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| APRIL 2005 | |
| From the CEO's Desk | |
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The sudden demise of Shri O. P. Jindal is a great loss to Indian steel industry, not because he was the chairman of 45,000 crores Jindal group. Also, not because he was included in the list of world's richest men. O. P. Jindal was a son of the soil. He started with a small bucket manufacturing unit. It was his shear dedication and innovativeness which took him to the present position. He had tremendous faith in Indian technological expertise and many times preferred Indian produced equipments and technology to a foreign one. This alone should serve as a glaring example for young technologists. Today, to be frank, very little R & D is being done in our country. Many of our so called technologists and sceientists are busy copying western technology. One more such example one can sight is of development of mini sponge iron technology. As we all know, India does not have much of coking coal and has vast reserves of non-coking coal. Thus we needed a steel making process which does not require metallurgical coke. Making sponge iron using non coking coal was such process. Mr.Jindal built a pilot sponge iron plant at Hissar which formed the basis of today's mini sponge iron industry. It allowed small and medium scale businessmen to put up sponge iron plants and rest is history. Today there are more than 250 such plants mushrooming in the states like Chattisgarh, Orissa, Jharkhand, Karnataka etc. and equal number of them in pipeline. This has drastically reduced the country's dependence on imported met coke. Again, Mr.O.P.Jindal was something more than merely being chairman of a steel empire. He took active interest in development of society. He built schools, hospitals and contributed generously to the upliftment of 'have-not's in the country. He was also elected as a member of Haryana assembly and later on to the parliament of the country. Only few days previous to his death, he was sworned in as a Minister in Haryana government. If the Indian steel industry follows the ideology and footsteps of 'Bauji', not only can it grow in leaps and bounds but also it can take pride of developing it's own technologies, and having lesser dependence on imported ones. D.A.Chandekar |
Pan
Electro Technic Enterprises Pvt. Ltd.
Allied
Consulting Engrs. Shanghi Organisation |
| Headlines
Record breaking performance of SAIL Essar Steel moves towards total integration RINL organises Vruddhi business partnership summit NCDEX touches Rs.200-cr steel volume Phenomenal growth in PSL exports Steel firms curb HR coil exports Steel cos reduce debt burden drastically Arcelor keen to invest in India Masteel orders two continuous slab casters China may end tax rebates for cheap steel exports SMS’s machine and plant engg. out of red US clears Mittal Steel and US International Steel Group merger Tata Steel to expand capacity of China units China Steel mulls high speed rail investment NetSteel deal excludes Wujin NSL CSC eying Japan's auto industry
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Record breaking performance of SAIL Maintaining its capacity utilisation of saleable steel production at 104%, Steel Authority of India Limited (SAIL) ended the financial year 2004-05 with a record breaking performance in production and sales. This assumed a special significance in view of the coking coal crisis that throttled production of saleable steel by 11% during the first half of the fiscal ’05. For the first time, the company’s turnover, for 2004-05, is all set to cross Rs 30,000 crore for any fiscal. Faced with the crisis of coal shortage, the company revised its strategy with a focus on optimising production of value-added products through the continuous casting (CC) route. Record finished steel production at 9.28 million tonnes (MT) with a growth of 5% over the previous year, record CC production of 7.53 MT (4% growth) and highest-ever CC ratio of 64% in total crude steel as against 61% in 2003-04 are some of the key production highlights. The proportion of finished steel in total production during 2004-05 went up to 84% from a level of 80% achieved during 2003-04, thereby, reducing the proportion of semis. Impressive growth was achieved in some of value added product categories - 15% in production of plates, 8% in bars & rounds, 7% in rails and 38% in wheels & axels. Besides, the company achieved best-ever overall energy consumption of 7.28 giga calories per tonne of crude steel with a reduction of 2% over the previous year. The coke rate recorded the lowest ever figure at 536 kg per tonne of hot metal with a reduction of 1% over 2003-04. |
