Steel Insights, February 2020

Contents 21 Imported scrap offers move down

6 | COVER STORY

22 Pig iron production down y-o-y, m-o-m in December

Flat Makers

23 December sponge iron production up 9% on year 24 December crude steel production down 0.8% y-o-y 29 Global crude steel output up 3.4% in 2019 30 Government plans to take coastal shipping share to 12% by 2025

Steel mills are shrugging off downtown with special offerings

25 | FEATURE

34 Seaborne coking coal offers rise in January

Union Budget proposal to boost steel sector

35 High financial commitment key concern over commercial mining norms

National infrastructure pipeline shows intent to unleash capex cycle

37 Global crude steel output up 3% in December

31 | FEATURE

38 Traffic handled by major ports up 1% till December

Motown starts 2020 on a low key

39 Railway’s coal handling in December up 1.5% on year

In January passenger car sales drop 5.3% over year, OEMs project negative growth

40 Government update 42 Tata Steel’s Q3 sales volume up marginally 44 JSW Steel report sharp fall in consolidated net profit 46 Shakambhari Ispat plans to expand capacity 47 Corporate update 54 Import Export data 58 Price trends 60 Production data 62 Consumption data 63 Import data 64 Export data

4 Steel Insights, February 2020

48 | INTERNATIONAL Coronavirus epidemic

China crisis infects global trade and manufacturing, Hubei auto hub hit

51 | TECHNOLOGY

Global steel makers set CO2 emission targets Using Hydrogen in blast furnace a challenge, says Nippon Steel

Cover Story

Flat Makers

Shrugging off downturn with special offerings Tamajit Pain

6 Steel Insights, February 2020

Cover Story

F

lat steel products are commonly used in capital goods, consumer durables or white goods and automotive industry.

Flat steel comprises of hot rolled coil, cold rolled coil, hot rolled plates and galvanized coil which are rolled from semi-finished steel products such as slabs, ingots or billets in the slabbing mills.

Flat Steel market in India is dominated

by JSW Steel, Tata Steel, Steel Authority of India (SAIL) and Essar Steel (now ArcelorNippon Steel).

Jindal Steel and Power (JSPL) is mainly into plates.

Apparent flat product consumption in FY19 stood at around 44.39 million tons (alloy + non-alloy), up 4 percent from 42.58 million tons in the same period last year, according to steel ministry data.

Consumption of non-alloy HR coils in FY19 stood at 14.94 million tons, up 2.7 percent from 14.54 million tons in corresponding period last year. Consumption of non-alloy plates stood at 5.60 million tons, up 8 percent from 5.18 million tons in the same period last year.

Consumption of CR sheets/coils stood at 5.87 million tons, while that of GP/GC & Galvalume stood at 7.29 million tons.

Import of flat products (non-alloy + alloy) in FY19 stood at 6.78 million tons, while exports stood at 5.37 million tons, according to JPC figures.

Latest data showed during the AprilDecember period of FY20, flat products consumption (non-alloy + alloy) rose 1 percent to 35.82 million tons. Import of flat products during the April-December period of FY20 stood at 4.91 million tons (non-alloy + alloy), while exports stood at 5.81 million tons (non-alloy + alloy).

Drop in imports and increment in exports implied that the country is now producing export quality material meeting international demands.

However, the domestic demand for flat products remained low owing to slow demand in consumer durables or white goods, capital goods and automobile sector.

Flat steel products

Flat steel products consist of sheets and

plates. They are rolled from slabs, which are a semi-finished steel product. These are used in a wide range of industries ranging from automobile and domestic appliances to shipbuilding and construction.

Flat products are further segregated.

Hot rolled sheets are used in automobiles, construction, agricultural equipment and machinery.

Cold rolled sheets are used to make predominantly high-precision products that include automobiles and domestic appliances.

Coated sheets are a sub-category of cold rolled steel and are coated with aluminium and zinc. This enhances the anti-corrosion properties of steel. As discussed previously, since steel is highly corrosive, it is mixed with other elements to enhance its quality.

Plates are generally made to customer specifications and are used in construction, shipbuilding and industrial machinery.

