Steel majors eye India as global demand slumps

A persistent demand slump that has seen steelmaking capacity idled worldwide for nearly a year is pushing top global producers to expand their footprint in India, which along with China is a rare bastion of growth.

Strong local demand driven by infrastructure building and rebounding car sales has led big foreign steelmakers to seek out investments among a fragmented local industry after efforts to develop standalone projects met with delays.

“India is on the radar of most companies given the lucrativeness of the market,” said Rakesh Arora, analyst at Macquarie Research. “India has both demand growth and cheap iron ore going for it.”

Mid-level firms including Usha Martin, Electrosteel Casting, Bhushan Steel and Monnet Ispat are seen as attractive targets for joint ventures or acquisitions by foreign firms keen to enter a market beset by regulatory hurdles and land acquisition issues.

Smaller, less-competitive domestic players, however, could see their market positions under threat as global players increase their presence in the country.

Earlier this month, global leader ArcelorMittal said it would acquire a one-third stake in Indian re-roller Uttam Galva, and more such deals are expected given the difficulty of going it alone in India.

“It is very difficult for someone coming from outside to set up a greenfield project,” Nittin Johari, chief financial officer of Bhushan Steel told Reuters.

Source:http://in.reuters.com/article/businessNews

Foreign Steel Maker Look to India for Expention

A persistent slump in demand for steel that has left plants idled worldwide for nearly a year is pushing top global producers to expand in India, which along with China is a rare bastion of growth.

Strong local demand driven by infrastructure projects and rebounding car sales has led big foreign steel makers to seek out investments in a fragmented local industry after efforts to develop independent projects met with delays.

Midlevel firms including Usha Martin, Electrosteel Casting, Bhushan Steel and Monnet Ispat are seen as attractive targets for joint ventures or acquisitions by foreign companies keen to enter a market beset by regulatory hurdles and land acquisition issues, analysts said.

Smaller, less-competitive domestic players, however, could see their market positions under threat as global players increase their presence in the country. ArcelorMittal, the global leader, said this month it would acquire a one-third stake in the Indian company Uttam Galva, and more such deals are expected given the difficulty of going it alone in India.
Global steel demand slumped by more than a tenth in the past year, but India’s 55 million-ton steel market has seen nearly 10 percent growth as its $1 trillion economy focuses on building physical infrastructure and as auto sales revive.

Source:http://www.nytimes.com/2009/09/29/business/global/29iht-steel.html(edited)

AK Steel Announces Price Increases For Carbon Steel Products

WEST CHESTER, Ohio, Sept. 1 /PRNewswire-FirstCall/ — AK Steel (NYSE: AKS – News) said today that it will increase spot market prices for its carbon steel products, effective with all new orders. Base prices for hot rolled products will increase by $40 per ton. Base prices for cold rolled products will increase by $50 per ton. And, base prices for coated products will increase by $60 per ton.

Press Release
Source: AK Steel
On Tuesday September 1, 2009, 5:15 pm EDT

Baosteel slashes steel product prices

Baosteel Group Corp, China’s biggest steel maker, cut some of its steel products’ prices in October due to market pressure—the first time in three months the company has done so—the International Finance News reported today.

According to the price cut policies released Monday, Baosteel decreased the price of low-carbon steel by 200 yuan ($29.28) a ton and the price of carbon by 300 yuan a ton. Other major steel products have also seen price cuts.

The price adjustment of Baosteel was roughly in line with market expectations. According to industry consultancy center Mysteel, China’s steel prices fell for four weeks in row, but the speed was slowing down.

Prices of some of Baosteel’s products are still higher than the market price, indicating that Baosteel is optimistic about market steel prices in the future, the newspaper said.

But buyers feel steel prices are still too high to purchase from Baosteel. In order to keep cooperation with the steel mill giant, they have to keep ordering products from Baosteel but reduce the demand, said Hu Yanping, an analyst with umetal.com.

Some industry insiders said Baosteel raised prices of its major steel products several times in the past few months, neglecting buyers cost pressure.

Although the economy seemed to be bottoming up, as the external environment was still weak, demand for steel will hardly have a big increase, Hu said.

Source: http://www.chinadaily.com.cn/china/2009-09/08/content_8667462.htm

Tata Steel Posts Unexpected Loss on Prices, Output

Tata Steel Ltd., India’s biggest producer, posted an unexpected loss in its first quarter because of lower prices and production cuts at unit Corus.

Corus, which provides more than two-thirds of Tata Steel’s output, almost halved first-quarter production after orders from automobile makers and builders collapsed. Earnings will “improve” this quarter as demand recovers, said Rakesh Arora, an analyst at Macquarie Group Ltd. in Mumbai.

Tata Steel shares, which more than doubled this year on optimism the government’s infrastructure spending will spur sales, fell 5.3 percent to 435.70 rupees at close of trade in Mumbai. The benchmark Sensitive Index rose 0.1 percent. The company’s global depositary receipts fell 20 cents, or 2.1 percent, to $9.20 as of 12:04 p.m. in London.

Corus increased prices by about $40 a ton in the June-July period and full-year factory use at the U.K.-based unit will be about 70 percent, compared with 50 percent last year, Managing Director B. Muthuraman said on July 29.

Global demand is improving and sales in India remains strong, Muthuraman said last month. The company expects to increase sales by as much as 25 percent this fiscal.

Tata Steel became the world’s sixth-largest steelmaker in 2007 after it acquired Corus for $12.9 billion. The unit, which makes steel for cars, building, packaging and engineering, operates in the U.K. and the Netherlands.

Tata Steel aims to save 700 million pounds by reducing energy costs and inventories and making more profitable products, Chief Financial Officer Koushik Chatterjee said on Aug. 6. The steelmaker wants to cut labor costs by 20 percent at its European operations, it said in its latest annual report. Raw material costs fell 40 percent in the period, the company said today.

The steelmaker plans to lift its domestic annual capacity by more than 40 percent to 10 million tons.

Source: http://www.bloomberg.com/