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Steel News

April 2003


CONTENTS

Iron and Steel - India

General News

  1. Steel makers expect demand growth

  2. Shortage of hot rolled coils presaged

  3. Steel policy may be finalised before polls

  4. Steel firms bullish on war prospect

Sail Plants

  1. Steel major cuts debt burden by Rs 500 crore

  2. SAIL earns Rs 400 crore from exports during Dec-Feb

  3. SAIL approves Rs. 136 crore. investment proposal

  4. Bokaro Steel Plant output up

  5. Durgapur Steel expects Rs 130 crore exports this fiscal

  6. BIFR may clear revival of IISCO

  7. SAIL plans second pipe plant

Vizag Steel

  1. VSP all set to post best ever yearly performance

  2. Vizag Steel's expansion plan

Tata Group

  1. Tata Steel plans to invest Rs 1995 crore for expansion

  2. Tata Steel okay with steel, has no plan for telecom

  3. Tata Steel hikes export target for current year to 18%

  4. Demand drop in China won't affect Tata Steel

  5. Tata Steel Awards

Other Private Sector Operators

  1. Ispat plan

  2. Ispat weighs merger of Metallics

  3. Ispat Alloys in talks to recast Rs 110 crore

  4. Jindal Vijayanagar Steel meet on debt recast

  5. Jindal Steel and Power starts bot trial of rail project

  6. Jindal set deadline to sell US unit

Coke / Coal

  1. Uniform duty on coke may help Sterlite, Hindalco

Consultancy

  1. Ian Davis to succeed Rajat Gupta at McKinsey

Direct Reduction / Pig Iron

  1. Indian budget hits pig iron producers

  2. Hike in input costs hits sponge iron units

  3. K R Alloys planning coal based sponge iron plant in Karnataka

  4. Usha Martin opts for new tech

  5. SAIL may set up sponge iron project in Rourkela

Ferroalloys

  1. Minister's assurance to ferro alloy units

  2. Tata Steel, Visa Ind keen to bid for Idcol

  3. Tata Steel awaits eco nod for ferro chrome unit in SA

  4. SAIDC may be Tata Steel ferro chrome project ally

Iron Ores

  1. SAIL to hike Iron ore output by 15%

  2. SAIL board okays iron ore plants

  3. Kudremukh looks for fresh mines

  4. Kudremukh, govt sign MoU

Stainless Steel

  1. Salem Stainless seeks lower duties

  2. Jindal Strips planning 1.8m tpa stainless steel plant in Orissa

New Projects /Expansions

  1. Manaksia plans new Indian steel plan

Steel / Raw Material Prices

  1. Steel majors hike HR prices by Rs 1500 per tonne

  2. Steel cos not to hike long product prices

  3. US pig iron prices pass $200 mark

  4. Galvanised steel prices a historic high

  5. Steel prices poised to fall

Men in News

  1. B Muthuraman Awarded

Iron and Steel - International

General News

  1. Warshaw gives bidders two weeks to study PHS

  2. U.S. steel tariffs violate trade rules — WTO

  3. LNM and Conares compete for Romanian pipe mill

  4. Osinek plans to relaunch sale of Vitkovice

  5. Leo schedules groundbreaking for hot strip mill

  6. Jiangxi Xinyu gears up to double wire rod capacity

  7. Italians close to winning Hadeed contract

  8. Unicoil nears final accord on CR and galv expansions

  9. Nisco to start work on pelletizing plant

  10. Lion Group restarts Gunawan plate mill

Ferroalloys

  1. CML head for ferro-chrome project decision

  2. Outokumpu to ramp up ferro chrome business

New Projects / Expansion

  1. Yung Kong plans new galvanizing line

  2. Handan installs second galvanizing line

  3. Tangshan to expand new hot strip mill

  4. Formosa Group to build giant steel plant

  5. BHP steel opens two new plants in China

  6. CST holds talks with on expansion

  7. Chengde to install new bar mill

  8. Vietnamese bar mill comes on stream

  9. Iran plan Bafq sintering plant

  10. Al-Rajhi to install 1m tpy meltshop

  11. Ispat starts work on slab caster at Karmet

Steel / Raw Material Prices

  • CIS flat products prices keep on rising

  • Steel prices may dip as US units go on stream

    Forthcoming conferences / Seminars

    1. Steel Success Strategies XVIII

    2. SEAISI 2003 Conference & Exhibition

    New Publications


  • A. Iron and steel - India

    General News

    Steel makers expect demand growth   The steel industry has described this year’s budget as a growth-oriented one. Leading steel producers such as SAIL and Tata Steel have said that the boost for infrastructure, particularly roads, railways, airports, ports and housing, will create substantial demand for steel. The steel industry is saddled with unutilised capacity. The industry, which has already seen a 6% growth in steel consumption in 2002-03, thinks that consumption will grow to touch 7 to 8 per cent in the next financial year due to the government’s focus on infrastructure. "The substantial investment earmarked for infrastructure will boost domestic demand for steel," said V S Jain, Chairman, SAIL. Added Sajjan Jindal, Chairman and Managing Director, Jindal Iron & Steel: "The outlay earmarked for road projects and renewed focus on housing will give a fillip to the sector." B Mutharman, Managing Director of Tata Steel, said that this year’s budget recognises Indian’s global competitiveness in steel production.[Business Standard, 1 March 2003]

    Shortage of hot rolled coils presaged    The Cold Rolled manufacturers Association (CORSMA) has said that the shortage of hot rolled coils will wider further in 2003-04 by at least one million tonne. As per estimates, the shortage has already touched one million tonne this fiscal. While demand grew 20% this year, as compared to last year, there has been no significant capacity addition. In 2003-04, the shortage is expected to intensify further as the domestic demand for HR coils is likely to grow by at least 10%. The cold rolled steel manufacturers have also said the 25% custom duty on HR products makes it economically unviable to import HR products from the international markets. CORSMA has urged the Finance Ministry to bring down the custom duty to around 10%. The reduction of custom duty on CR products to 25% from 30% will encourage the auto and consumer durables sector to import raw materials. Meanwhile, the country’s HR producers insist there has been no shortage of HR in the domestic market. [Business Standard, 11 March 2003]

    Steel policy may be finalised before polls    The Ministry of Steel has renewed its efforts to formulate a National Steel Policy. Though no specific time-frame has been fixed for finalising the policy, the unofficial mandate is that it must be put in place during the tenure of the present Government. "This will mean that the policy framework has to be in place by October 2004, which is when the present NDA Government completes five years. For that, the draft policy has to be circulated to all concerned latest by the first quarter of 2004," Government sources said. The Union Steel Minister, Mr B.K. Tripathy, has asked the new Steel Secretary to work on the policy. This has already started keeping in mind the compulsions of the World Trade Organisation (WTO) as well as the regional groupings, the sources said. Though nothing specific has been decided as yet, some of the key focus areas will be to help successful Indian steel companies emerge as global players and create an international database to be updated on real-time basis, a source associated with the policy formulation work said. Earlier in 2001, the Government suffered a major loss of face when the first Draft National Steel Policy prepared by the Steel Ministry was found unacceptable by all sections of the domestic steel industry which went on record saying, "this is nothing but a piece of paper." According to the sources, the Government is quite optimistic that there will not be a repetition of what happened in 2001 because "most of the steel companies are doing well now, which was not the case in 2001". During the first three quarters of this financial year, all the steel companies have done well and the Government's view is that since the industry is doing well, this is the time when support should be provided, the sources said, and added that even a small boost at this point of time will have immense potential to multiply manifold. [ The Hindu Business Line, 19 March 2003]

    Steel firms bullish on war prospects    Domestic steel manufacturers are quite bullish on the Iraq war, though none are ready to go on record. While most of the big companies are unwilling to even talk about the war that's looming large over Iraq and may start any moment now, the reality is the companies are actually trying to assess the scale of export demand that may arise during the first and second quarters of the 2003-04 fiscal if war breaks out. Post-war reconstruction of Iraq will require huge amounts of cement and steel, and Indian steel makers say that it may lead to a substantial surge in the demand for their products if the Government is able to strike a balance and maintain proper diplomatic ties with the ruling powers. Though no proper estimate could be obtained either from the steel industry associations or from the companies, unofficial estimates made by sections of the industry suggest that Indian steel exports may go up by two million tonne during the first six months of 2003-04. And even if one takes a conservative average price of Rs 15,000 per tonne, this adds up to Rs 3,000 crore, a senior official of a steel-making company said. "Even if it turns out to be a war half the magnitude of the 1991 Gulf War, India's export demand could go up by around two million tonne; not that the entire amount will go only to the Gulf." This is because India will not be the only country exporting to Iraq but probably be one of the small exporters compared to the volumes that may come in from other countries. "But the increase in overall demand will increase our exports to other countries too," the official added. [ The Hindu Business Line, 20 March 2003]

    Sail Plants

    Steel major cuts debt burden by Rs 500 crore    SAIL has managed to prune its debt burden in the current financial year by over Rs 500 crore to around Rs 13,500 crore. Replacing high-cost debt with new loans is also expected to reduce the company’s annual interest burden by around Rs 150 crore, top SAIL sources said. SAIL’s interest cost was Rs 1,562 crore in 2001-02. During the current fiscal SAIL replaced and paid back around Rs 2,400 crore, of which net reduction from its debt portfolio has been around Rs 500 crore. With all SAIL plants operating at 100% capacity, the company will be posting its all-time record output of over 10m tonne, a rise of over 5 lakh tonne. Though SAIL incurred a nine-month loss at Rs 578 crore, it is looking at break-even for the last quarter. The company incurred losses of over Rs 1,700 crore in 2001-02. [Economic Times, 13 March 2003]