Hot rolled steel

Hot rolled (HR) steel is produced at temperatures in excess of 1,000 degrees Fahrenheit. In this process, the metal

Flat product production and consumption - April 2018 to March 2019 (in ‘000 tons) Stocks

Consumption

April 2018-March 2019 Gross Production

Import

Consumed for Downstream Processing

Exports

Availability

Plates

5,641

431

-

420

5,652

454

505

51

HR Coil/skelp

37,185

1,951

21,601

2,608

14,927

1,519

1,504

-15

Product Category

As on 1st April 2018

As on 31st March 2019

Variation in Stock

April 2017 March 2018

Consumption variation over last yer (%)

5,601

5,184

8.0

14,942

14,547

2.7

April 2018 March 2019

Non Alloy

HR Sheets

2,421

2

-

1

2,422

189

199

10

2,412

2,315

4.2

CR sheets/Coil

14,688

565

8,687

642

5,924

251

302

51

5,873

6,359

-7.6

GP/GC sheets/ coil

8,049

1,089

746

946

7,446

502

654

152

7,294

5,891

23.8

Colour coated coils/Sheet

1,489

128

-

37

1,580

-

-

-

1,580

1,899

-16.8

Elect sheets

300

703

-

48

955

15

16

1

954

728

31

Tin plates (including w/w)

468

192

-

40

620

-

-

-

620

588

5.4

TMBP

0

7

-

-

7

1

1

-

7

1

600

Pipes

2,204

336

-

324

2,216

54

56

2

2,214.00

2,006.00

10.4

0

77

-

2

75

-

-

-

75

65

15.4

72,445

5,481

31,034

5,068

41,827

2,985

3,239

254

41,570

39,583

5.0

43

-9

2,826

3,006

-6

3,282

245

44,396

42,589

4%

Tin free steel Total

Alloy + Stainless Steel Flat

3,655

1,300

1,827

311

2,817

52

Total Finished Steel Total Flat

76,100

6,781

32,861

5,379

44,644

3,037

Steel Insights, February 2020

7

FEATURE

Union Budget proposals to boost steel sector

Steel Insights Bureau

T

he Union Budget presented

by Finance Minister Nirmala Sitharaman recently in the Parliament have some significant projects and investments that are to be made in the construction, infrastructure, and railways sector.

Duty changes related to steel sector

♦♦ Basic Customs duty on calcined petroleum coke falling under tariff 2713 1210 and 2713 1290 is being reduced from 10 percent to 7.5 percent ♦♦ It has been observed that imports under Free Trade Agreements (FTAs) are on the rise. Undue claims of FTA benefits

have posed threat to domestic industry.

Such imports require stringent checks.

In this context, suitable provisions are being incorporated in the Customs Act. In the coming months government shall review Rules of Origin requirements, particularly for certain sensitive items, so as ensure that FTAs are aligned to the conscious direction of our policy

Steel Insights, February 2020

25

INTERNATIONAL

230 of the Fortune Global 500 firms, now wore a deserted look, under lockdown.

lockdown has already severely impeded logistics operations that rely on access to highways to carry goods into and out of the region, while severe delays should also be expected on inbound and outbound air cargo shipments,” says a report by Resilience360, part of the DHL group.

As supply chain managers race to assess the potential impact of the virus outbreak on their supply chains, they will need to cope with the propagation of new or the extension of existing city lockdowns and the delayed restart of manufacturing activities in the affected areas and beyond.

Companies and factories in several major cities and provinces including Beijing, Zhejiang, Jiangsu, Guangdong and Shanghai have been ordered to halt their operations until at least February 9 with the exception of medical equipment, pharmaceutical companies, supermarkets, utilities and logistics companies in a bid to quell the coronavirus outbreak.

The virus has already spread globally with most confirmed cases being reported in China, in addition to overseas cases in the US, Singapore, South Korea, Hong Kong, Macau, Taiwan, Thailand, France, Australia, Malaysia, Japan, Canada, Vietnam, Pakistan, India and Nepal.

Thousands of flight cancellations to and from Wuhan have been announced by domestic and international carriers, while port congestion and delays have been reported on the Yangtze River as authorities attempt to control the outbreak. If the lockdowns continue it could have a major impact on industrial production throughout China.

