BT Steel Strips Blog

Tata-owned steel giant Corus has announced plans to cut production in Europe by up to one million tonnes over the next three months due to slowing demand. “The decision is aimed at aligning steel production with demand, which is now affected by the consequences of the global financial crisis,” the group said in a statement. The company said that production at its plants outside Europe will not be affected by the reduced production targets.
Corus, Europe’s second largest steelmaker, now produces more than 20 million tonnes of crude steel a year. “We are taking appropriate steps to optimise our operations and protect our sound financial position over the next few months,” Corus chief executive Philippe Varin said.

Source:http://www.headlinesindia.com/business-news/iron-and-steel/tataowned-corus-to-cut-steel-production-2899.html

Goa’s iron ore exporting industry is going through one of the worst slumps in its history, says a top official of an ore exporters’ lobby. Steel plants worldwide shifting to high grade ore to cut energy costs, several Chinese steel plants under closure and stiff competition from new-found mines on Australia’s western coast have combined to send Goa’s low grade ore exports into a tailspin, S Sridhar, the executive director of industry lobby Goa Mineral Ore Exporters Association, said on Thursday.

“Demand has fallen by more than 50 percent to 300,000 tonnes this September from 700,000 tonnes last September,” said Sridhar. “Prices too have fallen by 60 to 65 percent. This is one of the worst slumps we have seen. The closure of steel mills in China, which in the recent past had accounted for more than 85 percent of Goan ore exports, has hit the industry the most,” he said.

“China was a booming market until the Beijing Olympics. During the run-up to the Games, the Chinese government ordered several steel mills closed to cut down on pollution. These mills have not opened since due to a possible credit crunch,” he said. He further added that some of the ports in China had heavy inventories piled up to the tune of 70 to 80 million tonnes of ore. Sridhar also claimed that the global economic recession had forced the infrastructure industry to cut corners wherever they could and one of the first casualties of the trimming exercise was low grade ore.

“Energy costs for processing low grade ore are higher when compared to high grade ore and so steel plants worldwide have switched to high grade ore to cut down energy costs. High grade ore is, unfortunately, non-existent in Goa,” Sridhar said. He also said that the emergence of the Yandi mines in Western Australia meant that the mining industry in Goa would either have to buck up or go into the red. “The extraction of ore from Yandi mines alone rivals the extraction from the whole of Goa.”

In 2007, Goa exported nearly 33 million tonnes of iron ore to markets including China, Japan, South Korea and Romania. Sridhar warned that the slump in the mining industry would engineer a trickle-down effect, affecting everyone all the way to truck and barge owners. “Decrease in demand will obviously mean hardships for everybody.” He also hinted at possible resource sharing exercises by mining companies in Goa to cut production costs to fight the slump. “You could possibly see some joint ventures between mining firms in the near future,” he said.(IANS)

Source:http://www.headlinesindia.com/business-news/iron-and-steel/goas-iron-ore-exporters-in-worst-slump-3439.html

Europe’s second-largest steel company Corus has announced plans for a 30% cut in production over the next six months due to weakening demand in Europe.

Three blast furnaces, at Port Talbot and Scunthorpe in Britain, and one in the Netherlands, will shut temporarily.

Corus, which is owned by India’s Tata Steel, blamed the global economic downturn for the cuts.

Chief executive, Philippe Varin, said Corus had to adapt “to the changing environment with maximum speed”.

Shut down

The cut is greater than expected. Last month, Corus said it would cut production between October and December by a million tonnes of crude steel - about 20% of its output.

In a statement the firm said it had now decided to extend these production cuts beyond December.

Corus said no jobs would be lost as a result of the production cutback. The firm, which employs more than 24,000 workers in the UK, announced 400 job losses in its distribution business, on 6 November.

Michael Leahy, general secretary of the steelworkers’ union Community, said the shut down “underlines how the economic crisis is hurting manufacturing in Britain”.

“We are hopeful that Corus will look to retain capacity to meet long-term demand rather than make a knee-jerk reaction to short-term trends,” he said.

