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| MARCH 2006 | |
| From the CEO's Desk | |
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The iron & steel industry is undergoing a transition in terms of structure, markets and also technology. Last few years saw many mergers & aquisitions. Many unviable units were closed down while few others were taken over by big brothers. This surely gave a competitive advantage to the individual company as well as steel industry as a whole. It became stronger in negotiating with supplying and also consumer industry. Steel markets also underwent a geographical change, from West to East. The conventional markets i.e. EU and the US are not as attractive as before as their consumption curve has more or less flattened. Asia has now emerged as the single largest steel consuming region, thanks to China. Even Indian steel consumption is rising and is expected to touch 50 mt per annum by 2010. On technology front, we have witnessed acute shortage of met coke for the last few years. This has driven the experts to think about a different process route without using met coke. The basic feed material in this route is sponge iron which is produced using iron ore and non coking coal. India, fortunately is blessed with both these minerals and thus steel making using sponge iron became a popular process in this region. This triggered the growth of sponge iron industry in India and today we see hundreds of mini / medium scale and mega sponge iron units coming up in the states where iron ore and non coking coal are abundantly available. Even iron ore fines are being processed and made into pellets which are used as a feed to SI plants. Today, pelletization technology is the buz word in iron & steel industry. In this process, the industry has successfully reduced its dependence on met coke. I am aware that pelletization technology is not yet developed for small capacities but the industry driving force is such that I am sure it will be developed in due course of time. This is how the technology can drive the industry and bring about the required transition. D.A.Chandekar
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Allied Consulting Engineers Pvt. Ltd. Engineering & Industries Consultancy Services
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Steel output at all-time high this FY Tata Steel Ltd., India’s second-largest steel maker by capacity, said that its annual steel production has crossed 5 million metric tons to an all-time high in the current fiscal year that ends March 31. In a statement, the company said the record production was achieved through improved performance of its existing blast furnaces, which increased its production capacity. Tata Steel said it is producing 2 million tons of iron annually at its so-called ‘G’ blast furnace, its biggest, at its plant in the eastern Indian city of Jamshedpur after an expansion programme. The company is also building a 2 million-ton sinter plant, which smelts iron from iron ore fines, and has also placed an order for a 2.5-million-ton blast furnace for the Jamshedpur facility. “With the commissioning of these facilities in 2008, Tata Steel will produce more than 7.5 million tons of hot metal annually,” the company said. |
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Prakash Industries Ltd. Integrating forward and backward facilities Prakash Industries Ltd. is moving towards backward and forward integration of its plants in Chhattisgarh. The company is currently operating a steel plant at Champa in Chhattisgarh with manufacturing facilities for production of sponge iron, steel billets/blooms/ingots, power generation and ferro alloys. In a planned move towards the self reliance and ensuring the uninterrupted supply of consistent quality of raw materials for its manufacturing facilities, company has taken important steps towards backward integration. The company has been allotted two captive coal blocks (Chotia and Madanpur) by the central Govt in Chhattisgarh which are expected to start operating by next year. The company has also been allotted iron ore mines by the state Govt. (Nergaon and Metabodali mines in Chhattisgarh and Sirkagutu mines in Orissa). Consistent efforts are being put to start the mines with state of the art technology equipments with highest automation levels including coal washery and crushing plant. To get consistent availability of crushed Iron Ore for the DRI Kilns, company has a crushing and screening plant at Koira, Dist- Sundargarh in Orissa which will be further expended for its operating capacities after start of mining operations.With respect to forward integration of the operations, company has already setup Rolling Mill facilities at Raipur in the state of Chhattisgarh to manufacture heavy steel structural. Understanding the importance of value addition in making the operations viable and profitable , company has taken further steps towards setting up a Wire Rod Mill project to manufacture wire rods and HB wire at Raipur. A 2nd heavy structural mill to produce heavier sections is also part of the company’s expansion program. |
