Ranjan Yadav, Commodity Online
Leading global steel player Arcelor-Mittal (AMS: MT) has announced a setback in proposed plant set up in India by at least 2 years on account of economic meltdown.

Planned to be operational in Jharkhand and Orissa, the steel plants were to be setup with an investment of
US$30 billion.

Take advantage of recession. Trade success

A victim of global economic mess, Arcelor-Mittal clarified that the plants will not be operational before 2014, and has also initiated momentary production cuts in Europe along with a Chicago plant set to leisure with a lay-off of 400 workers or 6% of total work force at Indiana Harbor.

With steel demand on a fall by 7% to 10% worldwide, the circumstances are heating up, which actually resulted in MT ceasing productions, and operations in Contrecoeur, Quebec recently. In Q4 2008 and Q1 2009 the company cut production by 45%. Arcelor-Mittal is in consideration of downsizing its operations and have shuttered plants in France, Belgium and Germany during the winter and lay off temporary staff.

The effects of recession have affected balance sheet of Arcelor-Mittal, which is facing huge debts amounting to GBP19 million, in concern to which GBP4 billion have been financed. Analysts at JP Morgan predict a further fall of steel demand by 20% in 2009.

Arcelor-Mittal is anticipated to sell fractions of holdings in the steel group, the only possible lookout for MT in such turbulent times is the Asian giant China, and projected to be a strategic partner of MT. China is set to play an international role in direct steel production, as it currently holds US$2 trillion foreign exchange.

Global steel prices have drastically affected by the economic slowdown, wherein the Hot-rolled coil is currently exported by prime steel-producers worldwide at US$450/tonne in comparison to US$1,100 in 2008. Incidentally, global steel prices have seen a steeper plunge to around $450-500/tonne from last year’s peak of $1,400.

Considering India’s National Steel Policy, it is projected that the steel-production in the country will rise at a rate of 7.3% annually till 2020, while the consumption will ascend to 6.9%.

Shares of MT gained 3.28% on Thursday, with a 52-week high of 21.20 and a 52-week low of 20.27 respectively.

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