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| MARCH 2005 | |
| From the CEO's Desk | |
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It seems that 'Feel Good' mood has entirely captured the steel industry. Such a rush of new projects, brownfield as well as greenfield, especially in the states of Orissa, Jharkhand, Chattisgarh etc., has practically mesmarised the atmosphere. Entrepreneurs, not anyway connected with steel industry, are putting up mini sponge iron plants, small time traders have become big time iron ore exporters, most of the cold rollers do not have time to look at the domestic markets and scrap is being traded by almost everybody. The situation seems to be bubling - the buble of positive sentiment - will it continue to expand or will it burst ? Only the time will tell !!! I remember in 1992/93, the situation was similar. Steel was decontrolled & delicensed and there was tremendous rush of new projects in the sector. Unfortunately, by the year 1996/97, all of these projects were in the red and it was argued that Steel ministry's and financial institution's projections about steel demand were too optimistic. The situation is no different today. Everybody talks about steel making capacity but nobody seems to be bothered about the demand curve. How steeply it is going to climb ? Do we know ? Have we analysed ? Are we working towards it ? No, I think we all have taken 'demand' for granted. Another factor which I am worried about is raw materials supply. Whether it is iron ore, coal, coke, refractories or any additive, everything is in short supply. Moreover, roads, ports etc. are full uptill neck and can not handle any extra load. How are we going to feed our furnaces and how are we going to keep our rolling mills running ? No sir, merely vast iron ore deposits and vast population do not qualify any country to have a growing iron & steel industry on a sustainable basis. We have to address more basic issues like power cost, logistic, raw material linkages, infrastructure which have not changed and are still unfavourable to us. Sir, tell me one thing, what comes first ? infrastructure or steel industry? We have already committed one mistake earlier ! We have developed a world class auto industry and now, we are planning to build the roads ! What comes first ? D.A.Chandekar |
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| Headlines
Asian Metallurgy 2005 - A Report Steel cos to raise price as input cost go up APMDC to tap iron ore reserves in Chennai Steel cos in Maharashtra to be hit of free power supply to farmers SAIL board approves expansion plans NCDEX estimates steel futures trading Rs.800 billion/y Steel policy in consultation with industry L&T bags Rs.343 cr order to PSL Tata Steel seeks coal mines acquisitions abroad Siemens develops Mathematical metal Georgsmarienhütte renews a direct-current arc furnace Morgan Commissions First Bar RSM in China Mittal’s Polish unit to build new continuous caster Shanghai Baosteel iron ore price rises Arcelor eyes majority stake in Chinese steel cos Steelmakers clash with other cos over US tariffs JFE Holdings to raise price about Y10,000/ton Nippon Steel revises profit estimates upwards Kobe Steel reiterates net profit outlook Posco to raise domestic steel price soon Brazil Govt suspends tariffs on steel imports
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Asian Metallurgy 2005 - A Report Technocrats and professionals once again debated and
shared their heartfelt ideas with each other and leading companies exhibited
their most advanced technologies, products & services thus; added an emerald
in the annals of 'Steelworld' with the three-day exhibition-cum-seminar
between March 3 - 5, 2005 at Nehru Centre, Mumbai. The most attracting
feature of the exhibition was the participation from all parts of the
developing and developed world including China, Europe and South East
Asia. |
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Steel cos to raise price as input cost go up Integrated steel producers are all set to raise selling prices of various steel products effective April 01 because of hovering raw material prices leaps and bounds. The Prices of essential raw materials used by the steel industry have been rising over the past three years leading to an increase in production costs, an expert said. In January this year, the price of metallurgical coke had jumped 111 per cent over the March ’03 prices, while the melting scrap and iron ore prices registered a cent per cent rise. However, it was freight costs that overtook all others with freight rates soaring by 288 per cent. While prices of met coke, melting scrap and iron ore have come down after shooting up in ’04, freight rates are still on an upward swing. From $ 9 per