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EDITORIAL Dear Readers,
ndian steel makers are in the midst of trying times. Even as there are rays of hope that mining in Karnataka may limp back to normalcy, the steel sector is faced with pricing problems. With global steel prices on a downswing, owing to low raw material rates, Indian companies are taking a hit on margins because of rising local iron ore rates. Domestic companies have also been forced to cut prices. In August, steel makers reduced prices by 2-3 percent because of cheaper steel brought from Japan, Korea and China. Analysts also do not expect margins of steel companies to improve before next year. NMDC, the largest domestic iron ore supplier for the majority of steelmakers in India, has increased rates twice this year, the last rise being one of 8-13 percent. This had forced the Sponge Iron Manufacturers Association (SIMA), whose members include Essar Steel, Jindal Steel and Power, Monnet Ispat and JSW Steel, to appeal to the steel minister to intervene and save the sector. Earlier, companies had banked on a revival in steel demand this year to boost margins and profits. Now, however, that seems unlikely, as low global prices are leading to local producers reducing prices as well. And, to match imported steel rates, more price cuts are likely in the near future. According to data made available by the government, the April-August period saw a 40 percent rise in steel imports. This year, imports could stand at about 8 million tons (mt), 10 percent of India’s steel demand. Officials in steel companies say that rather than China, they are more concerned now about Japan and Korea. The two have been exporting steel to India at low rates, and there is no option but to cut rates and take a margin hit. Earlier, JSW Steel chairman and managing director Sajjan Jindal, had opposed the free trade agreements (FTAs) with Japan and Korea, saying the FTAs with these countries was hurting domestic steel companies, as these were leading low steel prices. The steel minister, however, turned down the demand and categorically stated steel would remain a part of FTAs with Korea and Japan. The rising imports and poor demand has added to the troubles of the secondary steel producers, who were already crippled by a severe raw material crunch (iron ore) and rising cost of power. In Karnataka, several secondary steel producers who produce steel through the induction route have shut shop. There are reports of several units shutting up in Jharkhand, Odisha and West Bengal. No wonder then, that iron and steel companies had the largest chunk of debt that has been referred to corporate debt restructuring (CDR) cell till June 2012. The quantum of the debt could increase, if imports increase in the same pace. At this juncture, we at Steel Insights have tried to find out the reasons behind higher imports, industry fears because of higher imports, government stance and possible import scenarios as demand rises going forward. The edition also covers views of top officials from the Metal Recycling Association of India (MRAI), IFGL Refractories and ANT Steel Engineers. Happy reading!
(Rakesh Dubey) Steel Insights, October 2012
Contents 29 ANT targets 100% growth in next few years 33 Low demand pushes down Q4 coking coal contract price 35 Mixed trend in ferro alloys 36 Auto sector on a bumpy road 38 SIMA looks at self-help strategy 40 Draft steel policy aims to remove growth hurdles 41 mjunction-HIS McCloskey meet dwells on India’s coal 43 Hot skin pass mill: A boon tech for HR coils 49 RINL posts 14% y-o-y growth in FY12 PAT 50 No plan to exit Dhamra port: Nerurkar 51 Jindal Steel arm acquires Canada’s CIC Energy 52 Fresh investments in steel to boost sentiment 53 Iron ore movement drops on import curbs 54 Railways commodity freight revenue down in Aug m-o-m 55 Macroeconomic indicators of India 56 Global crude steel output down 3.92% in August 58 Domestic flat & long products 62 Price data 63 Production data 64 Ferro alloys price trends 65 Iron ore export data
6 | Cover Story
India’s appetite brings hope for global steel mart Domestic output fails to meet growing steel demand
22 | INTERVIEW
National metal recycling policy need of the hour MRAI vice-chairman Zain Nathani holds forth on the dynamics of the scrap segment
26 | Interview
IFGL plans to double capacity in US Input and fuel cost plague the small and fragmented refractory sector
31 | FEATURE
Clampdown on sale, export of iron ore Companies granted mining leases must use the ore themselves
46 | CORPORATE
SAIL targets `12,000-crore capex in FY13 The company’s modernisation programme is on in full swing
Call 9163348243 for more details
4 Steel Insights, October 2012
India’s appetite brings hope for global steel mart Tamajit Pain & Arindam Bandyopadyay
ndia’s steel import is moving up by leaps and bounds. Strange as it may sound, the country’s imports went up by a hefty 39.9 percent during April-August, 201213, while the domestic market continued to slump. This phenomenon, say industry experts, calls for a segment wise analysis and corrective actions. It is high time, they say, that the country stopped exporting iron ore
6 Steel Insights, September 2012
and became a net exporter of the finished product, especially flat and value added steel which comprise bulk of its imports. The recent spurt in imports, from 2.39 million tons (mt) a year ago, was primarily due to increased demand for flat steel products from sectors like automobiles, white goods and consumer durables. Flat steel imports were at 2.89 mt over 2.10 mt
in April-August, 2011, according to the steel ministry. Non-flat products’ import also went up during the April-August period to 0.45 mt, up 58 percent, compared to 0.28 mt a year ago. If the import of semis and RR scrap is included, imports during April-August of 2012-13 stood at 3.65 mt compared to 2.61 mt in the same period a year ago, registering a growth of 40 percent year-on-year.
Cover Story Demand remained firm with sectors like consumer durables, machinery and equipment, electricity and motor vehicles. Given the relatively slow growth in supply conditions, the present import growth may well be due to the combined demand impetus provided by these sectors, industry sources said. A break-up of the sourcing countries showed that China was the largest exporter of steel to India with a share of 24 percent of the total imports at 0.809 mt. It was followed by South Korea at 0.657 mt (19.6 percent). Third in the order was Japan at 0.528 mt (15.7 percent). Ukraine and Germany followed suit with 0.188 mt and 0.140 mt, respectively.
Apart from domestic market conditions, the sources said, policy provisions related to concessional import duty for items imported from South Korea and Japan under CEPA also contributed to the growth of imports from these nations. Interestingly, these sourcing countries themselves are currently in a slowdown mode with supply outstripping demand. Price consideration is another crucial factor influencing trends in imports with the relative strength in domestic prices vis-a-vis import prices, sources said. Among the importing ports, Mumbai port accounted for the largest share of 33.1 percent (1.21 mt), followed by Mundra (19.1 percent share) and Chennai (17.6 percent share).
CATEGORY WISE IMPORTS Category
Quantity in ‘000 tons
Alloy & Non Alloy (Prime & Defective)
Alloy & Non Alloy (Prime & Defective)
Apr - Aug 12 (Prov.)
Apr - Aug 11
STEEL SEMIS (Including RR Scrap) FINISHED STEEL Non-Flat Products Flat Products
TOTAL Finished Steel
COUNTRY WISE IMPORTS
Quantity in ‘000 tons
Apr - Aug 12 (Prov.)
Apr - Aug 11
Source: Steel Ministry
PORTWISE IMPORTS Port Name
India is emerging as the sole bright spot for global steelmakers as brisk demand coupled with scarcity of raw material looks set to buoy imports in the next two years, bucking a slowdown that has hit even top consumer China. If India, the world’s fourth largest steel producer, retains its appetite for imports it would not only plug gaps in demand but keep steelmakers elsewhere – particularly in Japan and South Korea – humming despite a fragile global economy. Besides lower world prices and delays in new projects, India’s imports have been boosted by poor supplies of raw material and lower capacity use, according to industry sources. This indicates that India will be a forced net importer for at least the next two years, according to experts. Some industry stalwarts said steel imports in the fiscal year that began in April are likely to reach 8 mt, up 18 percent from a year earlier. At home, steel output growth slowed sharply to 2.7 percent in April-August to 31.24 mt, government data showed. Domestic steel demand in 2012-13 is expected to be about 80 mt against estimated output of 71-72 mt, forcing India to bridge the gap with imports. An attractive market
Source: Steel Ministry
The sole bright spot
Quantity in ‘000 tons
Apr - Aug 12 (Prov.)
Apr - Aug 11
Source: Steel Ministry
8 Steel Insights, October 2012
India’s shortfall presents an attractive opportunity for China, Japan and South Korea, which are struggling with weak demand and huge inventories, according to steelmakers. The share of imports from Japan and Korea is rising mainly because they enjoy a lower import duty, said Sajjan Jindal, head of JSW Steel. India cut its tax on steel imports from South Korea and Japan after signing free trade pacts with the two countries in 2010 and 2011, respectively, and they face a levy of less than 4 percent against the 7.5 percent others must pay. China, the world’s largest producer of steel, whose crude capacity outpaces demand by around 200 mt, is also shipping some products to India to counter slower demand at home that has crumbled domestic prices 13 percent in 2012. China’s biggest listed steelmaker Baosteel just halted production at a 3 mtpa plant in Shanghai as prices
Cover Story neared three-year lows. China is India’s biggest market for its iron ore, the key raw material for making steel, although Indian shipments have dropped sharply amid mining restrictions and export bans. Alarmed by rising imports from Japan and South Korea, domestic steelmakers have been urging the government to review trade pacts that require India to lower its import tax. Imports were brisk between April and July. But the pace of overseas purchases is falling after the June quarter suffered its slowest economic growth in three years, at just 5.5 percent, and car sales fell 19 percent in August. But India is still one of the fastest growing economies in the world, and the government estimates that the country will grow at 6.5 percent in 2012-13, unchanged on the year. Flat steel, used to make cars, trucks, machinery parts and consumer goods, forms the bulk of India’s imports of the alloy. Of late, there has been a surge in imports of nonflat products because of the non-availability of raw materials and the imposition of BIS standard specification norms in certain long product items. The temporary supply glut because of non-registration of many long product makers to BIS endorsed regulation was met through imports, resulting in price fluctuations in long products mainly in the western region. In the April-August period, billet and slab imports rose nearly 35 percent, while the bars and rods rose 54 percent and structurals rose 40.7 percent. Red tape, corruption
India has struggled to exploit its vast reserves of coal and iron ore in the face of bureaucratic hurdles, corruption squabbles, archaic land laws and protests over the purchase of land for mining and industry. In August this year, the Comptroller and Auditor General of India censured the Congress-led coalition government over coal mining concessions to power and steel companies without competitive bidding, potentially costing the treasury billions of dollars in lost revenue. Projects delayed by these issues include a 12-million-ton steel plant planned by Posco and ArcelorMittal, a 6-million-ton steel plant of Tata Steel in Odisha, and Coal India’s mine expansion in Chhattisgarh.
10 Steel Insights, October 2012
IMPORT OF IRON & STEEL THROUGH MAJOR INDIAN PORTS Apr -Aug 12 vis-à-vis Apr - Aug 11
Quantity in ‘000 tons
Non-Alloy (Prime & Defective)
Non-Alloy (Prime & Defective)
Apr - Aug12(P)
Apr - Aug 11
STEEL SEMIS ......Billets,Slabs,etc.
BARS & RODS
TIN PLATES W/W
TIN FREE STEEL
FINISHED STEEL Non-Flat Products
Flat Products PLATES HR SHEETS
TOTAL Finished Steel (Non-Alloy)
TOTAL Steel (Non Alloy)
TOTAL Finished Steel (Alloy+Non-Alloy)
TOTAL Steel (Alloy+Non Alloy)
MISC. STEEL ITEMS
TOTAL Steel (ALLOY)
Other Steel Items
Ferro-Alloy GRAND TOTAL:
32.4 47.5 Source: Steel Ministry
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Cover Story Meanwhile, Goa temporarily halted iron ore mining in September 2012 to check if operations were legal, denting domestic supplies. Karnataka, which has the largest reserves, continues to flip-flop on the issue of iron mining and exports, adding to steelmakers’ woes. “Most steelmakers are working at less than 80 percent of their capacities due to erratic raw material supply,” said a Mumbaibased analyst. Historical data
Indian iron and steel are freely importable as per the extant policy. Imports have
historically been in the region of 6-7 mt depending on the domestic production and domestic availability of the material. Imports followed a different growth path. Progressive reduction in customs duty levels after deregulation led to an imports surge. India became a net importer of steel even before the commencement of the Eleventh Plan period and net imports have fluctuated between a low of 1.40 mt in 2008-09 to 4.13 mt in 2009-10. These developments would imply that the rise in imports is, to a very large extent, the result of increased domestic demand and not of erosion in the competitiveness of
Import of total finished steel (alloy + non alloy) Indian steel industry : Imports Category Total finished steel (alloy + non alloy)
(in million tons)
Source: Steel Ministry
Import/export duty in steel sector (2012-13) CTH No.
Existing custom duty 2012-13
Bars & Rods
HR Sheets/plates (Non Alloy)
HR Coils (Non Alloy)
CR Coils/sheets (Non Alloy)
GP/GC Sheets (Non Alloy)
HRGO/HRNGO (Non Alloy)
HR/CR alloy steel (flat rolled) other than items of Headings No. 72253090, 72254019, 722550 and 72259900
Flat Rolled Alloy products of heading 7225 3090, 72254019, 722550 and 72259900
The industry fears that India’s finished steel imports could rise to around 8 mt in 2012-13, up about 18 percent, as a lack of domestic supplies means India bucks a global trend of weak demand for the construction material. the Indian steel industry. The reduction in import duty rates was undertaken to provide domestic steel users easier access to global supplies and thereby stem the abnormal rise in domestic prices and also to avoid possibilities of a supply shortfall in the domestic market. Steel Imports remained static around the pre-liberalisation level of 1 to2 mtpa till 2003-04 but thereafter almost doubled between 2003-04 and 2005-06 i.e., from 1.7 mt to 4.1 mt. This surge has continued during the Eleventh Plan also – primarily to bridge the gap between domestic demand and availability as well as due to price considerations. From 4.93 mt in 2006-07, steel imports peaked to 7.38 mt in 200910 before declining marginally to 6.8 mt in 2010-11. An important reason for the high level of imports during the Eleventh Plan has been the domestic non-availability or limited availability of sophisticated andspecialised steel products like the following: • CR sheets/coils for auto sector • CRGO and high grades of CRNO • Over dimensional plates, quenched and tempered plates, special grades of boiler quality lates
• Organic coated, vinyl coated sheets
• Prime quality tinplate (OTSC grade)
Stainless steel HR coils for coin blanks
• API grade large diameter pipes
Melting scrap (iron, steel & stainless steel)
Ships for breaking
Tinplates W/W and TFS seconds
Coking coal of ash content below 12%
Coking coal of ash content above 12%
Source: Steel Ministry
12 Steel Insights, October 2012
Imports have already soared 53 percent in April to July as local steelmakers, scrambling for raw materials like iron ore due to environmental and legal delays, run below capacity and are unable to meet demand in Asia’s third-largest economy. The industry fears that India’s appetite is in sharp contrast to economies from Europe
Cover Story to China may lead to around 8 mt imports, which is about 10 percent of India’s demand. In the financial year ending March 31, 2012, India imported 6.8 mt of finished steel, marginally higher than 6.7 mt in the previous year.
Import of iron & steel through major Indian ports report April-August 2012 (prov.)
Value Rs. Crore SL. NO.
14 Steel Insights, October 2012
Non Alloy Steel
Non Alloy Steel
However, disapproving the demand for removal of steel from free trade pacts with Japan and South Korea, steel minister Beni Prasad Verma advised the industry to become more competitive by reducing cost of production. “I don’t know what the industry is clamouring for. They have to understand that when import duty would be near zero by 2025, they have to compete. You have to lower operation cost, raise competency level and deploy latest technology. Only then will your cost of production come down,” Verma told the media. India had signed the free trade agreement (FTA) with South Korea in January 2010 and with Japan in August last year. Under FTA, duties on most of the products, traded between the countries, are either eliminated or reduced sharply. Verma said since India is a signatory to the WTO, it has to reduce import duty to near zero by 2025. It would be better if the domestic industry gears up from now on to achieve the competitiveness. “There is still a 3.5 percent duty on steel imports. So the industries in India must gear up to competition because, today or tomorrow you will enter into that near zero phase,” he said. Moreover, India has an adverse balance of trade between with both Japan and Korea, leaving it with less bargaining power to lobby for a product removal from the FTA purview. “When you are contributing less (to a bilateral trade), your negotiating power is also less. When you are in surplus, you can say we want to put iron, steel and others out of the purview,” he said. JSW had alleged that since economies of Japan and South Korea are not doing well, they are dumping lots of steel into India at a very low price, taking advantage of these FTAs. Essar Steel executive director (strategy and business development) Vikram Amin said, “There is a definite case to exclude steel
Quantity ‘000 tons
STEEL A. SEMIS ......Billets,Slabs,etc.
