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| MAY 2005 | |
| From the CEO's Desk | |
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For last few weeks, there
is a down trend in global finished steel prices. The reasons are being
discussed and debated but generally it is believed that China has slowed
down a bit and also Europe has taken a cautious approach. The price slide
in HR coils has reflected everywhere up and down the supply chain. The
prices of iron ore and so also those of GPGC have started showing a down
trend and naturally it has affected the positive sentiment prevailing
in the industry since long time. D.A.Chandekar |
Bonfiglioli
Transmissions
Federation of Indian Indian Mineral Industries Metco |
| Headlines
Record breaking H2 performance of RSP Usha Martin to acquire unit in US Tata Steel targets 15 mt capacity Board, Govt. approve VISA Ind name change Electrosteel registers Rs 89 cr bottomline Falling global prices boosts imports Bhushan Steel raises Rs 1,512 cr loan Mittal's desi investment alerts Tata Steel BCCL plans tapping reserves in Jharia Uttam Galva to raise $60 mn via GDRs Electrosteel castings to raise GDRs Tata Steel to buy Australian coal mine Posco agrees not to export iron ore Mittal to enter into India through Jharkhand Bao Steel eyes stake in Indian companies AK Steel announces June surcharges Vietnam Steel Corp mulls $430 Mn iron mining project JFE profits soar on firm demand, higher steel prices Japan steel exports fall for 2nd straight year -Nikkei
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Record breaking H2 performance of RSP The second half of 2004-05 has witnessed a record-breaking performance at the Rourkela Steel Plant (RSP), with production zooming up sharply in all areas of operation. The production of 0.94 million tons of hot metal, 0.88 million tons of crude steel and 0.87 million tons of total saleable steel from the finishing units, represent growths of 8.5%, 11% and 11% respectively over the corresponding period of the last year. One of the most spectacular success stories was notched up by the Plate Mill, which produced 1,86,789 tons of plates during H2, growing 20% over the corresponding period of 2003-04. Similarly, by producing 3,45,015 tons of HR coils for sale and 1,20,073 tons of HR plates, the Hot Strip Mill registered growths of 19% and 52% respectively over the H2 of 2003-04. The acceptability of RSP’s product in the market is evident from the dispatch figures, which touched 0.88 million tons, registering a growth of 8.4% over the corresponding period of 2003-04. Similarly, with the sales volume figures increasing by about 8%, the finished steel stocks at the steel plant came down to only about three days production. The Steel Plant’s focus on high value items have enhanced the profitability of the Plant significantly. A number of initiatives were also taken up during the year to enhance customer satisfaction as well as to cater to niche markets. Commercial production of special steels in Hot Strip Mill, 100% branding of galvanized sheets, development of higher coating thickness for CRNO, heat treatment of Defence Grade Steel for the first time for the Indian Navy and supply of heat treated plates with specific mechanical properties of Ordnance factory for manufacture of anti-mine vehicles were some of the endeavours in this direction. Introduction of computerization of the production planning and control functions of the steel plant has been a major step forward towards system improvement. |
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Usha Martin to acquire unit in US Usha Martin Ltd (UML) - wire rope manufacturer - is planning to acquire a mid-capacity wire rope unit in the US. A team headed by the Joint Managing Director P Bhattacharya is now working on the acquisition in the US. The company is in the process of short listing units for the purpose. Usha Martin posted a net profit of Rs 40.87 crore in 2004-05 compared with Rs 15.52 crore in 2003-04. The turnover has also grown from Rs 797 crore in 2003-04 to Rs 1,190.87 crore in 2004-05. It has reserves of about Rs 432 crore. The company's exports have registered a 104 per cent jump from Rs 212 crore to Rs 432 crore. |
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Tata Steel targets 15 mt capacity The largest private sector steel producer in India - Tata Steel - will inject Rs 12,000 crore into its capacity expansion drive over a period of next five years. The steel major has set an internal target to reaching seven million tonne capacity by 2008 and 15 million tonne by 2010. This was disclosed by B Muthuraman, Managing Director of Tata Steel. While flagging off the upgraded G Blast Furnace, which will augment its capacity to 1.8 million tonne per annum, Muthuraman said that Tata Steel was also toying with the idea of floating another company to be christened as Bluescope to get into cold rolled products. |