tonne in March ’03, it has touched $35 per tonne in January ’05. Yet, a ‘big hike’ in steel prices is not expected by the government, owing to the new steel capacity being built globally. As per data gathered by the government from the industry, met coke was priced $ 120 per tonne in March ’03. It climbed to $200 in September that year. Last year however the price in March stood at $ 500, came down to $ 330 in September and stood at $ 253 per tonne in January. Melting scrap, which hit a price-level of $300 in March ’04, has come down to $ 220 per tonne, which was the price range in September ’03. But the increase is 100 per cent over the March ’03 price of $110. Iron ore price has also doubled to $60 per tonne from the $30 per tonne about three years back. According to the government, the impact of price rise of raw materials varies depending on the process adopted by producers and the source — indigenous, captive or imports — of such raw materials. |
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APMDC to tap iron ore reserves in Chennai The Andhra Pradesh Mineral Development Corporation Ltd has signed a memorandum of understanding with Gimpex Ltd of Chennai to tap low-grade iron ore deposits in Prakasam district, sources said. The deposits, located at Konijedu and Marlapadu villages, covered an extent of 3143 acres, Sabitha Indra Reddy, Minister for Mines, said. The joint venture would see investments to the tune of Rs 150 crore to Rs 175 crore, with the Corporation holding 11 per cent equity. ‘The JV is expected to yield us Rs 2.25 crore every year at a rate of Rs 45 a tonne of concentrate produced,’ she said. ‘The plant would have a capacity of five lakh metric tonnes. Besides, the project would generate 500 and 800 jobs,’ she said. For the Mangampeta barytes project in Kadapa district, the Corporation picked M. Ramakrishna Reddy out of nine eligible bidders. ‘They have quoted Rs 119.02 crore, the lowest figure,’ she said. A panel comprising six members looked into the bids. She, however, said ABC Engineering Works, one of the bidders, moved High Court. ‘We have submitted relevant papers to court,’ she said. During the last five years, the Mangampeta project recorded an accumulated turnover of Rs 224.35 crore and a profit of Rs 43.74 crore. In a bid to tap huge bauxite reserves to the tune of 700 mt in Visakhapatnam and East Godavari districts, the Government was planning to forge tripartite alliances with private companies, APMDC and local tribals. ‘This is to protect interests of tribals,’ the Minister said. |
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Steel cos in Maharashtra to be hit of free power supply to farmers Unable to cope with mounting power shortages, largely due to free power to farmers, Maharashtra government may cover the steel industry in daily load shedding programme. Steel units comprising Ispat, Jindal Iron & Steel, Bhushan Steel, Mukand, to mention a few, are expected to be hit by the new measure, reports said. These units have a daily consumption of close to 1000 mw, drawn from the debt-ridden Maharashtra State Electricity Board (EB) at an average per unit tariff of Rs 3.67. The state cabinet, which met recently, has asked the ministries of industry and energy to explore the option of covering the steel companies in the daily load shedding programme being implemented by EB. EB is compelled to daily shed a load of 2500 mw to 3,000 mw. At present, high-tension consumers including steel units and continuous process industries are excluded from the load shedding programme. ‘If steel units are covered under the load shedding it will ease out power situation in certain urban and rural areas. This will be essential as students are suffering due to load shedding. At present, EB is carrying out daily load shedding of three hours in urban areas and six hours in rural Maharashtra,’ state government sources said. |
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SAIL board approves expansion plans Steel Authority of India Ltd – the largest public sector steel producer - said its Board of Directors had given in-principle approval for two projects at its Bhilai and Bokaro steel plants envisaging an investment of Rs 180 crore. The approval is for revamping a sinter plant at Bhilai and installation of air turbo compressor and oxygen turbo compressor at Bokaro, Sail said. With this, the total planned investment in different projects approved, both in-principle and final, during the current fiscal stands at Rs 2500 crore. These projects are part of the public sector firm’s long term plans to enhance its hot metal production to 20 mt by 2011-12 from 13 mt at present at a total investment of Rs 25,000 crore. The revamping of sinter plant at Bhilai would increase production of sinter as well as pig iron at the steel plant. The installation of turbo compressors at Bokaro would help meet the enhanced requirement of compressed air to augment oxygen production. Besides these two projects, the firm is also implementing projects worth Rs 271 crore at Durgapur steel plant, Rs 319 crore at Rourkela, Rs 428 crore projects at Bhilai and Rs 199 crore worth projects at Bokaro steel plant. |