Winner’s curse

Beyond SARS

Since January 23, the deadly coronavirus outbreak in Wuhan has triggered full or partial lockdowns in 12 more Chinese cities that have severely restricted key land, air, and maritime transport routes from across the country.

“Severe disruptions to inbound and outbound air cargo shipments, trucking and rail cargo services, as well as heavy port congestion for vessels along the Yangtze River near Wuhan will likely persist as the coronavirus crisis unfolds. The regional

The epidemic is drawing comparisons to the SARS outbreak, which paralyzed the economies of China and Hong Kong for weeks in 2003. But what happens in China carries a lot more weight these days.

In 2003, China accounted for 4 percent of global output. Now its share is 16 percent, according to the World Bank. The death toll from month long coronavirus outbreak touched 490 in China and 24,324 cases of infections. In 2003 during the SARS outbreak 349 people had died.

Coronavirus epidemic: China crisis infects global trade and manufacturing Hubei auto hub worst hit; authorities tries hard to revive economy

Sumit Maitra

W

hen Renault, maker of popular SUVs like Kwid and Duster, ventured into China in 2016 to set up its maiden manufacturing plant, it chose Wuhan, China’s automobile hub in the central province of Hubei.

“Wuhan, a traditional industrial powerhouse in central China, advances seven spots this year. High-tech industries, such as chip-making and biomedicine, continue to add growth potential to the city’s economy,” said a report on ranking of Chinese cities prepared by Milken Institute.

The city that attracted investments from

48 Steel Insights, February 2020

TECHNOLOGY

Global steel makers set CO2 emission targets Using Hydrogen in blast furnace a challenge

“Our roadmap and the emissions reduction target of 30 percent by 2030 for Europe is a big step in the right direction. It’s not a onesize-fits-all model, as different parts of our business are at varying starting points.”

Geert Van Poelvoorde, CEO, ArcelorMittal Europe This includes a carbon border adjustment complementary to the existing ETS and the Just Transition Fund, to invest in research, innovation and green technology.

Initiatives and technologies underway or to be implemented at ArcelorMittal Europe – Flat Products’ different sites include:

Steel Insights Bureau

A

rcelorMittal Europe has set target to cut carbon emissions by 30 percent by 2030, to contribute to the European Commission’s Green Deal.

It has announced a CO2 roadmap for ArcelorMittal Europe – flat products, is in line with an ambition to be carbon neutral in Europe by 2050.

The roadmap to achieve the 30 percent target is based on three distinct pathways that have the potential to deliver a significant reduction in carbon emissions, including: ♦♦ Clean power steelmaking, using clean power as the energy source for hydrogenbased steelmaking, and longer term for direct electrolysis steelmaking

♦♦ Circular carbon steelmaking, which uses circular carbon energy sources, such as waste biomass, to displace fossil fuels in steelmaking, thereby enabling lowemissions steelmaking ♦♦ Fossil fuel carbon capture and storage, where the current method of steel production is maintained but the carbon is then captured and stored or re-used rather than emitted into the atmosphere.

Key to the success of the roadmap will be supportive policy to ensure a global level playing field and so ArcelorMittal is banking on the European Commission’s Green Deal, and believes the right market mechanisms are a critical part of enabling the deployment of low-emissions steelmaking.

♦♦ Carbalyst – capture waste gases from the blast furnace and biologically convert it into bio-ethanol. The €120m launch project at ArcelorMittal Ghent is expected to be completed in 2020 ♦♦ IGAR – captures waste CO2 from the blast furnace and converts it into a synthetic gas that can be reinjected into the blast furnace in place of fossil fuels to reduce iron ore. An industrial pilot of this technology is being developed at ArcelorMittal Dunkirk in France. ♦♦ Torero – €40m investment to convert waste wood into bio-coal to displace the fossil fuel coal currently injected into the blast furnace. Our first large scale demonstration plant in ArcelorMittal Ghent is expected to be in operation by the end of 2020 ♦♦ Reducing iron ore with hydrogen – €65m investment at Hamburg site to

Steel Insights, February 2020

51

66 Steel Insights, February 2020

Tear along the dotted line

Tear along the dotted line