One blast furnace at Scunthorpe, Port Talbot, and IJmuiden in the Netherlands, will be temporarily shut down, the firm said.

Corus said it expected to produce about 30% less crude steel than planned during the two quarters to the end of March 2009.

Source:http://news.bbc.co.uk/2/hi/business/7716448.stm

JSW Steel Ltd (JSTL.BO: Quote, Profile, Research, Stock Buzz), India’s third largest producer, on Sunday laid the foundation of an integrated steel unit in eastern West Bengal state to produce 10 million tonnes of steel by 2020.

The project on a free tax zone would entail an investment of 350 billion rupees in three phases, Sajjan Jindal managing director of JSW Steel told reporters.

“We would produce three million tonnes of steel by 2012 from the unit when it goes onstream, followed by six million tonne by 2015.” he said.

“We will reach our target of producing 10 million tonnes of steel by 2020.”

The inauguration of the project at Salboni, which is about four hours’ drive from Kolkata in an economically backward district, was marked by a huge presence of cadres of the ruling communists in West Bengal.

Last month, Tata Motors (TAMO.BO: Quote, Profile, Research, Stock Buzz) moved its ultra-cheap Nano small car project from the state in the face of farmers’ protest over land seizure.

The communists in the eastern state is showcasing the project to fight negative publicity it got when Tata Motors shifted its plant to another state.

Unlike the Tata plant, the JSW project faced no protest over land acquisition after the steel maker offered farmers jobs and shares in its unit JSW Bengal Steel.

“We are against forcible land acquisition from farmers. We started work with support of the villagers,” Jindal said.

The company has acquired 4,500 acres of land for the plant.

JSW Steel owns 89 percent of the equity in the unit in Bengal. The remaining is held by the state government.

Source:http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSBOM41816620081102

China’s Rizhao Iron and Steel, one of China’s largest private-sector steel mills, has signed an agreement to consolidate with a state-owned rival, the official China Securities Journal said on Thursday.

Rizhao and Shandong Iron and Steel, located in eastern China’s Shandong province, signed a letter of intent on consolidation on Wednesday, the paper said. It gave no further details.

Fast-growing Rizhao produces 8 million tonnes of crude steel annually and has attracted analysts’ attention for its high profit margins.

Consolidation has progressed slowly but steadily in China’s fragmented steel sector, with encouragement from the government.

The state-owned parents of Laiwu Steel Corp and Jinan Iron and Steel Co have merged to form Shandong Iron and Steel Group, although they have yet to give a time frame for a formal combination of their equity.

Source: http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSSHA2680120081106

With a view to bring relief to the domestic steelmakers, the finance ministry is likely to impose a 10% import duty on flat steel products
(hot- and cold-rolled coils) shortly. The ministry, which is likely to announce a new fiscal package for the steel sector next week, may also re-impose 14% countervailing duty (CVD) on bars and structurals (primarily for steel) and withdraw export duty on steel products that were left out from duty waiver earlier.

“The steel ministry submitted a new fiscal package for approval to the finance minister (FM) on Friday. Though the FM has given an assurance of full support to the steel ministry, the decision on duty rejig may be announced once Prime Minister Manmohan Singh returns from Beijing,” an official source said.
Source:http://economictimes.indiatimes.com/Economy/Govt_may_impose_import_duty_on_steel/articleshow/3638875.cms

While the finmin is likely to change custom duty structure on steel, it is unlikely to reduce excise duty on the metal as suggested by the steel industry earlier. The industry had earlier asked steel ministry to reduce excise duty on steel products from present 14% to 8% level. Long steel products used for construction activities may also escape the 10% import duty. However, the CVD (14%) waiver on few long products may be withdrawn to create a level playing field.

The new fiscal package is likely to come as a breather for steelmakers including Tata Steel, JSW, Essar and Ispat who have been finding it difficult to sell their products in the domestic market due to the suppressed demand and cheap imports coming from countries like Ukraine, Thailand and China. The landed cost of steel from these countries has reached rock bottom level of between $500 -$600 per tonne, much lower than prevailing domestic steel price.

