Schnitzer Steel expects to report 1Q loss

Schnitzer Steel Industries Inc. said Wednesday it expects to report a loss in its fiscal first quarter as the economic downturn has led to reduced business.
Schnitzer said renegotiations, deferrals and cancellations of customer contracts led to lower sales and prices during the quarter. The company said this will result in a non-cash write down of about $60 million for its metals recycling and steel manufacturing inventories in its quarter ended Nov. 30.


The company said production output has fallen by about 40 percent from average 2008 levels, and said it has instituted cost-control measures including work force reductions.

The announcement comes two months after Schnitzer reported its fourth-quarter profit tripled to $126.4 million on rising business across all three of its segments. At the time, the company indicated business had begun to slow down in the first quarter.

Schnitzer said it expects to issue first-quarter results Jan. 8.

Shares of the company fell 66 cents to $35.30 in premarket activity


Meltdown hits Jharkhand steel units

The wounds of the global economic slowdown, and India’s own slump in the loan-driven automobile industry run deep. Sliding steel prices hit by cascading demand woes in autos has crippled scores of sponge iron units and induction furnaces spread across the mineral rich twin Singhbhum districts of Jharkhand.

Sponge iron is an alternative to steel scrap as a raw material for the manufacture of various steel products. Furnaces melt steel. Smaller ancillary industries linked to large companies like Tata Steel produce help produce goods that go into steel or fashion end-products based on steel.

Singhbhum’s ancillary units supplying spare parts to several automobile giants in India and abroad including Tata Motors, Daewoo Motors, Ford Motors, General Motors and few other multinationals are severely hit.

Well placed sources in the industry told Hindustan Times that in the past one month, 18 of the 32 sponge iron units spread across Singhbhum East and West and Seraikela-Kharswan have downed shutters, while five more could close down over the next week.

“Compared to last year, our production targets this fiscal has been slashed by 50 per cent. Some 5,000 temporary and casual labourers have lost their jobs. Beginning October month, Tata Motors had a target to produce to 1,050 vehicles this fiscal. Within a week’s time, the target was slashed to 7000 vehicles. There is no demand for commercial vehicles,” said Vikas Mukherjee, industrialist and leader of Singhbhum Industries Association.

The Singhbhum belt has more than 30 per cent of India’s iron ore reserves.

“Entrepreneurs are unable to pay back their loans, foot the power and transportation bills, and pay workers’ salaries on time,” said the Singhbhum Chamber of Commerce and Industry’s (SCCI) vice-president, Suresh Sonthali.


India Inc wants another stimulus deal to tide over slowdown

India Inc on Wednesday asked the government for another stimulus package to mitigate the impact of the economic slowdown. The demand is
for further cuts in interest rates, easing of export barriers and restriction on imports of steel, cement, chemicals and textiles.

In a meeting with the Cabinet secretary, captains of the industry highlighted problems being faced by sectors such as housing, construction, steel, cement and gems & jewellery on the back of a slowdown in demand. The meeting was also attended by the finance secretary, commerce secretary, department of industry policy & promotion secretary and Planning Commission deputy chairman.

“The situation of the industry is grim and so a series of incremental measures is required to restore the confidence of investors and consumers. We have asked the government to cut interest rates, particularly on housing loans, to 6-7% to boost domestic demand,” said Ficci senior vice-president and JK Paper MD Harshpati Singhania.

Steel Authority of India chairman SK Roongta, who represented the steel industry, demanded import duty on steel should be increased to 15% from 5% and that export sops such as the duty entitlement pass book benefits should be restored to make domestic players competitive in the global market.

Source: (edited)

Tata Steel to set up USD 5-bn plant in Vietnam

Steel major Tata steel today signed a joint venture agreement with Vietnam Steel Corporation, Vietnam’s largest steel company, and Vietnam Cement Industries Corporation to set up a steel plant in Vietnam, it said in a statement.

The integrated steel plant, with an annual capacity of 4.5 million tonnes, will be built in three phases at an estimated cost of USD 5 billion. The first phase of the plant envisages setting up a cold rolling mill, to be commissioned by 2010-end.

Tata Steel will hold 65 per cent stake, with Vietnam Steel holding 30 per cent and Vietnam Cement owning 5 per cent. The memorandum of understanding was signed on May 29, 2007. The definitive agreements were signed today after completion of detailed feasibility studies.

“We are excited to be a part of this landmark project that is slated to bring sustainable and long-term value to our companies and customers, and accelerate the development of Vietnam,” Tata Steel managing director B Muthuraman said in a statement.

Added Vietnam Steel president Dau Van Hung, “In Tata Steel, we have a strong partner to help us exploit the opportunities within our country, and make the most of our market potential.”

