Stemcor, the world’s largest steel trader had offered its Indian assets on sale which includes an Iron ore mine, a 4 MnT Iron Pellet plant, beneficiation plant and a surry pipeline, because of poor financial health.

After submission of financial bids this week, sources say it might so happen that the assets will not be sold out or be delayed for some more time. JSW Steel was keen to purchase Iron ore mines because of no captive assets.

A senior official at one of the bidding companies who was unwilling to disclose bid prices, told SteelMint, “The 3 participants namely JSW, Jindal Steel & Power and Essel Mining have quoted lower bids in contrast to Stemcor anticipations, owing to lack in buying interest at this point of time.

If things happened to take place about five months back, the financial bids as well as our buying interest would have been on the higher side. How would a buyer benefit from these assets now and why would he invest in something, returns of which are neither secured nor very predictable?”

The current scenario in Indian Steel industry is quite unpredictable and calls for a risk, if the big and expensive assets are purchased.

1. India’s Pellet capacity is increasing and prices will continue to be under pressure

2. Uncertainty over export policies; Government might impose an export duty on Pellets

3. Shah Commission hasasked for Iron ore mining ban along Baitarini River in Odisha

There is no clarity whether Stemcor assets will be sold out or put up on hold, looking at lower valuations received. Also, Indian Steelmakers margins are falling over weakening domestic Pellet prices.