MELTING POINT STEEL MAJORS FIGHT TO KEEP CHIN UP

RUSTY DEMAND FORCES JSW TO PUT US UNITS ON SALE

The global slump has hit Indian steel makers' foreign ops hard. Within days of Tata Steel saying it may shut Corus' Teesside unit in the UK, JSW Steel has said it's ready to sell its US plants even at a discount

 JSW Steel plans to sell its plants in the US to cut rising losses, after a sharp fall in demand triggered by the global slump devastated the country's steel industry.
    The company is now open to selling the units at a price lower than its acquisition cost, a company executive said. "We don't mind selling the plants at a discount," he said, requesting anonymity. Company officials, however, declined to comment.
    Jindal's American units posted a $61-million loss in the March quarter. "The US as a whole is not doing well. The steel industry in the country is struggling right now. And we are operating at a 10-15% capacity. So, it's literally very painful," said Sajjan Jindal, vice-chairman and MD, JSW Steel, on the sidelines of a press conference last week.
    JSW Steel had acquired the plants in August 2007 for $800 million, excluding $130 million it paid for the inventory, from Jindal Saw, owned by elder brother PR Jindal.
    JSW Steel was planning to export steel slabs from its Indian facilities and convert them into pipes for the American oil and gas industry. But its plans went haywire after demand from American companies collapsed drastically.
    JSW is not the only Indian company facing a tough time at its foreign subsidiaries. Last week, Tata Steel said it would have to mothball its Teesside plant, after some of its customers unilaterally terminated an offtake agreement.
    Tata Steel's plan to sell the plant to the same customers also fell through. Tata Steel was planning to sell the plant to them for $450 million to pay off its high-cost debt. With the company planning to mothball the plant, almost 2,000 employees are expected to lose their jobs.
    Global steel output fell 23.5% in
    JAI
March compared with the same month last year, the World Steel Association had said last month. Steel production in the association's 66-member countries had fallen 24% in January and 22% in February.
    Analysts said with world asset prices falling and financial markets in a freezer, it would not be easy for Indian companies to sell their assets abroad. In fact, with global steel prices continuing its fall and making more units unviable, a buyer would rather wait for some more time to get a better discounted price.

SAJJAN JINDAL VICE-CHAIRMAN AND MD, JSW STEEL

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