    SAIL earns Rs 400 cr from exports during Dec-Feb    Steel Authority of India (SAIL) is registering exports of more than one lakh tonne every month from December 2002, according to a press release issued by the company. "The monthly cash collections from the proceeds of the overseas market soared to a level of more than Rs 100 crore during the period," the release stated. SAIL has earned approximately Rs 400 crore from exports during these three months. It has also recorded the highest-ever exports of HR coils, GP coils, wire rods and billets. Even CR coils and sheets and TMT bars have been exported in large amounts. SAIL's exports to the neighbouring countries have registered a healthy growth. During April to February 2001-02, it exported only 650 tonne to Sri Lanka. In the same period in 2002-03, exports to Sri Lanka jumped to 27,610 tonne. Similarly, exports to Bangladesh went up by 64 per cent. Export earnings from Nepal and Myanmar in the April-February period in 2001-02 was Rs 11 crore and Rs 16 crore, respectively. In 2002-03, export earnings was up at Rs 115 crore and Rs 123 crore, respectively. The release further stated that SAIL had continued to export to Philippines, Hong Kong and Singapore. It made fresh forays in the markets of Vietnam and Mauritius. China was also a major importer of SAIL steel. ``SAIL has spurred growth in exports mainly by producing quality customised products, boosting production in plants, dovetailing production planning with customer commitments and exploring new destinations in the overseas market'', it said. Mr V.S. Jain, Chairman of SAIL, said that strong export focus had helped the company to serve domestic customers better on quality parameters. [The Hindu Business Line, 22 March 2003]

    SAIL approves Rs. 136 crore. investment proposal    The board of directors of SAIL has approved a Rs. 136 crore investment in its integrated plants in Durgapur and Rourkela. The latter cornered the lion's share of Rs. 112.50 crore towards rebuilding its 21-year old coke oven battery-I. The Durgapur Steel Plant that is set to register a net profit for the ensuing quarter was granted approval for 130 tonne ladle furnace to be installed at the steel melting shop at an estimated cost of Rs. 23.33 crore. According to a company source, the coke oven battery-I of RSP was shut down in December 2000 to comply with the pollution control norms set by the Central Pollution Control Board. The Centre for Engineering and Technology, the Ranchi based RND unit of SAIL, will be the project consultant. The CET will also offer consultancy for the ladle furnace in DSP that is expected to improve the share of continuous cast products, mainly semis. The DSP now produces steel through costlier ingot and continuous casting routes. Though the licensed capacity is evenly shared between the two routes to reduce production costs, the plan makes maximum use of the continuous casting plant. The company, however, did not clear the plant's pending proposal for a wire rod mill. The plant is also in the process of proposing for investments in a bloom caster to enhance continuous casting capacity further. [ The Hindu, 27 March 2003]

    Bokaro Steel Plant output up    February 2003 witnessed record production at Bokaro Steel Plant (BSO) with production at the hot strip mill at 2.82 lakh tonne, up 17% to February 2002. Exports also touched a record level of 44,000 tonne of HR/CR products. With hot metal output at 3.23 lakh tonne and crude steel at 2.97 lakh tonne, production of saleable steel soared to 2.68 lakh tonne, up 7%. On techno-economic front, best ever monthly performance with regard to coke rate (518 kg/THM) and overall energy consumption (7.590 Gcal/TCS) has been achieved. Cost cutting measures yielded saving in excess of Rs 16 crore. [Business Standard, 4 March 2003]

    Durgapur Steel expects Rs 130 crore exports this fiscal    Durgapur Steel plant expects to fetch Rs 130 crore from exports this fiscal, according to sources in the integrated steel plant of SAIL. The plant, which has already exported over 83,600 tonne in the current fiscal, has orders of over 30,000 tonne for the current month. This will enable the plant to cross the one lakh tonne mark in exports for the first time since inception. This is more than 300% increase over the exports in the previous fiscal. The plant has mainly exported continuously cast billets and TMT bars to the South and Southeast Asian countries like Nepal, Sri Lanka, Malaysian, Philippines and Thailand. Durgapur Steel has earned cash profit in the previous two fiscals and aims to make a net profit in the last quarter (Jan-Mar) of the current fiscal. [Financial Express, 8 March 2003]

    BIFR may clear revival of IISCO    The uncertainty over the revival of Indian Iron & Steel Company (IISCO), which was declared sick in 1994, may end soon. The Board for Industrial and Financial Reconstruction (BIFR) has stated that if the rehabilitation proposal submitted by the company and Steel Authority of India Ltd (SAIL), the holding company, is found acceptable by all parties, the Bench would consider sanctioning the scheme. Considering the facts of the case at the recent hearing, the Bench noted that the company and SAIL have submitted a rehabilitation proposal, which had the consent of the secured creditors and majority of the workers' unions. Some of the workers' unions, however, were objecting to the package formulated by the company especially requesting closure of Kulti mines, the Bench noted. "The company is required to sort out the matter with the workers unions and banks," it said. The BIFR bench also observed that the Government of West Bengal has agreed, in principle, to extend the envisaged relief and concessions. "The proposal submitted by the company should be discussed in a joint meeting where all the participants may give their final consent or otherwise," it said. IDBI, the operating agency (OA), has been directed by the Bench to discuss the same in a joint meeting and submit a status report along with a draft rehabilitation scheme (DRS) by March 31. The Bench also observed that the appointment of a permanent managing director would facilitate implementation of the scheme and revival of the company. BIFR suggested that steps be initiated for early filling of the vacancy. At the recent hearing, IDBI representative said that the DRS submitted by the company was discussed in a joint meeting held on December 23, 2002. The cost of the scheme of Rs 1,089 crore included provisions for voluntary retirement scheme (VRS) to the employees of Kulti Works and Burnpur Colliery Mines. It also provided for cash losses, which the company would incur during 2002-03 and 2003-04. The scheme would be funded from grants to be given by Government of India (GoI) and market borrowings against GoI guarantee. IDBI also said that the proposal was discussed with the labour unions, which were agreeable to VRS. The company has, however, since desired that the cut-off date should be modified to October 31, 2002, against April 1, 2002, earlier allowed by the Bench. It was proposed that VRS would be offered to 9,000 workers including Kulti Works. The proposal was required to be modified to the extent of actual losses incurred by the company up to September 30, 2002. [ The Hindu Business Line, 6 March 2003]

    SAIL plans second pipe plant    Even before the Rs. 89 crore modernisation of the ERW pipes plant at the Rourkela Steel Plant is complete, the Steel Authority of India Ltd. is exploring the possibilities for a second one to optimise the growing opportunities in the oil and gas pipeline market. The contender this time is the Bhilai Steel Plant (BSP). According to sources, the Bhilai Steel Plant, now manufacturing API grade plates, has recently appointed MECON to conduct a feasibility study for forward integration into 8mm to 25 mm thickness pipe manufacturing. According to a rough estimate the project would cost Rs. 200 crores. While a formal proposal will be placed before the board of directors in the next two to three months, SAIL's central marketing organisation is asked to conduct a detailed study of the opportunities in the wider pipe market. The basic thrust is on the high growth areas of large diameter water pipes, witnessing high demand in the southern States, and oil and gas pipes. The former is a traditional forte of RSP, which is now in the process of adding capacities for API X-70 grades used in gas and oil pipelines. The RSP was also a major supplier of pipes used in ash handling in power plants. Scheduled to be completed by October, the modernised ERW pipe plant is also expected to limit RSP's losses. For BSP, however, the pipe project, if comes through would be a means to enhance the profitability of its plate mill. Striving to change its product mix more towards special steel, the plant now in the process of tying up a major defence supply contract for DMR 249A grade import substitute plates used in warships. Sources said that the plant had already impressed the defence sector by scoring better quality parameter that they had expected. [The Hindu, 13 March 2003]

    Vizag Steel

    VSP all set to post best ever yearly performance    Vishakapatnam Steel Plant (VSP) is all set to achieve the best ever yearly performance in all fronts like production, marketing, financials, personnel as well techno-economic parameters during the first 11 months, ended February 2003. The company has registered a 22% increase in sales at Rs 4,289 crore for the 11-month period as against Rs 3,502 crore during the same period last year. The cumulative sales during the 11-months of the current financial year work out to a growth of 18% in the domestic market and 63% in the export market compared to the same period last year, the company said. The company has surpassed overall yearly production in sinter, medium merchant & structural mill production, hot metal, bar products and saleable steel. It produced 36,02,244 tonne of hot metal, 30,49,458 tonne of saleable steel registering an impressive growth of 14%, 10% and 12% respectively as compared to the 2001-02 fiscal year. On the techno-economic parameters, the company achieved an improved performance in labour productivity, specific energy consumption, gross power consumption and water consumption. [Financial Express, 8 March 2003]

