Steel Insights, December 2015

Contents 19 Low prices may channelise iron ore supplies to India 21 Moody’s keeps negative outlook on Asian steel cos 22 Housing For All may boost economy by 3.5% by 2022: Ind-Ra 24 Construction equipment industry may grow to $15 bn by 2020 25 FDI limit overhaul to benefit cash strapped builders 26 Clear-cut strategy must for ferro alloy availability: FIMI 28 Difficult days ahead for Indian ferro alloymakers 29 Coking coal offers drop further in November 30 Diwali fireworks continue in November car sales 31 Wind energy: New global roadmap beckons 34 Tata Steel dedicates Kalinganagar steel plant 35 Corporate snippets 36 Double whammy puts US steel industry on the mat 39 Primetals gets final nod for secondary dedusting system at Czech co 40 Thickest austenitic stainless steel slab cast in Belgium 41 Govt to address stress in steel sector, assures Tomar 42 Iron ore handling by major ports down 48% in Apr-Oct 43 Railways’ October iron ore handling up 916.10% m-o-m 44 Global crude steel output up 2% in October m-o-m 51 Price data 52 Ferro alloy data 53 Production data 56 Import data

4 Steel Insights, December 2015

6 | COVER STORY

‘Make in India’ fills alloy steel mills with hope

14 | COVER STORY

Despite high imports & low demand, alloy steel mills bet on government programs for a turnaround.

Global measures helping Chinese stainless steel imports into India ISSDA creating life cycle cost benefit awareness on uses to rejuvenate industry operating at 50% capacity.

23 | FEATURE

Ship-breakers in choppy waters as scrap rates dip Ship breakers in choppy waters as scrap prices fall and rupee devalues.

45 | INTERVIEW

Auto, electrical stamping, transformer segments stand China ground: Power2SME Steel contributes about 70% of turnover of Co which aggregates SME procurement.

48 | INTERVIEW

‘Beneficiation can help set up steel mills across country’ Angarak Resources has tied up with leading beneficiation companies in China to provide the best technology.

Cover Story

‘Make in India’ fills alloy steel mills with hope Tamajit Pain

6 Steel Insights, December 2015

Cover Story

I

n line with the other segments in the steel space in India, the alloy steel industry is in the midst of depressed demand conditions aggravated by high imports.

The government has issued a Stainless Steel Products (Quality Control) Order, 2015 in a bid to introduce stringent quality norms and rein in rising imports and that has crippled the domestic industry.

The order, issued by the union steel ministry on Thursday, will come into effect three months of its official notification. It makes it mandatory for all manufacturers of stainless steel flat products to seek a certification from the Bureau of Indian Standards (BIS). It prohibits “manufacture, storage, sale or distribution of any stainless steel product specified in the Schedule which do not conform to the specified standards and do not bear the standard mark of the BIS.” According to the official notification, “Sub-standard or defective stainless steel products which do not conform to the specified standard, shall be disposed of as scrap as per the scheme of testing and inspection of the BIS.” It will be applicable to products like stainless steel sheets and strips for utensils, low nickel austenitic stainless steel for utensils and kitchen appliances and stainless steel plates, sheets and strips.

Stainless steel imports into India jumped 49 percent in volume terms over the previous year to cross 5.5 lakh tons in 201415 against 3.7 lakh tons in 2013-14, out of which China accounted for nearly half of the imports. However, a substantial portion of the stainless steel capacity has remained idle in recent months due to the onslaught of imports.

Total alloy steel imports jumped 124 percent to 2.60 million tons in 2014-15.

Total alloy steel production in India stood at 9.32 million tons, while consumption stood at around 8.03 million tons in 2014-15.

However, the industry is optimistic.

Industry players say it is expected that global stainless steel production will grow in 2015 and particularly in India. India’s per capita consumption of 1.9 kg is well below the world average of 6 kg - potential to cover the gap.

India’s GDP likely to grow 7-8 percent in the coming years and domestic consumption of stainless steel is likely to increase 9-10 percent.

New government initiatives like “Make in India”, Smart Cities, focus on sanitation facilities are likely to benefit the stainless steel Industry.

Alloy steel

Alloy steel is that which is alloyed with a variety of elements in total amounts between 1.0 percent and 50 percent by weight to improve its mechanical properties. Alloy steels are broken down into two groups: Low-alloy steels and high-alloy steels.

Strictly speaking, every steel is an alloy, but not all steels are called “alloy steels”. The simplest steels are iron (Fe) alloyed with carbon (C) (about 0.1 percent to 1 percent, depending on type). However, the term “alloy steel” is the standard term referring to steels with other alloying elements added deliberately in addition to the carbon.

Common alloyants include manganese (the most common one), nickel, chromium, molybdenum, vanadium, silicon, and boron.

Less common alloyants include aluminum, cobalt, copper, cerium, niobium, titanium, tungsten, tin, zinc, lead, and zirconium.

The following is a range of improved properties in alloy steels (as compared to carbon steels): Strength, hardness, toughness, wear resistance, corrosion resistance, hardenability and hot hardness. To achieve some of these improved properties the metal may require heat treating.