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NCDEX estimates steel futures trading Rs.800 billion/y The National Commodity and Derivatives Exchange of India (NCDEX) estimates the size of Indian steel futures trading to be about INR800 billion ($18.35 billion) a year, a senior executive of the exchange said. “The market is huge and growing. Once the flat steel categories are also included, the size (of the futures market in steel) could grow much larger,” Chief Business Officer Narender Gupta said. The Mumbai-based NCDEX recently launched futures trading in steel ingots, a common type steel category used to make construction grade steel. This category is different from flat steel, which is used to make products including cars and consumer durables. “In the first two hours, of the launching day about 2,000 (metric) tons of ingots were traded. Although this is small, I expect trading to pick up fast... Within a month ingot prices will become a benchmark for prices of all construction grade steel,” said Gupta. “The futures contracts will be for three months. We’ll have three month contracts system,” Gupta added. With steel prices rising sharply, the futures trade is expected to enable steel companies to hedge part of the price risks. |
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Steel policy in consultation with industry The fast growing steel industry needs a comprehensive favourable policy which it has been demanding for quite some time now. But the Centre has woken up now and started talking steel policy which it assures will be framed soon in consultation with all stakeholders of the industry. This policy would also include a viable policy for exports of iron ore, steel secretary J P Singh said at the second Global Steel Conference —2005 at South Goa recently. Singh exuded confidence that once China reaches its peak in 10 years, next driver of world steel growth will be India. He quoted statistics to say that the projections for 2012 were 55 mt from the present 35 mt production capacity. By 2020, India would produce more than 100 mt of steel. On the export of iron ore, he pointed out that since in the lump segment there is ample of scope for value addition as domestic demand is high , the rational view could discourage exports. However, in case of fines, he was all in favour of encouraging exports. ‘Australia is expected to remain the dominant coking coal supplier to India taking into account Indian steel production projections of 60 mt by 2011 which would imply annual consumption of 70 mt of coking coal,’ says Kerry Hickey, minister for mineral resources from NSW Australia. Hickey told the stake holders of steel industry gathered at the global steel meet-2005 in South Goa ,‘India is commencing a significant economic growth and industrialisation which provided enormous opportunities for Australian business to invest in this country and to export Australian technology and initiative.’ |
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L&T bags Rs.343 cr order to PSL Steel pipe maker PSL Ltd has bagged a Rs 343 crore order from Larsen & Toubro for supply of spiral welded steel pipes, coating and other material for water projects to be executed in Gujarat. The company would supply about 85,000 tonnes of spiral welded steel pipes besides coating systems and related works pertaining to water projects by Gujarat Water Resources Development Corporation Ltd and National Water Resources Development Council, a PSL release said. The order is for the Sujalam Sufalam Scheme initiated by the Gujarat government to solve the water problem in 10 districts, it said, adding the order is scheduled to be completed during the financial year 2005-06. |