BARS & RODS
B.FINISHED STEEL 1.Non-Flat Products
RLY. MATERIALS TOTAL (1) Non-Flat Products 2.Flat Products PLATES HR SHEETS I
GP/GC SHEETS/ COIL
TMBP TIN PLATES TIN PLATES W/W TIN FREE STEEL
TOTAL (2) Flat Products
TOTAL Finished Steel=(1+2)
Other Steel Items II
MISC. STEEL ITEMS
8052.96 33382.75 Source: Steel Ministry
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Scrap import may drop on weaker rupee Notwithstanding a surge in flat steel imports, scrap imports into India may actually witness a drop in 2012-13, primarily due to an adverse exchange rate between rupee and US dollar and slowdown in domestic steel demand. According to scrap industry sources, India imported around 5-6 million tons (mt) of ferrous scrap in 2011-12, which comprised 60-65 percent of total scrap consumption in the domestic market. This showed a 2 mt increase over the previous year’s (2010-11) imports. In the current fiscal, however, imports of ferrous scrap may go down from last year’s level, depending on the exchange rate movement and overall macroeconomic scenario. products from the ambit of the FTA with Korea and Japan.” According to steel ministry, imports went up to 2.88 mt during April-July period of the current fiscal over 1.88 mt in the same period of last year, notching a growth of over 53 percent.
“In the recent months, rupee has lost ground and dropped to the level of Rs 56 per dollar. This has increased the difference between the prices of imports and domestic scrap, thus restricting imports. However, lately the currency has regained some ground, rising to the level of Rs 53 per dollar. If this trend continues, it will reverse the import trend going forward,” the sources said. Other than the exchange rate, the demand for steel in the domestic market and the economic recovery in global markets would impact the demand for imported scrap in the country. The latter factor would also hold sway
Import of iron & steel through major Indian ports report April-August 2012 (Prov.) Value Rs. Crore CATEGORY
A. SEMIS ......Billets,Slabs,etc.
In the Twelfth Plan, India’s domestic demand for steel is expected to be around 113 mt and imports are estimated to be in the region of 5-6 mt, according to a working group report on steel. However, the estimation is based on the fact that crude steel capacity would reach 140-149 mt and production would reach around 125-130 mt during the Twelfth Plan. The entire estimation is based on the following factors: • Actual extent of land already acquired; • Availability of investible funds with respective companies to support the planned increase in existing capacity; • Availability of infrastructural network at the project sites; and • Raw material linkages.
16 Steel Insights, October 2012
Quantity ‘000 tons Other Alloy Steel
As steel demand emanates from the various end using segments, category wise estimates of steel demand are best related to the activity levels in segments that account for a major share of consumption of steel in that category. Sectoral growth
over the movements in international prices. Over the last two-three months, scrap prices have eased in the international markets. If the global economy continues to see a downturn, scrap prices may fall further, and this may lead to some increase in scrap imports into the country. This drop in international prices may however be compensated by a likely decline in scrap collection during the coming winter months. However, as it stands now, total ferrous scrap imports by Indian buyers may not reach the level achieved last year. Some industry sources claim a drop of around 25 percent, while others maintain the fall may not be very significant.
1.Non-Flat Products BARS & RODS
TOTAL (1) Non-Flat Products 2.Flat Products PLATES HR SHEETS HR COIL/STRIP CR COIL/SHEETS GP/GC SHEETS/COIL
TIN PLATES W/W
TIN FREE STEEL
TOTAL (2) Flat Products
TOTAL Finished Steel=(1+2)
Source: Steel Ministry
Cover Story for instance, in construction, automobile, railway transport, transportation of oil & gas, ship building, capital goods (heavy machinery equipment), consumer durables, agricultural equipment, etc. would by and large account for a significant portion of steel consumption. Although some of the principal end-using sectors have brought out vision statement/ corporate plan their growth potential in the next five to 10 years, actualisation of these rates in the coming period would depend primarily on:
• Rate of inflation and associated fiscal and monetary measures; • Rate of urbanisation and unlocking of rural market potential; and • Global market scenario. It needs to be seen whether India is able to adopt the import substitution method. India imported 6.8 mt of saleable steel in 2009-10, which came down marginally to 6.2 mt in 2010-11. The major volume of imports belongs to HR coils, CR coils/sheets, plates, GPGC sheets, electrical steel, pipes, tinplate and bars & rods with little quantity of semifinished steel.
• Investment in economic infrastructure; • Per capita income growth;
Although a part of the imports are due to price considerations, a significant component of imports is due to non-availability or low availability of some of the key steel categories, which have been mentioned earlier. There is need to focus on product development for these specific products which at present are being imported in significant quantities. The working group on steel has drawn up priority areas and items for product development for the Twelfth Plan in these categories. What needs to be seen now is whether these product development initiatives actually take shape. Import will also depend on sectoral changes in the demand pattern. There is a
Port-wise details of imports of Iron & Steel through major Indian ports during Apr-Aug 2012 (P) Quantity ‘000 tons CATEGORY
CARBON STEEL SEMIS ......Billets, Slabs, etc.
BARS & RODS
RLY. MATERIALS PLATES HR SHEETS
TIN PLATES W/W
TIN FREE STEEL
GP/GC SHEETS/COIL ELECT. SHEETS TMBP
TOTAL Non Alloy STEEL
MISC. STEEL ITEMS
FERRO ALLOYS GRAND TOTAL Source: Steel Ministry
18 Steel Insights, October 2012
Cover Story Total Steel Demand and Required Level of Finished Steel Production (Alloy & Non-Alloy) For the 12th Plan (2012-17) (Year-Wise Break-Up)
in million tons
Domestic Demand for Carbon Steel
Domestic Demand for Alloy Steel
Scenario 1: Total Domestic Demand for Steel
Scenario 2: Total Demand for Steel including Export Demand
Source: Steel working group report
Note: Consumption is net of double counting.
Year-wise Requirement of Crude Steel Production and Capacity for the 12th Plan
in million tons
Demand for finished steel
Production of Crude Steel
Crude Steel Capacity
Demand for finished steel Production of Crude Steel
Crude Steel Capacity
Source: Steel working group report
Summary of Demand Supply Projections (Alloy & Non-Alloy)
in million tons
Demand for Carbon Steel
Demand for Alloy/Stainless Steel
Total Domestic Demand for Steel
Production (net of double counting)
Category-Wise Consumption (Carbon Steel) 24.44
Bars & Rods Structurals Rly. Materials Total Long Products Plates HR Coils/Skelp/Sheet (excl. double counting)
CR coils/sheets (excl. double counting)
Total Flat Products
Total Carbon Steel
Total Requirement of crude steel
Likely Capacity of Crude Steel
Source: Steel working group report
20 Steel Insights, October 2012
paradigm shift in the pattern of demand for steel by the major segments. The demand for high strength steel and thinner sizes is increasing in order to achieve the objective of reducing the total weight and improve the overall performance. For example, Advanced High Strength Steel (AHSS) provides an optimised balance of strength, weldability, toughness, ductility, corrosion resistance and formability besides reducing the overall weight by around 16 percent in fabrication and erection. Automobiles: The contribution of the automobile sector to domestic steel demand will be predominant in the Twelfth Plan period in view of increasing per capita income level and the rising aspirations of Indian population to enjoy a better quality of life. The demand for auto grade steel particularly those belonging to Dual Phase steel, Trip steel, AHSS grade, Ultra Fine Grain steel, Nano steel, etc. would be required in increasing quantities by all the auto majors who have set up their facilities in the country or are in the process of setting up fresh units. The safety regulation as per Euro norms would further require stringent specification of cold rolled products by the automobile sector. Power: The demand for cold rolled grain oriented steel (CRGO) by the power sector for manufacturing of transformers is being currently met exclusively from import, as no indigenous facility has yet been created. With the setting up of a number of ultra mega projects, the demand for CRGO steel which at the current level may be put around 1.5 lakh tons, would increase substantially in the Twelfth Plan period. Real estate/construction: Pre-fabricated steel structures are now penetrating areas such as high rise buildings and infrastructure. These steel structures are not only environment friendly but make execution much faster. One of the emerging areas of application of pre-fabricated steel structures is its use in ‘urban infrastructure’. This is due to the fact that the speed of execution is an important consideration, while building urban infrastructure. Such needs may go up significantly in future with rapid urbanisation. The emerging capacity being created by Indian steel producers must cater to the above requirements of special grade steel structures required for these applications.
National metal recycling policy need of the hour
I said, the total domestic scrap generation would be around 4 to 5.5 mt per year. However, due to the unorganised structure, I must admit, it is very difficult to come up with an exact number for the market size and growth. Recently, the Joint Plant Committee (JPC), which is based in Kolkata and is a division under the Ministry of Steel, has started conducting a study on the domestic metal scrap market. This will be sort of a pilot study for this sector, because when it comes to the domestic scrap market, most people are completely in the dark. So unorganised is the entire sector that it is difficult for the ministry and the associations to track what is happening in the market in terms of pricing, movement, availability, etc. Overall, I can say that the industry is growing year on year; but still remains very unorganised. Hopefully, now with the ministry becoming aware of the importance of this sector and JPC starting a study, these things are going to change in the years to come. What is the volume of India’s import of ferrous scrap?
he Metal Recycling Association of India (MRAI) promotes all types of metal recycling – ferrous, non-ferrous and ship recycling in India. Metal scrap is a vital raw material for the steel sector as Indian electric arc and induction furnace mills are heavily dependent on it. In fact, the future growth of the Indian steel industry will depend to a significant extent on the availability of ferrous scrap, most of which is imported. However, the lack of a national policy is affecting the growth of Zain Nathani, Vice Chairman, this sector. MRAI 22 Steel Insights, October 2012
In an exclusive interview to Steel Insights, vice-chairman of MRAI, Zain Nathani, stresses on shaping up this vital sector through proper legislative support and policies. Excerpts: What is the current demand-supply scenario in the domestic ferrous scrap market? Currently, the entire domestic scrap market is completely unorganised. Our estimate is that the size of the domestic ferrous scrap industry might be around 4 to 5.5 million tons (mt) each year. The growth rate in scrap consumption depends on what is happening in induction/arc furnace production. If it grows at 8-10 percent annually, the scrap market will grow at the same level. In India, a major part of metal scrap is provided by the shipbreaking industry at Alang in Gujarat. I think we had almost 470 ships broken for scrap at Alang last year. India doesn’t export scrap. So whatever scrap is generated is used domestically. As
From April 2011 to March 2012, India imported almost 6 mt of scrap. In the previous year it was 4 mt, so there was an improvement of almost 2 mt. The share of imports in total consumption would be around 60-65 percent. The major sourcing countries are the Middle East, US and Europe. The biggest port for scrap import into India is Nhava Sheva. Other ports through which scrap is imported include Chennai, Tuticorin, Haldia, Kolkata and Kandla. In logistics, a major issue is rail connectivity. What is the current demand and price trend in the global market? The global market right now is pretty much on a slowdown, impacted by the dim global economic scenario. The steel market worldwide is also going through a slowdown and that is having an impact on the scrap market. Price wise, as of September 2012, we can say the market has cooled off as compared to the early months this year. Prices in India have dropped from around $490 per ton cfr Nhava Sheva in July to $415 per ton
interview cfr in September. So the prices have come down by $75-80 per ton cfr Nhava Sheva within the last two-three months. In fact, all the commodities, whether ferrous or non-ferrous scrap or iron ore and coal, have cooled off in recent months. How is the demand scenario in Turkey and Europe? In Turkey and Europe demand is not that bad. You have to keep in mind, that demand for scrap is derived from the demand for the finished product which is steel. So if steel market is in a slowdown, the scrap demand also faces a slowdown. But it is not that people are not buying; they are not buying as much as they did this time last year. In contrast, the Middle East market is pretty strong right now. The rebar demand from the construction industry is very strong there. One may say the Middle East has largely bucked the slowdown trend seen in Europe and USA. What is the structure of the global market? In those countries, the industry is very organised. There are various laws governing the sector. There are big recycling yards and the recycling companies use proper machineries. USA is a major exporter of ferrous scrap. In Europe, UK is a big exporter. Then there are countries like Holland, Germany and France. Also, the Middle East is exporting to India now. Globally, the large scrappers are traders or processors. They have their own recycling units and machineries. They also have backward integration and large scrap yards. All the large scrappers are independent leaders. How is the global market likely to play out in the coming winter? Usually there is a slowdown in collection of scrap in the winter months, especially in the European countries. Due to the extreme weather conditions, collection becomes difficult in most places. This continues for the three months of November, December and January. During this period, scrap collection goes down and as a result, prices move up. This is on the supply side. On the demand side, it will largely depend on how the global economic scenario plays out. If
24 Steel Insights, October 2012
there is little or no global economy recovery, prices of scrap may come down even further. If there is some recovery and stability in the global market, demand for scrap may go up. Can we expect the domestic price to go up as well in winter? India is absolutely a price follower. Whatever happens internationally happens in Indian scrap import. Given India’s import volume, if the country buys some more scrap from the international market, it will not have much impact on global pricing. But if global pricing goes up, India has to buy at that price. And international prices are higher than domestic price. The other thing you have to keep in mind is the exchange rate. What happened to dollar versus INR in recent past made the difference between domestic scrap and imported scrap very high. But in the last few days, dollar has come down from `56 to `53. If this trend continues, then scrap import prices and even domestic prices may come down. What is the near-term outlook on India’s import of ferrous scrap? If the steel sector continues to grow, scrap import will continue growing. In the short term, the global economic scenario and dollar-rupee exchange rate will determine the volume of import. But in the long term, it is primarily the steel sector that will influence the market. India is now talking of increasing steel production from 70 mt now to 250 mt by 2020, but where is the raw material going to come from? What will be source of so much of iron ore or sponge iron? So scrap is going to play an extremely important role. We think in the long term, the growth potential is extremely good. On the other hand, in the short term it is going to be a challenging market given the uncertain global economic scenario. There was a demand from MRAI to reduce the duty imposed on import of machinery used for detection of radiation in scrap imports. There is zero duty on import of melting scrap, but some duty on re-rollable scrap which can directly be used. The majority of scrap that comes to India attracts zero duty. There is a 25 percent duty on import of
recycling machinery. We asked for reduction of that. Similarly, there is duty on import of machineries used for detection of radiation. If a large player in India wants to install a machinery why should there be a duty on it? What are the major challenges facing the Indian metal recycling industry? As I said before the industry is completely unorganised. That itself is a major challenge. Also, there is lack of any national metals recycling policy in the country. There is hardly any domestic law or legislation that assists and applies to the domestic metal recycling industry. No specially designated zone/area is there for metal recycling. Besides, the import duty levied on metals recycling equipment and radiation detection equipment poses a hurdle. There is also import duty on ships brought for scrapping at Alang in Gujarat. Add to this, the various bureaucratic hurdles that only help other countries such as China, Turkey, Pakistan in getting scarce secondary raw materials. Also, from time to time, the environment ministry (MoEF) puts hindrances that impact free trade of scrap in the country. MRAI is positioned as the ‘voice of Indian metal recycling industry’. What are the messages it wants to spread? We maintain that scrap is a mine above earth. Recycling of metal scrap helps reduce consumption of minerals and other raw materials, has immense environmental benefits, and helps saving energy consumption. MRAI wants to stress on the formulation of a national metals recycling policy. The government must frame legislations to assist and encourage the domestic metals recycling industry. Formation of special designated zones or areas for metal recycling in major cities is another area that deserves attention. Also, we would like to highlight the need for the installation of radiation detection equipment at all steel mills, ports and ICDs. Lately, however, we are pleased that the JPC under the steel ministry has taken up a study on this sector. We had been advocating for such a study for quite some time now. Once the study is done, the database must be maintained and updated regularly.
