Iron ore, new steel projects are of prime interest

Steel Insights has started a group on LinkedIn called India Steel Market Watch (ISMW). The readers are welcome to join the group and participate in daily conversations and surveys conducted by ISMW on the online forum. Steel Insights may, at its discretion, publish the results of such surveys and discussions for the benefit of a larger audience.

As the Indian steel industry wades through a slack market scenario, the community on ISMW identifies issues related to iron ore and new steel projects as of prime interest. News about domestic ore makers facing competitive import offers caught attention of the members who agreed with the reports. There is a unanimous view in the industry about the need for large scale pelletisation in the country and the ISMW could be no different.

Yet another major concern is about the long stuck-up steel projects of Posco and ArcelorMittal. However, nobody seems to hold an answer to the land acquisition hurdles, which is likely to take immense proportions going forward. Recently, an industry bigwig said it was becoming difficult to get land in Odisha even at a whopping offer of Rs12 lakh per acre. One only hopes the government has some solution in mind.

Posco waits on

There is something about Posco India other than steel. Seven years on, the steel major continues to hold patience and remain optimistic. Recent reports say the company is expecting acquisition of 2,700 acres of land for setting up its 8 million tons per annum (mtpa) steel plant near Paradip within 60 days.

"The state government has indicated that it will hand over 2,700 acres of land required by us to set up an 8-mtpa capacity steel plant within two months," Posco-India CMD Yong Won Yoon told reporters after meeting Chief Minister Naveen Patnaik last month.

He further said that the company would start physical construction of the project as soon as it got the required land. If not for anything else, industry sources said, the company deserves a fair treatment for its patience and optimism.

Meanwhile, there was little news about the other steel major ArcelorMittal. But a merger between two Japanese steelmakers created ripples in the global steel market.

Nippon, Sumitomo merger

The big news in recent past was the merger of Japan's Nippon Steel and rival Sumitomo Metal Industries, which together created the world's second largest steelmaker amid intensifying global competition.

As of 2011, the two Japanese firms produced a combined 46.1 mt of crude steel, about half of ArcelorMittal's production of 97.2 mt. Although still a distant second, the new combined entity is sure to be in a position to influence global prices.

Industry sources termed the development as a very pragmatic step in view of the intensified competition and cost pressures facing the leading steelmakers in the global market. In fact, cost was the primary concern of the two companies which decided to go for the merger late last year.

Met coke demand

In line with the domestic steel market, the metallurgical coke prices remained depressed in recent weeks. This was mainly due to the lack of firm interest in India, a coke maker told ISMW.

However, he hoped some buying interest would return soon as historically steel demand rises post-October with construction project work starting off after monsoons.

Commenting on the issue, Robert S, experienced corporate finance executive from Australia said, the scenario was about the same in the US. "It appears that there is oversupply in Eastern USA....Cannot see demand increasing until early 2013." 

Source: Steel Insights

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