Alloy steel makers line up massive expansion plans

Leading alloy steel manufacturers Mukand, Usha Martin, Mahindra Ugine, Sun Flag and Aarti Steel have lined up massive expansion plans lured by the booming demand from automobile and components sectors.

This expansion spree is expected to double the 2.12 million tonne domestic alloy steel market in a couple of years. Mukand is expanding its capacity to 4,60,000 tonne from 3,30,000 tonne for an investment of Rs 120 crore.

Mukand will use debottlenecking and productivity improvement initiatives to increase capacity, said Rajesh Shah, managing director.

Usha Martin is, however, planning to adopt the greenfield route. "The company would be expanding its alloy and special steel manufacturing capacity to 5,00,000 tonne from 3,20,000 in two years. The company would be spending Rs 650 crore on the expansion," said Arun Basak, senior vice-president (projects), Usha Martin.

Mahindra Ugine will expand its capacity to 2,40,000 million tonne per annum by 2008. Sun Flag plans to increase its capacity to 4 lakh tonne from 2.25 lakh tonne. Both the companies are understood to be investing about Rs 200 crore on their expansion, according to a market source.

All these companies are members of the Alloy Steel Producers Association, which represents more than 90 per cent of the manufacturers in the country. Alloy steel is obtained when regular steel is mixed with a mixture of metals such as chromium, nickel, molybdenum, vanadium, manganese, silicon, and boron, depending upon the end-use. Addition of alloys helps in improving mechanical properties such as impact, hardness, tensile strength, and yield stress.

Steel is used to manufacture components for automobiles such as crank shafts, piston rods, steering components, axles, gears and high-resistance screws. With festive season already underway, demand for cars, refrigerators, washing machines is expected to grow. Consequently, the alloy industry will also get a growth impetus. The automobile industry is growing at 15 per cent annually, while the auto component segment is doing even better with an annual 20 per cent growth rate.

Further, alloy steel makers are planning to increase prices by 3-5 per cent over two to three months.

The hike would make the commodity dearer by Rs 1,000-3,000 a tonne. Currently, alloy steel is priced at Rs 30,000 a tonne, for the low grade, and Rs 60,000 for high grade.

UNALLOYED GROWTH

Booming sales from automobile manufacturers driving demand up

Festival demand for cars, home appliances too increasing steel alloy offtake

The 2.12 million alloy industry to double in a few years

Mukand up ramp up capacity by 30%; Usha Martin readies for 50% capacity hike