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The steel consumption in the country is growing and the demand is getting stronger day by day. Few months back, when China started showing signs of slow down, all were worried a bit. A lot of iron ore as well as finished steel was getting exported to that country and naturally Indian steel makers were looking forward to atleast maintaining the same volumes (if not increasing) of exports to that country in coming months. Now, as per our information, many have reworked their export strategy with a motive of having lesser dependence on China. More or less, all the steel companies have been successful in keeping their account books in good shape despite problems with China. Morever, now the situation has started improving. Iron ore prices have started firming up and exports of finished steel also showing positive signs. The earlier theory of ‘Surge due to Beijing Olympics’ has again started gaining support. I think, more than the quantum of rise in steel consumption due to Olympics, (which is estimated to be only around 5 MT) it is the industry sentiment which is driving the growth. Ofcourse, growth due to any reason is a welcome situation, isn’t it ?
The most important happening in this month is aquisition of Nat Steel (Singapore) by Tata Steel (India). It is not very long back that we all were discussing about possibility of some overseas steel company aquiring Indian counterparts. It was also argued that Indian steel companies do not have many options other than bowing down before the buyers. Now look how the tide has turned ! An Indian company aquires a overseas company along with its facilities spread over many South East Asian countries. Is this not the indicator of the sea change in the approach of Indian steel business houses ? Has Tata Steel not paved the way for more such acquisitions in coming years ? Three cheers to Tata Steel !!! The Indian steel industry deserves to be complimented for one more reason. We all know that in last few weeks, inflation curve was climbing up and everybody including the top finance brains in the country was getting worried. This is the time when Finance ministry felt that one of the reasons for inflation rise was the surge in steel prices. Yes, steel being the core industry, steel price levels will affect the costing of every industry and also every product. We all are proud that our industry responded positively and patriotically to Finance Ministry’s suggestion and lowered the prices. If one sees this move on the backdrop of many bad years in recent past and also today’s rising steel demand, it looks more bright !!!

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´Panch ki Aanch´ by Tata Steel

Vedanta plans iron ore mining in Orissa

Recent price cut may hit bottomline

Orissa sees 4 new steel firms

ISA suggests steel exports to Pakistan

Highest sponge iron production in Gujarat

Minister happy with SAIL’s Q1 performance

Baoshan, Nippon, Arcelor in auto steel JV

Posco to produce 900,000 MT steel more

China unveils measures on steel investment

BHP Billiton to form Japanese iron ore JV

Roanoke Elec Steel swings in profit

A joint venture of the topmost steel leaders

South Korean steel cos ups prices

´Panch ki Aanch´ by Tata Steel

Tata Steel has launched ´Panch ki Aanch´ campaign under which the company targets crude steel production of five metric ton by next year. The plan includes setting up of a new sinter plant and upgradation of the G-Blast furnace as part of the project. The addition of the new capacity is not just an engineering project but an operational challenge, company sources said. A release quoting Tata Steel managing director B Muthuraman said that the campaign would focus the attention of all employees towards achieving the five MT capacity. Augmenting the raw material yards, setting up a third sinter plant and upgrading the ‘G Blast furnace’ for additional capacity are parts of the programme to achieve the five mt capacity, the release said. Addition of a new Rebar mill and upgradation of the Hot Strip mill and its reheating furnaces for hot rolled coils are parts of the engineering target, it said. These measures will increase the Jamshedpur plant capacity from one mt to four mt.

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Vedanta plans iron ore mining in Orissa

Vedanta Resources is planning to enter into iron ore mining and steel production in India after a successful venture into non-ferrous metals. Preliminary discussions have taken place with the Orissa government for potential development of an iron ore mine and a steel plant. An Orissa state government official said that the proposed steel plant would have a capacity of 5 mt at a cost of Rs 12,000 crore. The plant is proposed to be developed in two phases, to manufacture both flat and long products. The project, if implemented, will be developed over a period of five years. If plans succeed, Vedanta will manage all upstream projects, that is, iron ore, while any steel production will be under the control of Volcan Investments. The latter is Vedanta’s major shareholder with a 53.8 per cent stake. While Vedanta may go it alone on the mining project, Volcan is likely to rope in a partner for the steel venture. Vedanta said that negotiations regarding iron ore were at an early stage, but represent an opportunity for the company to diversify its portfolio of base metals.