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Sujana Metal Products Ltd is exploring ways to increase capacities in its galvanised steel division, which caters to transmission tower requirement of basic and cellular telecom operators and electricity transmission companies in the country. The move is a sequel to the existing facilities being exploited to more than their rated capacities and the huge order backlog, the company informed stock exchanges. The company said it plans to increase capacities in its existing facilities by installing additional manufacturing equipment and is exploring the idea of setting up a shore-based greenfield facility in Chennai to cater to the export markets in Sri Lanka and West Asia. |
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Board, Govt. approve VISA Ind name change Following the approval of the change in name, VISA Industries Ltd will now be known as VISA Steel. Board of directors had already given its approval which is subsequently followed by the government as well. According to a press release issued by the company, the name change would now reflect its core activity and focus. As the Indian flagship company of the VISA Group, the manufacturing activities of VISA Industries Ltd have been focused on chrome ore processing. With the manufacturing portfolio expanding to steel and related products, the management and shareholders felt that VISA Steel will be the appropriate name to reflect this focused evolution, the release quoted the VISA Group Chairman, Mr Vishambhar Saran. |
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Electrosteel registers Rs 89 cr bottomline Electrosteel Castings Ltd has reported a net profit of Rs 88.68 crore during the financial year ending March 31, 2005, a 20.35% increase over the previous fiscal's figure of Rs 73.68 crore. This net profit was posted over a total income of Rs 936.44 crore, up from the previous fiscal's figure of Rs 703.80 crore. Net sales contributed for Rs 890.37 crore (Rs 672.10 crore) and other income for Rs 46.07 crore (Rs 31.70 crore). |
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Falling global prices boosts imports The sharp fall in global steel prices has led to a rise in imports to India, triggering fears of a price cut in steel products, an analyst said. “There has been a steady increase in imports of hot rolled steel coils from Russia, Ukraine and Iran since April. This is mainly because imported steel is now about Rs.2,000 to Rs.3,000 a (metric) ton cheaper than local steel. Hot rolled steel coils are common grade steel items which are processed into high value products used in cars and consumer goods. Hot rolled steel coil imports in April totaled about 35,000 tons. “In May, imports have already crossed that level,” he said. India imports close to 1.5 million tons of hot rolled steel coils every year. Most of the imports are done by secondary steel makers which buy imported steel and process it into cold rolled steel and galvanized steel. Some of the major players in this segment are Bhushan Steel & Strips Ltd. and Uttam Galva Steels Ltd. Imports of hot rolled steel coils could go up further, as prices have fallen internationally. International prices are currently at about $570 a ton, while Indian steel prices are now at about $620/ton. If Indian hot rolled steel makers don’t reduce prices, imports will increase. Indian primary steel makers recently said that although they have not reduced prices yet, they are watching the situation closely. |
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Bhushan Steel raises Rs 1,512 cr loan Bhushan has raised Rs 1,512 crore through a syndicated loan for the expansion of its integrated steel plant project, the arranger to the loan said. The company is setting up a backward integration project to manufacture hot-rolled coils, steel billets, pig iron, and sponge iron, with installed capacity of 1.2 million tonnes in Orissa. The country’s largest bank, State Bank of India, was the lead arranger to the loan. |