The steel industry had demanded import duty up to 15% on steel products besides fixing a floor price of $800 per tonne on imports to prevent dumping from China, Ukraine and Thailand.

Tata Steel Ltd., India’s largest producer, said prices will decline by more than 10 percent this quarter as slowing economic growth and the global credit crunch forces builders and automakers to slash orders.

Prices per ton of steel will fall as much as 4,000 rupees ($80) by December, Chief Financial Officer Koushik Chatterjee said today in Mumbai, where the company is based. Demand from makers of trucks and buses have fallen, while supplies to cars and other light vehicle have remained flat, he said.

Deepening concerns about the global economic slump is keeping consumers away from purchases of houses, cars and home appliances, lowering demand for steel worldwide. ArcelorMittal, the world’s biggest steelmaker, and Tata Steel’s U.K. unit Corus have said they plan to cut production.

“Indian steelmakers will see a fall in realization by at least 20 percent this quarter as demand is hit,” said Bharath S., an analyst, at Sundaram BNP Paribas Mutual Fund, which sold Tata Steel shares last quarter. “Also, expenses are unlikely to come down as both raw material and borrowing costs remain high.”

Tata Steel shares fell 14 percent to 178 rupees at close of trading in Mumbai today. The stock has fallen 81 percent this year, compared with a 57 percent decline in the benchmark Sensitive Index. Rival Posco has dropped 56 percent in the period, Nippon Steel Corp. 60 percent and JFE Holdings Inc. 64 percent.

“Steel shares are being hammered because people don’t expect demand to revive in the next few quarters,” said Sanjay Makhija, vice president at Fortune Financial Services India Ltd. in Mumbai.

Earnings

Second-quarter profit, excluding unit Corus, rose to 17.9 billion rupees ($358 million), or 21.75 rupees a share, in the quarter ended Sept. 30 from 11.9 billion rupees, or 15.58 rupees, a year earlier, Tata Steel said today in a statement. Profit beat the 16.5 billion rupee median of five analyst estimates compiled by Bloomberg. Sales climbed 41 percent to 67.4 billion rupees.

Revenue from sources other than steelmaking jumped to 1.06 billion rupees from 610 million rupees a year earlier, the company said, without giving details. Tata Steel’s raw material costs surged 73 percent to 13.8 billion rupees, while interest charges rose 34 percent in the quarter.

The company reported a foreign-exchange loss of 3.45 billion rupees, compared with a gain of 610 million rupees, after a slide in the Indian currency against the dollar in the quarter forced the company to revalue its overseas debt.

Moody’s Investors Service lowered Tata’s credit-rating outlook on Oct. 22, citing challenges its U.K. unit faces because of the global economic slowdown.

The Indian rupee, which fell as much as 50 against the dollar to a record, is the worst performer in Asia this year after South Korea’s won.

Tata Steel is looking at forming iron-ore and coal ventures in Mozambique and scouting for limestone ventures in Oman, to secure raw material supplies, Chairman Ratan Tata said in August.

While Tata Steel imports a third of the coal needed for its mills in India and mines its own iron ore, Corus buys both the raw materials. Both iron ore and coking coal prices surged to a record this year on increased demand from China, the biggest producer of the metal.

Source:http://www.bloomberg.com/apps/news?pid=20601091&sid=a8ivswjjbXaM&refer=india

London-based India-born billionaire Lakshmi Niwas Mittal has been elected chairman of the World Steel Association (Worldsteel), which represents about 180 steel producers from across the globe.

Mittal’s election as chairman till October 2009 was announced Monday after a meeting here of the board of directors of the association, which also changed its name from the earlier International Iron and Steel Institute.

The Indian steel magnate was also elected as member of the worldsteel executive committee, while Naveen Jindal-led Jindal Steel and Power Ltd joined the association as an associate member in the category of steel companies producing less than two million short tonnes per annum, a statement from the association said.

The new vice-chairmen elected to the worldsteel were Ku-Taek Lee, chairman and CEO of POSCO; Paolo Rocca, chairman and CEO of Techint Group; and John Surma, chairman and CEO of US Steel.