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Recent price cut may hit bottomline

he major steel producers’ output price cut in the range of Rs.500-Rs.2000 is expected to hit the bottomlines of the respective companies between 3-8 per cent. The analysis was done on the basis of domestic sales volume for financial ‘04. This was multiplied by the reduction amounts — the price cuts — which gave the impact amount in monetary terms. The price cut was directed towards direct customers, mostly in the domestic market. Retail dealer level sales for companies account for 10-30 per cent of net sales and won’t face the brunt of this impact directly. However, derived demand avenues, like car prices, or, say, for example, in construction, lesser prices for end products may be visible by the end of the year. Domestic sales at Sail is around 9.5 mt. This means a price-cut of Rs 100 per tonne is equivalent to an impact of Rs 950 crore. When one takes into account the financial’04 net sales, the impact is only 3.9 per cent of the net sales value of Rs 24,178 crore. A similar calculation for Ispat shows that the hit on net sales will be only around 0.3 per cent; for Essar, it will be something around 1.7 per cent, and for Tisco it will be around 7.6 per cent of net sales figures of the previous year.

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Orissa sees 4 new steel firms

Orissa is shining and so are steel companies in India with proposals for setting up steel plants in the state. Four companies today signed memorandum of understanding (MoUs) with the Orissa government for setting up sponge iron and mild steel plants in the state. The combined capacity of the projects is about 2.8 mt of steel per annum with a projected investment of Rs 2,800 crore. The four companies are Maharashtra Seamless of Raigarh, Kolkata-based SPS Sponge Iron and Orissa Sponge Iron and Sunflag Special Steels Ltd of Nagpur. SPS Sponge Iron Ltd proposes to set up a Rs 400 crore sponge iron/steel making project in Jharsuguda. The project will be set up in three phases. First, the company intends to set up a 2.2 lakh tonne per annum sponge iron plant and then add a 2.6 lakh tonnes per annum billet caster for making steel in the second phase. The third phase comprises installation of blast furnace to produce 2 lakh tonne of cold pig iron, a rolling mill to manufacture one lakh tonne per annum of finished products and a 20 mw captive power plant. The first phase costing about Rs 62 crore is slated for commissioning by the end of September, 2004. Maharashtra Seamless proposes to set up a 0.5 mt steel billet plant over 600 acres of land at Duburi in Jajpur district. The unit will be a backward integration project for the company’s seamless pipe and tube plant located at Nagothane in Raigarh district of Maharashtra. The project is estimated to cost Rs 450 crore. Sunflag intends to set up a one mt steel plant in two phases of 0.35 and 0.65 mt capacities costing Rs 350 crore and Rs 590 crore, respectively. Orissa Sponge Iron, which has a one lakh tonne per annum sponge iron and 50,000 tonne per annum billet plant at Plaspanga in Keonjhar district, proposed to set up a one mt billet making plant at an estimated cost of Rs 1,037 crore. The project will come up in two phases of 0.35 mt and 0.60 mt and envisages a captive generation of 136 mw. Sources said the basic purpose of these companies to go for signing of MoUs was to ensure allotment of captive iron ore mines for their respective projects.

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ISA suggests steel exports to Pakistan

India has been succeeded in exporting one of its neighbouring countries successfully by shipping steel and other products and looking for opportunities in other countries including its arch-rival and old time business partner Pakistan. The Indian Steel Alliance (ISA), representing the five main primary steel producers in the country, has urged the government to promote steel exports to Pakistan. The members of ISA are Steel Authority of India Ltd, Tata Steel, Essar Steel, Jindal Vijaynagar Steel and Ispat Industries. With the National Foreign Trade Policy likely to be unveiled by the end of this month, the ISA has submitted a list of recommendations to the government that it feels would be beneficial for the domestic steel industry. Demanding that the Government needs to promote steel exports to Pakistan, the ISA has said that India, with its close proximity, can easily become major supplier of most items, including steel, to Pakistan.

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Highest sponge iron production in Gujarat

Gujarat is growing and so is sponge iron production in the state. The state registered the highest sponge iron production in the country in the first three-months of the current fiscal year 2004-05 during which the cumulative production of sponge iron stood at 6.24 lakh tonne indicating a healthy growth of 19.78 per cent over the previous year. The state has been a frontrunner in catering to the demand of stainless steel and alloy steel in the country followed by Maharashtra, Chattisgarh and Orissa. The rise in production of sponge iron in Gujarat is due to the shortage of available scrap in the domestic market and secondly due to increase in usage of pig iron which acts as a substitute of sponge iron, an expert of the industry said. The methodology of making sponge iron is comparatively cheaper and easier as compared to its substitute. The sharp rise in demand for steel and alloy steel in the domestic market is also one of the major factors for the rise in production of sponge iron, which is used as a constituent in manufacturing steel and steel related products. As per the statistical data obtained by the Gujarat Infrastructure Development Board (GIDB), in May 2004, the sponge iron production was 2.19 lakh tonne, which is highest production in the preceding 12 month period since May 2003. This implied a sharp increase of 43.19 per cent in Gujarat’s sponge iron output as opposed to a 8.43 per cent decline recorded in the corresponding month of 2003.