IFGL plans to double capacity in US
Tamajit Pain & Sanjukta Ganguly
he refractory industry is small and fragmented and its fortunes are inextricably linked to the iron and steel sector, which consumes 75 percent of its production. No wonder then, that the steel industryâ€™s current low phase has taken its toll on the refractory industry as well as it is fully dependent on its end user segments like steel and aluminium. There are about 150 players in the refractory segment but only about 16 to 17 of them are major players. Severe competition within the country as well as global players, mainly Chinese manufacturers, have forced Indian players to operate on thin margins. Production in the refractory sector has remained stagnant and resulted 26 Steel Insights, October 2012
in low capacity utilisation. Domestic consumption has not grown much during the Eleventh Plan period and has hovered around 1.17 million tons (mt). Increased refractory life cycle in critical areas of the steel making process was mainly responsible for stagnation in the demand of refractories. The industry has also faced increased import competition mainly from China in the last few years. Another area of concern is that Indian refractory makers are squeezed between raw material suppliers and steelmakers. Their negotiating power is very poor, as they cater to an industry far bigger in size. The low margins they work with result in low investment in R&D. Raw materials and energy cost account for 60 percent of production cost. Modern steel mills are using
7-8 kg of refractory for making a ton of the metal. However, with steel capacity set to touch 149 mt by 2016-17 refractory usage is set to rise. Aluminium, cement and other refractory consumers are also set to increase capacity resulting in more refractory consumption. In this backdrop, IFGL Refractories Ltd, manufacturer of specialised refractories and requisite operating systems for the steel industry, has made its presence felt through innovative product lines. IFGL has a large pool of trained engineers and application specialists to offer customers Total Solution for Refractory for flow control in Steel Teeming and Continuous Casting of Steel. IFGLâ€™s slide gate refractories plant was started in the year 1984 and it now manufactures Slide Gate Systems and Refractories. The Continuous Casting Refractories Plant set up in technical collaboration with Krosaki Harima Corporation, Japan (then known as Harima Ceramics Corporation) started production in 1993 manufacturing Isostatically Pressed Continuous Casting Refractories and Magnesia Carbon Tap Hole Sleeves. IFGL acquired Monocon Group in September 2005, with production facilities in Brazil, China, UK, USA and Taiwan. In December 2006, Monocon Group acquired Goricon Metallurgical Services Ltd, Wales (UK) and Goricon LLC, Ohio (USA) engaged in manufacture of Darts, Lances, Ladle Powders used by the steel industry. In September, 2010 IFGL acquired EI Ceramics LLC and CUSC International Limited (CUSC), both Cincinnati, Ohio based companies engaged in manufacture of Isostatically Pressed
interview Continuous Casting Refractories. IFGL now has manufacturing facilities in Brazil, China, Czech Republic, Germany, India, UK and USA. The company has also diversified into bio ceramics with the formation of IFGL Bio Ceramics Ltd. It is focused on bio-ceramic products for the health segment. Primary use of inorganic bio-materials is repair, replacement or augmentation of diseased or damaged parts of the skeletal system such as bones and joints. Ceramics used for the repair and reconstruction of diseased or damaged parts of the musculo-skeletal system, are termed as bio ceramics and have properties like bioactive, resorabable (eg tricalcium phosphate), bioactive (eg hydroxyapatite), porous for tissue in-growth. Applications include replacements for hips, knees, teeth, tendons and ligaments and repair for periodontal disease, maxillofacial reconstruction, augmentation and stabilisation of jaw bone, spinal fusion and bone repair after tumor surgery. IFGL Bio Ceramics is presently dealing in: • CeraEye® Synthetic Hdroxyapatite Orbital Implants (Spheres) • Alumina based Hip Joint Femoral Head
• BioGraft® Bone Regenerative Granules and Blocks. These products have both bio active and bio compatible properties, and are more advantageous compared to contemporary products, are moderately priced and are already being used by leading eye surgeons, orthopaedic surgeons, periodontists and oral and maxillofacial surgeons. The managing director of IFGL Refractories Ltd, Pradeep Bajoria, in an exclusive interview to Steel Insights, gave an in-depth analysis of the sector and future outlook of the company has a whole.
Excerpts: What is the current status of the refractory industry in India? Currently, there is overcapacity in the refractory industry as massive projections regarding the steel industry went haywire. The refractory industry had geared up accordingly, but when the steel industry did not take off, the refractory industry also suffered. For example, Vesuvius has doubled its capacity, but today they are being unable to operate at even their original capacity. Similarly, although IFGL has set up a plant in Kandla but keeping the poor market conditions in mind, the production has not really gone up according to the expectations.
Steel Insights, October 2012
interview Another factor which is bothering most refractory makers, but not so much IFGL, is an overstock situation. Low demand is resulting in huge stock. It is an alarming situation. Refractories are an integral part of steelmaking so there will be huge problem if the industry cannot rise to the situation. What is the capacity utilisation in the refractory industry at present in India? The refractory industry at present is working at almost 60 percent of its total installed capacity. Today, even if you produce more, the cost of production is so high that you will be unable to compete, just like nobody is able to compete with imports from China in the stainless steel market.
What is the most important concern of the refractory industry in India? The steel makers buy major raw materials like iron ore, coal, limestone in cash because they do not get any credit but all these customers squeeze the refractories industry for very high credit. If you pick up the balance sheet of any refractory industry, you will find that their outstanding is very high. Small customers do not pay for four to five months at a stretch. Even the best customers do not pay for three months. Another problem has been the depreciation of the rupee for the last 1-1.5 years because most of the major raw materials are all imported. In the domestic market, the refractory industry cannot ask for a price hike from its customers. Therefore, though its raw material prices are going up, it is unable to pass it on to its consumers. How is IFGL placed in the current scenario? IFGL is insulated to a certain extent as it is exporting 50 percent of its production. What are the other negative factors worrying the refractories sector? The other negative factor is the energy cost. Fuel cost is going up several times as we use LPG whose price has been constantly rising.
28 Steel Insights, October 2012
What are the raw materials mainly used by the refractory makers? For refractory making, the raw materials mainly used are alumina from bauxite, white fused alumina, calcined alumina, brown fused alumina, magnesite, graphite, dolomite, various additives such as resins, phenol resins, silicon carbide etc. Most of the raw materials are being imported even if it is available in the domestic market, and the quality is not right. Some quantities are available but the major part is imported mainly from China. What is the percentage of raw material cost in the cost of production of a refractory maker? For high end refractories, if you consider raw material cost, it will be about 50-55 percent and for others such as bricks it will be 60-70 percent. So raw material cost is very high. Apart from this, energy cost is also very high. To what extent is quality manpower available in refractory industry? I think quality manpower is an issue with all industries in India. As this is to some an extent a polluting industry, so it cannot be in a major city. So, you really cannot attract talent. For example, in China, even the industrial belt is far more modern and developed than Kolkata or Mumbai or any other metro in India.
What are the important export markets for IFGL? IFGL is exporting all over the world. Our biggest market today is Europe and we are trying to tap markets in Russia and South America where the steel industry is growing. Recently we have acquired a company called EIC in Cincinnati in the US where they make isostatically pressed products for the steel industry. We make 300,000 pieces per year in India whereas in the US it will be 80,000 and in our plant at Kandla, the current capacity is 60,000 which can be increased to 200,000-250,000 pieces. What was the rationale behind the capacity addition in Kandla? It was done on anticipation but unfortunately it did not materialise the way it was envisaged. Where are IFGLâ€™s other production units located? In 2005, we acquired UK-based Monocon which has units in UK, Brazil and China. In 2008, we made an acquisition in Germany. We have a service set-up in Europe. We operate through agents. What are your expansion plans in the US? We are looking at expanding capacity in the USA from 80,000 to 160,000 pieces. In the US, the demand is steady. We have a small market share which is about 3 percent or so but we want to increase that. What is your market share in India? In India our market share is about 35 percent of our main product line. Who are your main competitors? Our main competitors as far as our main product line is concerned are Vesuvius, Orient Abrasives and OCL. What do you have to say about future growth prospects of the refractory industry in India? As we are linked to the steel industry, if the customers give us more value, we will be able to serve him better. Otherwise our hands are tied.â€‚
ANT targets 100% growth in next few years
engineering of utilities and civil foundations as well. We provide assistance in the erection of equipment and commissioning of the plants. Productivity improvement and training is the most common domain for the running plants. We have taken up series of high level training programmes for SAIL. Our on-thejob training programmes for medium size plants are becoming popular and receiving good response. How is the market like in the fields of design, engineering, construction and process stabilisation of steel plants in India and abroad?
Dr Sudarshan Singh, Chairman & Managing Director, ANT Steel Engineers
Steel Insights Bureau
NT Steel Engineers (Asia) Pvt. Ltd was established in 2008 to serve the growing steel industry in Asia, Middle East and Africa. The company provides engineering and consultancy services to the steel industry worldwide, including setting up of greenfield projects. Its services include consultancy for productivity improvement of existing steel plants and selection of modern technology. The company is managed by highly qualified and experienced professionals for implementation of projects from concept to process stabilisation. Its engineering services encompass selection of most appropriate technology, most effective plant layout and selection of process equipment to meet the specific requirement of the clients. Speaking exclusively to Steel
Insights, the chairman and managing director of the company, Dr Sudarshan Singh, spoke extensively about the company, its varied services, future plans and marketing strategies. Excerpts: What is the basket of services that ANT Steel offers? Apart from our main business of providing engineering and consultancy services to the global steel industry, based on the clientâ€™s requirement, we prepare feasibility reports, due diligence reports and conduct technical audits. At the same time we keep our focus on the return on investment. We have necessary expertise in providing technical services in the areas of carbon, alloy and stainless steel making through BF/BOF route, Arc Furnace, LF, VD, caster route. In hot rolling mills we provide services in design, engineering and construction of section mills and bar/wirerod mills (bar mills of annual capacity up to 1.2 million tons) Our services include design and
In India the market has not been very favourable in recent years. As you are aware, the steel industry in India has suffered in the recent past on account of short supplies of iron ore and slowdown of construction activities due to various reasons. The news on the allocation of iron ore mines and coal blocks discouraged the investors in steel industry and most of the expansion programmes slowed down. Nevertheless, reforms announced recently by the government have got positive response in the market. We hope that the barriers in the growth of steel consumption and production will now get cleared and development of steel industry will restart. The global scenario has also remained weak except in a few countries like Saudi Arabia. Despite this, ANT has successfully completed some projects and more are in the pipeline. ANT had planned to diversify in the fields of power, mining and education. What is the status of this plan? All our diversification plans are live and we are moving ahead with our programmes. We are entering the fields of power and mining as well. In the past we have been concentrating more on steel plant projects which is our core area of business. In the fields of training and education; I am glad to mention that our training programmes are being well accepted by SAIL and other clients. We have conducted training classes on rolling mills, primary and secondary steel making, on job training and establishing of SOPs. The training programmes included the latest
Steel Insights, October 2012
interview technology in universal rolling of rails, blast furnaces and steel making. Preparations are underway for a training programme on sinter plants and coke oven batteries for SAIL. ANT was working on setting up a steel university in India or the Middle East. What is the status of this initiative? A steel university is very much on our agenda, though we have not yet made any significant progress in this regard. The response from the ministry of steel and the private sector has been lukewarm. However, our efforts are on and we hope to launch the steel university in India. Steel production in India is projected to grow fast in the near future. How far is ANT geared up to meet this requirement? ANT is fully geared to provide engineering and consultancy services to more number of new steel plant projects. Our client list is gradually increasing and all our clients are fully satisfied with the quality of our services. ANT’s engineering strength has
grown three times in terms of manpower. Our second engineering office in Pune will be operational by end of this month.
various departments of the government of Botswana. We hope to get a clearance from them by the end of this year.
What has been ANT’s growth so far?
What are the marketing strategies being adopted by ANT to acquire clients?
We have made considerable progress in the last four years and successfully completed several projects. Due to our quality of services we have started getting repeat orders from our clients in India and abroad. We are maintaining 50 percent growth on y-o-y basis, although the growth of steel industry in India in the recent past has remained slow. Hopefully the pace of growth of steel industry will now pick up and accordingly the growth of ANT is expected to be 100 percent y-o-y for the next few years. What is ANT’s market share in the steel engineering and consultancy service business and what is the target in the next few years? ANT started its activities in the year 2009. In India we have a market share of 7 to 8 percent, which is quite satisfactory for a new company. After having achieved ISO 90012008 certification and having pool of highly qualified and experienced professionals we are confident of capture 20 percent of the market in the next five years. You may be aware that we are also present in the international market and we plan to increase our presence in the MiddleEast and African Markets. What is the status of your plan to form a joint venture company to manufacture guides in India? On May 21, 2012, we signed a joint venture agreement with Hollteck Company, the reputed guiding equipment manufacturer. The portfolio is to assemble and market Hollteck guides in India. Hollteck Company is based in Virginia Beach in the US and has design and manufacturing facilities in Sheffield, England and Caxias do Sul, Brazil. The company is specialised in design and manufacturing of guides for bar and section mills including guides for slit rolling technology. What is the status of your plan for a steel plant in Botswana? The project is pending approvals of
30 Steel Insights, October 2012
Apart from advertising in leading steel magazines, we introduce ourselves to the industry heads through presentations, highlighting the success of various projects and assignments accomplished by us in India and abroad. Our main tools are the quality of our service, technical strength of our team, price competiveness, training on latest technology and showing the results on the shop floor. ANT is the unique company providing post commissioning assistance for stabilisation of process. Who are your domestic and international clients? Our clients in India and abroad are Hill Metals Jeddah, Kingdom of Saudi Arabia, Ghassan Holding Groups, Dammam, Kingdom of Saudi Arabia, Universal Rolling WLL, Bahrain, Amreli Steels Limited, Karachi, Pakistan, Sarah Steel Structures Manufacturing, Dubai, United Aran Emirates, Morocco Iron Steel, Casablanca, Morocco, ALTUB, Algeria, Tulsyan NEC Chennai, Bhilai Steel Plant, Bhilai-Durg, Steel Exchange India Limited, Vishakhapatnam, Steel Authority of India Limited, Mahalaxmi Steels, Wardha, Jailaxmi Casting & Alloys Private Limited, Aurangabad, Kalindi Vessels & Pannels Private Limited, Surat, Kalyani Gerdau Steel Limited, Tadipatri and many more. What is ANT’s roadmap for growth? As I mentioned, our aim is to achieve a sizable market share in the field of engineering and consultancy services. In addition we are also venturing into manufacturing activities related to steel. Our specialised services in steel making and hot rolling are recognised by most of our clients. It is our endeavour to share the expertise with as many clients as possible. To achieve the above objective we are further strengthening our marketing team, technical team and design facilities. SWOT analysis is a regular feature at ANT which keeps us on track and helps in achieving our goals.
Clampdown on sale, export of iron ore Steel Insights Bureau
he central government has banned states from allowing sale or export of iron ore by companies granted mining leases for own steel production. “The entire ore produced in the mining operation (of captive mines) shall be used exclusively for own consumption in iron or steel making and cannot be either sold in India or exported to other countries,” the mines ministry said in an order issued on September 19, invoking Rule 27 (3) of the Mineral Concession Rules 1960. The move comes after the Jharkhand government allowed one time sale of iron ore fines by Usha Martin and Steel Authority of India last year in a controversial move. The two are among six captive mining leases granted to steel makers in Jharkhand, where there are 40 iron ore miners. Indian steel makers traditionally use iron ore lumps from mines, leaving out ore fines smaller than 10 mm. As mines grow older, only about 30 percent of their outputs is lumps with fines comprising the rest. One way of using iron ore fines is
removing moisture, beneficiating the ore and baking it into tight balls or pellets, which are easier to transport and less polluting. Pellets are a more efficient feed in steel making than fines and help reduce coal requirement. Although most steelmakers can use pellet feeds, only a few domestic steel makers have facilities to make pellets. Jharkhand in August last year had relaxed a ban on exports of iron ore from captive mines to allow Usha Martin and SAIL sell nearly 20 million tons of ore fines through a one-time domestic sale. It led to much uproar in the state despite a safeguard clause that required the sale to prioritise Jharkhandbased industries. In February this year, the High Court in Ranchi stayed the order, saying only the Centre was empowered to issue such notifications, amend laws or introduce rules under the Mines and Minerals (Development and Regulation) Act. FIMI hails decision
Miners’ body Federation of Indian Mineral Industries (FIMI) welcomed the imposition of ban by the government on sale or export of iron ore from captive mines and demanded
its strict enforcement to prevent misuse by the allottees. FIMI is of the opinion that not only the iron ore but minerals from any mine allotted for captive use should be consumed for the specific purpose. FIMI said iron ore mining should not be allowed for any other purpose like export or sale in the open market, else the same would result in increased production by the allottee for profit making. Export outlook
Meanwhile, India’s exports of iron ore could fall by as much as 75 percent this financial year due to a combination of low global prices making exports unfeasible and government restrictions on mining operations in two of the largest producing states. India, the world’s third-largest iron-ore exporter, is importing increasing volumes of iron ore, as miners will find it hard to meet domestic demand given lingering restrictions in the state of Karnataka and a complete ban on iron-ore mining imposed earlier this month in the state of Goa. Reduced exports from India will likely support international iron ore prices, which hit a three-month low earlier this month of $86.70 per ton due to weak demand from China, though prices have recovered to around the $100 per ton level since then. Meanwhile, the Karnataka court order only opened the door for 18 mines to reopen, while hundreds more remain closed. However, output may not rise significantly even if the court’s ruling is favorable, as many
Steel Insights, October 2012
feature mining leases are expiring in the next three to four months. India’s exports could be as low as 15 million tons (mt) in financial year 2012-13 if the mining ban on Goa is not lifted, industry experts said. India exported 60 mt in 201112, which itself was down 39 percent on year. Steelmakers who lack their own captive iron-ore mines are increasingly relying on imports. Iron-ore imports will be a “significant” portion of total iron-ore supplies this financial year, industry sources felt. Mining ban to hit output
The recent move by the Goa government to ban iron ore mining is likely to hit the production of the mineral in the country during the current financial year. The
domestic production is likely to touch 140 mt in 2012-13, an 18 percent decline yearon-year. A similar production level was seen earlier during 2004-05. It had peaked in 2009-10 to 220 mt. For the financial year ended March, the domestic production of iron ore was estimated at 170 mt, a decline of 20 percent year-on-year. The production is likely to be affected due to the ban and slower MoEF clearances. After Karnataka and Goa, the ban might be extended by other states as well, according to analysts. The recent mining ban announced in Goa could wipe out about 30 mt from the seaborne market, partly offset the impact of about 50 mt of new supply expected to come on-stream globally in second half of 2012
Raw Materials/Indian Iron Ore 63% Fe fines dry/China import CFR N. China port ($/t) 26 Mar 12
2 Apr 12
9 Apr 12
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30 Apr 12
7 May 12
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1 Oct 12
32 Steel Insights, October 2012
calendar year and provide near-term support to global prices. India’s share in the seaborne market could decline from 13 percent in FY10 to around 3 percent in FY13. An increase thereafter would depend on the fate of the Goa mining industry. The government of Goa suspended mining after the Shah Commission Report was tabled in Parliament on September 12. This was followed by the suspension of environment clearances for all 93 mining leases by the ministry of environment and forests. It is unclear how long the process of obtaining fresh environment clearances is likely to take. Meanwhile, the government of Odisha is also planning to e-auction iron ore from next year (as is being done in Karnataka) to bring more transparency. The state government has constituted a five-member panel headed by principal secretary of steel and mines department to work out the modalities. Most of India’s iron ore production (over 95 percent) is in the states of Odisha, Karnataka, Chhattisgarh, Goa and Jharkhand. Public sector companies like NMDC and SAIL produce 25-30 percent of India’s output. The balance is from the private sector including companies such as Tata Steel. Iron ore fines account for 55-60 percent of India’s iron ore production and the balance is in the form of lumps. The domestic industry consumes around 90 percent of the lumps produced and a large proportion of fines are exported. Of the total iron ore produced (in FY10), about 25 percent is greater than 65 percent Fe grade, 46 percent is between 6265 percent Fe and the balance 29 percent less than 62 percent.