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Mittal's desi investment alerts Tata Steel With global major Mittal Steel is likely to foray into India with its proposal to set up a five million tonne steel plant in Jharkhand, Tata Steel has asked the government to check its track record before inviting the company. “Many global steel majors like Mittal Steel and Posco are trying to come to India. They want iron ore. But I will request Chief Minister Arjun Munda to check the track records of the company before inviting it to the state. You should see which company you are inviting”, Tata Steel Managing Director B Muthuraman was quoted as saying in a report. Pointing out the contributions Tata Steel had made for the development of Jharkhand, he said the company had spent Rs 45,000 crore on `nation building’ in 85 years and asked the state government and Centre to see whether those who wanted to come now, including Mittal Steel of L N Mittal, would create value for the state and make such contribution. He said TISCO has a shareholder base of ten lakh who get dividend but “here is a company where dividend goes to only one shareholder”. The Tata Steel MD, who was speaking at a public function on the occasion of completion of the company’s one million tonne capacity expansion programme, said mineral-rich Jharkhand could be an affluent state. “But if the natural resources go to wrong hands he will not do anything for the society here and work for his own betterment. |
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BCCL plans tapping reserves in Jharia Bharat Coking Coal Ltd will have to access a huge quantity of untapped coking coal reserves lying below Jharia in Jharkhand, reports said. The expectation is based on the fact that the recently constituted Jharia Rehabilitation and Development Authority (JRDA) has decided to shift all the inhabitants of Jharia to tackle the underground fire raging there. The process of shifting altogether 65,000 houses and about three lakh residents has begun. The Housing Urban Developing Corporation (HUDCO) has been roped in to undertake the massive job, entailing an investment of about Rs 2700 crore. HUDCO has been entrusted with the task of building a new town in a safe place where the people will be shifted. The present town is located in a spot, which is just above the ‘fire zone.’ JRDA has simultaneous plans to make available the huge stock of coking coal lying below the town for industrial purposes. Meanwhile, the Jharkhand Government has banned all construction activities in and around Jharia. On its part, BCCL is preparing itself to mine coking coal available below the town. The BCCL Chairman and MD, Partha Bhattacherjee, said that although the mining of coal in a fire-prone area was a difficult task, the success of such mining might turn out to be a boon to the ailing BCCL, which is at present operating with a limited, mineable coking coal reserve. He said that his company plans to go in for open cast mining. A search for suitable technology for this purpose is now on. |
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Uttam Galva to raise $60 mn via GDRs Uttam Galva Steels Ltd will raise $60 million from overseas through issue of Foreign Currency Convertible Bonds or Global Depository Receipts. The Board of directors have approved the offer, issue and allotment of either FCCBs, GDRs, securities representing either equity shares or other offerings of upto an aggregate amount of $60 million, subject to the approval of the shareholders, the company informed the Bombay Stock Exchange. |
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Electrosteel castings to raise GDRs Electrosteel Castings Limited, manufacturer of ductile iron pipes, would raise GDRs to meet capital expenditure plans and part repayment of its existing loans. A company official said that the board would meet on June three to approve the GDR issue, adding that the company plans to raise $ 50 million from this route. The GDRs would be listed on the Luxembourg Stock Exchange. The company plans to expand the Khardah facility in West Bengal for which Rs 100 crore was required including working capital. The entire process was likely to be completed by middle of August. |
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Tata Steel to buy Australian coal mine In order to meet the rising demand of coal Tata Steel Ltd. is planning to buy a coal mine in Australia, a company source said. “We need more coal, as we’re expanding our steelmaking capacities. For that, we’re looking at some (coal) mines in Australia. We hope to acquire a mine by the end of this (calendar) year,” managing director B Muthuraman told reporters at a conference here in Mumbai. Tata Steel has the capacity to produce 5 million metric tons of steel annually. Although Tata Steel has its own captive coal mines, it also imports 2 million tons of coal annually. This coal usage is likely to rise once it completes its capacity expansion program. The company is close to completing an expansion program at its plant at Jamshedpur to 5 million tons. Muthuraman said Tata Steel was also likely to expand the capacity at Jamshedpur by an additional 2 million tons later. Tata Steel is targeting a capacity of 15 million tons by 2010. “By 2010-11, we may require to import about 6 million to 7 million tons of coal, so we’re preparing for that situation,” the executive said. |