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Minister happy with SAIL’s Q1 performance

Mr. Ram Vilas Paswan, Union Minister for Steel, Chemicals & Fertilizers reviewed the quarterly performance of Steel Authority of India Limited and expressed happiness. In the first quarter of the current fiscal the public sector steel major reported a net profit of Rs.1112 crore in comparison of Rs.255 crore in the same quarter last year. The minister expressed concern over the declining physical performance of the company due to non-availability of required quantities of imported coking coal. He also expressed the view that SAIL should make advance planning for the import of coking coal so that the total coal availability from imported and indigenous sources match their requirements. In case difficulties are experienced in getting coal from indigenous sources, the possibilities of getting the same from imported sources should be explored by Sail. Sail should benchmark the parameters of all its steel plants against best available benchmarks in the private sector in India and world-class steel plants abroad.

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Baoshan, Nippon, Arcelor in auto steel JV

aoshan Iron & Steel Co. of China, Nippon Steel Corp. of Japan and Arcelor SA of Luxembourg-based launched their auto steel-sheet production joint venture in Shanghai,. For Baoshan Iron, also known as Baosteel, the US$800 million deal cements its position as China’s top steel-maker. The deal also gives the leading steel firms in Japan and Europe access to the world’s fastest growing car market. The 1,800 millimeter cold-rolled strip mill is being built in Shanghai. Baosteel has a 50% stake, Nippon Steel 38% and Arcelor 12%. Production on this plant is slated to start in the second quarter of 2005, and construction and preparations for that are on schedule. The output of the joint venture will be for the domestic Chinese market and the venture will supply many global automakers operating in China.

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Posco to produce 900,000 MT steel more

The world’s fifth-largest steel maker, Posco Co., plans to raise its steel sheet production capacity by 900,000 metric tons by 2008 to ease a supply shortage in the domestic shipbuilding industry. It will secure a steel sheet production capacity of 3.8 million tons by 2008 from the current 3.3 million tons by increasing its strip mill capacity and overhauling aging facilities from next year, the company said in a statement. It will also seek to secure an additional capacity of 400,000 tons by converting its hot-rolled steel production facility by the end of next year. “South Korean shipbuilders will be able to secure 85% of necessary steel sheet in the domestic market, up from the current 70%, after our production hike,” the company said. Demand for steel sheet for shipbuilding has been steadily climbing on the back of strong demand from the global shipbuilding industry. However, as supply from Posco and other local steel makers is limited, domestic shipbuilders have to import about 1.5 million tons of steel sheet annually, mainly from Japan, Posco said. As of the end of March, South Korean shipbuilders accounted for 56.2% of the global shipbuilding market, according to the South Korean government.

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BHP Billiton in tie up with JFE Steel

HP Billiton Ltd. (BHP) will sell iron ore to JFE Steel Corp. worth US$3.7 billion under a long-term deal as part of a new joint venture with the Japanese steelmaker. BHP Billition said the joint venture with the new entity from the recently merged Kawasaki Steel Corp. and NKK will underpin sales of around 16 million tons a year of iron ore over the next 11 years. The venture involves the joint technical development and commercialization of 160 million tons of lower channel iron deposit, or pisolite, iron ore, which hasn’t previously been used in the steelmaking process, Development of these reserves will also extend the life of BHP Billiton’s Yandi Mine in northwest Australia. Under the joint venture, JFE will take a 20% stake in a sub lease over part of BHP Billiton’s Yandi mine known as “Western 4” near Newman in Western Australia, which has an ore reserve of 109 million tons. BHP Billiton will retain a 68% interest, with Japanese joint venture partners Itochu and Mitsui Iron Ore Corp. retaining 6.4% and 5.6% interests, respectively. The Western 4 deposit will provide up to 15 million tons annually of iron ore, which will be included in the Yandi product. Production, which is expected to commence in the second half of calendar 2005, will be achieved using existing Yandi infrastructure and facilities.