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Essar Steel moves towards total integration Essar Steel Limited (ESL) posted a total income (net of excise) of Rs.1926.64 crore for the quarter ended March 31, 2005 compared to Rs.1227.11 crore for the corresponding period of the previous year, registering a growth of 57%. EBIDTA for the quarter stood at Rs.699.49 cr. (Rs.285.66 cr.) a growth of 145%. The net profit was Rs. 272.78 crore (Rs.98.02 crore in the corresponding period of the previous year), a growth of 178% after providing for finance costs of Rs.147.73 crore (Rs72.11 crore), depreciation of Rs.98.46 crore (Rs.95.99 crore) and provision for deferred tax and Tax of Rs.181.38 crore (Rs.55.35 cr). Total income (net of excise) for the full year 2004-05 grew by 65% to 6121.27 cr compared to Rs. 3717.65 cr last year. The EBIDTA rose by 157% to Rs. 2204.08 cr (Rs.859.21 cr). After providing for interest of Rs.550.73 cr (397.68 cr), depreciation of Rs. 394.29 cr (Rs.403.27 cr) and Provision for deferred tax and tax of Rs.203.95 cr (Rs. 34.08 cr), Net Profit stood at Rs. 590.15 cr (Rs. 59.99 cr). Value added products accounted for over 35 % of sales volumes as against 20 % last year, having a positive impact on profitability. The company proposes to utilise this to acquire 51% stake held by Stemcor in Hy Grade Pellets Limited (HGPL) and 100% stake of Stemcor in Steel Corporation of Gujarat limited (SCGL). The acquisitions are expected to be completed shortly. These acquisitions will make Essar Steel a fully integrated steel maker with control over the entire operations-from iron ore to ready-to-market steel products. |
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RINL organises Vruddhi business partnership summit RINL organised Vruddhi summit on April 10, 2005 at Vizag Steel Plant in order to update technocrats on various technology being utilised at VSP for steelmaking. It may be not yet that six sessions, namely, Sinter, Pelletization & Lime Calcination, Iron Making, Rolling Mill, Steel Making, Power Plants and Automation proceeded in the most effective way in this summit. Presentation on Project Management, utility and auxiliary facility and finance option were made by the delegates. Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), has recorded a highest turnover of Rs 8,181 crore since its inception. “The performance, both in production and sales, for the year 2004-05 was impressive and registered an increase of 10 per cent over previous years,” VSP chairman-cum-managing director Y Siva Sagar Rao, said. “The performance is noteworthy given the fact that the plant had to throttle its production during the first half of the fiscal due to severe coking coal crisis worldover,” Rao said. It is for the fourth consecutive year that the company has surpassed its rated capacity. |
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NCDEX touches Rs.200-cr steel volume Futures trading volume in steel has touched Rs 200 crore within a month of going live on the NCDEX platform. Success of long steel derivative has prompted the commodity exchange to explore flat steel products. Mild steel ingot contract in NCDEX has evoked good response from the Eastern and Northern states. Traders from Kolkata, Gobindgarh, Raipur and other areas have brought liquidity in the NCDEX steel futures. Large manufacturers from the eastern region have evinced keen interests to enter the market as a seller. Experts said that real estate builders were showing buying interests in the contract. Till recently, 83,510 tonnes of steel has been traded. Strong fundamentals for steel futures have prompted the exchange to enter in the long steel segments. Now, the exchange is planning flat steel products as well. HR Coil could be the right product to represent the industry, exports said. |
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Phenomenal growth in PSL exports PSL Ltd - spiral steel pipe manufacturer - has had a phenomenal increase in its exports which has shot up by 8000% to reach Rs 726 crore in fiscal ’04-05 as against Rs 9.24 crore in the previous fiscal. The company said the 81-fold jump in exports includes turnkey orders bagged by the company in the last year from countries like Sudan, Oman, Bangladesh for private and government projects. The new mill at Kandla, the tenth of the company, has been set up basically to benchmark PSL as manufacturers meeting international capacity standards to meet the volume and size of the international orders. The peak in exports can be attributed to the company’s pan-India presence of 9 strategically located pipe mills in Kandla, Chennai, Daman and Vizag, giving PSL the strength and backbone to undertake mega turnkey projects meeting international standards and timelines. Along with this, the company has also announced the commissioning of it’s new plant in Kandla scheduled for completion in Q3 of the current year, which once fully operational, will add a capacity of 3,60,000 MT to the existing capacity of 6, 75,000 MT. |
