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| MARCH 2004 | |
| From the CEO's Desk | |
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The production of sponge iron in India started about three decades ago. In the mid-1970’s, Indian mini-steel plants started examining the viability of setting up sponge iron plant. Since India has adequate coal deposits, production of coal based sponge iron was considered a feasible option. The growth of the DR industry till the 80s was slow largely because of restrictive licensing. It was only after delicensing that the industry expanded rapidly. Traditionally, scrap has been the main feed to EAFs. With more and more continuous casting, the generation of scrap has reduced drastically. Even in a developing country like India, continous casting has been extensively used to enable steel to remain competitive. Today steel industry is facing a situation of less generation of scrap accompanied by greater demand. Nevertheless, it needs to be emphasized that though scrap will continue to remain the major feed, pre-reduced material will gradually substitute more and more scrap in making high quality steels. Consequently, the supply of sponge iron is expected to grow substantially in coming years. Mini Sponge Iron Plant along with co-generation & Ferro Alloy producing unit has become a unique phenomenon in the region of Chattisgarh, Orissa, Jharkhand etc. An induction furnace along with casting and rolling facilities can also improve the viability of such a complex. Many such ‘Mini Integrated Steel Complexes’ have emerged in the region and have significantly contributed to the steel production. Due to the locally available raw materials and also local distribution of their products, they can compete very well with the main plants. The national seminar organised by ‘Steelworld’ at Raipur will address itself to the issues related to Sponge Iron production, co-generation and downstream facilities. It will discuss the technology involved at various stages and also the long term viability of such projects. The deliberations will consist of experts in the field, representatives of various trade associations, policy makers etc. It will also highlight the case studies of the organisations already engaged in the above activities and can serve as important guidelines and tips for others. I wish all the professionals, experts and policy makers a very informative and interactive seminar. D.A.Chandekar
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| Headlines
Iron ore exports to go
up |
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In order to increase the export earnings of high grade iron ore to China, the Cabinet today modified the annual export ceiling of 3 million tonnes from the Bellary and Hospet mines. However, government has not made any changes regarding the procedures to be followed by the exporters. Government has decided to continue with canalisation through MMTC Ltd and exporters would also be required to seek government licence to export iron ore with over 66 per cent iron content sourced from the Hospet and Bellary mines. This is exactly opposite of the expectations of the exporters. Industry is demanding restrictions on iron ore exports to China since Beijing has put curbs on the export of coking coal, pushing up prices in India. Exports from other mines were free of ceiling even earlier. The move could have an adverse effect on the Indian market and push up the prices of raw materials as there is a big demand supply gap. There is already a high demand for iron ore in India because of the surge in dometic steel demand. With more high grade ore now eligible for export, domestic companies may feel the pinch and prices may increase. It is certain that the government still had the power to regulate the export of ore. |
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Net profit for Bhushan steel rises in Q3 Bhushan Steel and Strip Limited has registered 80 per cent rise in the net profit for the third quarter from Rs. 12 crore during the corresponding period last to Rs. 22 crore for the third quarter this year. Gross sales have increased from Rs 134 crore during the third quarter last year to Rs. 451 crore this year. The exports of the company increased marginally by 3.5 per cent from Rs. 85 crore to Rs. 88 crore for the third quarter. The cash accruals of the company increased by 43.3 per cent from Rs. 43 crore during the third quarter this year. |
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Steel majors to resolve shortage of coking coal State-owned steel producers, Steel Authority of India Limited (SAIL) and Rashtriya Ispat Nigam Limited (RINL), are facing an acute shortage of coking coal with two Australian companies backing out from supplying the feedstock. At a time when the steel producers are working at full capacity to cater to the ballooning demand, two out of three Australian venders – MIM Holdings Limited and Anglo American – have enforced a cut of coking coal. MIM and Anglo American, along with BHP Billiton, are the three primary suppliers to SAIL and RINL, accounting for nearly 70 per cent of their consumption of coking coal. However, labour unrest, coupled with government restrictions owing to environmental concerns has caused disruption in production and forced them to suspend supplies for at least two months. Coking coal prices have gone up nearly four-fold in the last one year from $75 - $80 to 250 per tonne FOB. With rising international consumption and the mining industry plagued by accidents, China is no longer viewed as a credible supplier, creating a crisis for the industry. India imports about 15 million tonnes of high grade coking coal, which is primarily used by the state – owned producers. |