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Shrachi signs pact with Living Steel Living Steel, a global programme managed by the International Iron and Steel Institute, today signed a memorandum of understanding (MoU) with Kolkata-based real estate developer, Bengal Shrachi. The MoU outlines the partnership between Living Steel and Bengal Shrachi to demonstrate sustainable steel housing in Kolkata. The housing would be constructed based on the winning entry selected from the international architectural competition sponsored by Living Steel in association with International Union of Architects. Ten architectural firms around the world were preparing their designs for the Kolkata housing which would be judged in May this year at Brussels by an international jury. Scott Chubbs, director, Living Steel programme said, the MoU represents an important step in our efforts to show the versatility and strength of steel in melting housing needs around the world. Anand Sen, vice president, flat products Tata Steel said, steel was an alternate method of satisfying housing needs. He added that Tata Steel had decided to focus on the construction and automotive sectors. “We are committed to this project and through this we hope to improve our participation firstly in India and around the world.” The building would be a four to five storeyed building and would come up in New Town at Rajarhat. Speaking on the merits of steel in housing he said that steel was 20-30 per cent lighter than concrete and a steel frame allowed a lot of offsite fabrication and less occupation of infrastructure. |
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Rising ore prices to hit small steel companies Spot iron ore prices, which have firmed up over the last 6-8 weeks, is expected to hit small, unintegrated steel players. Analysts at domestic brokerage houses feel that domestic ore prices are toeing the international line. International spot rates of iron ore are currently pegged at $ 50-52 per tonne as with compared with $45 per tonne in the first week of January. The prices were estimated at about $42 per tonne in September-October 2005, add analysts. For a mid-sized steel player, iron ore contributes to 20 per cent of the total raw material costs. As a result, the steel industry is pitching for curbing ore exports from the country. However, industry experts feel that the government would not help in capping exports. Integrated players such as Tata Steel and SAIL will not be affected by higher iron ore prices, given their captive supplies of this input. The country’s iron ore reserves are estimated at 22 billion tonne, most of which have a rich iron content of 65 per cent. However, about half of these reserves cannot be tapped, as the they are located in environmentally sensitive areas. The strengthening of iron ore prices has come at a time when long term iron ore contracts are up for renewal. A year earlier, key suppliers from Australia and Brazil had hiked long term contract prices by 71.5 per cent. National Mineral Development Corporation, which accounts for a seventh of domestic iron ore production, expects its output to double to 45 million tonne by 2020. Amongst private players, the largest exporter is Sesa Goa, who would benefit if these contracts prices are raised in the next fortnight. |
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Uttam Galva in Russian JV talks Uttam Galva Steels is in talks with Russia’s largest steel manufacturer, Magnitogorsk Iron and Steel Works (MMK), for a joint venture to construct a 10 million tonne steel plant with an investment of around Rs 50,000 crore. After Posco and Mittal Steel, MMK is the third foreign player to evince interest in setting up a greenfield steel plant in the country. Sources close to the development said discussions between the two companies entailed setting up a steel plant with a capacity of 10 million tonne, comprising three million tonne each of hot rolled (HR), long products and tinplate capacities. In the first phase, HR production would be started. Ankit Miglani, director, Uttam Galva Steels said the company was still exploring options and nothing has been finalised as yet. MMK has a production capacity of 11.38 million tonne and happens to be one of the major suppliers for Uttam Galva. The locations for the proposed steel plant being considered were Orissa, Jharkhand and Chhattisgarh. Sources indicated that the total investment in the venture would be in the region of Rs 40,000-50,000 crore. The companies have not yet decided on the equity pattern of the joint venture. Besides, Uttam Galva is on a major expansion spree. The company was one of the shorlisted bidders for US-based Detroit Steel Company. Detroit Steel Comapny has 1.6 million hot-rolled capacity, finishing equipment and cold rolling facilities. On the Detroit Steel Company bid, Uttam Galva sources said discussions were at a preliminary stage. A decision on the bid was expected to be finalised within the next quarter. Uttam Galva currently has a capacity of cold rolling capacity of 6,00,000-7,00,000 tonne per annum. |