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Steel firms curb HR coil exports Steel companies are going slow on HR coil exports as domestic sales help them fetch better price realisation. This is reflected in the combined export figures of hot rolled (HR) coil by domestic steel majors such as Tisco, SAIL, Essar, Ispat and Jindal, which have declined by about 20% during April-February ’05, sources said. Domestic sales of HR coils, on the other hand, have risen by about 8% during this period. From about Rs 23,000 per tonne in the beginning of FY05, HR coil prices have shot up to about Rs 30,000 currently. However, companies said though the price realisation in the domestic market has been better, they still export to meet their long-term supply contract obligations. According to figures compiled by the industry, domestic sales of HR coil by the big five manufacturers have gone up to a little over 7m tonnes during April-February from about 6.4 mt in the corresponding period last fiscal. On the export front, combined HR coil exports by the five integrated steel manufacturers have come down to about 1.3 mt during April-February ’05 from over 1.6 mt in the corresponding period of the last fiscal. Total HR coil sales, however, have increased by only 4.4%, due to the capacity limitation. Most of the domestic HR coil manufacturers are operating at almost 100% capacity utilisation. HR coil prices have been on the rise in the domestic market during FY05, with companies revising their product prices either on a monthly or quarterly basis. But companies said their margins have not gone up much during the period as the price increase was mainly because of the steep hike in input costs. |
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Steel cos reduce debt burden drastically Private sector steel companies have brought about a drastic reduction in their debt burden in the course of ’04-05 by prepaying their debts. Major private sector steel players have together prepaid over Rs 3,000 crore in the previous fiscal to their lenders, experts said. Leading the prepayment drive is Jindal Vijayanagar Steel (JVSL), which paid off at least Rs 1,073 crore of its debts in the last fiscal. Mukand has prepaid Rs 450 crore. Essar Steel and Ispat Industries have prepaid almost Rs 400 crore each while Jindal Stainless and Jindal Steel and Power (JSPL) have paid off Rs 350 crore and Rs 200 crore, respectively to their lenders. The prepayments have been possible because of the huge cash flows being generated by steel companies as a result of buoyant steel prices. The comapny has saved at least Rs 50 crore in interest outgo because of its debt reduction drive. During the year JVSL also refinanced Rs 1,352 crore of its debts. JVSL will bring down its debt further by Rs 650 crore in the next fiscal to Rs 3,100 crore despite additional debt of Rs 800 crore being raised for its expansion projects. It will repay around Rs 1,500 crore of its debts in ’05-06. JVSL can continue on its debt reduction spree even if steel prices fall by 20% from the current level. Some steel companies may even be debt free in the next two years if current steel prices sustain. |
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Arcelor keen to invest in India The world’s second largest steel maker, Arcelor, is keen to invest in India, Union steel minister Ram Vilas Paswan said. Arcelor representatives have given positive response. They will send a delegation to chalk out investment plans, the minister told mediapersons after meeting a Luxembourg trade delegation, headed by minister of economy and foreign trade, Jeannot Krecke. “The meeting with the Indian steel minister was good. Arcelor has shown interest in Indian steel sector but no concrete proposal was discussed,” the Luxembourg ambassador said. Arcelor representative Patrick SEIL, from Arcelor International, Singapore, was also the part of the 12-member Luxembourg delegation. Meanwhile, another Luxembourg-based engineering major, Paul Wurth, is trying to forge a long-term alliance with SAIL to supply technology for its Rs 25,000-crore expansion programme. “We are talking to SAIL officials for contracts for their expansion. We are already working with SAIL and Tisco,” Horst Kappes, president & CEO, Paul Wurth India, said. |
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Masteel orders two continuous slab casters Maanshan Iron & Steel Co. Ltd. (Masteel) in the southern province of Anhui, PR of China, has awarded SMS Demag AG a contract for the supply of two double-strand continuous slab casters. The casters will be used to produce 230 and 250 mm thick slabs with widths ranging between 950 and 2150 mm. The two units will be rated for a total annual production of 5.7 million tons. SMS Demag’s supplies include the engineering, the mechanical and electrical equipment plus the complete automation system including Level 2, erection and time-schedule supervision as well as commissioning. The high-speed casters will be designed as vertical bending units with a 2.69 m long vertical section to attain a high degree of cleanliness. Features that determine the quality and production of the slab casters are the highly dynamic mold level control, mold width adjustment during casting and the spring-guided, hydraulically operate resonance oscillator®. It provides optimal access and inspection facilities. |
