Essar Steel acquires UK-based Servosteel

The Ruias-owned Essar Steel has acquired UK-based Servosteel, the largest independent steel processor in UK, with a processing capacity of 500,000 tonne per annum. Though the company did not disclose the buyout amount, the acquisition is said to be part of Essar Steel’s distribution strategy. This is Essar Steel’s first acquisition in the UK.

Located in Dudley, a major steel consuming hub, Servosteel was acquired by the subsidiary of Essar Steel Holdings, Essar Steel International BV. Servosteel offers a one-stop service for SCS (smooth clean surface technology), pickling, slitting and decoiling and various individual custom tailored services. In a bid tap the growing steel market, Essar Steel is focusing on service centres that provide tailor-made products of the metal to consumer industries, including ones in the automobile and consumer durables sectors.

Essar Steel has a global steel production capacity of 8.6 million tonne per annum. It operates seven service centres in India, Indonesia and Canada with aggregate capacity of over 3 million tonne per annum.

Earlier this year, its subsidiary Essar Steel Middle East had proposed setting up of a 2,50,000-tonne processing and service centre in Dubai’s Jebel Ali Free Zone.


Indian Steel Industry

India continually posts phenomenal growth records in steel production. In 1992, India produced 14.33 million tones of finished carbon steels and 1.59 million tones of pig iron. Furthermore, the steel production capacity of the country has increased rapidly since 1991 – in 2008, India produced nearly 46.575 million tones of finished steels and 4.393 million tones of pig iron.

Both primary and secondary producers contributed their share to this phenomenal development, while these increases have pushed up the demand for finished steel at a very stable rate.

In 1992, the total consumption of finished steel was 14.84 million tones. In 2008, the total amount of domestic steel consumption was 43.925 million tones. With the increased demand in the national market, a huge part of the international market is also served by this industry

Chinese steel prices unlikely rebound in future – Analysts

China Finance Online reported that China steel market has experienced more than one month decline since the end of April.

Prices for rebar arrived at CNY 4,007 per tonne at lowest level on June 7th and later started rebounding boosted by the costs, which was predicted to continue declining in the future on weak market demand. To steel mills, most of them don’t show any signs of output reduction at present. So, the steel prices would be certainly hard to rebound in the days to come on a large quantity of oversupplies.

Chinese government has put forward a series of macro-control policies on the house market, which led a decrease in construction steel price. Besides, the central bank may gradually tighten their housing loans in H2 this year and most house investors held fence sitting attitudes toward the future market.

Recently, the three mines planned to ask for increases of 30% to 35% and 10% to 15% respectively in iron ore and coking coal prices in the third quarter but they suffered a huge demand decline in China as the strong macro control in the house market. As per the latest customs’ statistics, the import of iron ore posted two month continuous decline since Apr this year.

To sum up whether the steel price would further slide or not all depends on steel mills output reduction plan and the future house market which is hard to rebound by large amounts in the coming days.

(Sourced from China Finance Online)

SAIL to focus on value-added steel

Steel Authority of India (SAIL) will enhance its production capacity of value-added steel required by the power sector and expand its global presence through mergers and acquisitions, company’s new chairman CS Verma said.

“I feel inorganic growth is important for a company like SAIL. This strategy would be pursued in days ahead,” said Mr Verma. In a globalised world SAIL will not confine itself as a domestic player but will spread its wings outside, especially towards building input security by acquiring overseas assets, he added.

SAIL will gear up to meet power sector requirement as 7% of its sales come from BHEL. “My first priority is to increase the 37% share of value-added products in SAIL by focusing on production of steel required for power projects,” Mr Verma told reporters after taking charge of company’s new chairman. Before joining SAIL, he was director (finance) at BHEL.

Mr Verma said the company’s ambitious Rs 60,000-crore expansion programme will be completed on time without any further time and cost overrun. The company plans to expand its capacity from 15 million tonne per annum to over 23 million tonne by December 2012.

SAIL will soon come out with a detailed strategy on pursuing its new growth programme, he said. Mr Verma expressed concerns over rising input costs. “The way input prices are going up, it will definitely have impact on the profitability of steel companies,” he said.

Spanning 29 years, Mr Verma’s career profile also covers stints as director (finance) of ITI, as group general manager of Indian Railway Finance Corporation, and as general manager of Delhi Stock Exchange, besides experience of working in a financial institution for nine years.


Steel prices crumble due to slack in demand

The major steel producers has reduced the prices in all sections by 3000/- per Metric Ton due to slack in demand.
This is more or less a regular phenomena at the eve of monsoons, when the overall demand gets a reverse gear.

But the auto sector still going very strong, there are strong vibes that the prices may pull back again in the month of July.