Booming steel industry prepares for Middle East Steel 2008

A recent report claims that the cost of steel has almost doubled (an increase of 91%) in the last six months.

And while the steel industry is booming in the region due to the extraordinary number of major construction projects, there is a significant imbalance between supply and demand.

Consumption of steel in the Middle East is growing at a phenomenal rate.

By 2010 the region is expected to consume 60 million tonnes a year, while expected to only produce 35 million tonnes per year.

This massive imbalance between supply and demand therefore means that the business opportunities for those involved in the region’s steel sector is immense.


India steel may edge up but analysts advice sell

Indian mild steel ingot futures on the National Commodity and Derivatives Exchange are likely to trade sideways with a positive bias this week after markets fell nearly 10 percent last week, analysts said.

But most analysts have suggested selling at current levels on expectations steel companies would refrain from raising prices and curtail exports to boost supplies in the local market.

“The government does not directly control steel prices but it looks like it has managed to convince steel makers not to raise prices this month,” an analyst in Motilal Oswal Commodities Broker Pvt Ltd, said.

Prices may edge up a little this week but in the medium term the market looks bearish and anyone holding long position may exit at current levels, Prakash Prabhu, Ventura Commodities Pvt Ltd, said. On July 31, India’s steel minister Ram Vilas Paswan said he had asked steelmakers not to increase steel prices in the ‘national interest’.

India is battling 13-year high inflation and steel prices are a major contributor.

Steel firms were expected to raise prices when a three-month moratorium on price increases ended last week, but chose to hold price, the steel secretary said last week.

There can be minor rise in prices but in the medium term the market should ease, the Bonanza Commodity analyst said.

Mild steel ingot futures <0#NST:> on NCDEX is the most traded product in the ferrous metal category in India.

Official data showed India’s steel consumption rose 10.7 percent in 20O7/08, while output growth was slower at 5.1 percent and the gap was met through 7.18 million tonnes of imports

Bhilai Steel Plant in last-lap suspense over Rowghat

Bhilai Steel Plant, the most profitable unit of the Steel Authority of India Ltd, faces a tense fortnight before it will know whether it can dig for iron ore at Rowghat, its only chance of survival even as it plans to expand steelmaking capacity to 7.5 million tonne a year from 4.2m tonne at present.

With the Supreme Court clearing the mining plans of Posco and Sterlite last Friday, following the green signal of a central empowered committee handling such cases, it is now Bhilai Steel’s turn at Friday hearings. This Friday being a holiday, Bhilai’s case is expected to be heard on August 22. Raghavachari Ramaraju, managing director of the Chhattisgarh-based plant, said he is hopeful about Rowghat. The plant’s current mines at Dalli Rajhara, 85km away, will be exhausted in four or five years.

“We expect that, with Posco’s and Sterlite’s case having been cleared by the Supreme Court…Ours will be coming up next and get the clearance,” said Ramaraju, who has been with Bhilai since joining it in 1972 as a graduate engineer. Rowghat, 180 km from Bhilai, has around 500 million tonne iron ore, which will last the plant 35-40 years at its expanded capacity.

“Dalli Rajhara is depleting fast and we are trying to stretch it to the maximum, but it won’t last us more than another four and a half years maximum,” he said. Bhilai Steel was set up in the middle of nowhere only because of the iron ore reserves, and its location makes imports or even supplies from other SAIL mines uneconomical. It gets Dalli Rajhara ore at Rs 600-650 per tonne, and imports will cost ten times more. “We can’t afford to buy from anywhere else, and at the same time there is no source which can give me the ore,” he said, pointing out that the NMDC Ltd mines nearby are fully booked. “That is precisely the point we are stressing, that an established unit will not have any linkages,” he said. He said, SAIL’s own raw materials division is already finding it difficult to feed the existing plants.

Bhilai is the only SAIL plant that has its own iron ore mines, apart from ISP, the recently acquired Indian Iron & Steel Plant.


Indian steel firms not to raise prices – govt

Indian steel firms have agreed to hold prices at current levels, Steel Secretary Pramod Rastogi told a business conference on Friday, giving a boost to government efforts to curb inflation at a 13-year high.

Firms in the world’s fifth-largest steel producing nation have been battling soaring costs of key inputs like iron ore and coal, but have been holding prices since May to help rein in double-digit inflation, which crossed 12 percent in late July.

“The government had initiated a number of fiscal measures to check prices and steel companies had agreed to hold prices and restrain exports. They have now agreed to hold prices further,” Rastogi said.

Officials of Tata Steel Ltd (TISC.BO: Quote, Profile, Research, Stock Buzz), state-run Steel Authority of India Ltd (SAIL.BO: Quote, Profile, Research, Stock Buzz), JSW Steel Ltd (JSTL.BO: Quote, Profile, Research, Stock Buzz) and Ispat Industries Ltd (ISPT.BO: Quote, Profile, Research, Stock Buzz) said on Thursday they would hold prices in August, even as the self-imposed moratorium ended.

But some company officials said they would review the situation next month. (Reporting by Devidutta Tripathy and Mayank Bhardwaj, Editing by Mark Williams)


Steel cos may hold capacity expansion

Indian steel producers may not be able to expand production capacity to meet burgeoning demand if their operating margins remain at current levels, Tata Steel’s managing director B Muthuraman said on Wednesday.