    Vizag Steel's expansion plan    Vizag Steel is now giving final touches to its Rs. 2,500 crore expansion plan which will take the capacity from 3.4 million tonne to 5.9 million tonne of hot metal. The project will enhance the capacity of finished steel production at a much higher proportion as compared to the existing 2.656 million tonne and broad base the long product basket. It may be mentioned that since 1999-2000, Vizag Steel has almost halved the interest burden from as high as Rs. 382 crore to about Rs. 190 crore in 2002-03. During the current fiscal alone, the interest burden came down by over Rs. 100 crore. Apart from early repayment of certain loans, the major contributors towards the interest cost savings were waiver of about Rs. 60 crore of penal interest by the LIC. The outstanding loan, which was the major cause of concern for the company so far, has come down to a `reasonable' Rs. 775 crore including Rs. 475 crore to the LIC, Rs. 200 crore to the bank consortium and Rs. 100 crore towards RINL bonds. But for some reduction, "the loan portfolio may be maintained for business interests," confirmed the acting chairman, B. K. Singh. Meanwhile, the plan for setting up a new coke-oven battery (No. IV) is still awaiting clearance of the Public Investment Board. The Rs. 320 crore project will be financed from internal resources of the company. "We will award the civil and technical contracts once the PIB clearance is received," sources said. [ The Hindu, 15 March 2003]

    Tata Group

    Tata Steel plans to invest Rs 1995 crore for expansion    Tata Steel will make an investment of Rs 1,995 crore to increase production capacity of crude steel by one million tonne to five million tonne per annum. The proposed expansion plan, taking the finished steel production capacity of the company to around 4.5m tone from the current level of around 3.7m tonne, would be executed over a period of 2-3 years. R N Nandrajog, Vice-President (Finance) at Tata Steel, said the proposed expansion would be largely financed through internal accruals. He added, "We are yet to take a final call on the mode of financing the balance expansion. We are currently exploring various schemes of financing," "We are among the least cost steel producers globally and our investment cost in installing the balancing capacity is far less compared with setting up a green-field project," Nandrajog said. [Business Standard, 27 March 2003]

    Tata Steel okay with steel, has no plan for telecom    Mining may be the next best option – Tata Steel has ruled out investments in telecom and aluminium sectors but has kept its option open to invest in any other non-steel business. It is seriously evaluating possible investments in thermal coal business, iron mining and titanium mining plant. The company is also considering expansion in areas such as an increase in steel capacity by about one million tonne, a ferrochrome project in South Africa and an increase in tube-making capacity. B Muthuraman said that the company is in the process of finalizing investment plans and will shortly make an announcement on the effect. [Economic Times, 31 March 2003]

    Tata Steel hikes export target for current year to 18%    Tata Steel is targeting a higher growth rate in exports of about 18-19% this year in comparison to last year’s growth, said R C Nandrajog, Tisco Vice President (Finance). Tisco has not seen any impact from the recent fall in steel prices in China yet.. The company said that Asian steel prices and its export realisation would remain stable for a few more months. It expected that the flat demand for steel will remain stable in China because of the good domestic demand there. The Indian steel industry faces several difficulties like high transportation costs, no proper power available etc., Tisco has managed to remain one of the lowest cost producers in the world. According to Morgan Stanley report, the company’s flat product price hike of Rs 500 to Rs 1,000 per tonne effective from March 1, 2003, has been accepted by its customers. The gap between the landed cost of imported flat products and domestic prices is now 5% levels. According to Tisco, this gap was comfortable and any further increase would need Asian prices to rise further. Commenting on the export front, Mr Nandrajog said that he did not see any stumbling blocks. "This year, exports have grown substantially higher. The main question is whether the Indian market is able to meet the specifications and what the prevailing price at the given time is." He said, "This year, prices are high so a lot of exports are happening unlike last year. There are two things that are important – price and quality – if these are maintained, exports can always be high," adding, "There are a few restrictions for Indian exports like the anti-dumping duties, but in my view, these are temporary measures and will not last very long." [Financial Express, 29 March 2003]

    Demand drop in China won't affect Tata Steel    Despite falling demand for steel in the Chinese market, Tata Steel feels that the price will remain firm in the domestic market. According to a company press release, the domestic supply will continue to be restrained as export requirements are expected to be maintained. "It is true that the import demand in China has reduced in March. In reality, there has not been any reduction in China's consumption requirement. However, the tariff-free import quota has been completed and China is expected to release fresh quota in May 2003," the release stated. The absence of imports for a month may lead to some price correction in China but this will not affect prices in India, which are already lower than the export prices in China. [The Hindu Business Line, 30 March 2003]

    Tata Steel    Tata Steel has received the Golden Peacock Award 2002 for excellence in corporate governance and corporate social responsibility in the private sector category. [Telegraph, 9 March 2003]

    Tata Steel    Tata Steel Sukhinda Chromite Mine has been selected for the National Safety Award (Mines) for the year 2001 under the category of "longest accident free’ mine. The award is given by the Union Ministry of Labour. [Telegraph, 8 March 2003]

    Other Private Sector Operators

    Ispat plan    The board of directors of Pramod Mittal-promoted Ispat Industries is planning to merge its subsidiary, Ispat Metallics India Ltd, with itself. The board had been convened on March 26 to consider the proposal. The merger will be effective from April1, 2003. [Telegraph, 21 March 2003]

    Ispat weighs merger of Metallics    Ispat Industries is planning a merger with subsidiary Ispat Metallics with effect from April 1, 2003. The board has mandated ICICI Securities and Ernst & Young for valuation and determining the share-swap ratio. The board also considered and accepted the financial restructuring scheme with the cut-off date for the restructuring being September 30, 2002. The debt recast includes writing down of Rs 692.59 crore equity of the company by 40% by way of conversion into 0.01% cumulative redeemable preference shares (CPRS), redeemable in the year 2018-19 and 2019-20. CPRS aggregating Rs 87 crore is to be allotted to the promoter group, which will be redeemable in 2018-19 and 2019-20. The holders of CRPS will not have voting rights. Equity shares aggregating to around Rs 185 crore is to be allotted at par to promoters after the proposed write down of equity, the company said in a notice to the exchange. Equity shares of close to Rs 40 crore is to be allotted at par to SMS Demag Aktiengesellschaft after the proposed write down of equity. [Business Standard, March 2003]

    Ispat Alloys in talks to recast Rs 110 crore    Ispat Alloys is in talks with its lead banker for restructuring of a Rs 110 crore loan, including $12m loan and was expecting to stage a turnaround from the next financial year. Incidentally, Mittal’s flagship, Ispat Industries Ltd, had recently received a major reprieve from financial institutions after they had agreed to restructure the company’s Rs 7,000 crore debt and if the current negotiation worked out, the Group was expected to come out of hard times faced due to falling steel prices over the past couple of years, industry sources said. [Financial Express, 24 March 2003]

    Jindal Vijayanagar Steel meet on debt recast    The board of Jindal Vijayanagar Steel (JVSL) will meet on March 11 to consider the debt restructuring package approved by the RBI-constituted corporate debt restructuring (CDR) cell. The package, if approved, would involve conversion of 40% of existing equity capital into 0.01% cumulative redeemable preference shares and issue of equity shares at par to certain lenders in lieu of part of debt, the company informed the Bombay Stock Exchange. [Telegraph, 9 March 2003]

    Jindal Steel and Power starts bot trial of rail project    Jindal Steel and Power Ltd (JSPL) said it has commenced hot trial runs of its rail and universal beam mill project about one month ahead of the scheduled completion data of March 31. The company had said in December that the 7,50,000 MT project was progressing as per schedule and was at an advanced stage of implementation. "These products will add significantly to the turnover and profits of the company," JSPL said, adding that the project would produce parallel flange beams and columns of all sizes including larger sizes which were presently imported. [Economic Times, 13 March 2003]

    Jindal set deadline to sell US unit    Jindal Strips Ltd (JSL) has set March 30, 2003 as the deadline for selling its US-based 61% subsidiary, Massillon Stainless. Sources said the Jindals have agreed to put the plant on hot idle, that is maintaining the minimum heat and electricity to preserve the equipment, but only until March 30. After that date, they will shut down the utilities and proceed with liquidation of the plant. The unit served as an independent converter of hot band stainless coil to cold rolled stainless sheet. Mike Locker of Locker Associates, a New York-based firm has been hired to find a buyer for the plant. Locker is reportedly negotiating with a buyer but is unlikely to meet the deadline. Initially, there were around 15 interested parties but most of them backed out. The New York firm is expected to request JSL to extend the deadline on behalf of the party by a couple of weeks so that it could do a due diligence of the plant. Sources said around 92 employees were out of work when the plant closed late last year. The future of the plant now hinges on the Jindals bearing the burden of extending the deadline. [Business Standard, 22 March 2003]

    Coke / Coal

    Uniform duty on coke may help Sterlite, Hindalco    This budget has had a marginal impact on the non-ferrous players. While the reduction in the peak rate of customs duty won’t have any perceptible impact, the move to make the duty on metallurgical coke uniform will actually help companies like Sterlite and Hindalco. The duty on coke is different for different sectors, While for the steel firms, the move means an increase to 10% from 5%; for the non-ferrous companies, it implies a reduction to 10% from 15%. The other steps do not impact the sector. As the customs duty on copper and zinc is at 25%, the reduction in the peak rate from 30% to 25% will have no effect. [Economic Times, 1 March 2003]

