JSW to sell plants in US, at a discount

JSW Steel plans to sell its plants in the US to cut rising losses, after a sharp fall in demand triggered by the global economic slump devastated the country’s steel industry. The company is now open to selling the units at a price lower than its acquisition price, according to sources. JSW Steel had acquired the plants in August 2007 for $800 million, excluding the $130 million it paid for the inventory, from Jindal Saw, owned by elder brother PR Jindal.

Jindal’s three American units made a loss of $61 million in the March quarter. The US as a whole was not doing well. However, JSW Steel Vice-chairman Sajjan Jindal also said that he expected the pipe mill to commence production shortly and plate mill will remain closed for some more time till the situation improves.

Global steel output slumped 23.5% in March compared to the same month last year, the World Steel Association had said last month. Steel production in the association’s 66-member countries had fallen 24% in January and 22% in February.

With world asset prices falling and financial markets in a freeze, it would not be easy to sell assets abroad. Indeed, with global steel prices continuing its fall and making more units unviable, a buyer would rather wait for some more time to get a better discounted price.