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Posco agrees not to export iron ore The world’s largest auto grade steel manufacturer the Pohang Steel Company (Posco) wants business in India by hooks or by crooks. After BHP’s denial to associate with Indian venture, the company wants to go solo for Orissa project. The company has submitted a fresh proposal to the Orissa government, which among other things, has raised the investment quantum to $12 billion for setting up a mega steel plant in Paradeep. Objective of Posco’s sweetened offer is to get a nod for iron ore export from the state. Earlier, it proposed to invest $10 billion. Posco in its new plan, seeks to import low alumina content ore from Brazil in lieu of high alumina content ore from Orissa. The project, though billed as the largest ever FDI for India, has been in the eye of a storm, following Posco’s condition to export ore from Orissa. This has not been agreed by the government, which insists only on ‘captive use’ of ore. `There shall be no net outgo of ore. Posco has suggested that it will import low alumina content ore from Brazil in exchange for high alumina content from Orissa. The Orissa ore, being high in alumina content, would affect the cost effectiveness of steel making, hence the proposal to bring some amount of ore from Brazil for blending,’ said a senior state government official, soon after a four-member Posco team led by its director Tae Hyun Jeong held a meeting with CM Naveen Patnaik and other officials. The state government, sources said, has kept two mines — Gandhamardan and Matangtuli — reserved for Posco and also earmarked a 3000-acre land. Jeong said Posco had agreed to two conditions set by the state government. One, Posco will develop the requisite infrastructure, including roads, port and power, for the project. Two, the mega 12 mt capacity steel plant will be completed within 10 years. |
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Mittal to enter into India through Jharkhand Now, L N Mittal - the steel baron – is planning to enter into steel production in India through Jharkhand. The state has huge coal and iron ore reserves and, therefore, the business baron is willing to exploit. Hence, some more players may enter into the state territory with strategic investment plans, an analyst said. Industrialisation after the creation of Jharkhand in November 2000 was progressing at a slow pace with only six of the 30 companies which signed MoUs with government actually working. When London-based steel magnate Mittal knocked with a proposed investment in the iron ore sector — the first of its kind in the country by the company — it was a surprising decision. Representatives of the firm visited twice recently, making several presentations. The team made an aerial survey of the Chiriya mines at Singbhum, and is expected to give its report in two months. Meanwhile, Jharkhand has engaged consultants to prepare a long-term roadmap for the development of mineral-based industries and the agriculture sector in the State and for preparing the outline for an international airport, sources said. Speaking to presspersons, Arjun Munda – the Chief Minister of the state - said the Government has appointed IL&FS and McKinsey towards this end. |
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Bao Steel eyes stake in Indian companies With the current bout of boom phase going on in Indian steel industry, major players around the world are striving to have a pie of it. Despite having tremendous business potential in the country of existence Bao Steel Group, China’s largest steel company, is eyeing a presence in India. The company, which produces 20 million tonne of steel annually, is keen to acquire a stake in a manufacturing unit in India. A senior level delegation from Shanghai was in the country last week in this connection. The six-member delegation, led by a senior representative of the company, Mr Bao Si Gen, included senior legal and technical personnels from China. The team visited Orissa and met the states Chief Secretary and the Chairman of the state nodal investment agency, Ipicol. Bao Steel will open a liaison office in New Delhi within the next two or three months. The Chinese company is in advance stages of negotiations for picking up an equity stake in Visa Steel. |
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AK Steel announces June surcharges AK Steel has advised its flat-rolled carbon steel customers that a $213 per ton surcharge will be added to invoices for products shipped in June 2005. AK Steel has also advised its electrical steel customers that a $170 per ton surcharge will be added to invoices for electrical steel products shipped in June 2005. AK Steel’s surcharges are based on reported prices for raw materials and energy used to manufacture the products, with the April 2005 purchase cost used to determine the June 2005 surcharges. Headquartered in Middletown, AK Steel produces flat-rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products, for automotive, appliance, construction and manufacturing markets. |
