
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