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China unveils measures on steel investment

China’s National Development and Reform Commission has recently unveiled measures to continue to rein in over-investment in the steel, aluminum, and cement sectors, media reports stated. Those sectors were previously identified as overheated and the government has already been limiting bank loans to them and shutting down some new projects, as part of its macroeconomic control measures aimed at slowing down China’s rapid economic growth. The commission, which is in charge of setting industry policy, stopped the construction of new iron and steel projects, electrolytic aluminum projects, and alumina projects that haven’t obtained government approval. It also says new projects must go through a strict state approval procedure. It’s not clear from the report how different the latest measures are compared with earlier measures to cool down investment in those sectors. Citing an official at the commission, the report said that production capacity in the three sectors has been growing too fast. The capacity of existing production centers combined with those now under construction has far exceeded prospective market demand, it said.

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Vietnam cuts import duty on select steel

After China it is the turn of Vietnam to promote domestic steel producers by hooks or by crooks. The country has lowered taxes on some imported steel products to encourage local traders to cut retail prices, reports said. The Ministry of Finance has lowered the import tax on steel ingot to 5% from 10% and the tax on other finished steel products to 10% from 20%. Local retail prices of construction steel products were raised $6.7 per metric ton in August. Vietnamese traders are importing steel ingot for around $405-$420 per ton. The government estimates imports of steel products will reach 3.062 million tons valued at $1.432 billion in the first eight months of this year, down 3.4% on year in volume but up 25% in value.

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BHP Billiton to form Japanese iron ore JV

BHP Billiton, the global resources giant, plans to form a joint venture with Japan´s JFE Steel Corp, a recently merged entity of Kawasaki Steel Corp and NKK, which will underpin sales of about 16 million tonnes a year of iron ore over 11 years in a deal worth about US$3.7bn. The resources giant said in a statement the joint venture would be BHP Billiton’s first iron ore joint venture with a Japanese steel maker. The venture involved joint technical development and commercialization of the 160 mt of lower channel iron deposit (LCID) at the group’s Yandi mine in northwestern Australia. The deposit’s ‘pisolite’ iron ore had not previously been used in the steel-making process but the development of these reserves would extend the life of the Yandi mine. Under the joint venture, JFE will take a 20 per cent interest in a sub-lease over part of BHP Billiton’s Yandi mine known as ‘Western 4’, which has an ore reserve of 109 million tonnes. BHP Billiton will retain a 68 per cent interest, with Japanese joint-venture partners ITOCHU Minerals & Energy of Australia and Mitsui Iron Ore Corp retaining 6.4 per cent and 5.6 per cent interests respectively. The Western 4 deposit will provide up to 15 mt a year of iron ore, which will be included in the Yandi product.

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Roanoke Elec Steel swings in profit

Roanoke Electric Steel Corp. swung to a profit in the third quarter on higher sales from improved selling prices. In a press release, the steel manufacturer said earnings for the third quarter ended July 31 improved to $7.8 million, or 70 cents a share, from a loss of $319,569, or 3 cents a share, a year earlier. Third-quarter revenue rose 57% to a record $129.4 million from $82.3 last year. Roanoke Electric Steel attributed the revenue increase to improved selling prices and continued product demand.

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A joint venture of the topmost steel leaders

This seems to be an era of joint venture, merger and acquisition. Companies are shaking hands with their counterparts for their business solutions. Here is a joint venture where three steel giants of the world, BaoSteel, Nippon Steel Corporation and Arcelor, was officially established in Shanghai to produce high-grade steel sheets for automobiles. Located inside BaoSteel in Shanghai, the new company involves a total investment of 6.5 billion yuan (783 million US dollars) and 3billion yuan (361 million US dollars) of registered capital. BaoSteel contributed 50 per cent of the capital, Nippon Steel 38 per cent and Arcelor 12 per cent. The company has a designed production capacity of 1.7 mt of high-grade steel sheet for automobiles, including 900,000 tons of cold-rolled sheets and 800,000 tons of galvanized sheets. The company intends to become the dominant auto steel sheet producer on the Chinese market. Its products would meet the requirements of all major joint venture automobile producers in China. Full-scale production will begin in June 2005.

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South Korean steel cos ups prices

Steel companies are raising the prices of their products in line with increases in the prices of steel imports, industry sources said. Following a recent price hike by Dongbu Steel Co., Union Steel Mfg. Co. has also decided to raise the price of cold-rolled steel products to 675,000 won (US$587) per ton from 620,000 won. The per-ton price of zinc-coated galvanized steel sheets will also go up by 45,000 won to 784,500 won.

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