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Tata Steel hopes to kick off Bangla plant by 2007 Tata Steel has resolved most of the issues regarding building of the 2.4 mt steel plant with Bangladesh government, B Muthuraman, MD, said. Tata Steel expects to start building the plant in Bangladesh in 2007 and the project is expected to cost Rs 6000 crore. “It is quite possible that we will start building the plant in 2007. It (timeframe) looks realistic,” Muthuraman said on the sidelines of a meeting between Bangladesh Prime Minister Khaleda Zia and Indian industry chambers. He said the gas pricing issue is also likely to be resolved soon. Tata Steel will use gas from Bangladesh for its proposed power and steel plants. Bangladesh has huge gas reserves. However, there are differences between Dhaka and the Tata group over the pricing of gas. Recently, Bangladesh Minister for Finance and Planning M Saifur Rahman said the price offered by Tatas for gas was “embarrassing”. Tata group is planning a total investment of $2.5 billion in Bangladesh to set up power, fertiliser and steel plants. Muthuraman said he expects steel prices to remain around the current levels for the remaining part of 2006. Steel prices have risen in the last two months after weakening during April-December. |
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Australian seamless steel tube mill attracts UAE investors Australian Boulder Steel has secured a second application for 85 million fully paid Boulder shares to the value of approximately $A12 million ($8.925 million) from another Dubai-based investor after the receipt of an application for 85 million shares from UAE’s Falak Holding LLC. Dubai based Mr Mohammad Yousuf Al Ali whose main activity is real estate development in the United Arab Emirates wants to expand his investments into steel related activities. Boulder Steel’s commissioning of the Australian Seamless Steel Tube plant in Ipswich Queensland is planned for 2008, with full capacity by the end of 2010. |
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Turkey’s Kroman runs trials on new bar/rod mill Turkish steel producer Kroman Celik is running tests on its new 20-stand flexible rolling mill, which started production two weeks ago. The 500,000 t/y mill, which has been installed at the company’s works at Gebze, near Istanbul, is currently producing rebar but will start also producing wire rod in May. The mill will produce high-grade wire rod for tyre cord, reinforcing bar and spooled bar-in-coil for the Turkish market and for export. It will operate alongside Kroman Celik’s existing light section and rebar mills, which have a capacity of 200,000 t/y each. |
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Intekno aims at Qatar for expansion Turkey-based Intekno Group of Companies is keen to enter Qatar eyeing steel, mines and financing segments, and use Doha as a base for its expansion to the US, European and Asian markets because of the logistical advantages. “Qatar is important for companies like us in Turkey. They can use Doha as a base for entering into the US and Europe markets,” Intekno president Halil Kulluk said. “Our activities are diversified. We have steel and mining on the one side and finance and sugar extraction from herbs for nutraceutical and pharmaceutical companies on the other hand,” he said, adding it was looking for investments in these areas. Nutraceuticals, also known as functional foods, are often used in nutrient premixes or nutrient systems in the food and pharmaceutical industries. Asked on the level of investment that Intekno was contemplating in Qatar, Kulluk said the group is trying to see what potential exists. He declined to put any numbers. “What we want to do is not only limited to Qatar but for the entire Gulf region using Doha as the base,” he said, reasoning that Qatar’s location is ideal from logistics angle because of it being a centre in the Middle East region. He said this advantage could help companies make inroads into Asian markets like China and India. Intekno said the group is expected to set up office in 2007, but is considering setting up a representative office late this year. “Our mission is to improve the global competitiveness of industrial companies by enhancing their exports, transferring advanced technologies, improving their investment capabilities, and establishing strategic alliances in the international markets,” he said. At present, Intekno Group conducts business between Turkey and US, Europe and CIS countries through it companies. Intekno seeks to achieve its mission through a four-pronged strategy including export and import management, technology transfer, foreign direct investment and consortium formation. It identifies and promotes opportunities through strategic applications of technology and commercial capabilities and has wide customer base in sectors like metal, cement, contracting, mining, petrochemicals, glass, paper and financing. |
