US shale boom should help JSW return positive revenues

India's largest private-sector steelmaker, JSW Steel, sees prospects for its US plate and pipe plant amid the US shale boom.

Next year, the United States is expected to be able to independently meet its gas and oil needs as it kicks off its mega shale gas and shale oil projects across the country. This will require the creation of a huge network of pipelines throughout the country. In this situation, JSW Steel is eyeing the orders of these projects in order to increase the utilization of its facilities in this country and to facilitate access to its steel products.

The company hopes to increase the utilization of its equipment by over 50 percent and this will help achieve positive cash returns. Sheshagiri Rao, CFO of the JSW Group, said that "by next year some good orders should definitely come to the company's plant" located in Texas, which has a total production capacity of 1.2 million tonnes of specialty steel plates that can be further processed to make pipes.

However, since the acquisition of JSW Steel in August 2007, the plant has accumulated losses due to lackluster demand. It is currently operating at 37 percent capacity utilization of the plate mill and pipe mill utilization at around 9 percent. The American plate and pipe facility produces 0.097 million tonnes of plates and 0.012 million tonnes of pipes per year.