Some of these find uses in exotic and highly-demanding applications, such as

in the turbine blades of jet engines, in spacecraft, and in nuclear reactors. Because of the ferromagnetic properties of iron, some steel alloys find important applications where their responses to magnetism are very important, including in electric motors and transformers.

According to industry sources, stainless and alloy steel make up around 8 percent of Indian steel demand.

Steel containing alloying elements like chromium, nickel, molybdenum and vanadium are used in highly specialised applications in automotive, engineering, railways and Defence sectors.

Alloy steel’s product profile includes grades of more than 400 varieties and the products are bars, wire rods, wires and bright bars.

The sizes vary from a wide range from 3 mm to 250 mm, while the shapes are rounds, squares, flats, hexagons, rectangles and customised shapes.

Alloy steels are produced conforming to international specifications such as Japanese (JIS), German (DIN), American (AISI/ SAE), Russian (GOST), British (BS) and Indian (BIS).

The product is supplied as rolled, forged, heat treated (annealing, hardening and tempering), cold finished, smooth turned and centreless ground.

Requirements of alloy steels are in small batches ranging from 500 kg to 60 tons per grade. Each alloy steel grade is tailor-made as per customer specification, quantity requirements and end application.

The manufacturing process can be of two types: 1. Electric arc furnace route 2. Mini blast furnace route Leading alloy steel producers are SAIL’s alloy steel plant and Bhilai steel plant, Jindal Stainless Ltd, Mukand, Usha Martin,

Alloy steel production & consumption in India ( in’000 tons) Product

2010-11

2011-12

2012-13

Production

Consumption

Non-flat

2468

2400

2569

2591

2780

2922

3659

3668

6237

6723

Flat

1746

2224

1917

2940

1850

2753

1951

2656

3089

1310

9326

8033

Total Steel Alloy

1151 4214

3473

1024 4486

4507

Consumption Production

2014-15

Consumption

Less: Double Counting

Production

2013-14

Production

1324 4630

4351

Consumption Production Consumption

1740 5610

4584

Source: Steel Ministry

Steel Insights, December 2015

7

Cover Story

Global measures helping Chinese stainless steel imports into India

T

he stainless steel industry is facing an onslaught of imports. Remedial measures like anti-dumping duties imposed by Vietnam, the EU and the recent investigations

by Malaysia into Chinese stainless steel flat products only further close these markets to stainless steel products from the dragon country. Consequently, these goods find a way into the Indian markets. At present, domestic stainless steel manufacturers have an installed capacity of nearly 5.4 mt a year but are operating at less than 50 percent capacity, almost half of which is used in making utensils and house-ware products. However, in the last few years, India has seen a complete transformation in the enduser application of stainless steel. Today, it is finding application in rail wagons, tankers, building and construction, nuclear plants, power, oil and gas, N C Mathur, President, Indian Stainless Steel Development Association & Chairman, Steel Furnace Association of India, tells Madhumita Mookerji of Steel Insights. ISSDA has been consistently helping create awareness among designers and specification writers on the benefits of stainless steel in various applications, using the life cycle cost benefits of specifying material. Excerpts from an interview:

Globally, what is the scenario like in the stainless steel industry? What is China’s share in this trade and where does India stand?

Globally, stainless steel production has been growing steadily. The International Stainless Steel Forum (ISSF) reported a meltshop production of 41.68 million tons in 2014.

Asian stainless steel producers account for almost 74.42 percent of the global production. Among Asian producers, China

14 Steel Insights, December 2015

alone accounts for 21.69 million tons (52 percent of total production). As seen in the pie chart, if we include other Asia, which includes India, Japan, Korea and Taiwan, almost 74 percent of the world production is happening in Asia. India has been a part of this impressive growth with its production of nearly three million tons in 2014, making it the third-largest producer and secondlargest user of stainless steel in the world.

The average growth in India recorded a

compound annual growth rate (CAGR) of over 8-9 percent over the last 10 years, double the world average growth during the period.

What is the current scenario like in the domestic steel industry in terms of installed capacity and actual production and utilisation levels?

At present, domestic stainless steel manufacturers have an installed capacity of nearly 5.4 mt a year, but are operating at less than 50 percent capacity, producing 2.7 million tons of mill products against a domestic consumption of 2.5 million tons, almost half of which is used in the making of utensils and house-ware products.

What is the demand like for stainless steel in India? How will industry meet the demand gap in future?

The ISSDA 2013 market survey report optimistically projected that Indian stainless steel consumption would grow at a healthy pace to reach around 5.46 million tons by 2022. India, at present, is quite selfsufficient in cold rolled and hot rolled stainless steel products with large capacity addition by the Steel Authority of India (SAIL), Jindal Stainless, BRG Group and others.

The overall cold rolled capacity is around 1.525 million tons which is sufficient to meet the projected demand until 2018.

Similarly, in case of hot rolled products, the country has a capacity of 3.55 million tons which is sufficient to meet the projected demand until 2020. This growth in the domestic market is likely to be serviced by

feature

Low prices may channelise iron ore supplies to India Steel Insights Bureau

A

s India embarks on an aggressive drive to become a manufacturing powerhouse and revamp its ailing infrastructure, the country may emerge as a bright spot for iron ore demand. The nation’s potential growth could act as the long-awaited trigger to help iron ore prices break out of the trough.

