JSW Steel expanding in US and Europe
28 June 2018
JSW Steel, one of India’s top steelmakers, is scouting for more deals in the US and Europe to expand its global footprint, hoping that demand overseas will pick up as countries act to save local businesses from the threat of imports, as in the United States.
JSW Steel is also looking at a pick up in the US economy that it feels will deliver demand for steel as well, especially with tariff protection against cheap imports.
“What is driving us is that, inherently, we find it is an interesting opportunity because the US economy is doing well,” and the investment cycle looks positive, joint managing director Seshagiri Rao said in Mumbai. He said the company has already built 5 million tonne capacity overseas and is now looking at a target of 10 million tonnes.
Also, steel mills in the US are now enjoying benign conditions with the impost of tariffs on most imports. US steel output has been picking up.
US steel production topped 7.3 million tonnes in March, the highest monthly total since late 2014, according to World Steel Association data. The economy is about to enter the 10th year of expansion, and growth may reach 4 per cent this quarter, the fastest since 2014.
In Europe, ArcelorMittal is selling assets in Italy, Belgium, the Czech Republic, Luxembourg, Romania and Macedonia to meet regulatory requirements enabling the world’s top producer to take over Italy’s Ilva SpA, for which a JSW-led consortium had also bid.
Mumbai-based JSW, which announced plans to triple output at its Texas plant, has now bought another US facility in Ohio, taking its total planned investment in the country to $1 billion.
Steel production worldwide hit a record in May as capacity utilisation climbed, according to the World Steel Association. Rao said investments, however, are not guided by trade moves that are transitory.
“The US economy, notwithstanding the trade remedial measures, which the US government has taken, is quite buoyant, demand is picking up,” he said on Tuesday. “It is not because tariffs were introduced in the US or somewhere else, that is why we wanted to invest.”
JSW Steel shares have soared more than 60 per cent over the past year, aided by record output and profit. To meet local demand, the company plans a $6-billion capacity expansion in India.
In May, it made an acquisition in Italy, and it has another purchase awaiting approval from India’s company law tribunal.