    Consultancy

    Ian Davis to succeed Rajat Gupta at McKinsey   In a keenly contested election, Ian Davis, chief of McKinsey’s London office, has been elected head of the management consultancy world-wide to succeed Rajat Gupta. He will now take over the global consulting firm for the next three years. Mr. Davis defeated Michael Patsalos-Fox, head of its New York Office, in an internal vote. There has been growing interest in this election not only across the world but also in India because Mr. Davis will now take over from global Indian Manager Rajat Gupta, who steps down in July after serving three terms. When Mr. Gupta took over the firm in the nineties, he was one of the early high-profile Indian managers to have reached the top slot in global corporations. Now Mr. Davis has the challenge of giving a facelift to McKinsey which in recent times has taken a beating with its association with Enron and other global corporations which have felt the global meltdown heat. He will also have to steer McKinsey through times when the global consulting business is going through a downturn. During Mr. Gupta’s regime, McKinsey’s network grew substantially worldwide. In the process, during his tenure, the number of employees more than double and revenues also grew substantially. But in recent times, the firm came under the scanner for its work with high-profile clients like Enron, Kmart, Swissair and Global Crossing. Prior to becoming the Managing Director in Britain in 1996, Mr. Davis led one of the firm’s practice for Europe. [Financial Express, 7 March 2003]

    Direct Reduction / Pig Iron

    Indian budget hits pig iron producers    In India’s budget for 2003-04 the peak rate of customs duty has fallen from 30% to 25%. The 30% rate applied to imports of cold rolled coil and galvanized sheet; the duty on hot rolled coil has remained at 25%. The drop is unlikely to harm either hot or cold rolled producers as steel prices have risen domestically and globally and the country is regarded as relatively free from the present threat of imports. The duty structure other wise remains intact on the steel industry except for the raw materials nickel and metallurgical coke. The import duty on metallurgical coke has been made 10% for all users. Formerly ferro-alloy and pig iron producers could import metallurgical coke with a 5% duty while others had to pay 15%. This anomaly has been eliminated and will bring protests from ferro-alloy and pig iron producers. SAIL Chairman said: "The direct impact of this year’s budget on SAIL will be marginal and around Rs100m, mainly on account of the increase in service tax and customs duty on nickel and coke." The price of metallurgical coke has risen steeply from $80-90 per tonne to $120-130 per tonne, and material is hard to obtain. The latest budget provides for spending of over Rs600bn on roads, bridges, railways and airports and the steel industry believes that steel consumption will grow by around 8% per year as a result. Growth is around 6% now. [Metal Bulletin, 10 March 2003]

    Hike in input costs hits sponge iron units   The domestic sponge iron industry has been hit by a 10 to 15 per cent increase in input costs. The price of iron ore, a key raw material used in the production of sponge iron, has increased to around Rs 1,000 to Rs 1,200 per tonne, from Rs 700 to Rs 800 per tonne a month ago. This increase in input cost will have an impact on the margins of sponge iron manufacturers, industry experts said. S S Bhatnagar, Director, Sponge Iron Manufacturers Association (SIMA), said sponge iron manufacturers have not been able to pass on the increase in input cost to the consumers. The requirement of iron ore in 2003-04 is expected to touch about 6.8m tonne, as against this year’s requirement of 5.5m tonne. At the same time, Bhatnagar said, the availability of non-coking coal has been a critical issue for the industry and the government’s decision not to reduce custom duty of the same has further aggravated the situation. Monnet Ispat Managing Director said, small and medium-sized producers were the worst-affected. He also said, a large number of mini sponge iron companies will be operational by the end of this year. India is the largest producer of sponge iron in the world, with total production of 6.53 million tonne in 2002. In the year 2001, India’s total production of sponge iron stood at 5.59m tonne. [Business Standard, 17 March 2003]

    K R Alloys planning coal based sponge iron plant in Karnataka   K R Alloys is planning to set up a 100 tpd coal based sponge iron plant at Meenahalli in Bellary district of Karnataka. An investment of Rs 100 million is envisaged. Popuri Engineering & Consultancy Services, Hyderabad has been appointed as the project consultant. As of February 2003, the company was in the process of achieving financial closure. Meantime, bids are under evaluation to finalise equipment suppliers. Work on the project is expected to begin by July and is scheduled to be completed by mid 2004. The company is planning to set up a 1.6MW power plant based on waste heat in the second phase. About 1 MW power is proposed to be sold to the state grid. [Recorder of New Projects, 1 March 2003]

    Usha Martin opts for new technology    The coal-based sponge iron technology developed and patented by Orissa Sponge Iron Ltd (OSIL) is gaining popularity across the globe. The latest to adopt the OSIL, process is Usha Martin Group, which is setting up a 1-lakb tonne per annum sponge iron plant at Adityapur, near Jamshedpur. World Bank subsidiary International Finance Corporation and German Development Bank (GDB) are funding the Rs 30 crore plant. This is the second plant to be based on the OSIL process. OSIL pioneered the development of commercial-sale technology for the use of coal in sponge iron production. Lloyds Steel was the first to successfully build a 1.5 lakh tpa plant using the OSIL process in 1996. Industrial Development Bank of India (IDBI) had funded this Rs 100 crore project. Interestingly, the OSIL process was preferred over the other leading technology of the world, developed by Lurgi of Germany. OSIL is a joint project between Ipicol of Orissa and Torsteel Research Foundation. The company recently added a steel billet making unit and a captive power generating unit to its plant. [Economic Times, 14 March 2003]

    SAIL may set up sponge iron project in Rourkela   SAIL is looking at options to set up its first sponge iron capacity to substitute sized iron ore as a basic feedstock for its blast furnace. SAIL’s plans to use more sponge iron as feedstock is being considered since it is believed to give higher hot metal yields and significantly improved productivity. Talks are on to set up a one-million tonne of initial sponge iron capacity in two modules of 5 lakh tonne each. While the exact location is yet to be finalised, Rourkela in Orissa tops the list of priorities. SAIL officials, however, played down the issue stating that talks of setting up such a capacity are at a very preliminary stage and it would take some time before the company decides on it. The move also assumes significance, considering the fact the Steel Minister, B K Trippathy hails from Orissa. Of course, Bokaro also figures on the list considering the SAIL’s largest single site flat product capacity of 4m tonne is located in this industrial town of Jharkhand. Sources said even options of acquiring stake or sharing capacities in existing or upcoming sponge iron project in Orissa were being looked into by SAIL. SAIL is yet to freeze the technology or the capacity of the proposed sponge iron making capacity. Sources said, investments could be in the region of Rs 1,500-2,000 crore for a start-up capacity of one million tonne. Options using gas, if available, also being weighed as basic fuel to run such sponge iron units. [Economic Times, 17 March 2004]

    Ferroalloys

    Minister's assurance to ferro alloy units   The Union Minister for Steel, Mr Braja Kishore Tripathy, has assured ferro alloy producers that their demand for lower power tariffs will be taken up by the Ministry with other Ministries concerned. Delivering an address at a `National Seminar on Ferro Alloys', organised on Friday by the Indian Ferro Alloy Producers' Association, Mr Tripathy said that the high power tariffs in India vis-a-vis other ferro alloy producing countries was the prime reason for the idle capacity in the domestic industry. About 50 per cent of the 10 million-plus tonne per annum capacity in the domestic ferro alloy industry is currently lying idle. Mr Tripathy said that the issue would be taken up by the Steel Ministry with other Ministries such as energy, among others. Since power is a State subject, it would be imperative to bring it within the purview of the Concurrent List to facilitate intervention by the Centre in this regard. "This is not going to be easy, but efforts have to be made to provide ferro alloy producers with a level playing field vis-a-vis international players so that they are competitive in the global market,'' he said. ``I am sure the new Electricity Bill, which is likely to be discussed in Parliament, will help this industry for its future. My Ministry will be ready to help the ferro alloy industry get a level playing field,'' he added. According to the Minister, the issue of increase in the import duty on imported coke from five per cent to 10 per cent, as announced in the Union Budget for 2003-04, would also be looked into. During an interface with newspersons, he said that a committee has been set up to study the possibility of a merger of the Institute for Steel Development & Growth, Joint Plant Committee and the Biju Patnaik National Steel Institute. No decision, however, has been taken in this regard. Speaking on the occasion, Mr Sandipan Chakravorty, Chairman of the Indian Ferro Alloy Producers' Association, said that the average cost of electricity in India was nearly Rs 3 per unit compared with 60 paise in South Africa, which is among the major producers of ferro alloy and ferro chrome. "If we are provided with a level playing field with regard to electricity tariffs, the industry's exports from India will double from the current level of Rs 500 crore.'' A reduction in electricity tariffs is important in view of the fact that it accounts for 50 per cent of the costs that are incurred for converting chrome ore into ferro chrome. Mr Chakravorty presented a case for uniformity in electricity tariffs across different States and reiterated the industry's demand for rolling back the import duty on `met coke' from 10 per cent to five per cent. [ The Hindu Business Line, 22 March 2003]