According to Vietnam Cement general director Nguyen Ngoc Anh, Vietnam is a ‘very attractive market’ with a growing population and demand for steel products. “This joint venture will be a strong platform to pursue growth opportunities,” Anh said.


Paswan calls for national iron ore policy

The country should have a national iron ore policy to ensure the its proper distribution to various sectors, Minister of Chemicals, Fertilisers and Steel Ram Vilas Paswan said on Sunday. “Looking at the benefit of the coal policy that was formulated in 2005, our ministry is also of the opinion that an iron ore policy should be formed at the national level,” he said after the unveiling of the foundation stone of the JSW Bengal Steel project at Salboni in West Midnapore district of West Bengal.

Earlier, during the ceremony, Chief Minister Buddhadeb Bhattacharjee urged the steel ministry to ponder over formulating an iron ore policy, which will help the country compete with developed nations. Seconding Bhattacharjee’s views, Paswan said, “A national iron ore policy is required, which will first look into the iron ore need of the nation” and then ensure equal distribution of the mineral to various sectors, he said.

“Looking at the benefit of the coal policy that was formulated in 2005, our ministry is also of the opinion that an iron ore policy should be formed at the national level,” he told reporters after the unveiling of the foundation stone of the JSW Bengal Steel project at Salboni in West Midnapore district of West Bengal.


Steel prices – bottomline?

Steel majors JSW Steel and Ispat Industries will pass on the 4 per cent reduction in the ad valorem Central Value Added Tax (Cenvat) rate to the consumers, effective midnight.

Seshagiri Rao, director (finance), JSW Steel, said that prices would be cut across products, from hot-rolled to galvanised, on the back of the government today announcing a 4 per cent cut in the Cenvat rate. In absolute terms, prices are likely to come down by Rs 1,000-1,400 a tonne.

Steel prices have come down by around 40 per cent since July this year. At present, prices of hot-rolled coil are ruling at Rs 30,000-32,000 a tonne.

Ispat Industries director (finance) Anil Sureka said ex-factory prices of hot rolled coils were even lower. He said the cut in steel prices would be automatic and the 4 per cent reduction would be passed on to the consumers.

An Essar Steel spokesperson said that the company would have to go through the notification first and then take a call on the extent and products where prices could be reduced.

Arvind Parakh, director for strategy and business development, Jindal Stainless, said overall cost would come down and so eventually prices would also decrease.

Ishita Ayan Dutt / Kolkata December 8, 2008, 1:03 IST


Steel, the recycled material is one of the top products in the manufacturing sector of the world.
The Asian countries have their respective dominance in the production of the steel all over the world. India being one among the fastest growing economies of the world has been considered as one of the potential global steel hub internationally. Over the years, particularly after the adoption of the liberalization policies all over the world, the World steel industry is growing very fast.

Steel Industry is a booming industry in the whole world. The increasing demand for it was mainly generated by the development projects that has been going on along the world, especially the infrastructural works and real estate projects that has been on the boom around the developing countries. Steel Industry was till recently dominated by the United Sates of America but this scenario is changing with a rapid pace with the Indian steel companies on an acquisition spree. In the last one year, the world has seen two big M&A deals to take place.
The Mittal Steel, listed in Holland, has acquired the world’s largest steel company called Arcelor Steel to become the world’s largest producer of Steel named Arcelor-Mittal.
Tata Steel of India or TISCO (as listed in BSE) has acquired the world’s fifth largest steel company, Corus, with the highest ever stock price

World steel industry and Crude Steel Production

The following table gives a clear picture upon the major crude steel producers in the world as of the year 2004.
Country Crude Steel Production (mtpa)
China 272.5
Japan 112.7
United State 98.9
Russia 65.6
South Korea 47.5
F.R.Germany 46.4
Ukraine 38.7
Brazil 32.9
India 32.6
Italy 28.4
In the year 2004, the global steel production has made a record level by crossing the 1000 million tones. Among the top producers in the steel production, China ranked 1 in the world.

Production of steel in the 25 European Union countries was at 16.3 mmt in January 2005. Production in Italy increased by 11.5 per cent in comparison to the same month in 2004. Italy produced 2.5 mmt of crude steel in January 2005. Austria produced 646,000 metric tones.

In Russia it increased by 4.0 per cent to reach at 5.5 mmt in January.

In case of the North America region particularly in Mexico it was 1.5 mmt of crude steel in January 2005, up by 8.0 per cent compared to the same month in 2004. Production in the United States was 8.3 mmt.

Brazil had produced 2.6 mmt of crude steel in January 2005. In South America region it was 3.7 mmt for January 2005.

According to rating made by the ” World Steel Dynamics”, Indian HR Products are categorized in the Tier II category quality of products. Both EU and Japan have ranked the top. USA and South Korea comes as like India.