Consolidation fever seems to have gripped Indian steel firms with Jindal Stainless now looking to feature among the top seven global stainless steel players. At present, it is ranked 15th on the global charts.
The domestic stainless steel maker is banking on the Mittal Steel-Arcelor merger to pave a smoother way in its consolidation strategy in eastern Europe.
Jindal Stainless has lined up a series of acquisitions in eastern Europe. A company source said, "We had been talking to them, but there were inhibitions at the back of their minds and we expect them to be more open and receptive to us."
Jindal Stainless is looking at acquiring small players with 50,000 tonne-200,000 tonne of stainless steel cold-rolled capacity. Acquisitions could be in Romania and the Czech Republic, among other eastern European companies.
At present, Jindal Stainless has a capacity of 600,000 tonne, which puts it at number 15 on a global scale. The source said with the expansion in Orissa, the company would be among the top 10 players with a capacity of 1.6 million tonnes.
The acquisitions are part of the company's strategy to be globally cost competitive. "With the acquisitions, we would be able to make moves and be among the top seven-eight players."
Among the 15 players, three-four players are Japanese, and if any consolidation is to take place in Japan, it will be among its own companies. Of a total steel production of one billion tonne, stainless steel accounts for 25 million tonne, of which 80-85 per cent of capacity is controlled by the top 15 players.
Inroads into eastern Europe would pave the way for entering the western market as well.
"The eastern block has high local costs and is fragmented. The idea is to enter the east European market through acquisition or joint venture and then market value-added products in east and west Europe. The raw material can be supplied from the domestic market," said the source.
Small eastern European steel producers are dependent on slabs or hot-rolled coils from larger companies as raw material prices are increasing.
As a result, no new fresh capacity is coming up and the growth areas for new steel-making have shifted to China and India.
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