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Tata Steel seeks coal mines acquisitions abroad Tata Steel Ltd, the second-biggest steel maker in the country, plans to buy coal mines in countries such as Australia, Indonesia, Mozambique or New Zealand as part of its plan to more than triple steel production to 15 mt, sources said. The company produces four mt of steel a year from mills supplied with coal from its mines in India, Tata Steel’s deputy managing director T Mukherjee said in Singapore. The planned production increase would mean buying mines to ensure supplies. India’s fastest economic growth in 15 years has stoked demand for houses, cars and appliances, boosting sales for Tata Steel and Steel Authority of India Ltd, the country’s biggest producer, and leading to a jump in coal use. Tata, one of the world’s lowest-cost steelmakers, faces growing competition for raw materials from China’s Boasteel Group and Steel Authority, which plans to invest in mines owned by BHP Billiton Ltd. ‘Securing supplies is the key to Tata Steel’s future plans as its own coal meets only half of its requirement,’ Jon Thorn, who manages $170 million in stocks at India Capital Fund Ltd, said. ‘Expanding sources of coal supplies will help it contain costs,’ he added. Tata Steel, which mines its own iron ore, imports about 1.8 mt of coking coal a year from BHP’s mines in Australia and mixes it with an equal amount of its own coal. It costs Tata about $154 to make one tonne of hot-rolled steel, compared with $158 at South Korea’s Posco, according to the Indian company. Tata Steel’s expansion plans will be aided by its acquisition of Singapore-based NatSteel, which will boost the company’s capacity by half to six mt this year. The company has announced plans to build a new $3.4 billion, six mt-a-year steel and iron ore complex in Orissa, which has two-thirds of India’s iron-ore reserves and a quarter of the coal deposits. |
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Siemens develops Mathematical metal Siemens has developed an innovative mathematical model to enable iron manufacturing in direct reduction plants to be monitored and optimized in real time. The expected properties of the direct reduced iron (DRI) can be determined and adjusted on the basis of online process parameters as early as the shaft furnace reduction phase. Simelt Sumpax enables adjustements to be made to process variations, thus improving DRI quality increasing productivity and reducing power consumption. Importantly the monitoring of critical process parameters enhances plant availability. The iron ore takes about six hours to move through the shaft furnace from top to bottom while hot, reformes natural gas flows over the ore. It is only after this phase that the quality of the final product - its degree of metallization and carbon content - can be analysed. Up till now, shaft furnace control requires a lot of instinctive feel and experience on the part of the operator, as the use of sensors, with the exception of a few temperature guages, is hardly possible in the presence of temperatures as high as 900 degrees celsius and the harsh conditions in the long shaft furnace drum. The huge practical problems involved in controlling this process have consistently resulted in fluctuations in DRI quality. |
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Georgsmarienhütte renews a direct-current arc furnace Georgsmarienhütte GmbH, Germany, has awarded an order to SMS Demag, both Germany, for the comprehensive renewal of its 125-ton DC arc furnace. The supply scope comprises a furnace shell with panel technology, the furnace roof, a new tilting platform and the erection. The arc furnace is to be equipped with change-vessel technology. The purpose of this measure is to increase the tapped weight to 140 tonnes, to enlarge the charging volume and to optimize the melting process sequences. The increased tapped weight and enlarged charging volume will be achieved by lowering the shell bottom section into the tilting platform while at the same time increasing the height of the shell top section. Crucial areas of the furnace shell will be equipped with panels comprising vertically arranged finned tubes made of copper. In the area of the slag zone, the shell will be fitted with special slag zone panels. The furnace roof will be provided with optimized cooling circuits. Commissioning of the furnace is scheduled for autumn of this year. The arc furnace supplied to Georgsmarienhütte in 1994 was the first of its kind in Germany. Georgsmarienhütte GmbH produces bars, semi-finished and bright steel products from quality steel and high grade structural steel and predominantly supplies the automotive industry and its suppliers. SMS Demag AG forms part of the Metallurgical Plant and Rolling Mill Technology Business Area of the SMS group. |