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China may end tax rebates for cheap steel exports China will slash or abolish export tax rebates for some low-end steel products to curb iron ore and power usage in the world’s top steel market, in a move analysts say may calm fears of cheap metal flooding the globe. China — which became a net exporter of steel products in the final months of ’04 — will remove a 13% rebate on steel billets, a government official said. The rebate on long products — typically, rods and bars for construction — will be reduced to 10% from 13%, said the official at the tax policy office of the State Council, or cabinet. The measures will take effect from April 1, a senior Hong Kong-based shipping executive said. “This kills two birds with one stone. It curbs excess capacity in China’s low-end steel industry and avoids the potential of trade wars due to rising exports of such products,” said Cai Haihong, an analyst at Merchants Securities. The move is expected to discourage exports. However, it may not be enough to prevent some manufacturers from trying to profit from global prices, which are 20-30% higher than in China, on average. China is trying to cool an overheated economic growth. While it has been pressuring smaller, inefficient steel plants to merge, it is also encouraging its flagship mills to develop production of higher quality steel products. Tax rebates make exports of some semi-finished steel products profitable because they are large, relative to the value of the export, the shipping source added. China’s steel industry is divided among more than 100 relatively small producers. The expansions by these producers helped boost the country’s output by 23% to 273m tonnes in ’04. The country’s steel imports fell 21% last year to 29.3m tonnes while exports doubled to 14.23m tonnes, official data showed. China also became a net exporter of steel billets for the first time in ’04, as exports of 6.06m tonnes exceeded imports of 3.86m tonnes. The rebate changes should have little impact on China’s three biggest producers — Baoshan Iron and Steel, Angang New Steel and Wuhan Iron and Steel — because they focus increasingly on high-end products, analysts said. |
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SMS’s machine and plant engg. out of red The SMS group, consisting of leading companies in Metallurgical Plant and Rolling Mill Technology, Tube, Section and Forging Technology and Plastics Technology, increased its order intake in fiscal year 2004 to EUR 2,282 million (previous year: EUR 1,933 million) and its sales to EUR 2,170 million (previous year: EUR 2,146 million). Globally, a total of 9,479 employees (previous year: 9,535) worked for the group. Fiscal year 2004 closed with a positive group result of EUR 20 million (previous year: loss of EUR 19 million). Considering the overall good market situation, Dr. Heinrich Weiss, Chairman of the Managing Board, expects at least a stable business volume for the current business year of 2005, and an even better operative result. The exceptional steel industry boom, driven especially by China, has resulted in full order books in the Metallurgical Plant and Rolling Mill Technology Business Area. The group companies in the Tube, Section and Forging Technology Business Area have further strengthened their market-leading position. The Plastics Technology Business Area is making significant progress toward positive results. On course for growth after successful restructuring The SMS group used the past fiscal year to further adjust its capacities to the changed market conditions. It is continually extending its group machine and plant engineering expertise by establishing supplementary services. The aim here is to create or expand additional business potential in the areas of electrical and automation systems, maintenance and repairs, technical assistance as well as communicating operator knowhow. Heinrich Weiss: “By intensifying our business with these additional services, we will increasingly become a partner for our customers over the entire service life of their machinery and plants for all aspects of plant technology, product quality and cost-effectiveness.” |
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US clears Mittal Steel and US International Steel Group merger Mittal Steel has obtained approval from US regulators for its acquisition of US International Steel Group, clearing a major hurdle in the deal to form the world’s largest steel maker, sources said. Mittal Steel and ISG said in a joint statement that a registration statement on its proposed merger lodged with the US Securities and Exchange Commission ‘has been declared effective as of March 11, 2005.’ ISG and Mittal will each hold special meetings of their shareholders on April 12 to give final approval to the proposed merger, the statement said. Mittal Steel will become the world leader in terms of steel shipments, far outstripping the current world number one, the European consortium Arcelor, according to its chairman Lakshmi Mittal, the world’s third richest man, according to Forbes magazine. The group will also be the number one steel group in terms of market capitalisation ($18.5 billion) ahead of Japan’s Nippon Steel. Mittal Steel was created from Netherlands-based Ispat International, which acquired LNM Holdings, also based in the Netherlands. Mittal himself is based in London. The companies have signed a letter of agreement with the United Steelworkers of America and the Independent Steelworkers Union. The current chairman of ISG, Wilbur Ross, will become a member of the board of directors of Mittal Steel. Mittal Steel will have operations in 14 countries including the United States, Canada, Mexico, France, Germany and eastern Europe and employ 165,000 people. |