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Galfar Eng & Cont. bid for 350 km of ductile iron & steel pipe The local Galfar Engineering & Contracting is low bidder at RO 65.8 million ($170.9 million) for the water supply schemes in the Rustaq, Al-Awabi, Nakhal, Wadi al-Maawil and Al-Musanaah wiliyats. The only other bidder is Malaysia’s Ranhill Engineers & Constructor at RO 94.8 million ($246.2 million). The project is part of the South Batinah development scheme and will provide a piped water transmission system from the Barka desalination plant via Al-Musannah reservoir and Barka reservoir. It involves the construction of about 350 kilometers of ductile iron and steel pipes, 18-20 reservoirs and distribution facilities, including two pumping stations, two substations, tanker filling stations, the installation of electrical and power systems and the implementation of a supervisory control and data acquisition (SCADA) system. The 20-month contract is expected to be awarded by the end of April. The client is the Housing, Electricity & Water Ministry. |
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Al Fozan to set up $12.3 mln plant at DIP Al Fozan, a major importer of steel, wood, electrical and hardware material, as well as a leading manufacturer of steel and wooden products for the building and construction industry, is to set up an Dh45 million ($12.3 million) manufacturing facility at Dubai Investments Park (DIP) said. The new facility will have the latest technology and equipment for fabricating steel and manufacturing wire-mesh and lumber, according to a top DIP official. The plant, which is being built in an area of 68,145 square metres, will have a production capacity of 60,000 tonnes of cut and bend steel bars, per annum. Al Fozan’s new plant is scheduled for completion in early October and it will employee around 250 staff. “By making the most of the facilities available at the Park, Al Fozan will be able to supply the GCC market with the best quality of fabricated steel, wire-mesh and wood products,” said Dubai Investments managing director and chief executive officer Khalid J Kalban. He added: “The increasing number of tenants who are setting up their regional operations in the Park is evidence of our high quality support services and well-planned infrastructure facilities.” “We have been committed to satisfying the needs of our tenants from different industries and ensuring that the Park serves as an ideal environment for their business.” Kalban said, “We will offer Al Fozan all the assistance they require to successfully carry out their operations from DIP.” |
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Haradh crude increment project used large quantity of steel Ali I. Al-Naimi, Saudi Minister of Petroleum and Mineral Resources, participated in the 300,000 barrel-per-day (bpd) Haradh crude increment III opening ceremony held at the plant. Haradh crude increment, in addition to its maximum production capacity of 300,000 bpd of Arabian Light crude, the facility has a gas processing capacity of 140 million standard cubic feet (scf) per day of associated gas. In excess of 1,090 tons of structural steel and 3,100 tons of steel piping were used in the project. Approximately 160 km of new pipeline and extensions will transport crude and gas products from Haradh GOSP III to processing facilities in Abqaiq and ‘Uthmaniyah. More than 150 km of new pipeline and extensions to existing conduits were constructed in order to transport treated seawater and produced salt water for injection to maintain reservoir pressure. The control facilities consist of a main Control Room, a Main Electrical Switchgear Building, Plant Storage and a Maintenance Shop. Haradh GOSP III is the first plant in Saudi Aramco to have full-scale, automated, remote well control and monitoring, enabling wells to be opened, closed, choked, and controlled down-hole by a simple click, using the state-of-art SCADA system. Haradh III was successfully completed ahead of schedule and under budget, having been officially approved in April 2004 and completed during January 2006. The integrated team approach throughout the life of the project, from design to construction to commissioning, was instrumental in meeting the challenging schedule of the project. In terms of safety, no lost-time accidents were reported after 8.6 million work-hours spent in construction of the project. |