Low demand pushes down Q4 coking coal contract price
Steel Insights Bureau
HP Billiton-Mitsubishi Alliance has signed the October-December coking coal contract with Japan’s Nippon Steel at $170 per ton fob Australia, down $55 per ton from the Q3 2012 price of $225 per ton, steel industry sources told Steel Insights. The settlement price of $170 per ton fob is the lowest since the fiscal year of 2009-10, when the annual contract was settled at $129 per ton. However, it is more than $27 per ton higher than current spot prices, which is hovering around $140 per ton for premium low-vol. Coke makers had expected the prices to come down from $221-225 per ton because of higher supplies from Mozambique and low priced offers from US and Canadian mines, which are witnessing precarious steam coal demand. Meanwhile, after falling continuously from the beginning of July, the spot price of coking coal appears to have stabilised at around $140 per ton fob Australia.
“However, even at this level, buyers are difficult to find as steel demand in major markets like China and India is not growing as per expectation,” an official of a leading Indian low ash metallurgical (lam) coke maker said. “China’s growth story has started showing signs of weakness and if there is no improvement in the situation in coming few days, we expect coking coal prices to fall further,” he added. However, some traders of coking coal believe that coking coal prices may not fall further in coming days after having fallen by about 38 percent from a high of around $226 per ton fob at the beginning of July to $140 per ton as on September 20 as miners would prefer shutdown instead of incurring operating losses. “Some of the leading miners in Australia have already announced production cuts on various grounds, including losses, and the situation is not that encouraging in the US and Canada, the other two suppliers of coking coal, and this might lead as overall reduced availability of coking coal that will put a break on fall in prices,” a trader said. Some industry sources said spot prices of
Coking coal FOB Australia ($/Ton) Date 2-Aug
HCC Peak Down Region
Premium Low Vol
HCC 64 Mid Vol
Low Vol PCI
Low Vol 12 Ash PCI
Steel Insights, October 2012
Coking coal CFR India ($/Ton) HCC Peak Down Region
Premium Low Vol
HCC 64 Mid Vol
Low Vol PCI
Low Vol 12 Ash PCI
premium coking coal may continue to weaken further till December despite BHP having recently decided to close down operations at two of its mines. “The current weak trend in spot coking coal prices, which is being quoted at around $140 per ton, has forced miners to cut the contract price for the October-December quarter to around $170 per ton from a high of $221-$225 per ton for the July-September quarter. This weak trend is likely to continue till December and thereafter it will depend on the global economic situation,” sources said. BHP Billiton had in May decided to shut its Norwich Park mine and on September 9 announced to cease production at Gregory mine, both in Australia, citing steep fall in coking coal prices that made its operations unprofitable. Miners generally opt to go for planned shutdowns whenever the prices of coking coal come down in an attempt to reduce supplies to keep price firm. However, this year till now, this strategy does not seem to have worked.
September due to lacklustre demand and a very low offer in the market, sources said, as 62% CSR (coke strength after reaction) and 12.5% ash coke is quoted at $317 per ton cfr east India as on September end. Coking coal CFR India ($/Ton) Date
Seaborne metallurgical coke prices fell in
34 Steel Insights, October 2012
A low offer for European-origin met coke, with no specified country origin, was heard at $315 per ton CFR India. The material was of 64/62% CSR, 11.5% ash, 5% total moisture, 0.70% sulfur, 0.035% phosphorous, 83% M40 and 8% M10 at $315 per ton CFR India for November shipment. There was buying interest for 62% CSR and 12.5% ash at `17,500 per ton ex-works east India, while sellers are offering material at `19,500 per ton ex-works east India. Coke sellers said sentiment was bearish, but they were divided as to whether such a low offer was indeed possible. It is difficult to make a profit in this market but it is possible to reduce losses, according to coke producers. No one is buying coke, it is a buyers’ market, trade sources said adding that anybody wanting to sell would have to lower their offers. On the buy side, interest for spot coke continued to be lukewarm, source said adding he would not consider any immediate purchases because he expects prices to drop even further in the near term. A lot of correction will take place in met coke price, sources said. The sharp fall in coking coal prices has not fully reflected in coke prices as yet, they added.
Mixed trend in ferro alloys Steel Insights Bureau
mixed trend was witnessed in ferro alloy prices in the month of September. Whereas offer prices firmed up in some cases, prices of ferromolybdenum, for instance, showed signs of slowing down. Ferro-manganese
In anticipation of increased buying activity but more because of increased cost of highcarbon ferromanganese production that has eroded producers’ margins, offer prices are being raised by about 1.88 percent to firm quotations at `54,000 per ton ex works. With no change in demand and the Indian Rupee becoming stable to appreciating by about 4 percent in the last three weeks, producers are able to project end-user requirements for October and perhaps beyond, with a view to taking advantage of increased requirement from steel mills as construction activity resumed after the monsoon season. For the export market, producers continues to report low requirements from Europe and the Middle East, but quotations are firm around $1030 per ton fob India, which is still price competitive relative to Koreanorigin material in the range of $1050-1080 per ton fob Busan ports. On the future trend, participants agreed there is little resistance that either traders or end-users could put up as steel plants rammed up purchases possibly from week 40. However, since most producers are carrying excess capacity increased material requirement for domestic consumption is unlikely to rally the market except for some marginal price increase. Ferro-silicon
Although officials of ferrosilicon producers are tight-lipped on new quotations for October, Gujarat-based Indian traders are reporting landing cost for next haulage of FeSi 75%min grade material at `71,000 per ton. With standard transportation cost in the range of `3000-3200 per ton, ferrosilicon producers seem to be asking in the range of `67,500-68,000 per ton ex works, which
would indicate about 1.5% price increase from the minimum level of `66,500 per ton ex works in the past week. Indian traders are cautiously reacting to the new high quotations, for although many reported no new enquiries are being received, they are upbeat of seeing real movement in the coming month. Traders feel the market is a bit slow at the moment but traditionally it should become more active as demand help push up prices. Silico-manganese
As in all metals, demand is not picking up for silico-manganese 60/14 material but mainstream offer prices are very firm at
`53,000 per ton ex works as producers claim to be operating at margins. Across the country, participants do not expect any improvement in buying activity for the rest of the month and although material requirement from steel mills had been expected to improve, this is yet to show in both prices and in volume of transactions being concluded. According to participants, the export market is also quiet with SiMn 60/14 and SiMn 65/16 being offered respectively in the range of US$ 970-990 per ton and at around US$ 1060 per ton FOB Indian ports. And as diesel and fuel prices rise by 13-14%, traders’ margins is further reduced as it is already difficult to sell material in the domestic market at `56,000 per ton ex warehouse and any volatility in the foreign exchange market could make it more difficult for dealers to be competitive as end-users could source material directly from producers.
The market scenario Devanand Chauragade
The Indian SiMn market has remained stable with prices staying unchanged in September, at `51,500 per ton for 60/14 material and ` 52,000 per ton for 60-15 grade material ex-works at Raipur. Prices for SiMn and FeMn Hc. in the Eastern part of the country at Durgapur eased due to stock pressures but in South India producers remained firm owing to low production levels due to non-availability of power. The Ferro Manganese with Grade 70-75 % Mn. material is being trading at `50,500-51,000 per ton at Raipur due to weak demand and the price level same as in the Durgapur belt. Export market The producers are quoting/trading the
export prices for SiMn 60-14 at $930940 per ton on FOB basis, the East Indian producers having a selling pressure for holding inventory and trading at $920-930 per ton ex-Haldia port and SiMn Grade with 65/16 is at $1040-1050 per ton on FOB basis, the average prices in between $1030-1040 per ton on FOB basis. During the last fortnight the dollar stayed between `55.10- 55.50 to a dollar. The rupee weakened mid-week but recovered a little at the end. The rupee ended up, but off its five-month high as importers bought dollars in late trade to benefit from the greenback’s sharp fall . The rupee is likely to rise on continued capital inflows due to improved investor sentiment. Dollar selling by exporters may support the local currency, some greenback demand at lower level from importers may limit any upside, expecting the dollar may settle at `52.50. Export trading may be difficult due to the highly volatile dollar exchange rates.
(Devanand Chauragade is GM marketing, Hira Group of Industries, Raipur)
Steel Insights, October 2012
Steel Insights Bureau
he Indian automobile industry, one of the key drivers of the countryâ€™s industrial growth, hit a speed-breaker in the month of August 2012 as domestic production, sales and exports suffered a decline year-on-year. The August de-growth pulled down the overall rate of growth in the first five months (April-August 2012) of the year. However, early reports from major players provided some hope of an improvement in September. The decline in August numbers is seen by most analysts as a momentary slip. According to the Society of Indian Automobile Manufacturers (SIAM), the industry holds significant growth prospects for the medium term. Despite the weak market conditions overseas, the Indian automotive sector needs to focus more on exports, analysts said. Nevertheless, it was apparent from the performance in the five months to August that the industry would perhaps miss the annual growth forecast of 11 to 13 percent. Only a robust growth in the second half could stretch the current growth to the desired rate. Production, sales, exports
According to data released by SIAM, the cumulative production data for April-August 2012 shows production growth of only 4.20 percent over the same period last year. In August, the industry produced 1,564,259 vehicles as against 1,682,213 in August 2011, which is a deceleration of 7 percent. The overall growth in domestic sales during April-August 2012 was 6.61 percent over the same period last year. However, in August 2012, overall sales declined by (-3.9) percent over August 2011. Passenger vehicles segment grew at 7.42 percent during April-August 2012 over the same period last year. Passenger cars marginally grew by 0.86 percent, utility vehicles grew by 57.03 percent and vans grew by (-9.37) percent during April-August 2012
36 Steel Insights, October 2012
as compared to the same period last year. In August, however, passenger car sales declined by over 18.5 percent over August 2011. Total passenger vehicles sales also declined in August 2012 by almost 4 percent over the same month last year. The overall commercial vehicles segment registered a growth of 4.57 percent in AprilAugust 2012 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered negative growth at (-11.94) percent, Light Commercial Vehicles grew at 17.05 percent. Three wheelers sales recorded marginal growth at 0.59 percent in April-August 2012. Passenger carriers grew by 4.45 percent during April-August 2012 and goods carriers registered de-growth at (-13.40) percent during this period.
feature Govt initiatives
Meanwhile, the Indian government has decided to take a host of measures to boost the automotive sector which has a strong multiplier effect on the economy and employs a large number of people. “First and foremost, we are going to soon form the National Automotive Board as an independent body, to coordinate the work of the various sectors in the automobile
Tata Motors enters Indonesian market
Two wheelers registered a growth of 6.80 percent during April-August 2012. Mopeds, motorcycles and scooters grew by 3.20 percent, 3.31 percent and 22.96 percent respectively in the period of April-August 2012. However, in August 2012, motorcycle sales declined by almost 8.5 percent over the same month last year. During April-August 2012, overall automobile exports registered negative growth at (-5.56) percent. While passenger vehicles grew by 1.29 percent and commercial vehicles grew by 7.48 percent, two & three wheelers declined by (-2.17) and (-34.97) percent respectively in April–August 2012 compared to the same period last year. In August 2012, car exports fell by almost 27 percent compared to last year August and motorcycle exports declined by over 7 percent during the same period.
Tata Motors, India’s largest automobile company, announced its entry into Indonesia, the largest automobile market in the ASEAN. The company has set up a wholly owned Jakarta-based subsidiary, PT Tata Motors Indonesia, and will foray into both passenger and commercial vehicles, it said in a statement. Indonesia is a key market for Tata Motors, which has a wide range of products from small cars to buses in passenger vehicles and from 0.5T mini-trucks to 49T heavy trucks in commercial vehicles. The company will begin to launch its products in 2013, for which extensive preparations are now on. By the time of the launch, PT Tata Motors Indonesia will have about 10 to 15 dealers nationwide, offering sales, service and spare parts. Over a period of three years, the company will set up a country-wide network of about 60 full-service dealers, about 100 other workshops and about 300 more spare parts retailers. The company is also evaluating options for setting up a manufacturing base in Indonesia to serve the country and the ASEAN region. Significant investments will also be planned for component localisation.
sector, act as a means of communication between industry and government,” said S Sundareshan, Secretary, Ministry of Heavy Industry & Public Enterprises. Speaking at the SIAM’s annual convention in September, he said, “Secondly, we are implementing, even as we talk, a half a billion program of NATRIP, the national automotive research organisation. We have recently unveiled the Mission for Electric Mobility. It is envisaged that over the next 6-7 years, the government will be spending between 2-3 billion dollars to make this program attractive, the total investment between 4-5 billion dollars. We expect this program be put in place and launched in the next 2-3 months. Lastly, in the 12th Plan, we have made far reaching proposals for participating in the development of the automobile industry.” S Rao, Secretary, Ministry of Commerce & Industry, said “It is expected by 2015, that 50 percent of the world trade will essentially be between developing economies. We need to align our policies and our activities within this sector to match with the growing demand. On export front, the automotive industry’s contribution has not been matching with what we thought was the possibility.”
