Indian Summer: Tata Steel, Authority of India Looking at Hot, Profitable Season

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For Indian steel companies, it’s a season of plant expansions, new capacity additions and the launch of new products.

One of India’s largest steel manufacturers Steel Authority of India (SAIL) is on a roll. It recently put a new blast furnace into operation in one of its plants in the State of West Bengal. The new furnace will send the facility’s capacity for hot metal production to 19 million tons (mt) by September.

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The plant’s current capacity is 14 million tons per-annum (mtpa). While the new blast furnace will be commissioned in August, the “first heat” in the new converter in SAIL’s Rourkela facility will be out by mid-May.

Hot metal production is high on the state-owned SAIL’s agenda. The company recently reported that its April 2014 sales rose 14 percent at 810,000 tons as against 709,000 tons in the same period of last year. A report in MoneyControl.com said the increase came about largely because of a 66 percent increase in exports as compared to April 2013.

SAIL said hot metal production had risen by 6 percent at 1.22 mt as against 1.16 mt in April of 2013. Crude steel production was up, too, was at 1.14 million tons, it was 4 percent higher than last year. Based on this, SAIL is optimistic that it will attain a double-digit growth level both in production and sales in 2014-15.

The steel major recently won two global tenders for supplying 117,000 tons of railway track in India for four important passenger railway projects criss-crossing the length and breadth of the country.

SAIL has already embarked on an expansion plan which will cost approximately $12.2 billion, which translates into an approximately 33 percent jump in the company’s planned expenditures compared to the previous five-year plan.

Tata For Now

SAIL’s well-known rival, Tata Steel has also commissioned a new coke oven battery, becoming self-sufficient in coke production for its Jamshedpur plant.

Tata Steel’s Specialty Steels business launched an enhanced version of its existing 4145H modified alloy steel grade, which creates a more durable high-strength steel. The improved bar product grade was manufactured at Specialty Steels’ production facilities in South Yorkshire, UK, and will be used in the oil and gas market.

Tata Steel is Europe’s second largest steel producer, with steelmaking operations in the UK and Netherlands, and manufacturing plants across Europe supplying products to construction, railways, auto, oil and gas and other industries.

Despite a significant slowdown in the overall economy, steel companies are expected to report healthy profits in the first quarter of 2014, driven by lower input costs and higher prices implemented during the first quarter.

Steel analysts feel that some of this forward momentum on the part of steel producers could translate into improved performance in the Jan-March quarter. They expect, on a year-on-year basis, net sales of steel to go up due to the increase in volume and price. Margins are also likely to improve due to higher prices on a year-on-year basis.

Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.

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