Mumbai: China’s second largest iron ore trader, Sinosteel Corp., said it will delay building a $4 billion (Rs20,080 crore) steel plant in India amid weak global demand, joining ArcelorMittal in deferring manufacturing plans in the nation.
“The project is delayed,” Zhongtao Wang, managing director of the Indian unit of Sinosteel, said on Thursday in an emailed reply to Bloomberg questions. “At present we can’t give any further details.”
Productions cuts at Toyota Motor Corp. and rival automobile makers and slumping construction demand worldwide are prompting steel producers to shelve projects and lower output.
Luxembourg-based ArcelorMittal, the world’s largest producer, said on 15 April it will delay a $20 billion plan to build two factories in India by at least two years and may cut initial capacity.
Sinosteel announced in 2006 a plan to set up a 5 million tonnes (mt) steel plant in Jharkhand, also the proposed site for ArcleorMittal and local rival Tata Steel Ltd.
Sinosteel would initially invest $500 million, then managing director Hongsen Wang had said in May 2007. The total investment, the biggest in India by a Chinese company, would be made over eight years, he said.
The states of Jharkhand, Orissa and Chhattisgarh account for 70% of India’s coal reserves and 55% of its iron ore, according to McKinsey and Co.
ArcelorMittal announced in 2005 it would build a 12mt plant in Jharkhand and unveiled plans for another facility of the same size in neighbouring Orissa the following year.
Sinosteel, which lowered iron ore imports from India by 25% to 9mt last year, plans to increase shipments to 12mt this year as China’s 4 trillion yuan (Rs29.80 trillion) stimulus package spurs demand, Wang said. “The stimulus package should help bring stability in prices and demand in the next few months,” he said.
China, the world’s biggest steel producer, became a net crude-steel importer for the first time in three years in March after overseas sales plunged. The nation boosted offshore iron ore purchases to a record in March for a second straight month as smaller steel makers sought cheaper supplies.
Iron ore imports climbed 46% to 52.1mt last month from a year ago, China’s customs office said on 10 April its website.
Spot prices of iron ore imports at Chinese ports have fallen 66% in the past year to $63.50 a tonne on 3 April as demand from steel makers dropped, according to research company Metal Bulletin.