“Our margins are not good,” he said, even as steel secretary R S Pandey noted that profit margins for some producers were as high as 20% in June.

Refusing to name any company, Pandey said, “The range of profit margins is as wide as 15-45% for different companies.” But Muthuraman maintained that steel prices in India were Rs 15,000-20,000 lower than international prices despite rising input costs. “I have seen consumer prices rising disproportionately to steel prices,” he said, adding that the benefits of low steel prices here hadn’t reached end users.

Steel minister Ram Vilas Paswan said that profits of domestic steel producers have risen despite hike in raw material costs. He said steel price hike has been higher than rise in cost of production.

“If I tell mediapersons that steel prices have risen because of higher input costs, they will ask me why this hike is higher than that in input costs,” Paswan said. He urged steel producers to monitor the prices themselves.

Govt may ban export of flat steel products, iron ore

The steel industry could be in for another shock with the government now considering banning exports of flat steel products with a view to check rising inflation.
“If the prices of flat steel products are not being kept in check, either the export duty could be increased or a ban on exports could be considered to increase domestic availability,” Committee of Secretaries (CoS) observed in its last meeting.
It also noted that the government may consider increasing export duty on long steel products and subsequently explore the possibility of banning iron ore exports to increase domestic availability.
Government had on 13 June exempted flat rolled products of iron and steel, including galvanized products, pipes and tubes that attracted export duty ranging from 5% to 15% ad-valorem, from the purview of the export duty.
The rate of export duty on long products such as bars and rods, angles, shapes, sections and wires was also increased from 10% to 15% and a 15% ad-valorem duty was imposed on iron ore.
The CoS decided that the Ministry of Steel in consultation with Department of Revenue would soon consider suitable measures for increasing the domestic availability of steel and moderating its prices.
The ministry would also consider proposals for implementation in early August when the three-month self- moratorium imposed by major steel producers to hold their priceline expires.
The ministry would quickly undertake an analysis on the options available for moderating the prices of iron ore and submit it for consideration of the company of secretaries during the next meeting, they added.

Corus Process to modernize RINL bloom caster

Corus Process Engineering has been awarded a multi million pound contract from Rashtriya Ispat Nigam Limited’s Visakhapatnam Steel Plant to modify and enhance the company’s number 2, four strand bloom caster at its plant.

As a turnkey contract, Corus Process Engineering’s responsibilities include the complete design, equipment supply, installation and commissioning of the modified bloom caster.

Corus Process Engineering will lead the project, with its consortium partner TATA Projects, handling some of the design, indigenous equipment sourcing and installation work.

Mr Brian Stalker international sales manager for Corus Process Engineering said that “The contract suits Corus Process Engineering’s skill sets entirely and includes supply of new moulds and top zones, mould oscillators and mould table, Tundish car frames, modified strand guide segments and enhanced secondary cooling spray systems. Corus Process Engineering is also responsible for replacing the process control and an automation system associated with the caster, as well as electrical works, including new electric motors and cabling.”

The number 2 bloom caster is one of six identical casters at RINL’s steel plant, which all share a common casting floor.


Iron Ore in India: The Present and the Future of It

‘Iron Ore in India: The Present and the Future of It’, authored by prominent author Dr AS Firoz provides you the valuable information on Indian iron ore market and is scenario. The report covers the reviews of the developments in Indian iron ore industry.

This report critically looks at the current situation in the industry, potential of the iron ore market growth in the medium term, growth plans of the individual major companies, demand and supply issues related to raw materials like coal and iron ore, competitive positioning of steel production in the country, socio economic and political factors which may have direct and indirect impact on the growth dreams of the Indian steel makers, etc among a large number of other relevant issues of strategic importance.

This report is the product of extensive and in depth analysis with incredible amount of time spent to put the numbers in perspective. There are neutral and frank expert views on matters which have drawn attention of the industry in the recent period.

The phenomenal rise in iron ore prices and their continued shortages worldwide have raised many important questions on the future of the iron and steel industry globally especially in the context of the changing dynamics in the environment surrounding especially in respect of raw materials to this industry. The steel makers are undergoing a phase of uncertainty, volatility and speculation amidst a supply side crisis looming large over raw materials, importantly iron ore and coking coal.

The Indian story is no different. A country having over 25 billion tonnes of officially declared iron ore resources and producing over 210 million tonnes of them annually and exporting nearly 95 million tonnes of them is important from all angles to the world of iron ore business.


POSCO may buy iron ore to feed steel plant in India

POSCO may buy iron ore to feed steel plant in India – Report
Bloomberg reported that POSCO may be forced to buy iron ore to feed its USD 12 billion steel plant in India should the government fail to award it a license to mine ore.

Mr SK Mahapatra GM at POSCO India said that “There is a possibility of iron ore requirement coming ahead of our captive mining operations. In this situation, the state government has agreed to make the iron ore required available.”

It may be noted that land disputes and delays in allocating mining licenses have stopped POSCO from proceeding with potentially the biggest overseas investment in India. It is yet to begin building the 12 million tonnes steel plant in Orissa state. Work was scheduled to start in April 2007.

Initially, POSCO will build a 4 million tonnes steel plant and set up a 400 MW power plant.


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