ArcelorMittal and Uttam Galva to set up steel plant in Maharashtra

In September 2009, Moneylife had reported that Mittal and Miglani had bigger plans on the anvil, which is now being seconded by some media reports

According to media reports, ArcelorMittal Netherlands BV, controlled by Lakshmi Mittal, is likely to build a one million tonne (MT) steel plant at Satarda in Maharashtra through a joint venture (JV) with Uttam Galva Steels Ltd (UGSL).

ArcelorMittal Netherlands BV, a subsidiary of ArcelorMittal, has made an open offer to raise its stake in USGL to 35% at Rs120 per share, which closed on Thursday.

Moneylife had earlier reported on 5 September 2009 that LN Mittal was likely to make an open offer to acquire another 29.4% in UGSL, making ArcelorMittal an equal partner with the Indian promoter Rajinder Miglani. Under the agreement, Mr Mittal will purchase a 5% stake (at Rs120 a share) in Uttam Galva followed by an open offer to acquire another 29.4%, making ArcelorMittal an equal partner with the Indian promoter Rajinder Miglani. Uttam Galva has a steel production capacity of 750,000 tonnes per annum.

USGL had informed bourses on 4th September about its co-promotion agreement with ArcelorMittal Netherlands BV.

Sources close to the deal had earlier told Moneylife that ArcelorMittal will partner with the Miglanis to set up a 2MT Hot Rolled Coil (HRC) project at Redi near Goa. The Miglanis already own 750 acres of land there, which once belonged to Usha Ispat, controlled by Vinay Rai. Usha Ispat had a pig iron plant at Redi, which was auctioned under the provisions of the Sarfaesi Act, 2002. The land is also located near a jetty and is close to the raw material source.


Steel Authority, rivals may increase price on demand.

April 22 (Bloomberg) — Steel Authority of India Ltd., the nation’s second-largest producer, and local rivals may increase prices for the fourth time this year because of higher material costs and orders from developers and carmakers.

Prices in India are 40 percent less than the record two years ago, leaving room for gains, Steel Authority of India Chairman S.K. Roongta said in an interview, without giving details. Domestic steel demand is expected to grow at more than 10 percent in the financial year ending March 31, he said.

Tata Steel Ltd., Steel Authority and JSW Steel Ltd., India’s top three producers, increased prices in January, March and April as the government’s push to build more roads, ports and bridges boosted steel sales. Demand is also increasing as automakers, including Volkswagen AG and Ford Motor Co., target buyers in India and China as disposable incomes rise in the world’s two fastest-growing major economies.

“Demand is good right now and there can be a tendency of prices remaining strong,” Roongta said yesterday in an interview in his New Delhi head office. “China will also be a major factor. Demand is good there and if they are not a major net exporter, the prices should remain firm.”

Steel Authority shares, which more than doubled in the past year, rose 2.8 percent to 225.40 rupees at the close of trading today in Mumbai. The benchmark Sensitive Index of the Bombay Stock Exchange gained 0.6 percent.

Rising Consumption

India’s steel consumption last year rose 7.6 percent to 56.32 million metric tons. The central bank estimates the $1.2 trillion economy, Asia’s third-largest, will expand 8 percent this fiscal year.

Steel Authority raised prices by about 4,600 rupees ($103) a ton this year, while JSW Steel, India’s third-largest producer, lifted prices by 14 percent. Market leader Tata Steel increased flat product prices by 10 percent in April.

The price increases have been a cause for concern for Prime Minister Manmohan Singh’s administration as it tries to rein in inflation, which is at a 17-month high. The government is expected to discuss at a meeting today recent price increases by steelmakers, the Press Trust of India reported late yesterday.

Changing Contracts

Prices of iron ore, the key steelmaking material, gained after Vale SA, the world’s largest producer, and BHP Billiton Ltd. last month ended a 40-year system of setting annual prices by signing short-term contracts. The World Steel Association has asked authorities globally to examine the iron ore market after Vale won a 90 percent price increase from Japanese mills. China last week said it was investigating the possibility that BHP, Rio Tinto Group and Vale may be monopolizing supplies of iron ore.

Steel Authority, aiming to almost double output to 23 million tons by 2014, will source all its iron ore needs from its own mines. The company will have to import coking coal, another steelmaking ingredient.

The company is likely to buy as much as 11 million tons of coking coal this fiscal year, Roongta said, without giving details. The company will add 2.5 million tons of steelmaking capacity by June 2011 at Burnpur in West Bengal, he said.

Steel Authority expects to take Kobe Steel Ltd. or Posco as a technology partner to set up a factory at one of its locations, Roongta said. The venture will be in addition to Steel Authority’s existing expansion plans, he said.

Nippon Steel Corp. plans to invest with Tata Steel to make auto-grade steel. JFE Holdings Inc. said in November it will cooperate with Mumbai based JSW Steel, while Sumitomo Metal Industries Ltd. has said it may buy a stake in Bhushan Steel Ltd.’s proposed mill. ArcelorMittal, the world’s largest producer, in February said it has bought a 34.42 percent stake in Uttam Galva Steels Ltd.


Steel price momentum

Steel market is looking up not only in India, but also in the US and Europe that were severely impacted by the economic downturn. The worst is over for the steel sector globally. In India, the metal demand grew at 10-14% in the first half of 2008, but dipped sharply in the second half due to the global economic and financial meltdown. Steel demand started recovering in April, 2009, and has till date been relatively better in India than the global demand trend. In the current fiscal, steel industry is likely to grow at 9% and attain 12% growth in the next fiscal owing to robust demand from automotive, infrastructure and consumer durable sectors. Steel demand will continue to rise as the government has proposed to invest Rs 1,73,000 crore in infrastructure in 2010-11, which will increase demand for steel and cement.

India sets eyes on becoming 2nd largest steel maker by 2012

India has chalked out an ambitious plan to more than double its current capacity of steel output of 57 million tonnes to become the second largest producer in the world as part of its overall thrust on infrastructure development.

The mandate has come from Steel Minister Virbhadra Singh, even as a major effort is also on to map the rich mineral resources of the country into a database to help prospect raw materials not just for the steel sector but also other industries.

“I have set a target of 124 million tonnes by 2012. Yes, we will then become the world’s second largest steel producer. But, more importantly, India has a vast capacity to consume that kind of output. It is necessary for our infrastructure development,” the minister said.

“Here I am only talking about capacity expansion of existing steel companies. If I also take greenfield projects into account, we have expression of interest for projects worth over $80 billion,” Singh said in an interview.

At present China is the largest steel maker in the world with a capacity of over 600 million tonnes, followed by Japan and South Korea. India ranks fourth.,india-sets-eyes-2nd-largest-steel-maker-2012.html