Steel Insights, October 2012
Steel Insights Bureau
ill now, the Delhibased Sponge Iron Manufacturers Association (SIMA) was largely involved in effectively putting forward Deependra Kashiva, the views and problems Executive Director, faced by its nearly 100 SIMA members before the government for resolution. It also organised small conferences for the benefit of its members. However, all this is set to change under the new leadership of executive director Deependra Kashiva, chairman Alok Chandra and vice-chairman Suresh Thawani as the association now wants to become a knowledge partner and help its members to focus on reducing their cost of production and improve efficiency at a time when availability and pricing of raw material has emerged as a major issue. The association, which is in operation from February 1992, was formed in the midst of radical change when India took its first tentative step towards economic liberalisation in 1991. It was officially registered under the Society Registration Act XXI of 1860 on January 31, 1994. The fundamental premise behind the formation of the association was to promote and protect the interest of the Indian sponge iron industry. SIMA has come a long way since inception to bring all sponge iron manufacturers together. From representing the Indian DRI industry and providing a common platform for regular interface with the government of India and other regulatory authorities, SIMA now wants to move a step forward, Kashiva told Steel Insights. Explaining the rationale, Kashiva said, “Till now SIMA was into small kind of lobbying and organising small buyer seller meets and meetings with CIL officials, but we realised that this is not going to work
38 Steel Insights, October 2012
because the sponge iron industry is not the priority of the government. Its first priority is the power sector. No matter how many letters we write, there will not be any result.” “When we know that nothing is going to happen by writing letters to government or meeting them, there is no point in wasting time. So we are looking at a shift in strategy and have told the members that they have to cut cost of production and improve efficiency to survive in this competitive world,” Kashiva, who joined SIMA in August 2011, said. Towards achieving these objectives, the association had recently organised an international conference in New Delhi in which nearly 200 experts from across the globe participated and focused on technical subjects like how to reduce the cost of production of sponge iron by reducing the
cost of raw material and how to derive ways so that inferior grades of raw material – coal and iron ore – can be effectively used. “We want to know from people on how to exploit the available grade of raw material and how to reduce the cost of raw material or reduce the specific consumption of raw material and share this with our members,” Kashiva said. The international conference in September 2012 in the aftermath of three regional conferences in Raipur, Joda and Kolkata, was the first in the history of India in which experts from the US, Japan, Austria, South Africa, China and even Germany participated in great numbers, he claimed. “We had two technical sessions in the conference. One was on dedicated coal based technologies and the other was on gas based
technology. Of the total 10 papers, seven were presented by the foreigners belonging to world renowned companies in the technology or equipment areas,” Kashiva said. There was a delegation of 16 persons from China who wanted to know how India could become the largest producer of sponge iron and how they are making the material. “We are the world’s largest DRI producer while China is the world’s largest producer of steel. We have to learn from China on how to use lower grades of iron ore and in return we can provide our expertise on how we excelled in DRI production. During the conference, we found that China wants to learn something from India and that I feel is a great achievement,” he said. Explaining the rationale behind the conference and a shift in focus of SIMA,
Kashiva said today the availability and pricing of key raw materials – iron ore, coal as well as gas – is an issue and in such a situation a shift in focus is definitely required. “Today whatever domestic gas is available, it has been earmarked for fertilizer and power sector and transport sectors because they are much more important. I agree with this and in such a situation, if we go and meet government officials and keep on writing letters nothing will come out. I was with the government and I know its priorities as well as its limitations,” Kashiva said. “We are concerned with the results so far and so SIMA is now trying to become a knowledge partner. Over the past one year, the efforts of SIMA are towards this direction,” he said. “We are basically focussing on exploiting our members in a better way by making them knowledge partners. The era of availability of good quality raw material is gone wherein we used to get 64% plus Fe content iron ore or coal of B or C grade or 6500 Kcal/kg. Now we have to live with E and F grade domestic coal and imported coal and imported gas and iron ore with Fe content of 48% to 55%. And we have to be prepared to use magnetite ore instead of only haematite ore,” Kashiva felt. In this connection, he pointed that already in Chattisgarh two steel companies – JSPL and Godavari Ispat - are using magnetite iron ore for making sponge iron and they are getting this type of ore from Chattisgarh itself. “I was surprised that their coal consumption has come down sharply to 132 kg per ton of sponge iron compared with earlier norm of 165 kg per ton,” he said, adding, there is advantage of using magnetite ore (Fe2O3) in rotary kiln compared with haematite ore (Fe3O4) as it saves heating time and in turn coal consumption because if magnetite ore is used, one step is avoided which results in saving of energy. Kashiva, however, said the problem with using magnetite ore is its availability in India which is very low. These two companies are using in a combination for which they must have done some R&D. He feels that R&D is an issue in the country at present. It has been found that induction furnaces mainly use coal based DRI as gas based DRI is not available in abundance. Only Welspun is selling a limited quantity of gas based DRI on merchant basis,
while others like Essar and JSW Ispat are using for captive purposes. Kashiva said with the introduction of quality control specification by the government for steel, there is an urgent need to address the problem related to high sulphur and high phosphorus in coal based DRI. Induction furnaces are of the opinion that they cannot adhere to the quality control order because the coal-based DRI that they use has inherent problem of high sulphur and high phosphorus and similarly the rolling mills say that they too cannot adhere to the order because the billets made out of induction furnace route are not of high quality. “It is high time that all the stakeholders – DRI producers, induction furnaces and rolling mills – come together to solve the problem, because it is not a problem of individual industry but the problem of the country.” Kashiva said, adding that India produces around 30-35 million tons of steel through induction furnace route and it is high time that all worked together. He further said that already some R&D has been done in this direction by 4-5 coal based DRI makers to address the inherent problem in refining in the induction furnace to address high sulphur and high phosphorus problem, but it is yet to be verified by SIMA. “I have at least five members, who can provide DRI with desired phosphorus. But I would like to see the process on my own before saying that no further R&D is required in this respect,” Kashiva said.
Steel Insights, October 2012
Draft steel policy aims to remove growth hurdles Steel Insights Bureau
he Indian steel industry, which far outstripped the government’s growth expectations during the Eleventh Plan (2007-12), now has a new set of numbers to attempt. The steel ministry has recently come out with a draft National Steel Policy which pegs the country’s steelmaking capacity in the range of 244-281 million tons (mt) by 2025-26. This, when compared to the current (2011-12) production capacity of 90 mt, implies addition of around 150 mt production capacity in a span of 15 years. The new policy has laid down two projections for the country’s steel production capacity. Assuming 7 percent growth in GDP, it has pegged crude steel capacity at 244 mt. Further, assuming an average economic growth of 8 percent, the policy has put the number at 281 mt. Along with projecting capacity, the draft policy has also projected the country’s steel demand at 202 mt (at 7 percent GDP growth) and at 233 mt (at 8 percent GDP growth) by 2025-26. The draft policy, which is being finalised by a committee headed by the Steel Secretary, seeks to replace the existing one that was formulated in 2005. A new National Steel Policy was warranted as the existing one lost its relevance with the industry’s changing dynamics, according to ministry sources. The National Steel Policy, 2005, had pegged country’s steel production capacity at 110 mt by 2020. However, with the ongoing capacity additions by almost all the existing firms (both in the public and private sectors), India’s production capacity is set to go past that projection in the current fiscal (2012-13) itself. The Indian steel industry entered into a new phase of development from 2007-08, riding on the resurgent economy and rising demand for steel. Rapid rise in production resulted in India becoming the fourth largest producer of crude steel and the largest producer of sponge iron or DRI in the
40 Steel Insights, October 2012
world. As of 2011-12, the terminal year of the Eleventh Plan, crude steel production capacity was around 90 mt, while production was at 73.9 mt, according to steel ministry data. XIIth Plan target
Earlier, as the Eleventh Plan came close to expiration, the government formed a working group on steel to take stock of the situation and set targets for the new Plan period (2012-17). The working group was of the view that a lot has changed since the release of the National Steel Policy (2005) and that it needs to be re-worked keeping in mind the rapid developments in the domestic industry and the stable growth of the economy. Meanwhile, in line with the changing economic scenario, the steel ministry had been aiming at a production capacity of 200 mt by 2020 to meet the growing demand for steel in the country. After deliberations with the group members, steel companies and industry associations, the working group came out with its estimations for the Twelfth Plan period. As per the report, there are a number of factors that could raise per capita steel consumption in the country, currently estimated at 55 kg (provisional). These include among others, an estimated infrastructure investment of nearly a trillion dollars, a projected growth of manufacturing from current 8 percent to 11-12 percent, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market for steel (currently consuming around 10 kg per annum) buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others. Based on the assessment of past trends and the current ongoing projects, both in greenfield and brownfield, the working group projected that the crude steel capacity in the county is likely to be 140 mt by 2016-17
and has the potential to reach 149 mt if all requirements are adequately met. Real issues
The new National Steel Policy is not only about numbers, the sources said, but would strive to deal with real issues obstructing growth of the sector. It will address a number of issues which were not addressed fully in the existing Policy of 2005 and which have a bearing on the development of steel industry in the country in the medium and long term. The new policy will aim to help increase capital inflow, overcome hurdles regarding land acquisition, assuage concerns about raw material security, and spur efficient utilisation of raw material resources and infrastructure development for the sector. Among the various impediments to growth, land acquisition has become the most troublesome in last few years. Steel projects, including those planned by ArcelorMittal, Posco and some others, worth around `300,000 crore, could not take off primarily because of land acquisition and delay in environmental clearances. There however was not much talked about the raw materials requirement and provisioning. India has abundant reserves of iron ore but lacks coking coal deposits. As the production capacity grows, the country needs to chalk out strategy to deal with this issue as well. Steel export
Apart from addressing concerns facing the domestic market, the new policy will seek to focus on how India could become a significant exporter of the product. Interestingly, while the steel sector deliberates on the draft policy, the large manufacturers cry hoarse to delete steel from the Free Trade Agreement (FTA) between India and countries like Japan and Korea. The steel majors in India are concerned that the FTA would put domestic steelmakers to unfair competition from these countries. India should be exporting steel rather than exporting iron ore and importing finished steel, they maintained. India had signed an FTA with Korea in January 2010 and with Japan in August last year. Under this agreement, duties on most of the products are either eliminated or reduced sharply.
mjunction-IHS McCloskey meet dwells on India’s coal
Viresh Oberoi, MD & CEO, mjunction services
Steel Insights Bureau
he 6th Indian Coal Markets Conference organised by mjunction services ltd and IHS McCloskey Group from September 24 to 26 attracted huge gathering from India and abroad and serious issues were discussed for the overall betterment of the coal industry in the country. The conference also provided an impressive network opportunity to Indian as well as overseas delegates.
P.S. Bhattacharyya, former Chairman, CIL
Speaking on the occasion, MD & CEO of mjunction services limited, Viresh Oberoi, said: “I believe that we as a nation have failed to take suitable advantage of the mineral wealth our country is endowed with. The policies that we have framed since our Independence have either led to the inequitable distribution of this wealth whereby the eco-system that today lives on top of and squarely in the middle of some of the coal reserves have benefited the least – which has in turn led to what is termed as the “Maoist problem”, and not what it should actually be called – “poor policies”. Unfortunately the poor policy formulation continued over the years and today we are paying the price by having to import coal to run our power plants. We have power plants newly built which may soon become NPAs on the books of many banks. All this while, we have a power shortage of 124,995 MW, which will grow to 199,540 MW in 2016-17 and to 283,470 MW by 2021-22, as per the draft 18th Electric Power Survey of India,” he added.
Amidst presence of eminent speakers like the former chairmen of Coal India Ltd (CIL) – P.S. Bhattacharyya and N.C. Jha (currently CEO Mining Business, Monnet Ispat and Energy Limited) – besides former power secretary R.V. Shahi (currently chairman Energy Infratech Limited), the participants at the conference tried to arrive at a consensus on what could possibly be India’s coal requirement in the coming years. The speakers pointed out that the euphoria generated about two years ago regarding India’s rising coal demand appears to be slowing down on the back of severe financial crisis faced by state distribution companies who are quite often unable to draw power from the generators due to lack of funds. Besides the demand-supply scenario, a host of interesting topics like country’s logistics infrastructure, tariff situation, global economic scenario, stagnation in China’s coal demand, excess world coal availability scenario amongst others were also discussed in detail. The tone of the conference was set by I.A. Khan, adviser (energy), Planning Commission who in his brief address highlighted the initiatives undertaken by the government to address country’s growing power and coal demand. P.S. Bhattacharyya spoke on the obstacles to increasing domestic production whereas Shahi raised the topic of interrupted fuel supply and its impact on power project development in India. BNP Paribas Securities’ analyst Girish Nayar felt that country needs a more flexible tariff structure and improvement in access to
N.C. Jha, CEO Mining Business, Monnet Ispat
Steel Insights, October 2012
SECL wins coal producer of the year award Steel Insights Bureau
R.V. Shahi, Chairman, Energy Infratech
loans and other ways to help the commercial for power generators and distribution companies. NTPC’s executive director (fuel security) talked about the problems being faced by the utilities in India in getting fuel supply whereas Western Coalfields Ltd (WCL) chairman and managing director D.C. Garg highlighted various initiatives taken by Coal India Ltd (CIL) to meet the country’s growing coal demand. Dr R. Srikanth, chief executive, Thiess India, highlighted the unique challenges of contract miners in India whereas Karam Chand Thapar & Bros. (coal sales) president Virendra K. Arora raised the issues of coal consumers in the countries and suggested ways to improve the situation.
I.A. Khan, Adviser (Energy), Planning Commission
42 Steel Insights, October 2012
The South Eastern Coalfields Ltd (SECL) emerged as the top coal producer of the year at the 3rd Indian Subhashis Chakraborty, Head Coal Markets Award 2012 on September 25 in (Marketing), Geo Chem receiving New Delhi held by mjunction services ltd and IHSthe award. McCloskey Group. Adani Enterprises Ltd emerged as the best International Coal Trader Importer of the year whereas Geo-Chem Laboratories Private Ltd was adjudged the topper in the Coal Inspection Agency category. Best coal port performer award went to Essar Bulk Terminal Ltd and Andhra Pradesh Power Generation Corporation Ltd (APGENCO) was declared Thermal Power Plant of the year award. There were four other nominees – Mahanadi Coalfields Ltd (MCL), Neyveli Lignite Corporation Ltd (NLC), Central Coalfields Ltd (CCL), Jindal Steel & Power Ltd. (JSPL) – in coal producer category and SECL pipped them all to emerge at the top. In coal trader importer category, there were three other nominees – Agarwal Coal Corporation Private Ltd, MMTC Ltd and Coastal Energy Private Ltd, but Adani Enterprises beat them all in practically all parameters, including the quantity handled. In coal inspection agency, D&B had nominated only three companies – Inspectorate Griffith India Private Ltd, Therapeutics Chemical Research Corporation (TCRC) and Geo-Chem Laboratories Private Ltd. The nominees in coal port performer category were Adani Ports and Special Economic Zone, Essar Bulk Terminal Ltd and Krishnapatnam Port Company Ltd (KPCL), while in thermal power plant category the nominees were Andhra Pradesh Power Generation Corporation Ltd, NTPC Ltd, The Madras Aluminium Company Ltd (MALCO), The Tata Power Company Ltd, JSW Energy Ltd and Jindal Power Ltd. (JPL). ACC Limited and Tata Steel Limited were adjudged the winners of Energy Efficiency in Cement sector and Iron & Steel sector respectively. The process of receiving nominations for the various award categories and shortlisting of nominated companies on various set parameters was handled by Dun & Bradstreet Information Services India Pvt Ltd, this year. Dr Neil J. Bristow, managing director, H&W Worldwide Consulting, provided an overview of coking coal and coal availability in the world while Steel Authority of India Ltd (SAIL)’s director (technical) S. S. Mohanty spoke on steel demand and changing raw material requirements. Tapan Prakash Dash of Tata Sponge Iron highlighted the prospects of sponge iron industry whereas Tata Steel Ltd’s chief procurement officer Amitava Baksi talked about challenges in procurement. M.K. Palanivel, president, All India Bulk and Car Carrier Services, Samsara Group, felt that India needs a regulatory body for ports also to improve the performance. According
D.C. Garg, CMD, WCL
to Palanivel, India has enough bulk cargo handling capacity, but the outcome is not that encouraging because of inherent problems that need to be addressed.
Hot skin pass mill: A boon tech for HR coils Tamajit Pain
odayâ€™s demanding market is pushing steel strip processors to a new height. The requirements for steel strips are of reliable consistent quality at competitive price. This market demand leads to development of newer grades of material at competitive cost. To minimize the overall cost of production for the end users, wherever possible they would prefer to use hot rolled coils over cold rolled coils. This necessitates production of hot rolled coils with tighter tolerances and much better surface finish. For example, the use of hot rolled strip for pressed components and tube making has initiated requirement of good shape, yield point suppression and specific texture. In the hot rolling process it is not possible to control these parameters due to the fact that rolling takes place at higher temperatures. The end products from hot skin passing are produced at ambient temperature where the properties of material are different than at elevated temperature.
Sanat K. Bhaumik, Sr. VP (flat products), Danieli India
Steel Insights spoke to Sanat Bhaumik senior vice-president (flat products) of Danieli India on the sidelines of the Minerals Metals Metallurgy & Materials conference 2012, to understand the benefits of hot skin passing technology and its relevance in the Indian steel industry. Excerpts: Can you please give us an outline of the hot skin passing technology? Hot skin passing operation is performed at room temperature to improve the strip quality with respect to flatness, elongation and surface roughness of the hot rolled coils produced from a conventional hot strip mill or thin slab and casting and rolling plant. Such hot skin pass mills will also reduce the rejection level of hot rolled coils by the very demanding customers as well as it can also be used as coil dividing lines to meet the specific requirements of customers. In this operation, hot rolled strip is passed through a set of rolls to get 1 percent to 3 percent elongation. The input strip can be black hot rolled (HR) or hot rolled pickled and oiled (HRPO) depending upon the end products requirement. Most of the skin-pass mills are standalone installations. However, hot SPM in-line with pickling line is also widely used for specific applications. The stand alone mills are more flexible in operation as compared to inline ones. Hot skin passing can be dry as well as wet type. The wet type can provide elongation more than 3 percent. While the dry type is equipped with a Scale/Dust Extraction system, the wet type mills have fume exhaust system and sludge removal facility. What are the main purposes of the hot skin pass mills? The main purposes of the hot skin-passing operation are developing appropriate mechanical properties, improving strip flatness, transferring roughness at strip
HSPM housing assembly at Danieli workshop
surfaces, for pickled material, improving shape of coil winding and recoiling and dividing the coil. What are Luder Lines and how can they be eliminated by hot skin passing operation? During metal forming operation, rough surface with stretch marks are observed. These stretch marks are called as Luder Lines. The stretch marks are caused due to uneven permanent deformations. At the yield point the material exhibits increase in the strain with slight drop in the stress value exhibiting permanent plastic deformation. Loading the specimen beyond yield point, the material again shows increase in the strength with increase in strain. Due to the elongation, the free atoms of carbon and nitrogen leave the dislocations inside the grain structure. Dislocations are free to move and further deformation (i.e. stamping) is more uniform. If the tensile test is carried out on skin-passed (cold worked) material, the stress strain curve does not show distinctly the yield point and there is gradual change of slope in the transition zone. This shows that a little cold working suppresses the distinct yield point phenomena. During skin-passing the material is stressed beyond yield point to achieve permanent deformation. Luderâ€™s lines are not generated in stamped strip which was previously skin-passed, within a certain time limit. If the material is not deformed within a certain time after skin passing, yield point will occur again (material aging) and consequently the Luderâ€™s lines after the following deformation.
