India’s top steelmaker plows $1bn into US, more to come

Bloomberg

India’s top steelmaker JSW Steel Ltd. says it’s scouting for more deals in the US and Europe to expand its global footprint, betting that vibrant growth will underpin demand in overseas markets and complement a boom at home that’s seen the mill ramp up local output.
“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 an interview. After meeting half its target for 10 million tons of capacity overseas, the steelmaker is now looking to buy more facilities, Rao said in Mumbai.
While the global industry has been roiled this year by tariffs imposed by US President Donald Trump on some flows of steel into the world’s top economy, mills are still enjoying benign conditions.
Worldwide production hit a record in May as capacity utilisation climbed, according to the World Steel Association. Against that backdrop, Mumbai-based JSW has been busy: after announcing a move to triple output at its Texas plant, it snapped up another US facility in Ohio, taking total planned investment in the country to $1 billion.
For Rao, the commercial lure isn’t dependent on the trade moves, which he said 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. “It is not because tariffs were introduced in the US or somewhere else, that is why we wanted to invest.”
Still, Ritesh Shah, an analyst at Investec Capital Services Ltd., said JSW’s decisions were sound in the context of the curbs. “It does make sense to have manufacturing bases in US and Europe in an increasingly protectionist world,” said Shah. “One, it gives JSW Steel access to markets which would otherwise be difficult to get into. Secondly, it ensures you are closer to your customers.”
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.
As part of its trade agenda, Trump imposed a tariff of 25 percent on imported steel aiming to restrict a flood of cheap foreign supplies. JSW’s decision to plow more funds into Ohio caught the attention of Commerce Secretary Wilbur Ross, one of the key architects in the administration for its moves on steel as well as potential curbs on a host of other items. In a tweet, Ross lauded the “investments made in the great state of Ohio.”