Released February 02, 2011 | JOHANNESBURG
en
Researched by Industrial Info Resources (Sugar Land, Texas)--The decision by India's Environment Minister, Jairam Ramesh, to give POSCO (NYSE:PKX) (Pohang, South Korea) 12 million-ton-per-year steel project in Orissa the go-ahead is one of the factors supporting official forecasts that Indian steel production will increase to 120 million tons per year by December 2012, from the current level of just less than 80 million.
According to World Steel Association (WSA) (Brussels, Belgium), India held fourth place in global steel production, with production of 50.1 million tons for the nine months from January to September 2010. China led the field during this period, with production of 474 million tons, followed by Japan with 81.9 million tons, and the U.S. with 60.9 million tons.
Only months ago, falling steel production and mills in some countries struggling to keep up viable production levels was an overall token of the global financial crisis and an image of economic depression. Now, global steel production estimates for 2010 are up 16%, or 190 million tons per year, on 2009 figures at 1.4 billion tons, with China, Japan and the U.S. contributing more than 50% of that growth. According to industry authority MEPS (Sheffield, England), the estimated total for 2010 is 1.415 billion tons and 1.485 billion tons for 2011. A further year-over-year increase of 4.4% is forecast for 2012, which equates to a tonnage increase of more than 65 million tons per year in the 2011 total.
The consolidation and expansion of Indian steel production will be of benefit to the country's balance of payments, as the price of steel is forecast to top $1,000 per ton in the third quarter of 2011. This compares with an annual average of $733 per ton in 2010. The sharp rise in price will be driven by a number of factors, creating higher input costs for steel mills, MEPS forecasts. Spot prices of coking coal are being driven higher by shortages caused by the Australian mine floods; the escalation of scrap prices; and the fact that that availability of Indian ore in the global market has been reduced, as a larger amount of this key input in the steel production process is being retained for domestic production purposes.
Although the flat conditions in the construction industry and remaining uncertainties in financial markets leave questions about future demand, the price of steel is seen topping the $1,000-per-ton mark, driven by increased order volumes by purchasers anticipating price increases, and thus enabling mills to lift margins on sales. The all-time steel price high was $1,160 per ton in 2008, just prior to the financial crash.
The okay for the POSCO project, which could create as many as 50,000 direct and indirect jobs, applies only to the first phase, with the construction of a 4 million-ton-per-year plant, a 400-MW power plant, and a captive port for raw materials and finished goods. As the project progresses to its full specification of 12 million tons per year, each new phase will require a new raft of permits. The clearance to go ahead with the project is accompanied by a number of environmental and land-use conditions, and a rider that 2% of the plant's annual profit should be spent on social welfare in areas surrounding the site. These conditions must be met by POSCO, which is currently studying them before announcing its position. On the plant site, 12 kilometers south of Paradeep Port, 1,253 hectares of the 1,620 hectare plant site is forested, with some human settlements.
The government's decision is sending a message of hope to other project developers in the steel sector, where investments worth more than $80 billion have been held up on account of environmental and land issues. As the largest foreign investment made into India, the project approval also may indicate that the path to investment in the country will be smoother in the future.
The state-owned steel company SAIL has announced plans to invest $15.5 billion in upping steel production capacity from 12.84 million to 21.4 million tons per year by 2012/13, and other players in the sector have immediate and major project expansion plans of up to five times current levels, plus greenfield steel production plans, most of which will be completed, final clearances permitting, by the end of 2013 or before. The arithmetic of this wave of projects says that the target of 120 million tons per year by December 2012 can be done.
For related news item, see November 2, 2010, article - POSCO's $12 Billion Steel Project in Orissa Gets Negative Report from Committee.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
According to World Steel Association (WSA) (Brussels, Belgium), India held fourth place in global steel production, with production of 50.1 million tons for the nine months from January to September 2010. China led the field during this period, with production of 474 million tons, followed by Japan with 81.9 million tons, and the U.S. with 60.9 million tons.
Only months ago, falling steel production and mills in some countries struggling to keep up viable production levels was an overall token of the global financial crisis and an image of economic depression. Now, global steel production estimates for 2010 are up 16%, or 190 million tons per year, on 2009 figures at 1.4 billion tons, with China, Japan and the U.S. contributing more than 50% of that growth. According to industry authority MEPS (Sheffield, England), the estimated total for 2010 is 1.415 billion tons and 1.485 billion tons for 2011. A further year-over-year increase of 4.4% is forecast for 2012, which equates to a tonnage increase of more than 65 million tons per year in the 2011 total.
The consolidation and expansion of Indian steel production will be of benefit to the country's balance of payments, as the price of steel is forecast to top $1,000 per ton in the third quarter of 2011. This compares with an annual average of $733 per ton in 2010. The sharp rise in price will be driven by a number of factors, creating higher input costs for steel mills, MEPS forecasts. Spot prices of coking coal are being driven higher by shortages caused by the Australian mine floods; the escalation of scrap prices; and the fact that that availability of Indian ore in the global market has been reduced, as a larger amount of this key input in the steel production process is being retained for domestic production purposes.
Although the flat conditions in the construction industry and remaining uncertainties in financial markets leave questions about future demand, the price of steel is seen topping the $1,000-per-ton mark, driven by increased order volumes by purchasers anticipating price increases, and thus enabling mills to lift margins on sales. The all-time steel price high was $1,160 per ton in 2008, just prior to the financial crash.
The okay for the POSCO project, which could create as many as 50,000 direct and indirect jobs, applies only to the first phase, with the construction of a 4 million-ton-per-year plant, a 400-MW power plant, and a captive port for raw materials and finished goods. As the project progresses to its full specification of 12 million tons per year, each new phase will require a new raft of permits. The clearance to go ahead with the project is accompanied by a number of environmental and land-use conditions, and a rider that 2% of the plant's annual profit should be spent on social welfare in areas surrounding the site. These conditions must be met by POSCO, which is currently studying them before announcing its position. On the plant site, 12 kilometers south of Paradeep Port, 1,253 hectares of the 1,620 hectare plant site is forested, with some human settlements.
The government's decision is sending a message of hope to other project developers in the steel sector, where investments worth more than $80 billion have been held up on account of environmental and land issues. As the largest foreign investment made into India, the project approval also may indicate that the path to investment in the country will be smoother in the future.
The state-owned steel company SAIL has announced plans to invest $15.5 billion in upping steel production capacity from 12.84 million to 21.4 million tons per year by 2012/13, and other players in the sector have immediate and major project expansion plans of up to five times current levels, plus greenfield steel production plans, most of which will be completed, final clearances permitting, by the end of 2013 or before. The arithmetic of this wave of projects says that the target of 120 million tons per year by December 2012 can be done.
For related news item, see November 2, 2010, article - POSCO's $12 Billion Steel Project in Orissa Gets Negative Report from Committee.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