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Vietnam Steel Corp mulls $430 Mn iron mining project State-owned Vietnam Steel Corp. (Vinasteel) - the country’s largest steel producer - hopes the government will help finance a $430 million project to mine about 5 million metric tons of iron ore a year, a company official said. “We have completed a pre-feasibility study for Thach Khe iron mining area, where we are inviting foreign investors to build a plant to process iron ore for export,” the Vinasteel official said. Over the past two years, Vinasteel has tried but failed to get the government’s financial backing to help build a steel production plant in Thach Khe district in central Ha Tinh province, about 400 kilometers south of Hanoi. Its plans to build a steel plant had involved huge funding requirements, which the government said it was unable to provide. “Vinasteel has considered this project several times. As we don’t have enough capital, we need to think about a smaller production plan now,” the official said. The official said Vinasteel will seek the participation of foreign firms in the project, particularly in key areas such as financial management and technical expertise. Surveys done by Vinasteel indicate the Thach Khe mining area has 540 million tons of iron ore, which has a 60% iron ratio. Vinasteel is expected to export all of the 5 million tons of clean iron ore produced by the plant. |
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JFE profits soar on firm demand, higher steel prices JFE Holdings Inc. reported a 50% jump in its group net profit for the last fiscal year and forecast even sharper growth ahead as strong global demand pushes up prices of steel products. The Japanese steel-making group, vying for top position in the industry in Japan with Nippon Steel Corp., said its net profit rose to Y160.06 billion for the year ended in March from Y106.87 billion in the previous fiscal year. Its group sales climbed 13% to Y2, 804 trillion from Y2,474 billion. “The market for high-grade products, where we are very competitive, continues to be strong, and the tight supply and demand balance is keeping the upward trend in prices intact,” JFE Vice President Toshikuni Yamazaki said. JFE said the average price of its steel products climbed to around Y61,700 per ton in the just-ended fiscal year from Y50,500 in the previous year. JFE and other steel makers have an upper hand in price negotiations with their customers such as auto makers and shipbuilders in the face of soaring raw materials prices. Booming steel consumption around the world, particularly in China, has made supplies of coal and iron ore extremely tight, allowing steel makers to pass on the increases in production costs to their customers. The pace of increase in raw materials prices is “unprecedented,” and JFE’s bullish earnings forecast reflects the company’s expectations for further price hikes, Yamazaki said. For this fiscal year, JFE expects a 81% rise in its group net profit to Y290 billion and a 11% increase in sales to Y3,120 trillion. JFE’s profit growth will accelerate this fiscal year as the steel maker won’t book any big special losses as it did in the last year. Its projected net profit of Y290 billion for fiscal 2005 will exceed the Y265 billion Nippon Steel expects to garner in the same year. |
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Japan steel exports fall for 2nd straight year -Nikkei Japan’s steel exports dropped by 2.2% to 34.61 million tons for fiscal 2004 but maintained the fourth highest total since fiscal 1947, according to numbers released by the Japan Iron and Steel Federation. With a global shortage, steelmakers have placed a priority on supplying domestic users, causing exports to slip for the second straight year. Exports of steel had entered a prolonged slump since hitting a peak in fiscal 1976. But China’s growing appetite for steel has lately boosted demand, bringing Japan’s exports to a near record level in fiscal 2002. Japan’s steel exports declined again in fiscal 2003 with key domestic consumers, including car makers, experiencing steel shortages. Ordinary steel product exports, which comprise 74% of overall exports, dipped for the first time in eight years. Exports of ordinary steel products such as steel bars and section steel, specialties of Chinese steelmakers, fell across the board. |
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