    Tata Steel, Visa Ind keen to bid for Idcol unit without captive mines    The privatisation process of Idcol Ferro-chrome Alloys Ltd has taken an interesting turn, with three companies opting to take over the plant even without the mines. Sources said that Tisco and Kolkata-based Visa Industries have agreed to bid for Idcol’s Jaipur Road plant without the mines. A Tamil Nadu based company has also expressed willingness to take part in the bidding even if the mines are not tied up with the plant. Though the state government had received expressions of interest (EoI) from as many as 11 companies for the high carbon ferro-chrome manufacturing facility, it is yet to invite the bids as the cabinet sub-committee on divestment is not in favour of putting the Tailingi chromite mines along the plant on the block. It was pointed out that the mines, which promise chromite ore, deposits worth about Rs 600 crore, would fetch huge royalty and profit for the state government. As there was no consensus in the sale of the plant and mines at one go, the cabinet sub-committee headed by Chief Minister Naveen Patnaik asked IDBI, the global advisor for divestment of the unit, to find out whether the bidders are willing to participate in the privatisation process even if the mines was separated from the units. Sending a questionnaire to all the interested parties, the IDBI had asked them to answer in yes or no whether the parties are willing to take the plant without the mines and would source the chromite form Idcol’s Tailingi mines and Orissa Mining Corporation. The three companies have reportedly answered affirmatively to the questions. Besides Tisco, IMFA/ICCL, Jindal Strips and Visa Industries are among the frontrunners who have submitted EoIs, sources said. [Financial Express, 13 March 2003]

    Tata Steel awaits eco nod for ferro chrome unit in SA    Work on Tata Steel's proposed ferro chrome plant in South Africa is expected to begin after the receipt of environmental clearances that have been applied for. The feasibility report for the project has been completed even as work on a detailed project report is under process. The company has proposed to set up a 1,20,000 tonnes per annum (tpa) ferro chrome plant in South Africa in association with South Africa Industrial Development Corporation. The project is slated to entail an investment of Rs 200 crore. Stating this during an interface with newspersons on the sidelines of a function organised here today by the Indian Ferro Alloy Producers' Association, informed sources said chrome ore would be sourced from India and the ferro chrome produced at the South African plant would be sold in global markets. The idea behind the initiative was to take full advantage of the benefits that both nations have on offer — the high-quality chrome ore of India and the lower costs of electricity in South Africa. "The conversion levels of South African chrome ore is 38 per cent while that of Indian chrome ore is 50 per cent. Hence, the quality of the Indian ore is superior. Electricity costs in South Africa are far lower than in India'', the sources said, adding that 50 per cent of the costs incurred on converting chrome ore into ferro chrome was on electricity. The ground-breaking ceremony of the proposed plant is expected to be held after the environmental clearances are received, which is expected to take one year from now. The plant, which will have a single furnace of 1,20,000 tonnes per annum capacity, is expected to be commissioned within 18 months from zero date. The sources were bullish on the prospects of the proposed South African plant since "the global market for ferro chrome was growing steadily at around five per cent every year''. [ The Hindu Business Line, 22 March 2003]

    SAIDC may be Tata Steel ferro chrome project ally    South African Industrial Development Corporation (SAIDC) is likely to take 20% equity in Tisco’s ferro chrome project in South Africa. The project is expected to commence by the end of the fiscal – 18 months from which it will be commissioned, said official from Tata Steel. At present, Tata Steel is awaiting environmental clearance for the project which will use chrome from India and reap the benefit of 50 paise per units of power cost to manufacture chromium used mainly in stainless steel manufacture against Rs 2.8 in India. The 120,000 tonne ferro chrome project will be a subsidiary of Tata Steel where the former will hold around 80% of the Rs 100 crore proposed equity. Rest of the project cost will be sourced from external borrowing – close to Rs 100 crore putting its debt equity ratio at 1:1. The funding of the project, however is yet to be tied-up. Chrome manufactured from the South African venture will be exported to Japan, European Union and the USA. Executive Director-in-Charge, ferroalloys and minerals, from Tata Steel, P Roy said that the company would manage to earn handsome profit even after paying freight for importing ore from India to South Africa and then again exporting finished products to countries like Japan. [Business Standard, 22 March 2003]

    Iron Ores

    SAIL to hike Iron ore output by 15%    SAIL Raw Materials Division (RMD) has decided to increase production of iron ore to 13.59m tonne in 2003-04 fiscal from the current fiscal’s 11.74m tonne, a growth target of 15%. SAIL has decided to hike hot metal production to 12.8m tonne. RMD’s higher production would meet the iron ore requirement of SAIL’s three steel plants in the eastern region – Bokaro, Durgapur and Rourkela. Its largest integrated steel plant, Bhilai gets iron ore from its captive mine at Rajhara, located in the same state, Chhattisgarh. [Financial Express, 28 March 2003]

    SAIL board okays iron ore plants    The SAIL board has approved an expansion plan for iron ore mining which envisages a 15% increase in ore mining output at 13.6m tonne for the next fiscal. This will be utilised to feed SAIL’s integrated plants in eastern India – Rourkela, Bokaro, and Durgapur. In the current year, SAIL has set a 11.74m tonne iron ore despatch target, which will be higher by 6% compared to last year’s despatch. Bhilai has separate targets from its own captive mines in Chattisgarh. According to SAIL Chairman V S Jain, the increase mining has been planned to feed a high target of hot metal production of 12.8m tonne. New mines will be opened up in Kiriburu-Meghgatuburu, Bolani and Barsua ore mines in Orissa. [Economic Times, 29 March 2003]

    Kudremukh bid to get mining lease   In its attempts to ensure its survival after it stops mining in 2005 as per the orders of the Supreme Court, Kudremukh Iron Ore Company Ltd (KIOCL) is continuing to try and get a mining lease for the Ramanadurga deposits in the Bellary-Hospet region of Karnataka. This time, the Kudremukh Mazdoor Sangh (KMS) has approached the leader of the Opposition in the Karnataka Legislative Council, Mr D.H. Shankara Murthy, and asked him to intercede on behalf of the company. On his part, Mr Shankara Murthy has written a letter on behalf of the KMS to the Chief Minister, Mr S.M. Krishna, seeking an early decision on the issue of granting the company mining rights in the Bellary-Hospet region. [The Hindu Business Line, 3 March 2003]

    Kudremukh looks for fresh mines    Faced with closure of its mining operations, the state-owned Kudremukh Iron Ore Company has started scouting for fresh mines in Karnataka and other states as part of a strategy to ensure survival. The iron ore major has approached the state government for fresh mining leases in the southern state after the Supreme Court ordered that its existing mining lease would not extend beyond 2005. [Business Standard, 26 March 2003]

    Kudremukh, govt sign MoU    Kudremukh Iron Ore Company Ltd signed a memorandum of understanding (MoU) with the government setting an export target of 1.675m tonne of iron ore and 3.575m tonne of pellets for 2003-04. [Business Standard, 28 March 2003]

    Stainless Steel

    Salem Stainless seeks lower duties    Salem Stainless Steel has requested the Indian government to reduce custom duties on stainless steel slabs to 15% from the present 25%. The company states that the import duty is the same on stainless slab as on stainless hot rolled, which discourages value addition. Salem is taking a number of initiatives to generate cash and reduce losses so it can remain an independent entity. If the import duty on slab is reduced to 15% it can gain a larger share of the Indian market. Salem is also involved in converting slab into hot rolled coils for other companies particularly Jindal Strips and Shah Alloys for low-nickel stainless exports to China. In 2002-03 it will convert nearly 70,000 tonnes, while in 2003-04 it has targeted 100,000 tonnes.[Metal Bulletin, 27 February 2003]

    Jindal Strips planning 1.8m tpa stainless steel plant in Orissa    Jindal Strips has announced plans to set up a 1.8m tpa stainless steel plant at Durburi in Jajpur district of Orissa. The project estimated to cost Rs 50,000 million is to be implemented in 3 phases. Feasibility study is to be undertaken by the company’s in-house project team. Work on the project will be initiated in the next 5-6 months on studying the chrome ore reserve. The first phase is scheduled for completion in 36 months from zero date. [Recorder of New Projects, 1 March 2003]

    New Projects / Expansion

    Manaksia plans new Indian steel plant   Manaksia group is planning to set up an integrated steel plant in India. It will invest around Rs 3bn in setting up the long and flat products plant over a period of around 4 years. As a first step it has inaugurated a sponge iron plant with a capacity of 30,000 tpy in the Purulia district of West Bengal, 200km from Kolkata. The plant, known as Mark Steels, is in talks with financial institutions to fund the downstream project, but a series of bad loans to steel projects over the past decade may make them reluctant. The sponge iron capacity would be expanded to 350,000 tpy and would have a captive power plant and a steel mill of 300,000 tpy. Manaksia group's flagship company is Hindustan Seals which is the market leader in certain types of bottle tops in India. [Metal Bulletin, 27 February 2003]

    Steel / Raw Material Prices

    Steel majors hike HR prices by Rs 1500 per tonne    Leading steel producers such as SAIL, Tata Steel and Essar Steel have increased the prices of hot-rolled (HR) coil by around Rs 1,500 per tonne from March 1, 2003. This has been the highest jump in the price of steel this fiscal. In February, these companies have raised the prices of HR coil by Rs 1,200 per tonne. According to an official at Essar Steel, "The global price of HR coil has gone up in the last few weeks and we are just following the global trend." He also said that the strong market condition in India has helped the steel sector to go ahead with the hike in price. A Tata Steel official said that Indian steel prices are determined by global trends. HR producers have said that the hike in prices is just a corrective move. "In 2001-02, prices had dropped abnormally and this year we have just seen prices coming back to the normal level," said J J Irani, Chairman, Indian Steel Alliance. Dr. A S Firoz, Chief Economist, JPC, said that domestic prices are unlikely to go up any further in the next few months. Steel producers, which saw around a six per cent growth in consumption, have been steadily increasing the prices from April 2003. While HR coil producers have been increasing prices, cold-rolled players have urged for a roll-back in prices. [Business Standard, 5 March, 2003]

