ArcelorMittal wins EU approval for JV with Swedish firm

ArcelorMittal, the world’s largest steel maker, won approval from the European Union (EU) Thursday to form a flat carbon steel joint venture (JV) with Swedish company BE Sverige. “The proposed transaction would not impede effective competition,” the European Commission said in a statement.

ArcelorMittal was a leading global steel company based in Luxembourg. BE Sverige, which belongs to BE Group, is a steel distribution company on the Scandinavian market and is active in the steel service centre sector in Sweden.

Steel service centres specialise in the finishing and processing of steel for the purpose of fabricating, plating or moulding steel parts.

The 50-50 JV would combine the steel service centre activities of the parties in Sweden.

ArcelorMittal said last month it would create the third largest player in the market with sales of more than 80 million euros ($126.4 million) per year.

ArcelorMittal, Rio Tinto, GVK in race for CIL’s abandoned mines

ArcelorMittal, Anglo Australian major Rio Tinto, Hyderabad-based GVK Power & Infrastructure, Essar Mineral Resources and JSW Steel [ Get Quote ] are among 10 prominent corporations in a shortlist to develop 18 abandoned coal mines owned by state-owned Coal India Ltd and its eight subsidiaries.

A senior CIL official said these companies would form joint ventures with CIL to develop these mines, which have estimated reserves exceeding 1,600 million tonnes.
CIL and its subsidiaries collectively produce 403 million tonnes of coal a year and have estimated reserves of 81 billion tonnes.
The mines, which were abandoned because they are waterlogged and CIL lacked technology to exploit them, are spread over West Bengal [ Images ] and Jharkhand.

issued last year. The private participants will be responsible for developing, reviving, maintaining and operating the abandoned mines.
Other companies in the shortlist are sponge iron, steel and power company Monnet Ispat & Energy Limited, speciality steel maker Sunflag Iron & Steel Company Limited and contract miner and equipment manufacturer Titan Mining.
JSW has submitted two bids–one with US-based Joy Mining and the other with government-owned Singareni Collieries.
The bidders will be able to select and choose from amongst the abandoned mines. The tendering process for the revival and development of these abandoned mines is scheduled to be completed by the end of this fiscal.(EDITED)

ArcelorMittal to invest US$1.6bn to expand long carbon steel operations

The globe’s largest steelmaker, Luxembourg-based ArcelorMittal, plans to invest US$1.6bn in its long carbon steel operations in Brazil to expand production capacity by 2.6Mt/y to 6.5Mt/y within 30 months, the company reported.

ArcelorMittal noted that the investments are in addition to the US$1.2bn previously allocated to the expansion of the Monlevade plant in Brazil’s Minas Gerais state, which will add another 1.2Mt/y.

Works include two new blast furnaces with a total capacity of 400,000t/y, two electric arc furnaces with capacity of 1.2Mt/y and 800,000t/y, a ladle furnace, two continuous casters and a 520,000t/y rebar mill, the company said in a statement.

ArcelorMittal will also build a 500,000t/y merchant bar quality-special bar quality mill to produce special bars for the automotive industry and a 650,000t/y structural mill for the production of medium-heavy structural sections.

The locations for the new facilities will be announced after the conclusion of feasibility studies which are underway, the company said.


World average carbon steel prices

Our price forecasts (09.06.2009) for the flat products sector are little changed from April 2009. We believe we are close to the bottom of the current cycle. There is still some negative pressure on transaction values due to subdued demand and bloated inventories. Consequently, transaction values may slip in June 2009 before stabilising during the third quarter. De-stocking is likely to continue in most countries as many companies fear a further deterioration in the economic climate. The holiday period may also restrict any significant build in inventories. An agreement between iron ore miners and Japanese / South Korean steelmakers for a one third cut in the cost of iron ore fines has now been reached. This is slightly less than the anticipated reduction and could help Asian mills to press for higher steel transaction numbers.

Prices are forecast to start rising in the final quarter of this year. Government stimulus projects should begin to filter through to higher sales. Supply shortages could develop as mill output cuts continue. Distributors are, therefore, likely to increase order volumes after the summer. This will, almost certainly, put upward pressure on selling values but, purchases may be restricted by limited access to finance. Further advances are predicted early in 2010 as the world economic climate improves.

Transaction values for the long products sector could record modest increases in the short term due to rising scrap costs. Negative price pressure is likely to continue in June 2009 in North America. Buyers may resist any advances because end user consumption is expected to remain weak. Many customers believe that the recent price hikes are too soon and doubt that they will stick. Some slight decreases in selling figures are, therefore, possible before the holiday period.


India to be among the top three steel producer

India is poised to occupy the second or third position in the world’s steel industry, the Steel Authority of India (SAIL) said here on Thursday.

“Two years back we were the third largest producer in the world steel industry. While world steel industry is going through a turbulent period, we are still growing and are poised to occupy the second or third position in the years to come,” SAIL Chairman S K Roongta said.

In 2008, India was the fifth largest steel producer in the world.

“In fact, in the period January to May India has already become the third largest producer. It speaks of our performance and industry,” Roongta said while speaking at the 47th foundation day of the SAIL’s Management Training Institute.


Morgan Stanley retains ‘underweight’ on Tata Steel

Morgan Stanley has retained its ‘underweight’ rating on Tata Steel, following the fourth quarter numbers, which the brokerage house termed as “disappointing”. “We liked the company’s clean-up efforts at taking large inventory write-down and restructuring costs in the quarter.

We believe that Q409 (January-March 2009) will turn out to be the earnings bottom for Tata Steel, although a rebound will depend on the pace of restructuring at Corus and steel prices in Europe,” said the Morgan Stanley note to clients.

“While the steel stock sentiment has improved and extremely stressful scenarios for steel companies may no longer be relevant for these stocks, Tata shares could see some short-term pressure due to the poor Q409 result,” the note added.