Steel Cos may Seek Tie-ups with Global Majors

Indian companies are planning to form strategic tie-ups with global majors such as ArcelorMittal and ThyssenKrupp to access new markets, instead of bidding for these large units which will be expensive.
Jindal Stainless and SAIL are the two large stainless steel companies that could likely look at adding larger and bigger customers by collaborating with the global majors, and also by adopting newer technology as part of the global restructuring in the stainless steel industry, said two people connected directly with the development. "This is the trend happening globally," said Arvind Parakh, finance director at Jindal Stainless (JSL), India's largest stainless steel producer. "It would be beneficial to get high value markets in Europe and the US."
On Friday last, German major ThyssenKrupp said it will spin-off its stainless steel unit to focus on carbon steel. The move follows a similar move by ArcelorMittal in January where its stainless steel division Aperam was demerged. Both companies cited overcapacities in stainless steel industry in Europe and Asia as the main driver for consolidation. "It is good to be focussed," said Yatinder Pal Suri, country head of Outokumpu India, the Indian arm of Finnish world leader in stainless steel. "Carbon steel and stainless steel need separate attention. This will bring a healthy dose of competition. Companies too will be far more responsible in pricing and in their approach to market. Stainless steel is a highpriced product and requires discipline in inventory control and stocks," he added.
While hot-rolled coils, the base grade category for carbon steel, is priced at an average of . 37,000-38,000 a tonne, stainless steel is at more than . 1,20,000 a tonne. Indian stainless steel producers are of comparatively smaller size at 1.5 million tonne, while global majors, such as ThyssenKrupp, are more than double that size.
According to a top industry official, the Indian market is growing, but has been using mainly low-end products. Indian steel companies should look for R&D technology, new applications and support new product development, instead of eyeing equity tieups with global majors.

Spreading Wings


• Jindal Stainless & SAIL
may look at adding larger & bigger customers by collaborating with global majors

• Cos may also adopt
newer technology as part of the global restructuring in the stainless steel industry