Steel Insights, October 2012
technology This storage time depends upon room temperature, the higher the storage temperature the shorter the storage time; material aging is typical for common carbon steel. The skin-passing is essential for mild steel and ferritic grades of stainless steel. It may be noted that for material with the higher yield strength and thickness, there may be increase in elongation of the strip (0.5 % – 3.0%). Also due to elongation of strip there is improvement in the shape. How do the HSPMs improve the strip flatness of HR coils? During hot skin-passing operation, there is increase strip flatness due to the fact that the strip is elongated in the rolling direction under controlled tension conditions, so that all fibers are of the same length leading to flat strip. To achieve controlled elongation a constant front and back tension is maintained. The work rolls in the skin-pass mill are provided with bending facility to facilitate generation of roll crown. Waves defects can be corrected using positive and negative bending and suitable work roll crown. These skin-pass mills can be provided with anti crimping roll (effective under 1.5mm strip thickness) and these rolls help in eliminating the cross bow in the strip.
Can it be used for improving shape of coil winding, recoiling and dividing the coils? During skin-passing the coils are unwound and rewound under tension control of pay-off reel and tension reel. Strip Centre Position Control (CPC) and/or Edge Position Control (EPC) are provided to reduce coil telescopic shape of wound coil. The good coiling accuracy is facilitated by the suitable strip tension, proper work roll gap leveling (tilting) and work roll roughness. The Hot SPM also can be used to rewind and divide the coils. Since hot skin passing is a finishing operation, what are the major parameters that have to be considered? As the skin-passing is a finishing operation, it is necessary to take in to account certain important parameters to achieve desired results. These are strip temperature and steel aging after skin-passing. Special care needs to be taken concerning the strip temperature which should be lower than 50°C. That is, the coils shall be properly cooled before skin-passing. If the strip temperature of the coil is higher than 50°C, the benefit of the yield point suppression will be lost. The mechanical properties achieved during skin-passing deteriorate after some days as the free nitrogen and carbon atoms slowly return to the grain boundary producing again a more significant yield
point. Hence the skin-passed coils have to go to the subsequent forming process within 10 to 15 days for best results. The process of aging is faster with higher environmental temperature. It has been observed that usually the Aluminum killed steels do not exhibit distinct yield point and hence do not generate Luders lines. These steels are skinpassed for flatness improving. What are the different operating modes for hot skin passing? The Hot SPM is mainly operated in two types of control modes – elongation and roll force. In the Elongation control mode the percentage elongation (reduction) is kept constant by applying constant tension and varying the roll separating force. Under this condition the constant mechanical properties are achieved along the strip rolling direction. This mode is popular where anti-fluttering properties are required. In this mode, shape correction is predominant. The elongation is measured using encoders mounted on the deflector roll and the strip tensions are kept constant. The roll force is varied based on feedback from the elongation measuring tachometers and the elongation set point. Elongation control mode is for constant mechanical properties along the rolling direction. In the Force control mode the roll separating force is kept constant by
You also mentioned “Roughness transfer”… The hot skin-pass mills are often used for transferring roughness to the strip. In case of hot rolled black strips usually the rolls are not textured due to the presence of scales. The oxides on the surface of the strip are sometimes thicker than the height of crests and valleys of the textured surface. This prohibits transfer of roughness to the strip. Also the roll surface gets loaded with scales/oxides leading to inferior roll surface. The texture transfer (with shot blasted rolls) is mainly carried out on the HRPO (Pickled and Oiled) strips where the product will undergo subsequent coating/painting operation. During skin-passing the work rolls transfers roughness to the strip. Average transferred roughness is around 50 percent of that of the work roll. The higher the rolling load, the higher is the roughness transfer.
44 Steel Insights, October 2012
Danieli HSPM in operation
technology opening or closing the gap irrespective of the thickness variation. In this mode, the elongation is achieved by keeping the entry and exit strip tensions constant. This mode is predominantly used when strip shape (waviness) correction is required and texture transfer is important. Roll force control mode is used for strip shape (waviness) correction and texture transfer. Strip elongation is achieved by the roll force and strip tension control. Is it possible to add other functions with hot skin passing? A Hot SPM can be provided with entry side welder, bridles, stretcher leveller, accumulator, side trimmer, oiler, inspection facility, walking beam conveyors, etc to improve on the yield, quality and production depending upon technical and production requirements. What is the presence of Danieli in hot skin pass mills installations worldwide? Danieli is the world leader with maximum number of reference installations of hot skin pass mills. From the initial installations of HSPMs with simple skin passing
operation, Danieli have HSPM installations with tension leveling and side trimming functions. Danieli is supplying the first HSPM for 2100mm wide strips with inline side trimming at Gerdau Acominas, Brazil. This unique mill will process 823,000tpy (1.2mtpy in phase 2) of hot rolled strip of LC and MC, API up to X56, shipbuilding, HSLA, pressure vessel, deep and medium drawing grades ensuring full compliance with final product requirements for suppressed yield points, improved strip flatness, roughness transfer and improved coil shape. In the last three years, Danieli Wean United has commissioned two number of most up to date 4-Hi Hot Skin pass Mills with a production capacity of 1,100,000 tons per year each, at Dragon Steel Corporation, Taiwan. These state-of-the-art mills are identical to each other. These mills will produce material to cater the demand of skin passed HRPO coils and HR black coils required for producing pipes, pressure vessels, pressed steel components for automobiles and other applications. Danieli received the order for a third HSPM from
the same customer but this HSPM will also include a stretch leveler in line. The first Danieli HSPM in the country will be installed at JSW Ispat Dolvi plant. How does this new technology find importance in the Indian steel industry? To meet the continuously increasing demand for higher quality hot rolled coils by the end users in India, the hot skin-passing will become the means of improving shape and properties of hot rolled coils especially with respect to strip flatness, elongation and surface roughness. I have already mentioned that hot rolled coils from conventional hot strip mills or thin slab casting & rolling plants need further processing like recoiling and skin passing to reduce the rejection rate. When the strip is used to produce pipes, pressed steel components, etc. its use is beneficial to increase quality and reliability of the end product by hot skin passing operation. With a large reference of Hot Skin Pass Mills installations worldwide, Danieli is committed to supply high quality and stateof-the-art plants to meet the present and future requirements of the ever changing market demand at an optimum cost.â€‚
Steel Insights, October 2012
SAIL targets `12,000-crore capex in FY13 Steel Insights Bureau
he Steel Authority of India Ltd (SAIL), the leading steel manufacturer of India, has planned a capital expenditure of `12,000 crore for fiscal 2012-13 after incurring a capital expenditure of `11,021 crore in 2011-12 to ramp up the company’s steel production. Apprising shareholders on the status of modernisation and expansion, chairman C.S. Verma informed that the completed new facilities include new Coke Oven Battery No.11 and Wire Rod Mill at IISCO Steel Plant, Sinter Plant No.3 & Coke Oven Battery No.6 at Rourkela Steel Plant and 700 tpd Air Separation Unit at Oxygen Plant-2 at Bhilai Steel Plant. SAIL’s modernisation and expansion program being implemented at an expenditure of around `72,000 crore, besides targeting higher production, also addresses the need for eliminating technological obsolescence, achieving energy savings, enriching product-mix, reducing pollution and developing mines and collieries. Notwithstanding the short term dampeners in the Indian and the world
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economy, he expressed confidence in the growth of the Indian steel industry driven by the increased infrastructure investment and higher pace of urbanisation. “In terms of per capita consumption of finished steel, India at 57 kg, lags behind the world average of 214.7 kg, indicating a huge potential for growth”, he said. In the area of enhancing power capacity from the present 1,000 MW to nearly 1,800 MW, NSPCL (a 50:50 JV of SAIL and NTPC) is preparing a feasibility report for setting up 2x250 MW power plant at Bhilai and 1x250 MW power plant at Rourkela. At the AGM, a special resolution was passed wherein SAIL was authorised to purchase, acquire or hold its own shares or other specified securities as per the applicable statutes. To maintain its current dominance in the domestic market and to meet future challenges, Verma stated that “SAIL is working on a long term strategic plan ‘Vision 2020’ which will steer the company towards meeting its strategic objectives of achieving higher profitability through organic and inorganic growth and infusion of state of the art environmental friendly technologies”.
C S Verma, Chairman, SAIL
The company is determined to meet its enhanced requirement of iron ore from captive sources, by augmenting production from existing mines and by developing new mines at Rowghat in Chhattisgarh and Chiria in Jharkhand. SAIL achieved production of hot metal, crude steel and saleable steel at 14.1, 13.4 and 12.4 million tons respectively, registering a corresponding capacity utilisation of 102 percent, 104 percent and 112 percent. Keeping up this trend, cumulative production of crude steel at SAIL was 5.65 million tons (mt) in April-August 2012, up by 3 percent. Steel sector growth
According to Verma, India’s steel sector needs to grow at about 8 percent with the GDP growing at 5.2 percent. In a media
Corporate interview to a newspaper, Verma said that growth in real consumption at 7.8 percent is a positive indicator but the output growth has been affected by availability of raw material and the weakening rupee. While global prices, both for flat and long steel, have dropped significantly, in India it has not been as bad. “It indicates that India can’t remain insulated from the happenings in global
PM’s Trophy for BSP Bhilai Steel Plant (BSP), the flagship unit of Steel Authority of India Ltd (SAIL), received the Prime Minister’s Trophy for emerging as the best performing steel plant in the country. Prime Minister Dr Manmohan Singh presented the Trophy for Best Integrated Steel Plant in the country to SAIL chairman C.S. Verma accompanied by CEO of BSP Pankaj Gautam in the presence of Union Minister for Steel Beni Prasad Verma and Secretary (Steel) D.R.S. Chaudhary. Stressing on the need to bridge gap between steel output and consumption, Prime Minister expressed satisfaction at the expansion program undertaken by public sector plants under SAIL, which, he said, will not only increase their production capacity but also improve the efficiency and productivity. With this, BSP has achieved the unparalleled distinction of being the only steel plant in the country, public or private, to have been honoured with the prestigious PM’s trophy 10 out of the 18 times it has been awarded since it was instituted. Steel from Bhilai has gone into various strategic sectors and projects of national importance, such as defense, atomic energy, power, infrastructure, heavy machinery, oil and gas, telecom, railway among others. The entire network of Indian Railways runs on rails supplied by Bhilai Steel Plant.
markets, but being a demand centre, the impact here is lesser than that in saturated Western economies,” he said. Verma said, last year SAIL had imported or converted about 1 mt of coke. This year, with the start of three coke oven batteries, the purchase and conversion will be 0.6-0.7 mt. The company has already commissioned the rebuilding of two coke oven batteries in Bokaro. This year, production of steel will increase with the start of a new blast furnace in Rourkela. The company is also setting up two new stem charge coke oven batteries in Bhilai and Bokaro on a build-operate-run basis and that should take care of SAIL’s coke requirement for another five to seven years, Verma said. Demand growth
SAIL feels that India’s steel demand is likely to be augmented following massive expansion plans of the Railways, including freight corridor and Metro projects, but lower than expected growth in steel demand in the country is a major concern. “Demand is not growing as per expectation whereas increase in domestic capacities is resulting into intense competition amongst domestic suppliers,” the company said in its annual report for 2011-12. According to the company, delayed project implementation, constant depreciation of rupee, highest interest rates and in some cases inadequate infrastructure for movement of imported units and distribution output is also affecting its performance. The report pointed that a number
of capacities, specifically in flat products category are expected to be commissioned in India in 2012 and 2013, which may lead to surplus over domestic demand in a few product categories. The company, however, sees an opportunity for the company as India’s medium term demand prospects continued to be strong allowing for capacity expansion of domestic players while there is growing demand of steel emerging from non-metro and rural centres. August output
The leading steelmaker has produced 1.16 mt of crude steel in August 2012 recording a growth of 7 percent as compared to the amount produced during corresponding period of last year, the company said in a statement. The cumulative production of crude steel by SAIL stood at 5.65 mt during AprilAugust 2012, up 3 percent over corresponding period of last year. With continued thrust on improving techno-economic parameters aimed at cost competitiveness, Blast Furnace productivity of the company in August 2012
Steel Insights, October 2012
Corporate was up by 9 percent on a year on year basis whereas concast production as a percentage of crude steel grew by 4 percent. Steel ministry advice
The largest steelmaker of India whose `61,870-crore expansion and modernisation project to increase its production capacity to 21.4 million tons per annum (mtpa) from 12.8 mtpa has been considerably delayed due to multiple reasons, has been advised to take immediate steps to improve its performance, an official of the ministry of steel said. “The ministry has expressed its concern over the fact that production of crude steel in 2011-12 has been lower by 3 percent over the corresponding period of the previous year,” the official said. SAIL’s crude steel production the year 2011-12 was 13.35 mt as compared to 13.76 mt in 2010-11. SAIL had earlier said its production had declined during the year mainly due to repairs of blast furnace and coke oven batteries at Bhilai Steel Plant and also because of frequent power disruptions at the Bokaro Steel Plant. Meanwhile, it is expected that the expansion at SAIL’s five integrated steel plants at Bhilai, Bokaro, Rourkela, Durgapur and Burnpur and special steel plant at Salem to enhance production capacity in the first phase to 21.4 mtpa is likely to be completed by 2013, the official said. Post completion of expansion project, the installed crude steel capacity of Bhilai Steel Plant will go up to 7 mtpa from 3.93 mtpa and that of Bokaro Steel Plant to 4.61 mtpa from 4.36 mtpa. The capacity of Durgapur Steel Plant will increase to 2.20 mtpa from 1.80 mtpa and that of Rourkela Steel Plant to 4.20 mtpa from 1.90 mtpa. He pointed out that the expansion plan of Rourkela Steel Plant is at an advanced stage and is likely to be completed within schedule. In case of expansion of IISCO Steel Plant, Burnpur, difficult and unforeseen soil conditions, removal of underground boulders and hillocks etc. led to substantial increase in civil and structural work and also entailed extra time, the official pointed out.
48 Steel Insights, October 2012
SAIL sweeps Vishwakarma Rashtriya Awards Steel Authority of India Ltd (SAIL) swept the Vishwakarma Rashtriya Awards with 54 percent of total awardees from SAIL after clocking `143 crore recurring annual savings and `58.8 crore one time saving from award winning projects. “It is a matter of pride for all of us that more than half of the total awardees who have won the Vishwakarma Rashtriya Puraskar (VRP) are from Steel Authority of India Limited,” SAIL chairman C.S. Verma said in a statement. Continuing with its glorious tradition of previous years, 64 out of total 118 awardees for the performance year 2010 were from SAIL, who were awarded by Union Minister of Labour and Employment Mallikarjun Kharge. The 13 awards won by SAIL went to 64 employees from SAIL’s five plants including Bhilai Steel Plant, Bokaro Steel Plant, Rourkela Steel Plant, Durgapur Steel Plant and Salem Steel Plant. One of the award winning projects includes design, development and installation of Purging System for skirt pressure impulse lines in Basic Oxygen Furnace, SMS-II of Bhilai Steel Plant. The skirt pressure lines maintain the draught in the Gas Duct of Gas Cleaning Plant of the convertor of SMS-II. Bearing close proximity to the convertor mouth, the tapping points of skirt pressure signal line were prone to get blocked due to splashing of metal and slag during steel making process, which had to be cleared using expensive inert gases. It is in response to this challenge that a group of workmen from Bhilai constructed an auto purging system of Tapping Points using high pressure nitrogen. The new system is not only more efficient and clean, but has forever replaced manual purging with a more ergonomic and speedy alternative.
In case of Bhilai Steel Plant (BSP) expansion, the timelines were affected due to inadequate deployment of manpower, lack of technically competent/skilled manpower and non-deployment of modern and robust equipment by the contractors, he said. An official of SAIL said the company has already taken various measures for expediting the project works including enhancing delegation of powers for faster decision making, strengthening of project management organization by recruiting or redeploying fresh and experienced project managers, assistance to contractors in the form of supply of steel, pipe and other SAIL products, provision of space for fabrication yard inside and outside the plant to facilitate the contractor in fabricating structures and reducing transportation delays. It has also set up a board sub-committee to review the physical and financial progress of the modernisation and expansion plans, the official said. SPU at Manhar
SAIL is reviewing the proposal to set up a Steel Processing Unit (SPU) at Manhar in Vaishali District of Bihar since the project has been found to be financially unviable, an official said. The land identified for Manhar SPU has been found to be low lying and thus significant land filling is required, the official said, adding, “as a result of which the project is financially unviable and is under review.” SAIL had laid the foundation stone for setting up of the SPU at three locations in Bihar at Bettiah in West Champaran District, in November 2007, and at Gaya and Manhar in December 2008. The company has already set up the SPU at Bettiah and has acquired land for the remaining two locations. However, in case of SPU at Gaya, the permission for change of land use is awaited from the state government. As far as the Bettiah unit is concerned, the company has completed integrated trials of pipe plant and corrugation unit and has already received orders from Central Marketing Organization (CMO) for production of pipes, the official said.