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Morgan Commissions First Bar RSM in China Morgan Construction Company, of Worcester, MA, is commissioning its first bar reducing/sizing (BRSM) mill installed in China. The new mill, which was designed and built by Morgan, was installed late last year at Echeng Iron & Steel Co., Ltd., in Echeng, Hubei Province, of the People's Republic of China. According to Project Manager Fan Li, "The new mill produced more than 500 tons of 25, 28 and 32 mm bar during the first three days of start-up at rolling temperature 870c. In addition, the mill achieved the guaranteed tolerance of 0.1 mm ovality for both 25 mm and 28 mm products during the same period. The new mill, which will produce specialty steel products for rounds, rebar and flats, is designed to provide high-precision tolerance and thermo-mechanically rolled products. "The Bar RSM," he added, "will also provide single family rolling for enhanced rolling schedule flexibility, high-output efficiency, and high quality bar." Morgan has also provided Echeng with a controlled cooling line with the Morgan Temperature Control System (METCS) and full Bar RSM control system. The mill, which was designed at the company's Worcester headquarters, was manufactured at Morgan's USA and Chinese manufacturing divisions. Morgan Construction Company is a designer and producer of high-quality rolling mill products and services for the metal industry worldwide. |
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Mittal’s Polish unit to build new continuous caster Mittal Steel Company said that its Polish subsidiary, Mittal Steel Poland, has signed a letter of intent to construct a new continuous caster at Dabrowa Gornicza. This investment forms a significant part of the PLZ2.4 billion capital expenditure programme agreed with the Polish Ministry of State Treasury under the terms of the privatisation agreement for Polskie Huty Stali. The announcement follows earlier agreements, finalised in December 2004, to modernise Mittal Steel Poland’s wire rod mill in Sosnowiec, and install a colour coating line in Swietochlowice, for a total consideration of PLZ260 million. The letter of intent to build the new continuous caster has been signed with the German company SMS Demag, who will be the turnkey supplier for the project. Contracts are expected to be finalised next month, with the project expected to be on-line by the end of 2006. Frantisek Chowaniec, CEO and Chairman of the Management Board of Mittal Steel Poland said: “These investments are vital to the future success of Mittal Steel Poland, and our final investment commitment is likely to significantly exceed the PLZ2.4 billion figure established as part of the privatization agreement”. Mittal Steel Poland is simultaneously holding talks on implementing the other key investment - a hot rolling mill in Cracow. |
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Shanghai Baosteel iron ore price rises Rio Tinto PLC said that the price of Hamersley Iron ore products to Baosteel will increase by 71.5% over contract year 2004 prices under a new agreement. Rio Tinto said that Hamersley Iron reached agreement with Shanghai Baosteel Group Corporation on prices for Hamersley iron ore deliveries for the contract year commencing Apr. 1, 2005. |
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Arcelor eyes majority stake in Chinese steel cos Steel giant Arcelor is looking at opportunities in the fast-growing Chinese steel market. “We are in talks in China but they are at a very early stage,” said Luc Scheer, a spokesman for Arcelor’s Chief Executive Guy Dolle. Scheer declined to be more specific but did say Arcelor views the eventual acquisition of a majority stake in a Chinese steel maker as being the ultimate prize. Dolle said that conducting talks in China isn’t an easy task because governments, city administrators and private owners all want to get involved. Last year China consumed around 30% of the world’s steel supplies as its economy booms. The construction industry and auto makers are driving the demand for steel there. Arcelor is streamlining its presence in Europe, while building up in lower-cost countries overseas. In December 2003 Arcelor teamed up with Japan’s Nippon Steel Corp., and China’s top steelmaker, Baosteel, to launch an EUR639.2 million joint venture. Arcelor also has invested around EUR120 million in a share in a Shanghai plant that started to supply metal sheets to auto makers in China in January. |
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Steelmakers clash with other cos over US tariffs Lawmakers, steel companies and unions urged a trade panel to keep steel tariffs on some foreign imports for five more years. Carmakers and appliance manufacturers said it’s time to let competition back into the market. The U.S. International Trade Commission is reviewing penalties put in place in 1999 to stop a flood of low-priced hot-rolled steel from Brazil, Japan and Russia. A second wave of steel imports from 11 other countries led to additional tariffs in 2002, which President George W. Bush lifted in late 2003. “Unfortunately, unfairly traded imports of hot-rolled steel have continued to plague this industry and continued to harm steel workers and their families,” Rep. Ted Strickland, D-Ohio, told the panel. “Now is not the time to terminate relief as the domestic hot-rolled steel industry has only just begun to recover.” About two dozen other lawmakers from steel producing states, including Pennsylvania, West Virginia, Michigan, North Carolina and Illinois, also testified in favor of keeping the tariffs. But domestic manufacturers such as Ford Motor Co. (F), General Motors Corp. (GM), Maytag Corp. (MYG), Whirlpool Corp. (WHR) and auto parts maker Dana Corp. (DCN), told the trade panel that the tariffs are causing higher steel prices and harming their business. |