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Essar Steel net loss restricted to Rs 21.74 cr in Q3 Essar Steel Ltd has posted a net loss of Rs 21.74 crore during the third quarter ended December 31, 2003 after depreciation of Rs. 102.78 crore, down from a loss of Rs. 65.91 crore recorded during the same period of the previous year. The company’s total income rose to Rs. 1,027.56 crore during the quarter under review, as against Rs. 841,53 crore posted during the corresponding quarter a year ago. The steel major’s finance cost stood at Rs. 136.55 crore in the reporting quarter, compared with Rs 166.74 crore posted during the same period of fiscal 2004. |
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KIOCL betters production target Kudremukh Iron Ore Company Limited (KIOCL), a public sector undertaking of the Ministry of Steel produced 3.098 million tonnes of concentrate and 2.434 million tonnes of pellets during April-November 2003 against their respective targets of 3.015 million tonnes and 2.29 million tonnes. In case of concentrate, the target fulfilment was 103 per cent and in case of pellets 106 per cent. The targets set for the production during the year 2003-04 is 5 million tonnes of concentrate and 3.4 million tonnes of pellets. |
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RSP to raise capacity to 3.5 mt Rourkela Steel Plant is planning to double its steel making capacity to 3.5 m tonnes in the next five years. RSP’s current steel making capacity is about 1.8 mt. This was announced by RSP’s Managing Director, Sanak Mishra recently. |
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Improved financials in Q3 for JISCO Jindal Iron & Steel Company Limited reported improved financial result in Q3. It has reported 76 per cent improvement in profit after tax on sales growth of 37 per cent. Profit before tax (PBT) for Q3 is Rs. 72.27 crore and profit after tax (PAT) is Rs. 52.41 crore. JISCO continues to maintain its leading position for galvanised steel market, both in terms of market share and the premium it commands over its competitors, JISCO is aggressively working to create a brand equity for its GC Sheets sold under the brand name of Jindal Vishwas. In an efforts to penetrate further down the value chain. The outlook for Q4 continues to be robust and the company is confident of sustaining its margins and profitability as per Q3 or better, based on various industry related projections. |
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Ministry plans cut in exports, encourage barter deals In an attempt to provide relief to domestic steel consumers hit by rising input prices, the steel ministry has proposed a series of measures. It is also exploring the possibility of barter deals with major coking coal exporters like China. About whether steel ministry is proposing a barter type arrangement with countries like China – the country is a major coking coal exporter – Mr. Tripathy, the Steel Minister said that he will have a detailed discussion with his counterpart in the commerce ministry. A similar arrangement is already in place between Brazil and China for trade in iron ore and coking coal. |
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Highest ever net profit for SAIL SAIL has put up an outstanding performance by recording a net profit of Rs 1,498 crore on a turnover of Rs. 16,934 crores in the last three quarters of the current year. The net profit figure for the first three quarters in 2003-04 is higher than the full year profit of Rs. 1,319 crore registered in 1995-96. In the first nine months of 2002-03, SAIL had reported a loss of Rs. 546 crore on a turnover of Rs. 13,097 crore. For the October-December 2003 quarter, SAIL’s net profit stood at Rs. 738 crore against a loss of Rs. 79 crore in the third quarter of the previous fiscal. The turnover in the third quarter of the current fiscal stood at Rs. 6,522 crore, an increase of 33 per cent over the Rs. 4,908-crore registered in the corresponding period last year. V S Jain, CMD, SAIL also said that the board had cleared an investment of Rs. 250 core to introduce new schemes for upgradation of various plants. The company expects to incur a capital expenditure of about Rs. 800 crore to Rs. 1,000 crore during the next financial year, most of which will come from internal accruals. The oustanding feature of the company’s performance has been Durgapur Steel Plant entering a net profit zone after a long time. The Rourkela Steel Plant also emerged from a period of sustained loss for the last five years to earn cash profit for the first nine months. The Special Steel Plant, which had earlier dragged down the company’s profitability, also managed to reduce their losses by more than Rs. 100 crore. |