RINL posts 14% y-o-y growth in FY12 PAT Steel Insights Bureau
he Rashtriya Ispat Nigam Ltd (RINL) posted 14 percent year-onyear growth in profit after tax at `751 crore in 2011-12, A.P. Choudhary, CMD, RINL, informed at the 30th annual general meeting of the company. On the expansion front, Choudhary said that Stage-1 of the 6.3-million tons per annum (mtpa) expansion plan was brought to the stage of hot commissioning during the period. RINL’s production, besides surpassing 100 percent capacity for the 11th consecutive year, showed improvement and achieved better technical parameters such as fuel rate, energy consumption and water consumption. He said during the current financial year the Company for the first time has commenced the Redemption of Preference Share Capital with `100 crore being paid on March 31, 2012 and further redemption of a cumulative amount of `1,226.60 crore, the instalments of which were due between April 1 to September 1, 2012, thus totalling to `1,326.60 crore of redemption. Sarita Taneja, under-secretary to the government of India, ministry of steel, attended the AGM on behalf of the President of India as authorised nominee. Umesh Chandra, director (operations),
P. Madhusudhan, director (finance), T.K. Chand, director (commercial) and shareholders were also present. Other functional directors like Y.R. Reddy, director (personnel) and N.S. Rao, director (projects) were also present. P. Mohan Rao, company secretary, coordinated the proceedings of the meeting. Choudhary mentioned that RINL achieved overall good performance in the year while earning “Excellent” rating for the 3rd consecutive year against the MoU for the year 2011-12 signed with the Ministry of Steel. CIO100 award
For the highest level of operational and strategic excellence in Information Technology (IT) shown during the year, RINL-VSP and its CIO (IT Head) KVSS Rajeswara Rao and deputy general manager (IT) was conferred with CIO100 award, the company said in a statement. This year, the Seventh Annual CIO Symposium and Awards Ceremony was held at the Marriott, Hyderabad which witnessed 491 companies file nominations out of which 100 finalists were awarded. David Hill, President and CEO of IDG International Publishing Services and Chairman, FIPP, gave away the awards.
RINL prices (inclusive ED exclusive VAT/CST) for Sept’12 Sl. No.
Billet 125x125 mm
Channel 200x75 mm
Round 20.64 mm
Wire rod 7 mm
Wire rod 8 mm
Vizag Steel also bagged the CIO100 Special Awards under the category ‘Networking Pioneer’ for its network project “Alignment to best practices model in Enterprise Networking – Revamping of VSP Network from 1Gbps to 10Gbps and implementation of VLAN”. Founded in 1964, International Data Group (IDG) is the largest technology media, events and Research Company in the world with a presence in more than 90 countries. It has constituted an award titled CIO-100 award in different countries to recognize and honor 100 outstanding organizations and their CIOs (Chief Information Officer) who have been exemplary in their use of Information Technology to deliver business Value. It is the largest felicitation of its kind, honoring 100 IT leaders who are using Information Technology for getting the competitive advantage, optimising business processes, enabling growth or improving relationships with the customers. CIO 100 Award is an acknowledged mark of excellence in enterprise IT. It was started in the USA and now extends across countries like Canada, Sweden, Australia, Singapore, Vietnam, Hungary and India. ISO 50001 company
According to a statement released by the company recently, RINL-VSP which is a pioneer in adopting modern and green technologies and out of 240 MW of captive power, 150 MW of power is generating from waste heat, waste gas and waste steam etc. has added the certification of “ISO 50001” on Energy Management System. In fact, RINL was the first Steel Plant and the only public sector unit certified for Energy Management System BSEN:16001 in Dec 2010. The Energy Management System is upgraded to ISO 50001 by M/s BVCI with effect from August 6, 2012. D.V. Nanda Kumar of BVCI, handed over the certificate “ISO 50001” to R.Ranjan, Chief Executive (QMS, EMS, EnMS & OHSAS) and Executive Director (Works), RINL. A.P. Choudhary, CMD, congratulated the RINL team for achieving this prestigious certification, which will help the organization to scale to new heights in energy management systems.
Steel Insights, October 2012
No plan to exit Dhamra port: Nerurkar Steel Insights Bureau
ata Steel, one of the leading steelmakers of the country, has ruled out any immediate plan to exit from Dhamra port in Odisha, although its joint venture partner Larsen and Toubro (L&T) is searching for buyers to offload its 50 percent stake, according to information available with Steel Insights. “L&T is doing it first. We are where we are. They (L&T) are trying to do something. Our Board has not yet made up its mind, we have not yet taken it up,” H.M Nerurkar, managing director of Tata Steel told in reply to a query on the issue. Meanwhile, the L&T spokesperson refused to divulge any details regarding the matter and said, “As a matter of policy, our
company does not confirm or deny market speculation.” According to media reports, at a recent AGM, the L&T chairman had said the company has identified Dhamra Port Company Ltd (DPCL) as a non-core asset and is looking to find a buyer by the end of this fiscal. The port is strategic for Tata Steel and can be used as a gateway of transferring raw materials and finished products from its upcoming 6 million tons per annum (mtpa) steel plant in Kalinganagar, Odisha. DPCL has been awarded a concession by Odisha government to build and operate a port on Dhamra river in Bhadrak district on BOOST (Build, Own, Operate, Share and Transfer) basis for a total period of 34 years, including a period of four years for construction. The company, which
Tata Steel to supply rails to Europe project Steel Insights Bureau
ata Steel will supply about 50,000 tons of rails for the new BrittanyLoire Valley line, which will connect the French cities of Le Mans and Rennes. The steel will be manufactured in Scunthorpe, UK, before being rolled into rails at Tata Steel’s mill in Hayange, north east France, for delivery from 2015. The order value is likely to be around €50 million, the company said in a statement. The Le Mans to Rennes rail project is one of the biggest in Europe and will be built by the French construction company Eiffage. The new line will be an extension of an existing high-speed link and will reduce
50 Steel Insights, October 2012
travel times between Paris and Rennes by 37 minutes. The project is expected to create 10,000 jobs during the construction phase and will be completed in 2016. “One of the key reasons for awarding this letter of intent to Tata Steel was its commitment to deliver the rail when we need it, directly to the job site at Sablé and Laval,” Jean-Luc Trottin, managing director of Eiffage Rail said. “This is our second high-speed rail project
commenced operations in May last year, had suffered a `458-crore loss in the first year of operations, largely due to high interest cost and amortization, according to information available with Steel Insights. DPCL, which can handle about 25 million tons (mt) of cargo of various types of coal, limestone and iron ore, had handled 5.1 mt total cargo last fiscal. According to Tata Steel’s annual report for 2011-12, the two promoters of DPCL (Tata Steel and L&T) have pledged their 51 percent stake with IDBI Trusteeship Services. The financial details of the pledge have not been disclosed though. Located between two major ports, Haldia and Paradip, DPCL is one of the deepest ports of India with a depth of 18 metres, which can accommodate super Capesize vessels up to 180,000 DWT. The immediate hinterland of Dhamra port – Odisha, Jharkhand and West Bengal – is rich in mineral resources with reserves of iron ore, thermal coal, nickel, bauxite and chromite, all of which have significant export demand.
secured in the last year and is a recognition of our world-class products and services. We will be supplying rails, each measuring 108 metres long, for this new high-speed line, giving passengers a smoother ride and reducing maintenance costs,” said Gérard Glas, head of Tata Steel’s rail sector. “We have been investing significantly in state-of-the-art technology at our Hayange rail mill, almost €50 million in three years, to enable us to make the highest quality rail and help us create a sustainable future for our 400 employees there,” he added. In 2011, Tata Steel secured a major order to supply rail for a new, 302km (188 mile) long, high-speed line between the French cities of Tours and Bordeaux; and in 2009, French railway operator SNCF signed a €350-million contract with Tata Steel to buy rails for up to six years. Tata Steel supplied the rail from its Hayange plant for the track on which a TGV broke the world train speed record in 2007. The French train reached a speed of 574.8 kph (357 mph) between Paris and Strasbourg.
Jindal Steel arm acquires Canada’s CIC Energy Sanjukta Ganguly
indal BVI, a subsidiary of Jindal Steel and Power Limited (JSPL), has acquired Canada’s coal company CIC Energy for about $115 million (about `600 crore) by merging Jindal BVI with the foreign company, JSPL said in a statement. The Minister of Minerals, Energy and Water Resources of Botswana where CIC has its coal mines, has already approved the change of control from CIC to JBVI and all other approvals for the merger have already been granted and the merger certificate will be issued in the next few days marking the completion of the acquisition, the statement said. The deal will provide JSPL access to CIC’s high quality thermal coal in Greater Mmamabula coalfield in SE Botswana which is estimated to be in excess of 6 billion tons (approx) (including Measured and Indicated resource of 2.4 billion tons). “This is another step in the direction of backward integration as the coal assets will give the company self-sufficiency when it comes to dependency on natural resources. This will enable JSPL in becoming a more self-reliant and fuel secure enterprise,” JSPL’s director and Group CFO, Sushil Maroo said while speaking on the occasion.
The deal will provide JSPL the opportunity to tap the highly lucrative and power deficient South African Development Community (SADC) countries and given the huge resource, will also provide an opportunity to set up a coal to hydrocarbons project, the statement further added. As a result of the merger, JBVI, being the surviving company, will make cash payment of C$2 per share to the current CIC shareholders aggregating to C$116 million approximately. JBVI has already transferred the consideration amount to the depository for onward payment to CIC shareholders, the company statement said. In fact, CIC has already been granted water allocation for the mining and power plants and has also received the environmental approvals for its power projects. CIC has done extensive drilling in its coalfields and has drilled approximately 2100 boreholes totaling about 186,000 meters. According to information available with Steel Insights, the company has also already incurred development expenditure of C$246 million on the projects including the manpower costs and overheads. CIC Energy, the company which is the frontrunner for building a 1200 MW power plant in Botswana for supply of power to South Africa has assets of 6 billion tons coal resources in Botswana. The ROM coal quality which constitutes of ash ranging from 23 percent to 42 percent and the Gross Calorific value (GCV ) ranges from 3700 to 5500Kcal/Kg. The total area of the mines stretches for about 315 sq km (approx). JSPL, which already has acquired stakes in coal mines in South Africa, Mozambique, Australia and Indonesia, together with Jindal Power limited has chalked out an ambitious target of having more than 25,000 MW electricity generation capacity by 2020 and in the long run, this new deal would potentially provide the company a long-term source of coal, feel the industry experts.
Ravi Uppal new MD & CEO of JSPL Ravi Uppal has been appointed managing director & CEO of Jindal Steel & Power Limited (JSPL) with effect from October 1, 2012, the company said in a statement. Uppal, an alumni of IIT Delhi and IIM Ahmedabad, has worked with companies like ABB, Volvo and recently Larsen & Toubro, the statement said.
Uppal, who brings with him more than 35 years of experience of working in engineering and infrastructural segments in India and abroad, has successfully set up several new businesses and also turned around low performing units in the past. His appointment, therefore, is in line with the Group’s continued effort to further strengthen and professionalise its management for achieving an accelerated growth and business excellence both in the domestic and international markets, the statement added. “I am very pleased at the appointment of a business leader like Ravi Uppal who has an impressive record of achievements in diverse business domains. I am sure that his presence would give further impetus to our growth plans,” said Naveen Jindal, the Group chairman.
Steel Insights, October 2012
Fresh investments in steel to boost sentiment Steel Insights has started a group on LinkedIn called India Steel Market Watch (ISMW). The readers are welcome to join the group and participate in daily conversations and surveys conducted by ISMW on the online forum. Steel Insights may, at its discretion, publish the results of such surveys and discussions for the benefit of a larger audience.
Steel Insights Bureau
lthough the domestic s t e e l market in passing through a lean phase, the industry stakeholders seem to take interest in new investment proposals. The recent announcement by Steel Authority of India Ltd (SAIL) on fresh investments grabbed the eye balls and was welcomed by the members of ISMW on LinkedIn. As announced by company chairman CS Verma, SAIL has planned a capital expenditure of Rs 12,000 crore for fiscal 2012-13, which will be higher by around Rs 1,000 crore than the capex of Rs 11,021 crore in 2011-12. Verma said that SAIL’s overall modernisation and expansion programme of around Rs 72,000 crore will not only target higher production, but will also address the need for eliminating technological obsolescence and achieve energy savings, enrich product-mix, reduce pollution and develop mines and collieries. To maintain its current dominance in the domestic market and to meet future challenges, Verma stated that “SAIL is working on a long term strategic plan ‘Vision 2020’ which will steer the company towards meeting its strategic objectives of achieving higher profitability through organic and inorganic growth and infusion of state of the art environmental friendly technologies”.
52 Steel Insights, October 2012
As part of the investment proposals, SAIL has also decided to spend Rs 35,000 crore to set up plants for steel, power and urea at Sindri in Dhanbad. “The money will be invested in setting up steel plant, power plant and urea plant in Sindri,” Verma said. While Rs 25,000 crore would be spent on a new 5.6 million tons (mt) steel plant, Rs 5,000 crore each will be invested in a 1,000 MW power plant and 1.1 tons urea plant, Verma said. Over 20,000 people would benefit from direct and indirect employment after the plants come up. SAIL has 6,000 acre land at Sindri where these plants would come up in the next four years. Welcoming the move, N K Choudhary, Director and Group CEO, Pegasus Mineral and Metalalloys, said “It is a very good proposal to utilise this idle site and availability of raw material (which is) in plenty in Jharkhand region.” Goa iron ore mines
The other news that caught the attention of the members of ISMW was the Goa government’s decision to temporarily suspend operations in working iron ore mines. The Goa government has temporarily suspended operations of all the working iron ore mines in the state, pending verification of documents relating to mining activity and environmental clearances. In his order,
Principal Secretary (mining) R K Verma said, “It is necessary in order to scrutinize clearances obtained by the mining lease holders and allowing continuation of mining without proper scrutiny and verification of requisite approval.” The order by the state’s mines and geology department specifies that the suspension of mining operation shall not affect trade and transportation of ore already mined and existing in the lease hold area, in transit or stored or stocked on jetties. The order came three days after an enquiry commission headed by Justice MB Shah exposed an allegedly illegal mining scam to the tune of Rs 35,000 crore in Goa’s iron ore mines. Quality norms for steel
At the forum of ISMW, the members also discussed about the new quality regulation that has come into force for most long products but deferred for select flat steel products. Industry sources said the Centre has made the certification mandatory for most of the long products above 16 mm from September 12. According to the new BIS guidelines, all manufacturers, foreign and domestic cannot manufacture, import, store for sale or distribute steel and steel Products, which do not conform to the standards and which do not bear the standard mark (ISI Mark). However, a steel ministry notification said the implementation of the new government quality-control order has been deferred for some products so as to give steel mills more time to have their material certified by the Bureau of Indian Standards (BIS), as the new regulation mandates. The notification said among the products for which the regulation has been deferred were cold rolled grain-oriented (CRGO) electrical steel sheets and strips with HS codes 72251100 and 72261100. The regulation has also been deferred until March 31 for hot rolled sheets, strips and coils less than 6mm thick. The new deadline also applies to plates more than 80mm thick and weighing more than 12 tons under ultrasonic test conditions, and for plates less than 16mm thick and more than 4 metres wide, the notification said.