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Tata Steel to expand capacity of China units Tata Iron & Steel Co., India’s largest private sector steel company, plans to expand the capacity of its three Chinese units to add value to products shipped from India, reports said. Tata Steel will make semifinished steel in India and export the product to its Chinese facilities to be made into value-added products, the report says. The value-added products could be galvanized sheets, rebars, wire rods and wires, the report says, adding that the specifics are yet to be finalized. In February, Tata Steel bought NatSteel Ltd.’s steel business, giving the Indian company a combined capacity of 790,000 metric tons in three Chinese plants at Xiamen, Wugin and Wuxi respectively. |
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China Steel mulls high speed rail investment China Steel Corp. may increase its investment in Taiwan High Speed Rail Corp. by NT$3 billion, reports said. Taiwan’s largest steelmaker currently owns NT$2.5 billion worth of preferred shares in the builder of Taiwan’s bullet-train system. The move - pending approval by China Steel’s board of directors before the end of May - would make China Steel the third-largest shareholder in Taiwan High Speed Rail, behind Continental Engineering Corp. and the Fubon Group, according to the report. |
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NetSteel deal excludes Wujin NSL The Board of Directors of Natsteel Ltd clarified after referring to the announcement dated 15 February 2005 in relation to the completion of the sale of the Company’s regional and Singapore steel businesses to Tata Steel. Unless otherwise defined, capitalised terms used in this announcement bear the same meaning as those used in the announcement and the company’s circular to shareholders dated 25 November 2004. Due to a delay in the receipt of the necessary approvals from governmental and regulatory authorities, the Company’s interest in Changzhou Wujin NatSteel Company Limited has not been transferred to NatSteel Asia Pte Ltd on 15 April 2005. As such Tata Steel will not be under any obligation to transfer S$60 million to NatSteel Asia for subsequent payment to the company. However pursuant to the terms of the Amended Subscription Agreement and the Amended BTA, the Company continues to be obliged to procure the transfer of Wujin NSL’s 30 per cent interest in Wuxi Jinyang Metal Products Company Limited and 5.91 per cent interest in Southern NatSteel (Xiamen) Limited to NatSteel Asia on or before 15 May 2005, failing which the company will pay NatSteel Asia S$20 million. |
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CSC eying Japan's auto industry Taiwan’s Largest integrated steelmaker, China Steel Corp (CSC), is eyeing the Japanese auto industry as a potential market for its galvannealed exports when it commissions its new 300,000 tpy galvanizing line be the end of 2006. CSC recently shipped out 100 tonnes of its GA sheets to traders in Japan for distribution to the country's automotive manufacturers. The samples, which arrived in Japan in the week beginning January 31, for easements by the local auto manufacturers before any orders are placed, sources said. We definitely hope that we will be able to supply Japan in the long-term. But that will have to wait till our galvanizing line comes on steam, said a CSC official. We are now setting the stage to enter the Japanese market. While the official could not indicate when the Japan companies were likely to inform CSC of their decision, he said that CSC would be checking regularly with the traders. CSC currently has a 300,000 tpy line at its Kaohsiung works it southern Taiwan which produces both HDG and GA sheets. A new 300,000 tpy line to be commissioned by the end of 2006 will bring CSC’s total galvanizing capacity to 600,000 tpy. CSC produced around 100,000 tonnes of GA sheets and 160,000 tonnes of HDG sheets last year from its existing 300,000 tpy line, but the product mix could be changed to 130,000 tpy HDG sheets and 150,000 tpy of GA sheets this year due to strong demand from the auto industry for GA sheets. CSC’s GA sheets are currently mainly supplied to the domestic market due to strong demand from the local auto industry, with only around 10-20 percent of its production being exported to destinations like China and Southeast Asia. Japan’s carmakers are currently facing a shortage of steel sheets, including GA sheets, that has forced Nissan Motor, Japan’s second largest automaker, to cut production at three of its four domestic plants. If CSC is successful in its plans it could emerge as a rival to South Korea’s Posco, which ships around 30,000 tpy of GA sheets to Japan. |
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