    Steel cos not to hike long product prices    In a rare move, primary steel makers SAIL, Tata Steel and RINL have decided not to go for any early-March price hike in long products. The change in rule for calculating excise duties proposed in the budget is one key reason behind the steel majors’ decision to somewhat ease accelerating steel prices, witnessed in the last 11 months of the current fiscal. SAIL, Tata, and RINL together produces around 9m tonne of long products. The move to hold on to long steel prices comes at a time when international long steel prices saw a sudden jump of $15 per tonne over the last one month. In comparison, rising flat steel prices have stabilised though contracts for April-June, 2003 are being negotiated with a $20-30 per tonne increase, by Japanese steel makers for exports to China. The Union Budget for 2003-04 has proposed that the excise duty on steel products will henceforth be charged ex-depot or ex-stockyard prices and earlier practice of excise calculation on ex-factory prices will be discontinued. [Economic Times, 5 March 2003]

    US pig iron prices pass $200 mark    Merchant pig iron prices in the USA have hit – and in some cases passed – the $200-a-tonne mark on a delivered mill basis, a price several traders said they had not seen for at least five years. The prices have been pushed upward by an array of factors that one trader described as "the perfect storm", including strong demand for both pig iron and ferrous scrap from steelmakers in the Far East; political turmoil in Venezuela that led to an abrupt curtailing of suppliers of hot briquetted iron, and harsh winter weather conditions curtailing shipments from Russia. HBI shipments out of Venezuela have resumed in the past month. The first sales in the spot market were concluded at $160 a tonne of New Oreleans. Added to the supply crunch is a report that Nucor has agreed to buy an estimated 400,000 tonne of pig iron from merchant producers in Brazil. The big steelmaker was said to have agreed to pay an estimated $175 a tonne for the Brazilian pig iron cif New Orleans. For those mills on the inland river network, the delivered price was said to be close to or slightly more than $190 a tonne, while those mill requiring truck or rail transport could be paying $200-plus. The Nucor deal, one trader said, covered deliveries through to September and might serve as a ceiling for ferrous scrap prices, which have been rocketing upward in recent months. The iron market has become so attractive that even a few US integrated steelmakers have joined the parade. Mini-mill buyers in the south said they had received calls from one Chicago-based integrated steelmaker offering 3,000 tonne of basic pig iron by rail or truck. [Metal Bulletin, 10 March 2003]

    Galvanised steel prices a historic high    Prices of galvanised corrugated steel have touched an all-time high of Rs 36,750 per tonne, after two successive price hikes within a week. Industry sources said, the last time the galvanised prices peaked was around 2-3 years back at Rs 34,000 per tonne and the current price is a historic high as far as galvanised products are concerned. What is more, the steel majors are planning another round of price hike for cold rolled and galvanised steel by the month end. The move to increase price within a week is largely due to an uptrend in the international demand with China putting bulk of the demand. Last , prices were increased by Rs 750-1,000 per tonne. [Business Standard, 13 May 2003]

    Steel prices poised to fall   Steel prices, having risen several times in the past year, are expected to come down from 1 April, 2003. Prices are likely to be corrected by Rs 500-700 per tonne for hot rolled (HR) products. The downward revision in prices has been prompted by a backlog in the Chinese market, which has emerged as the most important export destination for steel produced in India. The glut has resulted in prices of HR coils coming down to $340 from around $370 per tonne. Sources pointed out that a temporary glut in the Chinese market implies more material for the domestic market and a resulted downward pressure on steel prices here. Moreover, steel is also being imported from Commonwealth of Independent States (CIS) countries at a reduced rate, said Vinod Garg, Director-in-Charge, Ispat Industries. K S Subramanian, Head of Exports, Essar Steel, also said a price correction would take place next month. The industry expects other steel companies to follow suit. But, the industry feels that downward revision will be affected and prices stabilised once the backlog in China is cleared. The price cut is expected to be more in the commercial grades of HR products. Since the beginning of this month, there has been a sharp increase across almost all flat steel products. Prices of hot rolled coil appreciated by Rs 800-1,200 per tonne, cold rolled products by around Rs 1,000 per tonne and galvanised products by Rs 1,200-1,500 per tonne. Industry sources said, though demand still exists in China, India steel majors are playing wait-an-watch game as the country will impose new quantitative restrictions soon. In the European Union, however, prices have risen from $300 in December to $325 now. It is still lower than the prices prevailing in China. [Business Standard, 28 March 2001]

    Men in News

    Muthuraman Awarded    B Muthuraman received the19th Michael John Gold Medal from Jamshed J Irani, Director of Tata Sons, an award constituted by Tata Workers Union in the memory of its president Michael John in the year 1985. [Business Standard, 10 March 2003]


    B. Iron and steel - International

    General News

    Warshaw gives bidders two weeks to study PHS    The Polish government has announced the next stage in its privatisation of Polskie Huty Stali (PHS). LNM Group, US Steel and Arcelor have given two weeks to make "further investigations of PHS and make a binding offer" from February 24. These investigations will centre on PHS’s books, which are heavily in the red. LNM Holdings, US Steel and Arcelor came forward as the three sole bidders in the privatisation of PHS, having met the February 10 deadline for submission of preliminary offers. The Polish government set conditions in the tender that the successful bidder must take on PHS’s existing debt of 1.65bn zlotys ($415m) and initiate an investment plan to modernise the mill. The injection of capital needed immediately is thought to be around $150m. Meanwhile there are reports that PS’s largest plant, Huta Katosive has had to close one of its blast furnaces due to lack of working capital. [Metal Bulletin, 27 February 2003]

    U.S. steel tariffs violate trade rules    WTO - The World Trade Organisation has ruled that steel tariffs imposed by the U.S. President George W. Bush last year to protect the American industry from a surge of imported steel violated international trade rules. The WTO was acting on complaints by the EU and major steel producers and exporters in Asia and Latin America. A U.S. trade official yesterday said they intended to appeal, which could take many months and would perhaps last till the end of the three-year life of the current U.S. tariffs. The main thrust of the complaints by the EU, Japan, Brazil, China and others was that the tariffs, supposedly aimed at protecting the U.S. industry from a "surge'' of imported steel, came when U.S. imports had been declining for a couple of years. U.S. Congressmen reacted sharply to the decision with democrat Sander M Levin, member of House Ways and Means subcommittee on trade, saying it "furthers a trend that jeopardises the credibility of the WTO dispute [The Hindu, 28 March 2003]

    LNM and Conares compete for Romanian pipe mill    LNM Holdings and Conares Trading have been named as the two bidders for Roman’s Tepro lasi, the pipe mill put up for privatisation by the Romanian government on February 20, 2003. Sources said that Swiss-based steel trader Conares together with the Russian Mechel group have already purchased some of the buildings and equipment in the hot cold strip mills at the Tepro lasi site. But neither company was able to confirm this however. Meanwhile, LNM has sent a 30-strong team of specialists to Tepro to study the plant. According to a local source. The Romanian state ownership body Apas confirmed to MB that the deadline for bid submission is March 19, 2003. [Metal Bulletin, 10 March 2003]

    Osinek plans to relaunch sale of Vitkovice    The process of privatising Vitkovice Steel will start in the second quarter, according to Osinek, its current owner, which aims to sell the Czech steelmaker by the end of the year. Osinek said on 6th March 2003 that a public tender would be held, ending speculation that the Czech state might relaunch exclusive talks with LNM Holdings. Late last year the exclusivity period expired without a satisfactory offer from LNM. Its bid, thought to have been worth Czkr650m, was rejected by the state on the grounds that it was too low. Last year Osinek bought Vitkovice Steel, a former division of engineering company Vitkovice, for Czkr3.31bn. The exact timing of a tender has not been decided because of technical difficulties relating to the almost simultaneous privatisation of the Vitkovice engineering company, according to Osinek. The government recently described that sale of Vitkovice as a priority. Interest in the engineering company has already been expressed by at least two parties, and officials expect its sale to go through in the summer. The privatisation of the steel producer, meanwhile, will only be concluded after approval by the Czech anti-monopoly office. Vitkovice steel produced 908,000 tonne of steel in 2002, 18,000 tonne less than the previous year. Sheet metal output fell by 33,000 tonne to 667,000 tonne while section production rose slightly to 108,000 tonne. Exports accounted for two thirds of sales, mostly to the European Union, scandinavia and North America. [Metal Bulletin, 10 March 2003]

    Leo schedules groundbreaking for hot strip mill   Leo Inc plans to break ground on a 1.2m tpy hot strip mill in Louisville, Kentuchy on May 1, 2003, although it does not expect to finalise the financing of the $176m project until June 2003. Sources said, the company would lease the 50-acre site along the Ohio River ahead of the completion of the financing so that site preparation can begin as soon as possible. Sources said that China’s Metallurgical Construction Group Corp (MCC) is involved in the project through machinery and fabrication orders. The slab reheat furnace will be built in China by a division of MCC. Any work that can be done in the USA will be handled by Pittsburgh-based Tippins Inc, which is supplying the key equipment for the project – its patented twin-stand reversing mill. A similar Tippins mill was commissioned by Kunming Iron & Steel in China last year. Another is operating at Ispat Nova Hut in the Czech Republic. [Metal Bulletin, 10 March 2003]