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Airport project of $805 mn to consume 28,000 tons of steel The airport operator Tepe Afken Ventures (TAV) consortium won the tender for the biggest airport project of the Middle East. With an $805 million proposal, TAV in cooperation with its Japanese partner Taise won the main terminal building tender, the biggest project from among 18 proposed in Qatar’s capital Doha. The British contractor John Ling submitted an $866 millions proposal, another Turkish company Enka reached $905 million, while the Takenake-CDC partnership offered $1.033 billion. TAV announced construction of the main terminal building will start within a few months. The building will be a prestigious symbol for Qatar, which aims to welcome 50 million tourists in upcoming years. This project is the fourth that TAV has undertaken abroad. TAV previously realized airport construction and enterprise projects in Cairo, Tbilisi, Batumi, and Dubai. As part of the project, conducted by US contractor giant Bechtel, the winning company will construct a terminal building approximately 220,000 square meters. The construction time frame was announced as 28 months though later revised to 26 months. In the project, which will use nearly 28,000 tons of steel, 43 bridges will be constructed. Twelve million passengers will be transported through the airport per year. |
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Mittal sees steel merger with Arcelor by June Mittal Steel (MT) will own rival Arcelor by June, according to Lakshmi Mittal, Britain’s wealthiest man and Mittal’s chairman and chief executive, who expects to have beaten off opposition to his EUR18.6 billion bid to create a European steel superpower by then, reports said. Mittal said the protectionist backlash over his deal from France “was a surprise for me”, in an interview with the Daily Telegraph.”Arcelor was itself created out of a merger. I’m surprised there was such a move against our proposal.” |
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Steel mills want to settle quickly on price The chief executive of iron ore at Rio Tinto Ltd. (RTP), Sam Walsh, said that the market for iron ore remains “extremely” tight. Recent increases in iron ore spot prices indicate “things are on the move and steel mills want to settle now, quickly, before the market gets tighter,” he said. Walsh was referring to annual price talks between major iron ore producers, including Rio Tinto, and consumers including Chinese and Japanese steel mills. “Certainly if I look at supply and demand, the market is extremely tight,” he said, adding that conditions now appear more favorable for a settlement than a few months ago. “People are starting to talk numbers and that is an encouraging sign that people have moved away from a decrease to actually recognizing the market fundamentals.” Analysts are tipping a price rise of 10%-20% on top of last year’s 71.5% increase. |
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Rumored Russian Steel deals unconvincing Russian steelmakers may be under pressure for a strategic response to Mittal Steel Co’s (MT) bid for Arcelor SA, but none of the rumored deals of the week are particularly convincing, analysts said. The companies themselves declined to comment, with OAO Novolipetsk the latest to play down rumors about the intentions of its largest shareholder, Vladimir Lisin. The report said that Lisin, who owns more than 75% of Novolipetsk, was prepared to buy as much as 15% of Arcelor to help it fend off Mittal’s unwelcome EUR18.6 billion ($22 billion) bid. Vedomosti, citing unnamed sources, said Lisin was trying to be the first Russian to break into the European steel elite, after Alisher Usmanov’s failed attempt to muscle his way onto the board of Anglo-Dutch group Corus PLC (CGA) in 2005. Corus’ own long-term search for cheap supplies of semifinished product, or slab, led to another rumor of a strategic partnership with Evraz Group SA, a rumor that was spiced up with suggestions of football-loving financier Roman Abramovich playing middleman. The benefits of such tie-ups appeared skewed in favor of the western European companies, analysts in Moscow said. “Why would Lisin want to buy into Arcelor now after it’s gone up so much in response to the Mittal bid?” said Tim McCutcheon, an analyst with Aton Capital in Moscow. Abramovich “isn’t the kind of guy to spend billions on a 5% return,” he added. |
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Taiwan’s China Steel 05 net down China Steel Corp., Taiwan’s largest steel producer by revenue, said Tuesday it made a net profit of NT$50.65 billion in 2005. That’s down from the net profit of NT$51.62 billion the company reported for 2004. The company said earlier its pretax profit fell last year mostly due to lower global steel prices. The company also said its board recently approved NT$3.75 cash and 3.5% stock dividends, based on 2005 earnings. The planned 2005 dividend payout, which is pending shareholder approval, is lower than the NT$3.9 cash and 5% stock dividends the company paid investors for 2004. |