Price of ore, a vital ingredient for steelmaking, has recently tumbled to $42 a ton, thanks to the excess supply (low-cost miners like BHP Billiton and Vale continue to churn out output), and dwindling demand from China, the world’s largest iron ore importer.

There is more bad news in store. Fitch Ratings has predicted more than 145 million tons (mt) of new supply coming to the market next year. As a result, analysts warn, prices could go below the level of $40 next year. This forecast is primarily based on the negative cues coming from the steel mills in China and the traders.

In such a scenario, the market is gradually shifting its focus to India. Currently, Vedanta Resources of the UK is the only major foreign miner active in India, but the analysts believe other heavyweight firms could turn to the Indian markets soon.

It is interesting to note the recent trend in trade-flows.

Way back in 2008-2010, India used to be one of the biggest exporters of iron ore, but over the last few years, that trend has reversed. Indeed, a 2011 ban on domestic mining in the mineral-rich states of Karnataka, Odisha and Goa led to a severe supply deficit, resulting in increased need for foreign supply. Imports are already on rise and have crossed a record 15 mt in 2014-2015.

While the ban has since been lifted, output caps have been imposed, which further underpins import growth. In Goa, for instance, iron-ore production cannot exceed 20 mt per year and each miner is allocated a specific amount. The cap is 5.5 mt for Vedanta, for example.

Meanwhile, Prime Minister Narendra Modi’s decision to treble spending on roads, highways and other public infrastructure projects could boost steel consumption by 7-8 percent in the 2016 calendar year, versus an estimated 4 percent rise this year, analysts said.

Furthermore, in reaction to a flood of steel imports over the past year, the government has levied a 20 percent safeguard duty on imports in September after raising custom duties twice this year.

Former Rio Tinto boss Tom Albanese echoed these sentiments, saying India’s iron ore industry is likely to be

Steel Insights, December 2015

19

Interview

‘Beneficiation can help set up steel mills across country’

T

he current demand for beneficiated ore is high and this is likely to go up to over 100 million tons in the next 10 years.

However, Indian companies lack both technology and knowledge regarding beneficiation. India has billions of tons of low grade hematite and magnetite iron ore across states stretching from Kerala and Tamil Nadu to Gujarat, Madhya Pradesh and the North East, which is not being used.

Beneficiation can thus allow integrated steel players to set up plants in any of these states that are generally not looked upon as a favourable steel manufacturing location. One can use low grade iron ore, beneficiating the same to higher grade at a nominal cost. The government too needs to be educated on these aspects, Sri Krishna Kejriwal, Managing Director, Angarak Resources Pvt Ltd, tells Rakesh Dubey of Steel Insights.

Excerpts.

Tell us something about Angarak Resources, such as how it came into existence, who are its promoters and partners?

Angarak Resources Pvt Ltd was incorporated on June 24, 2014. Its promoter is a graduate metallurgical engineer from IIT Kanpur with over 30 years’ experience

48 Steel Insights, December 2015

in steel-making and rolling. Technology is his hobby and he has helped the Steel Authority of India (SAIL) shift to Fe 500 grade TMT steel from the Fe 415 grade it was originally making, thus saving Indian customers thousands of crores of rupees by using 18 percent less steel for construction.

The business began when an international sales manager of Shunda Mining Machinery Co Ltd (A top 10

mining crusher company) came to visit us in May 2014 to sell beneficiation equipment.

She said she would meet again after 2-3 weeks post visiting other clients.

During the next meeting, we enquired how business was as mining was booming in India. But she was disappointed and said no business had happened so far. It was said in jest that it can’t be hard to sell mining equipment and we could do it easily. She said ‘Ok. Do it!’ It was a challenge and we agreed to take it up!

Shunda was our first supplier. From one it increased to seven beneficiation companies to cover all the different equipment needed like WHIMS, hydrocyclones, VCD, balls mills, spiral separators etc.

Mecon called us in end-May as they got to know we could beneficiate from over 45 percent Fe hematite to over 65 percent Fe in concentrate. They wanted to sign a contract with us for beneficiation technology. However, they could do that only do with a company and not a private person and so a company was created to enable that. Thus, Angarak Resources Pvt Ltd was formed.

Angarak means Mars in Sanskrit and is an apt name since this red planet has an influence on earth and the colour red is the colour of iron ore too. So both our business start-up and company formation owe their creation to pure circumstances.

From beneficiation, we have expanded to cover all the needed lines from mining to steel manufacture and rolling. Today we are, may be, the most integrated supplier for mining to steel equipment in India from China. We have access to the best technology suppliers in China for it. We have two suppliers who make together 40 million tons of steel, but we give preference to “Make Steel in India”.

We only market any technology or equipment once we have understood it and are convinced of the technology, equipment and supplier.

What are the new facilities/technologies that have come up in recent years for beneficiation?

The major technological change in the last 4 years is high intensity magnetic separators

62 Steel Insights, December 2015

Tear along the dotted line

Tear along the dotted line