Thursday , 23 June,
West Asia is emerging as a key strategic zone for Indian steelmakers such as Jindal Steel and Power Ltd and Essar Steel. Even as the region is seems growing demand for steel products, the availability of cheaper gas makes it an attractive geography for the steel producers.
Thats why Jindal is increasing the capacity of its steel plant at Sohar, Oman and Essar has set up a processing and distribution facility in Dubai hoping to supply to growing demand of consumers in West Asia and North African region. Jindal is looking at setting up an integrated steel plant in Oman as there are no such plants in the region. It would be cost effective to produce steel due to the availability of gas and also due to the demand.
According to World Steel Association (WSA) forecast, the steel market in West Asia is expected to grow by 2.6 per cent in 2011 and 7.6 per cent in 2012. In 2010, the steel consumption in the region stood at 45.3 million tonnes.
The supply shortfall, estimated at more than 12 million tonnes, could augur well for the Indian players looking to tap that market. The availability of cheap gas in the region would work in favor of the Indian players locating their operations in the region, an analyst said.
HAZIRA ADVANTAGE
Essar, which has its steel plant and port located on west coast of India at Hazira, sees a natural market in West Asia for its products. The company plans to export hot and cold rolled coils from its Hazira plant to its Dubai facility and subsequently sell the processed products such as steel plates and color coated steels for customer in ship-building, oil and gas sectors in the region.
For Essar, it costs less to move steel to West Asia from Hazira than to move it outside of Gujarat. Similarly, the time to move to West Asia is less than the time it takes to move to the east coast of India. The travel time to east coast of India from Hazira is anywhere between 4 and 7 days depending on the location and the time taken to reach West Asia is 3-4 days.
Similarly, the freight cost from Hazira to east coast works out to $30-40 tonne, while to West Asia is about 25-30 tonne.
SAIL’S PRESENCE
Public sector firm SAIL, though primarily a domestic player maintains a continuous strategic presence in export markets mainly in Asia, Middle East, North Africa and Europe. They strive to add at least one new country every year to our repertoire of countries to which they export, to broaden their global reach. In the past three years they have added Sudan, Ethiopia and Syria,” SAIL sources said. Last year, West Asia and North Africa accounted for a fifth of SAIL’s total exports of 3.3 lakh tones.
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