Steel Insights, January 2018

Page 1


Contents 20 2017: the year of long- overdue restructuring of steel industry 22 Coking coal offers surge in December 23 NMDC, Odisha miners increase offers 25 Year ends on a high for Motown 27 Steel demand growth facing cyclical upturn 29 Prices of silico manganese on high growth trajectory 30 Global crude steel output down 6% in Nov m-o-m 31 Traffic handled by major ports up 3% in Apr-Nov 2017 33 Railways’ November iron ore handling slip 12.66% 34 New Year expected to be better for steel industry: Tata Steel CEO 35 SAIL supplied 6.20 lakh tons rails to railways in 2016-17 36 JSPL completes 250 ton basic oxygen furnace at Angul 37 RINL posts 30% growth in turnover in Apr-Dec 2017 38 Corporate update 40 Committee set up for revival of SAIL, RINL: Vishnu Deo Sai 41 Primetals to supply two continuous slab casters, hot rolling mill to JSW Steel Dolvi plant 42 China still a key factor in global steel market in 2018 51 Price data 52 Ferro alloy data 53 Production data 56 Consumption data

4 Steel Insights, January 2018

6  |  COVER STORY Long products rise from construction rubble

16  |  COVER STORY

Construction activities are boosting growth of long products in India at present, thanks to the government’s infrastructure push.

SME long products makers to play key role by FY31 As the share of SMEs is predominant in long products, they are likely to enhance their capacity utilization.

18  |  COVER STORY

‘Long products likely to grow over 10% in 7 years’ Key challenges include obsolete technology, high pollution rates and tax evasion in the secondary sector.

46  |  INTERVIEW

‘Low spend on IT slowing India’s mining operations’ Deployment of IT helps to increase safety, efficiency and productivity, but the Indian miners seem reluctant to take advantage.

48  |  INTERVIEW

‘ABC, ART sectors growth drivers for stainless steel in India’ Architecture, building & construction (ABC) and automotive, railways and transport (ART) driving stainless steel growth


Cover Story

Long products rise from construction rubble Madhumita Mookerji & Tamajit Pain

I

ndia, being a developing economy, has a dominance of long products over flat. Long products have been primarily driven by the growth in the construction and infrastructure sectors and, to some extent, have been driven by the auto and engineering industries as well. But, primarily, construction activities in roads and bridges are boosting the growth of long products in India at present, thanks to the government’s emphasis on infrastructure construction. The construction sector, in fact, accounts for 50 percent of India’s total steel consumption. However, long products consumption grew a mere 1 percent in April-November, 2017 to 27.78 million tons against 27.52 million tons seen in the same period of the previous fiscal. But, there is room for huge growth since the project awarding in infrastructure has started gaining ground. Thus, one may have to take a slightly long-term view on the growth of the long products segment. In fact, industry experts feel that since the maximum components of long products (reinforcement bars, wire rods, structurals, and railway products) are used in the construction and infrastructure sectors, the health and development of this critical segment would be the primary driver of growth of long products in India. “This is the current scenario and would continue to be the same in the coming years also. The

6 Steel Insights, January 2018


Cover Story

SME long product makers to play key role by FY31

A

s the share of the SMEs is predominant in long products, it is expected that they will be able to enhance their capacity utilization by a significant extent. In wire rods, there will be increasing demand for the high carbon variety. The demand for electrode quality, tyre bead quality and cold heading quality would also be substantial. It is expected that the quantity of imports in these varieties would come down due to higher availability from the domestic sources. The scenario for long products would be influenced by the trend towards special grade wire rods for industrial use, rebars with higher Fe content, structurals with light-gauge high-performance properties and rails with head hardening properties and stainless steel rebars. However, the major challenge being faced by the SMEs pertaining to long products is the conformation to the Mandatory Quality Control Order issued by the Ministry of Steel, Sushim Banerjee, Director General, Institute for Steel Development & Growth (INSDAG), tells Tamajit Pain.

What is the total share of steel long products in the entire 100-odd million tons of steel produced in India? What is the production level of long products by the integrated steel players and secondary players in this basket? India has produced 98 million tons of crude steel in FY17. The finished steel production in India during the year was 101.8 mt. Share of long products in finished steel production was 43 percent. Out of the total production 44 mt of long products in FY17, the share of the integrated steel players was 32 percent and the balance 68 percent was from other players in the small and medium enterprises (SME) sector. India has a target of 300 mt by 2030. What would be the demand for long products in

16 Steel Insights, January 2018

that kitty? Which segments are the largest long consumers and which segments will drive growth, going forward? National Steel Policy, 2017 has indicated a capacity target of 300 mt of crude steel by India by 2030-31. The finished steel demand by FY31 has been estimated to be at 230 mt, where long products’ share has been projected at around 55 percent. Since the maximum components of long products (reinforcement bars, wire rods, structurals, and railway products) are used in the construction and infrastructure sectors, the health and development of this critical segment would be the primary driver of growth of long products in India. This is the current scenario and would continue to be the same in the coming years too. The construction segment comprises of real estate (residential construction), industrial