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Steel price to go up by Rs. 4,000 In one of the highest one-time price hikes in recent years, domestic steel manufacturers have increased the prices of hot rolled coil by up to Rs. 4,000 per tonne, to around Rs. 27,000 per tonne, recently. This sharp rise is due to an increase in the price of raw materials such as iron ore, coke and scrap, which has pushed international hot rolled coil prices to $560-570 per tonne, an all-time high. Globally, steel prices have nearly doubled from around $300 per tonne in June-July 2003. The domestic price hike is different for different companies – in the range of Rs. 2,000 – 4,000 per tonne – with Essar Steel raising prices by Rs. 4,000. Tata Steel had also increased its hot rolled coil prices by Rs. 2,000 per tonne, taking its ex-factory price to Rs. 25,000. |
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Rs 3,000 price increase by Tata's despite govt advisory against rise Tata Steel has increased prices of both flat and long steel products by about Rs 2,500-3,000 per tonne. The price hike, which is about 10% on basic list prices, has come into effect from March 1. Incidentally, the Union government had announced an excise duty cut from 16% to 8% and a peak import duty cut from 20% to 15% in the last couple of weeks. The government had withdrawn the 12% DEPB benefit against steel exports. It had earlier put out an advisory against further steel price hikes by companies. These measures were largely aimed at stabilising steel prices. Company spokesman said that 'Tata Steel is committed to operate within the price level indicated by the government and our levels are well within these limits. Moreover, 70% of our products are sold to institutional buyers on long-term price agreements, where prices do not change during the pendency of the agreements.' PSUs like Steel Authority of India (SAIL) and Rashtriya Ispat Nigam (RINL), have opted to follow the government’s advice to hold on to the February prices than hike prices this time. SAIL and RINL said that the benefits of excise cuts will be passed on to the consumers. The Union steel ministry has also asked the two PSU steel companies to divert all exports for increased availability of steel in the domestic market. However, SAIL is still in talks with the steel ministry to go ahead with its planned March price hike, stating that over the last one month, international steel prices have jumped by $70-80 per tonne. International hot rolled coil (HRC) prices are currently at $580 per tonne (FOB) with landed steel price on Indian ports at over Rs. 33,000 per tonne. In comparison SAIL’s prices are cheaper by about Rs. 5,000 per tonne. While the government cannot directly control steel prices, it can impose conditions for steady supply to sectors like small-scale, defence and engineering exports. Though the quantum is small, the government has directed the PSUs to offer discounts of Rs. 500 per tonne for supplies to these sectors. |
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Middle East Steel markets booming Most Middle East steel markets enjoyed boom in 2003, despite the war in Iraq. But re-rollers faced an unprecedented squeeze as prices for imported billets had exceeded local rebar prices by the end of the year. Continuous chaos in Iraq delayed measures to rehabilitate the country’s infrastructure. Stocks of steel were looted and, as the Iraqi market completely collapsed, were re-exported at prices as low as $50 per tonne, destabilising neighbouring markets such as Jordan. But the story was one of growth in the steelmaking locations of Egypt, Saudi Arabia, Qatar and Iran. Prices soared and steel producers progressed expansion plans. New entrants in Egypt , Saudi Arabia, the UAE and Iran studied plans to set up direct reduced iron (DRI) plants. |
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Morgan Receives Bearing Contract from China Mill Builder The MORGOIL* Bearing Division of Morgan Construction Company has received a contract from China Erzhong, a mill builder located in Deyang, Sichuan Province, the People' s Republic of China for the design and manufacture of MORGOIL Bearings. The bearings will be installed in a new mill being built by China Erzhong for Chongqing Iron and Steel, in Chongqing City in China. Engineering and technical support for this contract will be supplied by the company's headquarters facility in Worcester, Mass., while the equipment and manufacturing components will be manufactured at the company's Morgan- Shanghai manufacturing facility in China. Delivery is scheduled for October 2004. |
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Stainless steel demand from China puts pressure on prices Rising prices of nickel and other alloying metals were uppermost in the minds of stainless producers and consumers in 2003. Nickel’s 3-month LME price started the year at $7,900 per tonne but hit $13,000 per tonne and above by December, while charge chrome rose from a base price of 34 cents per Lb in the first quarter of 2003 to 50 cents per Lb in the fourth – an increase ascribed largely to the unforeseen application of the South African rand against the US dollar on the currency markets. |
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Posco has announced plans for a massive investment in steelmaking facilities at home and abroad over the next four years to take total capacity to 42 million tpy by 2008. The plan was outlined by Posco Chairman & ceo, Lee Ku-Taek, at a meeting of investment analysts called by the Korean steel gaint to present its 2003 business results. Lee declared that Posco would invest a total of 10.7 trillion won ($9.06 billion) in the Korean steel industry and increase its crude steel production capacity to 32 million tpy by 2008. |