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Brazil’s CVRD, Usiminas study $3 bn steel project Brazilian mining giant Companhia Vale do Rio Doce (RIO), or CVRD, and local steelmaker Usinas Siderurgicas de Minas Gerais, or Usiminas, are studying a plan to build a $3 billion steelmaker complex in Brazil’s southeast region, a CVRD official said, reports said. However, the continued appreciation of Brazilian reals against the dollar is forcing the two parties to delay commiting to the investment, said Jose Mendes Pessoa, CVRD’s director for steel at a conference in Sao Paulo. The real appreciated more than 15% in 2005. The proposed steel complex will have capacity to produce five million metric tons of steel slabs per year for export, said the report. |
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Austrian Mill Builder Orders MORGOIL* Bearings The MORGOIL* Bearing Division of Morgan Construction Company has received a contract from SIEMENS-VAI (Voest-Alpine Industrieanlagenbau GmbH & Co), a mill builder located in Linz, Austria, for the design and manufacture of MORGOIL Bearings. The bearings will be installed in a new mill being built by SIEMENS-VAI for Mittal in Poland. According to Gabriel Royo, Vice President and General Manager of MORGOIL, “These bearings represent the company’s latest MORGOIL* KLX(tm) technology, which is the highest capacity oil film bearing ever designed. The KLX technology is now installed or being installed in 25 different mills around the world. The MORGOIL* KLX(tm) has been broadly accepted as the new oil film bearing for this century.” 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 through worldwide sources. Delivery is scheduled to start in the spring of 2006. The MORGOIL Bearing Division provides a wide range of oil film bearing solutions for the most demanding applications in the metal rolling industries worldwide. Its parent firm, 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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Siemens VAI Receives Pickling-Line Upgrading Orders from Posco, Korea The Siemens Group Industrial Solutions and services (I&S) received orders from the Korean steel producer Posco for the upgrading and supply of equipment for three of the company’s pickling lines located in Pohang and Gwangyang, Korea. Upon completion of these projects Posco will be able to pickle 6.5 million tonnes of steel in these line. All three orders will be implemented by VAI clecim, Saintchamond, France – a company of the I&S division VAI. It was agreed not to disclose the contract prices. With a crude-steel output exceeding 30 million tonnes (2004) Posco (Pohang Iron and Steel Company Ltd.) is one of the largest steel producers in the world. At its production sites in Pohang and Gwangyang the company produces a wide range of carbon, stainless and electrical steel grades which are sold as coils, sheets, plates and wire rod that are used for a multitude of industrial applications. 75% of the company’s steel production is consumed domestically, and the remaining 25% is exported primarily to China, Japan other Southeast Asian countries and the USA. In the steel-production, scale (oxidized iron), which forms on the strip surface during hot rolling, must be completely removed prior to the subsequent cold-rolling step. This is accomplished with the use of a mechanical scale breaker and subsequent immersion of the strip in a hydrochloric acid bath in the packling tanks. After emergence of the strip from the acid bath, residue acid on the strip surface is washed off the strip surface by dematerialized water tank. Finally the Strip surface is dried with hot air. |
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Brazil steelmaker CSN is not for sale: President Brazilian steelmaker Companhia Siderurgica Nacional (SID), or CSN, is not for sale, the company’s president said. The company’s shares rose sharply Monday on market talk that Mittal Steel Co. (MT) and Arcelor are both trying to acquire the company. “This business that CSN will be sold is over. We are buyers,” CSN President Benjamin Steinbruch said in a meeting with analysts transmitted on the company’s web site. The executive said that CSN will continue its strategy of increasing exports. He said expansion abroad could be carried out via acquisitions or joint ventures. “But we will only do this while maintaining a strong hand in terms of capital and management,” Steinbruch said. CSN’s board has approved a plan to contract with an investment bank to structure the sale of 10% to 20% of its Casa de Pedra iron ore mine in the state of Minas Gerais, he said. Steinbruch said there were a lot of parties interested in the stake, which he valued at $5 billion. The executive said he expects that once a bank has been contracted, the sale will only take 90 to 120 days. |
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