Iron ore movement drops on import curbs Steel Insights Bureau
ovement of iron ore through the 12 major Indian ports plunged 38 percent in the April-August period of 2012-13 due to restrictions imposed on mining and a hike in export duty on iron ore. The major ports together handled 17.03 million tons (mt) of iron ore in the April-August period compared to 27.46 mt handled in the same period last year. According to data released by the Indian Ports Association (IPA), Mormugao port handled the highest volume of 7.42 mt of iron ore in April-August. This volume, however, was about 20.81 percent lower
than the iron ore traffic moved through the port in the same period last year. The 12 major Indian ports Traffic handled at major ports have together handled 229.01 (During Apr-Aug, 2012* vis-a-vis Apr-Aug, 2011) mt of traffic during the first (*) Tentative (in ‘000 tons) five months (April-August) of April to August traffic % Variation 2012-13, 3.51 percent lower Ports against prev. than 237.33 mt recorded during 2012* 2011 year traffic the same period last year. KOLKATA The country’s major ports handled a total of 13.04 mt of Kolkata Dock System 4835 5140 -5.93 coking coal in April-August Haldia Dock Complex 12232 14282 -14.35 period, up 1.73 percent as TOTAL: KOLKATA 17067 19422 -12.13 compared with 12.82 mt handled in the same period last PARADIP 21079 24244 -13.05 year. VISAKHAPATNAM 25766 30539 -15.63 However, the movement of ENNORE 6794 5264 29.07 thermal coal through the major ports was up 2.11 percent to CHENNAI 22829 24713 -7.62 21.39 mt during April-August, V.O. CHIDAMBARANAR 11945 11772 1.47 compared to 20.95 mt achieved COCHIN 8636 8131 6.21 in the same period last year. Movement of container NEW MANGALORE 14043 13973 0.50 traffic in terms of tonnage and MORMUGAO 11661 14726 -20.81 TEUs showed an increase in MUMBAI 24164 21969 9.99 the April-August period. The major ports handled 51.37 mt JNPT 27599 26721 3.29 of tonnage and 3.30 million KANDLA 37435 35864 4.38 TEUs in April-August period TOTAL 229018 237338 -3.51 compared to 49.40 mt of
tonnage and 3.23 mt of TEU in the same period last year. Among the major ports, Paradip port had the distinction of handling the highest volume of thermal coal of around 7.03 mt in April-August period. Visakhapatnam port handled the highest quantity of 2.94 mt of coking coal during the period. Movement of coking coal through Paradip, Kolkata, Visakhapatnam, Chennai, Cochin and Mormugao ports declined during the period when compared to the corresponding period last year. Seven major ports showed positive growth in traffic handling during the AprilAugust period of the current fiscal, while the remaining five showed negative growth on a year-on-year basis. In terms of growth, Ennore port topped the list with a 29.07 percent increase in cargo throughput. New Mangalore port’s growth was lowest at about 0.50 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of 37.43 mt recorded for the period. The Mormugao port registered the highest decline of 20.81 percent in traffic handling during the period due to fall in iron ore export.
Steel Insights, October 2012
Railways commodity freight revenue down in Aug m-o-m Steel Insights Bureau
he Indian Railways’ revenue earnings from commodity-wise freight traffic fell month-on-month in August due to lower transportation of coal and cement. Revenue earnings from commodity-wise freight traffic during August 2012 stood at `6,328.28 crore, down 2.46 percent compared with `6,487.94 earned in July, according to information available with Steel Insights. The Railway’s revenue from transportation of coal fell to `2,537.7 crore in August from `2,702.17 crore in July. The Railways transported 36.69 million tons (mt) of coal in August compared with 39.36 mt transported a month ago.
54 Steel Insights, October 2012
Commodity-wise revenue Commodity
Quantity (in mt) August 2011
Coal i) for steel plants
ii) for washeries
Raw material for steel plants except ore
i) from steel plants
ii) from other points
i) for export
ii) for steel plants
iii) for thermal power houses iv)for public use
Pig iron and finished steel
iii) for other domestic users
Mineral Oil (POL) Container Service i) Domestic containers ii) EXIM containers iii) Total
Balance other goods
Total revenue earning traffic
Revenue from transportation of iron ore for exports, steel plants and for other domestic user in August fell to `620.84 crore, down 7.53 percent from `671.39 crore in July. The quantity of iron ore transported fell to 9.21 mt in August from 9.83 mt in the previous month. Revenue from transportation of cement in August stood at `551.57crore (7.52 mt)
from `587.09 crore (8.18 mt) in July, while that from foodgrains transportation rose to `597.09 crore (4.22 mt) in August from `499.83 crore (3.83 mt) in the previous month. The Railways revenue from transportation of fertilisers in August rose sharply to `427.08 crore (4.29 mt) from `374.18 crore (4.09 mt) in July. Revenue from transportation of petroleum oil and lubricant (POL) in August stood at `409.31 crore (3.83 mt), while the same from pig iron and finished steel from steel plants and other points was `397.9 crore (2.95 mt). Revenue from container services was `293.32 crore (3.31 mt) and from transportation of other goods was `381.92 crore (5.15 mt).
Macroeconomic indicators of India
INR movement against select major currencies
Steel Insights Bureau
89 84 79 74
INR vs GBP
INR vs USD, Yen
73 70 67 64 61 58 55 52 49 46 43
Inflation rate in India USD
9.00% 8.00% 7.00%
The INR which fell earlier in the month of September recovered its losses to rise to 52.78 towards the end of the month on speculation of Prime Minister’s measures to boost foreign investment which are attracting capital inflows as global funds poured $3.6 billion into holdings of the nation’s equities last month.
Foreign Exchange Assets
India’s WPI based inflation rose in August this year to 7.55 percent, mainly on back of rising prices of food items and manufactured goods. Manufacturing or core inflation rose to 6.14 percent in August from 5.58 percent in July, on the back of high prices of cotton textiles, paper and paper products, cement and lime. However, overall, food inflation declined to 9.14 percent in August, from 10.06 percent in July. July inflation stood at 6.87 percent while that in August 2011, was 9.78 percent. Inflation for June was revised upwards to 7.58 percent, from the provisional estimates of 7.25 percent. Experts expect inflation to rise further in the coming months mainly on account of a rise in price of diesel as input costs will rise and may rise above 8 percent by end-2012.
Wholesale price index (Selected categories) 220 210 200 190 180 170 160 150 140 130 120 110
in Rs crore
Source : OEA, GoI, Ministry of Commerce & Industry
in million $
in Million $
in Rupees crore
India’s foreign exchange (forex) reserves went down by $502 million to $293.97 billion for the week ended September 21 mainly due to rise in foreign currency assets by almost $48 million to $261.03 billion.
Index of Industrial Production 205 185 165 145
All Commodities Manufactured Products Basic Metals Alloys & Metal Products
Primary Articles Fuel & Power Steel
Source : OEA, GoI, Ministry of Commerce & Industry
ndia’s wholesale price index (WPI) (Base 2004-05=100) rose by almost 7.55 percent to 166.6 in August as compared to 154.9 recorded in the corresponding month of 2011. Also WPI for June this year was revised to 164.7 this month. The index for primary articles group increased by 10.08 percent to 219.5 from 199.4 in August the previous year. The index for manufactured products group also rose by 6.14 percent to 146.9 from 138.4 in August 2011. Fuel and power index rose 8.32 percent to 181 from last year while index for basic metals and metal alloys rose by 8.11 percent to 166.6 on rising prices of the product globally. Steel index however remained unchanged.
125 105 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Mining & Quarrying
Source : Govt. of India, MoSPI
Industrial output as measured by the index of industrial production (IIP) expanded just 0.1 percent year-on-year in July, from the 1.8 percent contraction seen in June with fourteen of the 22 industry groups that make up the pushing it into its second straight manufacturing index which is the biggest constituent of the IIP reporting a fall.
Steel Insights, October 2012
market report In the EU, Germany produced 3.4 mt of crude steel in August 2012, a decrease of 7.1 percent on August 2011. Italy’s crude steel production for August 2012 was 1.2 mt, down by 15.5 percent compared to August 2011. In August 2012, Spain produced 1.0 mt of crude steel, 10.3 percent lower than August 2011. France’s crude steel production for August 2012 was 1.0 mt, a decrease of 7.2 percent on August 2011. In August 2012, Russia produced 5.8 mt of crude steel, an increase of 1.8 percent compared to the same month last year. Ukraine’s crude steel production for August 2012 was 2.7 mt, 13.5 percent less than August 2011.
Global crude steel output down 3.92% in August
European Union (27) C.I.S. (6)
Asia Oceania Rest of the world except China World
56 Steel Insights, October 2012
Rest of the world except China
(in ‘000 tons)
World crude steel production
orld crude steel production for the 62 countries reporting to the World Steel Association (Worldsteel) was 123.7 million tons (mt) in August 2012, down 3.92 percent as compared to 128.787 mt in July 2012. However crude steel production for August 2012 was lower by just 0.46 percent compared to August 2011. In August 2012, Asia produced 81.794 mt of crude steel, an increase of 0.67 percent over August 2011. The EU produced 12.196 mt of crude steel in August 2012, down by 4.2 percent compared to the same month of 2011. North America’s crude steel production in August 2012 was 10.221 mt, 0.89 percent higher than the corresponding month of 2011. China, the single largest producer, produced 58.703 mt of crude steel in August this year, a decrease of 0.47 percent
as compared to the corresponding period in 2011, when production stood at 58.752 mt. Again, m-o-m production saw a fall of 4.85 percent as compared to July’s produce of 61.693 mt Elsewhere in Asia, Japan produced 9.208 mt of crude steel in August 2012, an increase of 3.35 percent compared to the same month last year. India’s production Crude Steel Production Growth Rate (Y-o-Y) for August 2012 stood at 6.36 mt, up 3.25 percent compared to August 2011. South Korea produced 5.674 mt during the same period, a 2.8 percent increase on the same month 2011. June10/09
Turkey’s crude steel production for August 2012 was 3.0 mt, an increase of 8.7 percent compared to August 2011. The US produced 7.5 mt of crude steel in August 2012, up by 1.2 percent on August 2011. Brazil’s crude steel production for August 2012 was 2.8 mt, down by 6.2 percent compared to August 2011. The crude steel capacity utilisation ratio for the 62 countries in August 2012 declined to 75.5 percent from 79.4 percent in July 2012. Compared to August 2011, it is 3.2 percentage points lower. It is to be noted that the March to August 2012 data covers 62 countries against 64 in March to June 2011. In January and February 2012, only 59 countries are covered as three African countries, Algeria, Libya & Morocco while two Middle East countries Iran and Qatar did not provide monthly production statistics.
Market Report market. The buyers were least interested in making any purchases as end user segments were yet to see any revival. The major factors which attributed to the marketâ€™s persistent sluggishness were poor construction activities, growing imports, extended monsoons, liquidity crisis, weak economic fundamentals and festivities. The market sentiment generally remained dull. The buyers have lost their confidence on speculations as it did not augur well for them in September.
Domestic flat & long markets
Low demand keeps markets subdued
Like every year, the festive flair has started spreading out across the country with the commencement of the month of October. Generally at this time there is a spurt in buying activities in the end market which pushes up the demand for materials, as a result of which the prices start to spiral up too. However, this year with the market coming out of a long lull, require a real push from the demand side to get up and going. So far there has been no real signal in the market and the buyers are really a bit sceptical about relying too much on speculation as it did not work out very well in September. Hence they are currently on a wait-andâ€“see mode. The market is expected to remain more or less quiet and not expected to show any major movement in the coming few days. Flat products
he flat products market continued to struggle in September on the back of downcast demand conditions and manufacturers started offering hefty discounts. However, despite the rebate offers, the movement of the materials remained sluggish and the buyers preferred to wait and watch. On the other hand, the domestic long and scrap steel market also remained by and large subdued across the country over the week. Poor construction activities, liquidity crisis among the buyers and weak economic fundamentals kept the market low as transaction activities remained sparse. Imports are a threat now with the Indian Rupee appreciating slightly against the US Dollar of late. The western corridors,
58 Steel Insights, October 2012
especially, have become vulnerable to the injections of imports. Long products
The long product market remained drab over the month. The market remained calm, with the sellers correcting their prices every now and then. Nevertheless, the demand remained slow as the construction sector continued to remain weak. There were lower number of enquiries and huge inventory in the
The sentiments remained weak on account of poor market conditions of the end products.
HR products price trend 34000
Steel Insights Bureau
Defective HR Plate-Rourkela Cobble Plate Def. Chequered Plate
Semi Rolled Plate Defective HR Plate-Bokaro
Defective Plate HR Sheet
Price in `/t is basic
Market Report CR products price trend 37000
35000 33000 31000 29000
against the US Dollar, and is giving the imports an edge to intrude into the domestic market. On the other hand, eventually Chinese market
experts believe that Indian offers will be kept unchanged next month. The domestic offers for HR coil of 2.5 mm stands at `34,000- 35,500 per ton ($635650 per ton) ex works excluding excise duty of 12.36 percent and VAT, whereas import offers from China stands at around $530-535 per ton cfr.
Long products price trend
Defective CR Coil
Defective CRNO Sheet
CR Sheet Cutting
UACE from HDGL
Price in `/t is basic
The major end-user sector of automobiles is on a slowdown and therefore, sales remained down. High diesel and petrol prices have also affected car sales in a big way. Outlook
The Rupee has slowly started appreciating
was also found to correct by $1520 per ton in this month. Moreover, with Chinese market showing signs of revival,
Wtd. Avg. Price(Rs./MT)
33000 CR Coil End from SPM - I
MM end Cutting
Price in `/t is basic
60 Steel Insights, October 2012
Indicative market price for August 2012 Steel Insights Bureau (Rs. Per tons)
BILLETS 100 MM
BLOOMS 150X150 MM
WIRE RODS 6 MM
WIRE RODS 8 MM
ROUNDS 12 MM
ROUNDS 16 MM
ROUNDS 25 MM
TOR STEEL 10 MM
TOR STEEL 12 MM
TOR STEEL 25 MM
ANGLES 50X50X6 MM
ANGLES 75X75X6 MM
JOISTS 125X70 MM
JOISTS 200X100 MM
CHANNELS 75X40 MM
CHANNELS 150X75 MM
PLATES 6 MM
PLATES 10 MM
PLATES 12 MM
PLATES 25 MM
H. R. COILS 2.00 MM
H. R. COILS 2.50 MM
H. R. COILS 3.15 MM
C. R. COILS 0.63 MM
C. R. COILS 1.00 MM
G. P. SHEETS 0.40 MM
G. P. SHEETS 0.63 MM
G. C. SHEETS 0.40 MM
G. C. SHEETS 0.63 MM
MELTING SCRAP H M S - I
MELTING SCRAP H M S - II
SPONGE IRON (COAL BASED)
NOTE: (1) All prices are in `/Ton and has been compiled on the basis of average of main & others producers’ price. (2) Prices are inclusive of Excise Duty & Sales / Vat Tax (3) All prices are as on 16 day of every month (4) Prices are indicative. The indicative market price is calculated as per the methodology prepared by the committee constituted by members from SAIL, ERU & JPC.
62 Steel Insights, October 2012
Production, Imports, Exports, Availability & Apparent Consumption (provisional) April - August 2012 Steel Insights Bureau (in â€˜000 tons)
FINISHED STEEL PRODUCERS
Non-Alloy Steel (Carbon) 2012 - 13 (Prov.)
2011 - 12 (Prov.)
a) Prod. of Main Producers
2012 - 13 (Prov.)
2011 - 12 (Prov.)
% Variation 5.7
d) Imports $
e) Exports $
Others Less : IPT/Own Consumption c) Total Production for Sale
e) Availability (c+d-e) f) Variation in Stock g) Apparent Consumption (e-f) Less : Double Counting Real Consumption
2011 - 12 (Prov.) 3959
2012 - 13 (Prov.) 4183
b) Prod. of Major Producers $
Source: Steel Ministry
Steel Insights, October 2012
Ferro alloys & metals price trends Steel Insights Bureau Ferro alloys & Metals
Ex-works Rs/ ton Ferro Silicon (Si - 70%) 70250
Ex-works Rs/ ton HC Ferro Chrome (Cr - 60%) 68500
Ex-works Rs/ ton HC Ferro Manganese (Mn - 70%) 54000
Ex-works Rs/ ton Silico Manganese (Mn - 60%, Si - 14%) 55000
Ex-works Rs/ ton MC Ferro Manganese ( Mn - 70%, C -1.5) 74500
Ex-works Rs/ ton LC Ferro Manganese (Mn - 70%, C - 0.1) 119000
Ex-works Rs/ kg Ferro Vanadium 735
Ex-works Rs/ kg Ferro Moly (Mo - 60% min) 1055
Ex-works Rs/ ton Ferro Titanium (Ti - 30%) 157500
64 Steel Insights, October 2012
Iron ore export data for August 2012 Steel Insights Bureau
Unit price (in Rs/ton)
Quantity (in tons)
14 Aug 12
17 Aug 12
30 Aug 12
3 Aug 12
16 Aug 12
23 Aug 12
Quantity (in tons) 181,798
6 Aug 12
8 Aug 12
113,275 2 Aug 12
Unit price (in Rs/ton)
9 Aug 12
10 Aug 12
16 Aug 12
52 30 Aug 12
17 Aug 12
79,342 23 Aug 12
27 Aug 12
22 Aug 12
25 Aug 12
17 Aug 12
1 Aug 12
4 Aug 12
JAPAN 28 Aug 12
24 Aug 12
29 Aug 12
30 Aug 12
Steel Insights, October 2012
Tear along the dotted line
Tear along the dotted line
66 Steel Insights, October 2012
Published on Oct 5, 2012
Published on Oct 5, 2012
Steel Insights is a monthly magazine providing he widest coverage of the Indian steel industry. From iron to finished steel, technology for...