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JFE
Holdings to raise price about Y10,000/ton |
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Nippon Steel revises profit estimates upwards Nippon Steel Corp. revised upward its group net and pretax profit forecasts for the fiscal year to March 31, citing higher prices of steel products stemming mainly from bigger demand overseas. The steel maker expects to post a net profit of 200 billion yen and pretax profit of 340 billion yen in the current fiscal year, up from the previous projections of 190 billion yen and 320 billion yen released on Oct. 28. It also revised upward its sales projection for the 12-month period to 3.36 trillion yen from 3.33 trillion yen. |
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Kobe Steel reiterates net profit outlook Kobe Steel Ltd. reiterated its previous group net profit forecast for this fiscal year ending March 31, but nudged up its sales and pretax profit forecasts. Along with other Japanese steel makers, the company has had to raise its steel product prices to cover soaring raw materials costs. Kobe Steel said it still expects to post a group net profit of Y50 billion for the year, though it raised its group pretax profit to Y110 billion from Y105 billion, and lifted its sales forecast to Y1.45 trillion from Y1.44 trillion. |
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Posco to raise domestic steel price soon Posco, the world’s fifth-largest steel maker, will raise its domestic steel product price in the near future, the company’s chief executive said. “Look at how much the raw material prices have risen this year. We have to raise the price anyway. We only have to decide when and how much we will raise the price,” said Lee Ku-Taek. in January, Posco agreed to purchase hard coking coal from Australian coal miners BHP Billiton Ltd. (BHP) and Rio Tonto Ltd. at prices slightly more than double from last year. The one year contracts begin in April. Posco also last month agreed to pay 71.5% more for iron ore supplied by Brazilian mining company Compahia de Vale do Rio Doce, or CVRD, in 2005, following similar agreements with Japanese steel makers. During a presentation at a conference, Lee said Posco is paying about $40 a metric ton for iron ore in 2005, up sharply from $16 in 2001. For coking coal, a key material used in steel-making along with iron ore, Posco is paying around $114/ton this year, up from $45/ton in 2001, he said. The global steel industry is facing mounting pressure from rising raw material costs as China’s strong demand for steel has boosted demand for iron ore and coking coal. |
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Brazil Govt suspends tariffs on steel imports Brazil’s government suspended import tariffs on 15 steel products used primarily by automakers and white goods manufacturers to try to keep high steel prices from passing through to consumer inflation, reports said. The decision is likely to please local automakers but anger Brazil’s steel industry, which includes large flat-steel makers like Companhia Siderurgica Nacional (SID), or CSN, and Usiminas. The head of Brazil’s national steelmakers association said that the government ceded to pressure from steel buyers, who will now have a stronger position when negotiating prices. Brazil’s powerful auto manufacturing lobby Anfavea has been pressurising the government to suspend tariffs on steel imports for more than a year amid spiking world steel prices and rising costs for inputs like coal and iron ore. Anfavea represents a $20-billion-a-year auto industry that includes international giants like General Motors Corp. (GM), Fiat SpA (FIA), Volkswagen AG and Ford Motor Co. However, it’s unclear whether the suspension of tariffs will allow automakers and white goods manufacturers to buy steel much more cheaply than they already do. Brazil is one of the world’s top 10 steel producers with annual output of more than 30 million tons, and local steel prices tend to trail prices on global markets. That makes the possibility of paying extra to transport foreign-made steel to Brazil a less attractive option for local manufacturers. |
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