UK steel plant undergoes $410M move to India

The original home of stainless steel, Sheffield in the United Kingdom, is contributing to India's industrial development with the transfer of a stainless steel cold rolling mill (CRM) to a new site to be selected by Outokumpu Oy (Helsinki, Finland). The Finnish company, a world leader in the product, will invest $410 million to transfer and set up the mill with other equipment in India. The mill has been shut down and mothballed at its UK site.

The company is looking for a 125-acre site in either Maharashtra or Gujurat to establish the 250,000-ton-per-annum (TPA) mill. The main selection criterion for the site is proximity to a port and to a major consumption center. Outokumpu will import hot rolled coils from its mother plant in Finland and these will go through the process of annealing and pickling before being put on the market.

The company is optimistic about growth prospects for stainless steel in the Indian market, and this has driven its decision to set up the mill. It will also set up a $40 million steel service center near Sheva port in Bombay. Two other companies in the Indian market, Salem Steel and Jindal Stainless, each have 100,000-TPA capacity for stainless production. Currently, per-capita consumption of stainless steel in India is only one kilogram compared with China's four kilograms per capita. Accepted wisdom in the steel industry is that for every percentage growth in GDP, stainless steel consumption rises by a factor of 1.9.

Product from the mill will be cut to length and customized at the service center. Looking at applications is steel frame buildings, goods containers in railways, oil storage tanks and grain silos. Outokumpu is claiming that its flagship Duplex stainless 2010 product is more durable, twice as strong as comparable products and highly corrosion resistant. These properties are claimed to save tonnage and lower capital costs by up to 40 percent.

In the first nine months of 2007, Asia had an accumulated stainless crude steel production of 12.2 million tons which shows a growth of 12.2 percent over the same period in 2006. China was the main growth contributor with an increase of 45 percent, producing 5.2 million tons in the period, according to the International Stainless Steel Forum. Indian production increased marginally to 1.33 million tons and at 3 million tons for the nine months Japanese production was stable. Despite some plateaus in world markets in 2007, underlying demand for stainless is believed to be healthy.

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