Cover Story

T

‘Long products likely to grow over 10% in 7 years’ What is the total share of steel long products in the entire 100-odd million tons of steel produced in India? What is the production of long products by the integrated steel players and secondary players in this basket? The share of long products is 46 million tons (mt) and in this kitty, the share of integrated steel producers is 16 mt and secondary producers’ share is 30 mt. India has a target of 300 mt by 2030. What would be the demand for long products in that kitty? What factors are driving the growth of long products in India at present? The share of long products will be 150

18 Steel Insights, January 2018

mt in the 300 mt targeted by 2030. The current growth drivers will be the National Highway Authority of India (NHAI), road projects, buildings, railways, ports and housing projects. Thanks to the overall infrastructure push by the government. Important projects like the railway network expansion and railway electrification, those in the transmission and telecom tower sectors, national and state highways, Bharatmala projects, ports connectivity, Dedicated Freight Corridors (DFCs), Housing for All, the Smart Cities programme, etc will definitely boost long products consumption in the long run and help in growth of this sector.

he share of long products is slated to touch 150 million tons (mt) in the 300-mt target set by the government by 2030 from the present 46 mt. However, while there are enablers like the government’s emphasis on infrastructure development, the key challenges include obsolete technology, high pollution rates and tax evasion in the secondary sector, Vijay Kumar Chama, Executive Vice-President (S&M), Jindal Steel & Power Limited, tells Madhumita Mookerji. Excerpts from an interview:

Experts are betting big on infrastructure development, going forward. So, by how much would this benefit long products growth? Long products will be the main beneficiary with the push for infrastructure development –roads, ports, housing, Smart Cities, bridges, new and expansion of existing railway network, Dedicated Freight Corridors, high rise buildings, Metro Rail projects etc, as already mentioned. At your company what is the share of long products compared to other products in your portfolio? The capacity is 55 percent and the current


Interview

‘Low spend on IT slowing India’s mining operations’

W

ith around 20,000 clientele worldwide, Carlson Software of the US can boast of its unique software and hardware product lines for the mining and construction industries. Deployment of IT helps to increase safety, efficiency and productivity, but the Indian miners seem to be reluctant to take advantage of these novel offerings, say Alexander Efimov, Director, Carlson Software and Harkeerat Singh, Assistant Manager, Technical, Carlson Software (SIPL), in an exclusive interview to Arindam Bandyopadhyay. Excerpts:

46 Steel Insights, January 2018

Please tell us about Carlson Software’s genesis and its IT product offerings for the Indian coal mining industry. Carlson Software was established in 1983 in Kentucky, USA, which is a major coal producing region in the country. The first software we developed was for mining engineers and surveyors working in underground mines. Our current product line includes geological packages and software for mining, training and design for opencast and underground mines. Also, we


interview

ABC, ART sectors growth drivers for stainless steel in India

T

he stainless steel sector has been in the news recently with the government initiating protectionist measures to safeguard it from the onslaught of cheap exports from China. Stainless steel production in India touched 3.6 mt in 2017, making the country the second largest producer after China. Increase in demand for stainless steel is the main reason for increased production, says Ashok Gupta, Director, Finance & Marketing, Jindal Stainless (Hisar) Ltd. In a freewheeling interview to Ritwik Sinha, Gupta says two segments have been driving the growth of stainless steel consumption – architecture, building & construction (ABC) and automotive, railways and transport (ART). On the policy front, Gupta hopes that there will be some relief for the stainless steel industry in the form of an import duty cut on raw materials, including on ferro nickel and stainless steel scrap, in Union Budget 2018-19. There is also a need to curb unwarranted imports into the country by bringing the basic customs duty on stainless steel flat products at par with carbon steel, at 12.5 percent. Since cheap quality imports continue to be a threat to the domestic industry, experts hope that the government will move more quickly in implementing the quality control order on more stainless steel products. Excerpts:

48 Steel Insights, January 2018

Government has recently initiated a lot of protectionist measures like countervailing duty against Chinese products to safeguard stainless steel imports into India. Has this positively impacted business? The measures to safeguard the domestic stainless steel industry were long awaited. In fact, the measures should have been implemented earlier as the domestic stainless steel industry was severely impacted by unwarranted and sub-standard stainless steel imports for the last 5 years, especially from China. At this stage, the industry is still recovering from the damage caused by such imports. China alone accounted for over 50 percent of the total imports of stainless steel into India. Although there is a slight impact in total imports at the moment, but it is too early to judge the impact of CVD on stainless steel industry in India as stainless steel players will take some time to resume to normal trade.


62 Steel Insights, January 2018

Tear along the dotted line

Tear along the dotted line


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.