    Jiangxi Xinyu gears up to double wire rod capacity    Trial runs have begun at Jiangxi Xinyu Iron & Steel’s new wire rod mill in southeast China. It hopes to raise finished steel output this year following the start-up of the 500,000 tpy rod mill at the tail end of last year. An exact production target for this year has yet to be finalised, a company official said, since the new mill is still operating on " a test-run basis". Supplied by Danieli Morgardshammar, the new rod mill is capable of producing 5.5-20mm dia wire rod in coils of up to 2.2 tonne. Most of the sales will be targeted at the local market. The new mill is Jiangxi Xinyu’s second wire rod facility and will double the company’s rod rolling capacity to 1m tpy. The company also makes sections and blooms at its plant in Xinyu city. In 1996 Xinyu Iron & Steel merged with Jiangxi Steel Works to form Jiangxi Xinyu Iron & Steel Co. [Metal Bulletin, 10 March 2003]

    Italians close to winning Hadeed contract    Saudi Iron & Steel Company (Hadeed) has taken a first step towards upgrading its Jubail steel plant by signing a letter of intent with Italy’s Danieli & Company for a project to enhance and diversify its product range. Under the SR 54m ($14m) contract, Danieli will install a vacuum degassification unit in the plant, adding new steel grades to Hadeed’s flat products range and improving the quality of its present products. The facility will enable Hadeed to produce steel grades required for the manufacturing of sour gas and oil pipelines, as well as for industrial appliance and vehicles. The project is part of a larger scheme to double Hadeed’s flat product capacity to 2m tonne a year. Under the expansion programme, Hadeed will also raise its long product capacity to 3m tpy from the existing 2.5m tpy. The bulk of the new capacity is expected to be sold on the domestic market. International companies are gearing up to submit bids to Hadeed by the end of March for the contract to expand the company’s hot rolling mill. [MEED, 7 March 2003]

    Unicoil nears final accord on CR and galv expanions    Saudi Arabia’s Universal Metal Coating Co (Unicoil) is expected to decide soon on who will win the contracts for its proposed installation of new cold rolling, pickling and galvanizing facilities at its Al-Jubail plant.. Danieli of Italy and Austria’s VAI are two of three companies that have made it to the final rounds of bidding for the expansion plan. Unicoil did not reveal the precise design capacity for the new equipment, although the colour-coater has previously expressed an intention to add between 250,000 and 400,000 tpy of new CR and galvanizing capacity. The Saudi company has also assessed an offer from Japanese steelmaker Nippon Steel for the supply for the new facility. If the expansion goes to the plan, Unicoil hopes to bring it on stream by 2005. A portion of the new cold strip capacity will be used as feed for Unicoil’s existing 120,000 tpy colour-coating line. The company seeks to increase overall sales of colour-coated sheet this year by "a minimum of 25% as well as boosting exports to China after its first successful export shipment of 6,000 tonne to the mainland last year. Unicoil achieved total sales of 80,000 tonne for the full year 2002. [Metal Bulletin, 17 March 2003]

    Nisco to start work on pelletizing plant    After a delay of almost three years, the National Iranian Steel Co (Nisco) and Japanese steel plant builder Kobe Steel are ready to put into effect a contract to build a 3.4m tpy iron ore pelletizing plant. The two sides signed a ¥9.72bn deal to construct the plant in Ardakan, near Yazd in central Iran, in May 2000. But now, as the prospect of another war in the Middle East looms, have the financing and other arrangement for the project been completed . [Metal Bulletin, 20 March 2003]

    Lion Group restarts Gunawan plate mill    Malaysia’s Lion Group has begun production of steel plate after restarting the former Gunawan Iron & Steel mill on the country’s east coast. Lion Group is rolling 8-30mm thick plate at the mill in Kemaman, Tregganu state, after acquiring the facility last year from the receiver, PricewaterhouseCoopers. The mill is now operating as Lion Plant Mill Sdn Bhd, a wholly-owned subsidiary of the Lion Group. The plate mill has a capacity of around 250,000 tpy, though the official did not disclose current production rates. [Metal Bulletin, 27 March 2003]

    Ferroalloys

    CML head for ferro-chrome project decision    Australian company Consolidated Minerals Ltd (CML) expects to make a final development decision on its proposed Pilbara ferro-chrome smelter project by June 2003. The company has commissioned South Africa’s Pyromet Technologies to undertake a technical feasibility study on its Pilbara ferro-chrome smelter project after an initial study concluded that the downstream processing project was potentially viable. The initial study concluded that Pyromet’s successful design for a plant using a 30MVA semi-closed furnace, as installed at the ASA Metals ferro-chrome smelter in South Africa, could be adapted for the planned plant in Western Australia. The study considered three other variants: a single furnace producing 50,000 tpy of chrome alloy; a two-furnace project producing 110,000 tpy, or a single furnace using Maxred smelting technology and producing 70,000 tpy. The study concluded that all were viable. Michael Kiernan, Managing Director of CML, said that initial evaluation had demonstrated 25% profit margins and confirmed the attractiveness of the project as a development opportunity. CML announced a consolidated profit of just over $5m for the half year ended December 31, 2002, compared to almost $8m in the corresponding period of the previous year. CML has sales agreements for all planned production for 2003, with 75% of manganese ore production covered by long-term sales agreements into Europe and China. The company reported that its first trial cargo of chromite ore was shipped to Sweden in November 2002. [Metal Bulletin, 13 March 2003]

    Outokumpu to ramp up ferro chrome business    Outokumpu has identified ferro chrome as the focus area of the future for the company. The company specialises in technology for ferroalloy industry among other areas. It would work to scale up its ferro chrome technology business in India. "We have been talking to three companies which have shown interest in Outokumpu technology and equipment. They include, Jindals, Tatas for the offshore project in South Africa and Navbharat Ferroalloys," Martti Nurmisalo, sales manager of Outokumpu technologies, said. Even though Outomumpu is present in entire ferroalloy, copper and zinc sectors with technology and capital equipment offerings in India, chrome would be the focus area for the company, he added. He pointed out that talks with these companies are at initial stage. "In India, high power tariff is an impediment for growth of this industry. Investment decision by companies would depend on whether power input cost comes down," he added. Apart from new plants, the company is also looking at expansion projects being taken up by existing plants. Outokumpu is now vying for two such expansion projects of Birla Copper and Sterlite Industry. [Business Standard, 25 March 2003]

    New Projects / Expansion

    Yung Kong plans new galvanizing line    Malaysia’s Yung Kong Galvanizing Industries (YKGI) plans to spend M$66m (US$17.37m) installing a 150,000 tpy galvanizing line in Klang, Selangor state. The plant is looking to arrange finance in order to proceed with the expansion, said a company official. The company has already started negotiations with several plantmakers for the supply of the new line, with a view to starting production by 2005. The official stated that the decision to build the new line in peninsular Malaysia would not only give the company greater proximity to its customer base, but also allow savings on transport costs. Output from the new line will be targeted mainly at the Malaysian market, though YKGI also plans to raise its proportion of exports from 2% at present. The new galvanizing line will be YKGI’s second investment in Klang. [Metal Bulletin, 27 February 2003]

    Handan installs second galvanizing line  China’s Handan Iron & Steel has marked the next step in its strip products expansion by ordering a 350,000 tpy hot-dip galvanizing line form VAI, Austria. The new galvanizing line will add to Handan’s existing facility, which was installed by Danieli, to give the Hebei province mill a total galvanizing capacity of 650,000 tpy. The new line is scheduled to come on stream in 2004 to coincide with the startup of Handan’s 1.3m tpy SMS Demag cold rolling mill. According to sources, Handan is looking to produce 800,000 tpy of cold strip for sale at the new mill, while the balance will be used as feed for its galvanizing and colour-coating facilities. The expansion is expected to transform Handan into one of the largest producers of flat products in eastern China. In a separate contract sealed in January 2003, Handan selected the engineering arm of South Korean steelmaker Posco to supply two new colour-coating lines, each with a capacity of 120,000 tpy. [Metal Bulletin, 6 March 2003]

    Tangshan to expand new hot strip mill    Tangshan Iron & Steel is interested for further expansion of the new facility. The second phase expansion will raise capacity at the Danieli hot strip mill rise from 1.5m to 2.5m tpy by the end of 2004. Tangshan is investing a further 1bn yuan ($120m) to expand the mill, following an initial investment of 2.4bn yuan ($290m). Tangshna’s new hot strip mill began commercial production in February, rolling 850-1,60mm strip down to a thickness of 0.8mm. February output is expected to reach 17,000 tonne, said a mill official. Tangshan is working on plans to bring cold rolling and colour-coating facilities on stream by the end of next year, although the company is still in the process of preparing a tender for equipment supply. Work has also started on the installation of a new galvanizing pickling line.[Metal Bulletin, 3 March 2003]

