Bhushan Steel Ltd today signed a technical collaboration and marketing agreement with Sumitomo Metals, Japan’s third-largest steel producer. The two companies are also exploring the setting up of a joint venture for setting up a six-million tonne steel plant at Asansol in West Bengal.
The company had signed two agreements with Sumitomo Metals for technical know-how and marketing for selling products from the Orissa plant, Neeraj Singhal, vice-chairman and managing director, told reporters. The first phase of the Orissa plant, with a capacity of 2.2 million tonnes (mt), is scheduled to go onstream in January. In the second phase, the plant’s capacity will go up to 5 mt by October 2012. The company’s current steel capacity is 1 mt. The Japanese steel major will provide technical expertise to Bhushan’s Orissa plant and market a part of the produce under the Sumitomo brand for its customers in India.
“We are exploring a joint venture with Sumitomo for the West Bengal plant. We are yet to finalise it, but Sumitomo’s equity in the project is expected to be in the range of 26-40 per cent,” Singhal said.
The first phase of the West Bengal plant is likely to have a capacity of 3 mt, along with a captive power plant of 1,000 Mw. The first phase, expected to become operational by 2014-15, is estimated to cost Rs 20,000 crore. The company’s share price at the Bombay Stock Exchange closed at Rs 1,340.10, up 0.68 per cent from the previous day.
PTI adds: The company today said it would increase prices of its products by up to Rs 1,500 a tonne next month to cash in on the uptick in demand.
“There is going to be a price increase of our flat and long steel products from January onwards, maybe in the range of Rs 1,000-1,500 a tonne....From January, the demand will definitely pick up,” Bhushan Steel Managing Director Neeraj Singal told reporters here.
Flat steel products are primarily used by the white goods and auto industry, while the long products are used in the construction industry. The company had lowered prices of its products a few months back along with its peers in the industry amid threats of cheap imports. The price range of the cut could not be immediately ascertained.
“We are in discussions with Volkswagen to supply steel to its India plant,” Bhushan Steel Vice-Chairman and Managing Director Neeraj Singal said. Bhushan Steel sells its products to almost all the automobile firms in the country, he added. But the company does not export steel to any auto firms. Volkswagen had last year set up a plant in Chakan near Pune to manufacture 110,000 units annually.
“The prices had gone to unexpectedly low levels in the last two-three months so it has to come to a realistic level again. From January the demand will definitely pick up,” Singal said.
The country’s largest steel producer SAIL is also planning to increase steel prices in January. The move is expected to be followed by other steel producers as well. Steel prices have globally recovered by about $50 a tonne to about $450 per tonne after falling by $150-200 per tonne in the last two months due to fear of over capacity in Chinese steel mills and import threat.