Anticipating pick-up in demand in construction and road sector in the Gulf Cooperation Council (GCC), Indian industrialist Naveen Jindal feels Jindal Shadeed Iron and Steel (JSIS) with its 1.4 million tonne per annum (MTPA) rebar facility is all set to take advantage of the $6 billion market opportunity in the region.

Jindal Shadeed Iron and Steel, a subsidiary of the steel-to-power group Jindal Steel and Power (JSPL), has invested $1.2 billion to set up a 2-MTPA steel melting shop and a 1.4-MTPA rebar mill at the industrial port city of Sohar in Oman.

The firm, which boasts of the third largest steel plant in the GCC, hopes to beat competition from China and other steel-surplus nations to get a significant pie in the region’s $6 billion TMT bars market with the newly inaugurated rebar mill.

The GCC is a political and economic alliance of six nations — Oman, Saudi Arabia, Kuwait, Bahrain, Qatar and the United Arab Emirates.

According to market analysts here, GCC requires around 15 million tonnes of steel annually. The current prices have gone up from $360-380 a tonne to $410-420 per tonne, which is a significant market in the region.

Jindal’s rebar facility gives his firm inroads in this 15 MT market opportunity in the GCC region, of which around 3-4 MT is imported. "Unlike other producers in the region, we have an edge when it comes to the cost of production since this technology would allow us to produce TMT bars directly from the hot metal that comes out from the steel melting shops," Jindal told reporters here.

He added the company through its specialised products (TMT bars) will get an edge over Chinese export of steel billets. "Having specialised products gives us an edge over imports here of billets from China. We are giving customers here better products," Jindal noted.

After acquiring Shadeed Steel and Power in 2010 for $500 million, Jindal, chairman of JSPL, invested another $700 million to set up the steel melting shop and rebar mill. So far, the company has produced billets and other related products to sell them to local steel producers who would use them to produce finished products. It also exports specialised steel products to auto component manufacturers in Europe.

With the rebar mill, Jindal Shadeed can sell TMT bars directly to the customers not just in the GCC region but will also tap the markets in Africa as well as other neighbouring countries.

Jindal hopes to produce other value-added products in the future though he declines to give a time-frame, saying the focus of the company would now be on consolidation. He said listing of the unit on domestic bourses is also an agenda, but it will all depend upon the market condition, which is somewhat subdued now due to present oil crisis.

The oil crisis has also forced the local governments to cut down investments on developing infrastructure, but Jindal is not apprehensive.

Steel demand here is bound to grow as all the investments do not necessarily come from the states. On top of all, the aim of the company would be to replace the burgeoning imports, mainly from China, with local produce.

China, he claimed, has also been playing havoc with the local market, the same way it has been impacting the Indian market back home. Jindal said the local government should also take a cue from India and impose minimum import price (MIP) on imports of steel products to help the domestic industry counter competition.

Jindal Shadeed buys pellets, the raw material used for iron-making, from Brazilian major Vale, which has a pellet plant near Jindal’s plant here. Asked whether the company would divest Jindal Shadeed to repay its mounting debt, he answered in the negative.

"We are committed to Oman. Our focus is now on integrating the plant fully. Debt restructuring is a continuous process.”

Accusing China of dumping products at predatory prices in the GCC region as well, Jindal said this has impacted the sales and profits of steel producers in the region.

 

Source : timesofoman.com

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