On behalf of the board of directors, director general of the World Steel Association Ian Christmas welcomed Mittal as the new chairman.

“The board of directors expressed their gratitude to Ku-Taek Lee as he completes his year as chairman and gave a warm welcome to Lakshmi Mittal. We are delighted to welcome our new members on board,” Christmas said.

“Since we were formed in 1967 the world for steel has substantially changed and so has this organisation. We are now a truly global body representing 18 of the world’s 20 largest steel companies, including six of the top 10 producers in China,” he added.

Besides Mittal, the 2008/9 executive committee includes: Hajime Bada, JFE Steel Corporation; Daniel DiMicco, Nucor Corporation; Jorge Gerdau Johannpeter, Gerdau SA; Karl-Ulrich Köhler, ThyssenKrupp AG; Ku-Taek Lee, POSCO; Alexey Mordashov, Severstal JSC; Shoji Muneoka, Nippon Steel Corporation; M. Aydin Müderrisoglu, Erdemir; Paolo Rocca, Techint Group; John Surma, US Steel Corporation; Sakari Tamminen, Rautaruukki Oyj, Philippe Varin, Corus Group; Lejiang Xu, Baosteel Group; Xiaogang Zhang, Anshan Iron & Steel Corporation; Ian Christmas, World Steel Association.

Four new companies - Badische Stahlwerke GmbH, Deacero, S.A. de C.V, Laiwu Steel Group Ltd and Metalloinvest Management Company - were inducted as regular members, companies producing more than two million short tonnes per annum.
SOURCE:http://www.zeenews.com/articles.asp?aid=474544&sid=BUS

Steel consumption is likely to grow but at a moderate pace over the next two years, according to Citinank analysts.

While contract prices have declined given the recent fall in international prices, they are still higher on a year-on-year basis.

Meanwhile, domestic steel companies are likely to continue acquisitions abroad, focusing on the mining sector, in an effort to improve integration of raw materials, add analysts.

For instance, players like JSW Steel plans to increase its capacity by 2020 with two greenfield projects of 10m tonnes each in West Bengal and Jharkhand, and it is also attempting to increase its captive supply of key raw materials via its overseas mines.

JSW Steel has 25 per cent captive iron ore, but is fully dependent on external sources for coal. It expects to attain self sufficiency to the extent of 40-50 per cent in iron ore and coking coal over the next two to three years, via a combination of expansions of captive mines and JVs both in India and countries such as Chile and Mozambique
Source:p://economictimes.indiatimes.com/Indicators/Steel_consumption_to_grow_but_at_moderate_pace/articleshow/3566247.cms

Indian steel makers may cut prices and as also production in tandem with dip in demand in domestic market spawned by a global slowdown.

The growth targets may also have to be revised from double digit to single digit, though the long-term expansion plans of companies could remain intact, they added.

“The production growth in the steel sector is likely to decline to 8-9 per cent this year from the expected 12-13 per cent due to global economic slowdown,” JSW Group Chief Financial Officer Sheshagiri Rao told PTI.

Indian steel companies would have to cut prices to survive, else domestic market will be flooded with cheaper imports, he said.

Globally, steel prices have softened by about USD 350 per tonne in the last couple of months, alluring large-scale consumers to go for cheaper imports from countries like China and Ukraine.

“The global turmoil has affected demands and put pricing pressure in the US. These would have a ripple effect on Indian market too,” an Essar Group spokesperson said.

British steel giant Corus, part of Indian conglomerate Tata group, has already said it is taking steps to optimise production as per the changing demand scenario.

Even as the dynamics of global economic market continues to change, the domestic steel firms don’t see its impact on their long-term expansion plans.

“We have secured finances for our projects lined up till 2010. In this scenario, however, raising capital from abroad will not be easy,” Rao said.

India’s largest steel producer SAIL too said the crisis would not affect its expansion plans as it has enough financial resources.
Source:http://economictimes.indiatimes.com/Steel/Steel_prices_prod_may_come_down_on_global_crisis/articleshow/3586137.cms