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BHP Billiton, Rio Tinto’s subsidiary Hamersley Iron, and CVRD persuaded Nippon Steel to accept a price increase of more than 18 per cent for iron ore fines to be delivered during the year 2004. The two major Australian suppliers secured an increase in the price premium for lump iron ore fines after further negotiations with their main customers and for BHP’s Mt Newma fines is 35.99 US cents per metric tonne unit a fob basis. This was an increase of 18.62 per cent, which matches exactly the percentage price rise announced recently for deliveries to Europe starting on January 1 of Carajas fines from CVRD to Arcelor. |
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Mechanical expander for JSC Chelyabinsk The order placed by JSC Chelyabinsk, Russia, with SMS Meer GmbH, Mönchengladbach/Germany, for the supply of a single-head mechanical expander will be delivered in the second quarter of 2004. The mechanical expander will be used to expand longitudinal SAW steel pipes with diameters from 20" (508 mm) to 48" (1219 mm) and lengths from 10 to 12.2 m in material grades up to X70. The wall thicknesses range from 7.0 to 22.2 mm. The maximum expander force in the main cylinder is designed for 7.5 MN. The orders for expanders with similar parameters recently received (Julong Steel Pipe and Shashi Steel Pipe, both PR China, Sadid Industrial Group, Iran, Wan Chi Steel, Taiwan, and JSC Vyksa Steel Works, Russia) and the short delivery time thanks to the available technical know-how were among the deciding factors for the placement of the order with SMS Meer GmbH. |
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CIS export prices to fetch record level CIS export prices have reached new highs, overtaking the record levels seen in March 2003. Billet has passed $280 per tonne FOB. Prices for billet rose to $270 in early March '03, a record for CIS produced billet. Prices dipped below $210 in June, but have been steadily rising ever since. Turkish exporters are reported to be asking $310 per tonne FOB at present but are expected to push this up to $315 in the next few days, as scrap costs continue to pressure margins. Similarly, CIS-origin HR coils has risen to $335 per tonne fob, with offers coming in at $350 per tonne fob. The $330 per tonne achieved by CIS exporters in March was in previous high level. Slab in China is being offered at $350 per tonne CIF , equivalent to $305 fob black sea. |
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Ispat Karmet plays down Chinese cold rolled import duty China’s imposition of an import duty on January 14 on cold rolled coil from Kazakhstan for the next five years would not be a great obstacle for Ispat Karmet according to sources at the company. The level of import duties for the five countries targeted by the anti-dumping measures ranges between 6 and 55 per cent. But reportedly Kazakhstan’s steel is relatively low down in the list at 14 per cent. At round 600,000 tonnes, cold rolled material accounts for only 30-35 per cent of the LNM group’s roughly two million tpy of steel imports into China, added the source. Most of this CR strip comes from Ispat Karmet it was added. The other countries hit by the measures are Russia, Ukraine, South Korea and Taiwan. |
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Iron ore price rise to lift Brazilian steel prices This year’s substantially higher iron ore prices will be reflected in almost immediate steel product price rises of 2.5-3 per cent by Brazil’s integrated mills, according to steelmaking and analyst sources. Brazilian steel institute, IBS indicated it is inevitable the higher iron ore prices will be passed on to steel customers as iron ore represents around 12 per cent of steelmaking costs in the country. Iron ore prices in Brazil are based on international price levels. The average impact on local steelmakers of the new iron ore price will be of a 107 per cent rise in steelmaking costs, according to analysts. |
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Latin American billet prices continue to climb Latin American billet prices continued their upwards climb this week, reaching $283 a tonne fob for low carbon grade from Trinidad & Tobago and $300 a tonne fob for 20mnsi grade from Brazil, producer sources reported. The Prices, some $8 a tonne higher than the previous week, were atributed to international market tightness mainly due to lower billets exports from Russia and Ukraine. Although some sales are being effected at the new prices, trade sources note the higher billet prices continue to meet some resistance particularly as rebar prices have not moved up so fast. The rebar actor many thus limit the billet price escalation, traders and consultants said. Rebar prices from Venezuela were meanwhile put at a firm $310-315 a tonne, or $330 c&f in the central American / Caribbean region. However, trading sources still put average latin American rebar in the $270-280 FOB range. |
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This is a compilation of news
from various dailies, magazines, trade publications and Press Releases. |
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