    Formosa Group to build giant steel plant   High-level officials from the Formosa Group, founded by Taiwan's "king of business", Wang Yung-ching, have confirmed that the group is planning to develop a giant steel plant in Qingdao, northern China. The planned steel plant - estimated to cost Formosa US$5 billion, making it the largest-investment project with foreign capital in Qingdao's history - is aimed mainly at supplying steel for Formosa Motor, a spinoff of the Formosa conglomerate, which has plans to relocate part of its manufacturing operations from Taiwan to mainland China, a corporate source said. The Qingdao steel plant would be part of the "Formosa business map" that has been on Wang's mind for a long time, a Formosa official who preferred not to be named said. The steel plant would be the last piece of the Formosa business map, which includes petrochemical, electronics, high-technology and automobile operations, plus aviation and maritime fleets, the official said. Unconfirmed sources from mainland China reported on Sunday that the Formosa Group is planning to invest $5 billion over the next 10 years to build a steel plant in Jiaonan, Shandong province. The steel plant, which is estimated to cost $6 billion, will include an investment of $1 billion from the local Qingdao Steel Holding Co. The plant is projected to have an annual capacity of 10 million tonnes of various steel products, with after-tax profits amounting to $1.1 billion a year, according to reports from Beijing. Haier Qingdao, mainland China's leading maker of household electrical appliances, is expected to be among the major customers of the plant's products, the reports said. The output of the steel plant is also expected to supply the mainland's shipbuilding industry as well as its emerging auto and construction industries. [Source www.worldsteel.org, 20 March 2003]

    BHP steel opens two new plants in China    Australia's largest steel maker, BHP Steel Ltd, said it would open two new roll forming plants in China this week as it expands further into China's booming construction market yesterday. The company said in a statement it opened the first plant at Langfang, near Beijing yesterday. A second plant at Chengdu will be opened in the western province of Sichuan today. BHP Steel chief executive officer, Kirby Adams, said the new plants would support BHP Steel's expansion plans in northern and western regions of China, and would spearhead future investment. BHP Steel already operates two roll forming plants in China. "Some of our most important customers in Beijing will be those authorities and companies associated with the Beijing 2008 Olympic Games," BHP Steel said. The two new plants will cost less than $A10 million ($NZ10.93 million). BHP Steel is the parent company to New Zealand Steel. A spin-off from minerals giant BHP Billiton Ltd/Plc, BHP Steel posted a maiden first-half profit last month on higher steel prices and strong Chinese demand. It said it was set to beat its year profit forecast of $A400 million. [Source: www.worldsteel.org,,, 20 March 2003]

    CST holds talks with on expansion    CST of Brazil is holding meetings with three or four consortia to establish formal proposals for its projected raw steel capacity expansion form 5m tpy to 7.5m tpy early 2006, CST finances and investor relations director Leonardo Hota said. The project, which involves building a new coke plant and installing a No.3 blast furnace at the CST works in Espirito Santo state, has not yet been formally approved by CST’s board. However, approval is expected to be granted once the current talks on price and conditions are satisfactorily completed with the potential suppliers. He said, "2003 will be reserved for the contracting of the services and equipment required for the expansion. These will be set up in 2004 and 2005 and the project should come on stream early 2006". The expansion will allow CST to achieve slab sales of some 5.5m tpy as well as hot rolled coil sales of 2m tpy from its rolling mill, which was brought on stream last year. [Metal Bulletin, 27 February 2003]

    Chengde to install new bar mill    Chengde Iron & Steel plans to install a new 800,000 tpy bar mill that will bring finished steel capacity form 1.5m to 2.3m tpy. A Chengde official said, the company is striving to commission the mill by the end of this year. Installation of the new equipment is set to begin shortly and will extend the size range of Chengde’s bar products to 12-60mm dia, Chengde will also undertake upgrades of its steelmaking and casting facilities to meet the extra demand for billet generated by the new bar mill. In addition to the new mill, which will be supplied by Danieli, Chengde operates a 700,000 tpy bar mill bought second hand from Germany five years ago. The Hebei province steelmaker also produces hot strip and welded and cold drawn pipes. [Metal Bulletin, 6 March 2003]

    Vietnamese bar mill comes on stream   Vietnam has a new entrant to its growing ranks of bar and rod producers after the successful commissioning of a rolling mill in the outskirts of Hanoi at the catchily named Song Da Construction Transportation Material Co No 12. The 300,000 tpy high-speed mill has begun commercial production after completing hot tests in February 2003, said an official close to the project. The mill is producing 10-36mm plain and deformed bars and 5.5-12mm wire rod-in-coil, according to the plant supplier, Danieli Morgardshanmmar [Metal Bulletin, 6 March 2003]

    Iran plan Bafq sintering plant    Iran plans to build a sintering plant near the city of Bafq in the central province of Yazd have been unveiled by Iran Mines & Minerals Industry Development & Renovation Organisation (Imidro), the state holding company in charge of developing the local mines and metals industry. Imidro in late February invited local firms and local/foreign joint ventures to bid by 16 March for the engineering, procurement and construction contract for the 800,000 tonne/year facility. Feedstock for the estimated $100m-200m plant will come from the local Central Iron Ore Company (Choghart), which operates the nearby iron ore mines. The successful bidder will be required to arrange financing. Iran has four main iron ore deposits that are currently being mined or are under development: Chadormalu, Choghat, Gol-e-Gohar, and Sangan. [MEED, 28 February 2003]

    Al-Rajhi to install 1m tpy meltshop    The Al-Rajhi Co for industry & Trade in Saudi Arabia is to install a 1m tpy meltshop in Riyadh. The feasibility study for the new meltshop has been carried out and is under review and it has yet to be decided who will supply the required equipment: an electric arc furnace, a ladle furnace and a continuous casting machine. Construction is likely to start in the middle of 2003 and completion is forecast to take about 18 months. Al-Rajhi is also thought to be behind a project to install a rebar rolling mill – Arab Steel Co (Asco) – in the Lattakia free zone in Syria. [Metal Bulletin, 13 March 2003]

    Ispat starts work on slab caster at Karmet   Kazakhstan’s steel giant Ispat Karmet is to build a new continuous slab caster at its works in the Karaganda region. Ispat Karmet General Director Nawal Choudhary said at a ceremony to launch the project on March 10 that the project is aimed at developing and modernising production to improve quality and competitiveness in the market. Ispat Karmet uses the ingot casting route, which will remain in place while the slab casting facility is installed. The mill’s capacity will remain at 5.2m tpy. The new facility will cost $280 and should be completed within 18 months. [Metal Bulletin, 17 March 2003]

    Steel / Raw Material Prices

    CIS flat products prices keep on rising    Russian and Ukrainian flat product prices are continuing to rise. Chinese demand remains strong, but demand has increased in other areas. Product is moving to the Middle East, Turkey, Philippines and Vietnam as well. Business for Russian cold rolled coil has been done at $460 per tonne fob basis and some mills are confident of achieving a further $20 increase for April deliveries. Traders say Novolipetsk is sold out for March supply and that they are struggling to get allocation at some mills. Hot rolled prices are also rising, although less supply than CR. Prices are being quoted at $330-340 per tonne fob. CIS slab prices are up $10-$15 per tonne at $235-245 per tonne fob basis. Ukranian plate has risen in the last fortnight with prices quoted at $330-340 per tonne fob basis price.[Metal Bulletin, 27 February 2003]

    Steel prices may dip as US units go on stream    Steel prices may see a decline in the next few months following the re-opening on a number of steel plants in the US. The re-opening of some of the plants in the US has also resulted in surplus availability of steel in the country which in turn may affect global steel prices. Besides, this has already led to a surge in US steel exports to china and East Asian countries. Though the surge in exports have not yet impacted the Indian steel market, domestic steel producers are worried that their export pie to China may be in danger. China is one of the key export markets for India. About one million tonne of steel have been exported to China and East Asian countries form the US in the last few months. The OECD members, in a meeting recently, have pointed out that the US act has violated the OECD ruling. In December 2002, the OECD members, that met in Paris, had decided against any addition to the existing global steel capacity. Besides the member countries had also agreed to shut all non-viable steel units to maintain the global demand-supply balance in the sector. Industry exports said that the addition to the existing steel capacity may once again create disbalance in the global demand supply ration thereby resulting in a drop in prices. Meanwhile the European Union emphasised that once financial assistance for closure is extended to a plant, it should be ensured that the plant n question is not allowed to re-open. [Business Standard, 24 March 2003]

    Forthcoming Conferences / Seminars

    Steel Success Strategies XVIII   Winners Emerging, 16-18 June 2003. Organised by the American Metal Markets (AMM) and the World Steel Dynamics (WSD). Venue: The Plaza Hotel, New York.. Registration Fee: $1000 (before 1 May 2003), and $1100 (after 1 May 2003) Contact: Jeannie Lee, AMM, 1250 Broadway, 26th Floor, New York, NY 10001, USA, Fax – 212-213-6619, Email: jlee@amm.com [Metal Bulletin, 17 March 2002]

    SEAISI 2003 Conference & Exhibition    Achieving a Sustainable Iron & Steel Industry in Asia, 19-22 May 2003. Organised by the South East Iron & Steel Institute (SEAISI). Venue: The Imperial Queen’s Park Hotel, Bangkok, Thailand. Registration Fee: US$450 (for Member before 18th April 2002), and US$500 ( for member after 18th April 2003), US$600 (for non-member after April 18th April 2003. Contact: PO Box 7904.40702 Shah Alam, Selangor, Darul Eshan, Malaysia. Phone - +60 3 5519 1102, Fax – 60 3 5519 1159, Email: seaisi@seaisi.org [Source: Leaflets]

    New Publications

    SEAISI Steel Statistical Yearbook 2002  Published by the South East Asian Iron and Steel Institute (SEAISI). Price: US$50 / copy for members. Contact: PO Box 7904.40702 Shah Alam, Selangor, Darul Eshan, Malaysia. Phone - +60 3 5519 1102, Fax – 60 3 5519 1159, Email: seaisi@seaisi.org [SEAISI Newsletter, March 2003]