Steel Insights, January 2022

CONTENTS 1 4 Imported scrap trade pick up 15 India pig iron production down y-o-y in November 16 November sponge iron production up y-o-y, m-o-m 17 November crude steel production up 2.2% y-o-y 18 Coking coal prices to ease gradually: Aussie govt report 23 Kanpur Metro uses pre-engineered steel for faster project execution 25 Year ends in a mixed note for Motown 27 Seaborne coking coal offers rise in December 28 Iron ore handled by major ports down 24% till November 29 Railways’ iron ore handling up 14.5% till November 30 Global crude steel output down 1.6% in November 33 Posco plans corporate revamp for a green future 36 Tata Steel India delivery up 19% in 9 months 37 CIL plans major investments in tech to achieve 1-bt output 39 NMDC should target 110 mt by 2030: Steel Minister 40 “2022 to be a very promising year”: RINL CMD 45 Jindal Stainless group gets rating upgrades 47 JSPL expansion project to begin from September 49 JSW lays roadmap to 18 mtpa Vijayanagar capacity by FY24 51 Corporate update 53 Government update 55 Import export data 59 Price trends

4 Steel Insights, January 2022

6 | COVER STORY

Total recall: Covid shadow on demand revival Analysis of challenges posed by the pandemic.

21 | FEATURE

Coal Ministry puts 206 mt of coking coal reserve under 4th tranche Out of 99 mines, 2 pure coking coal and 2 coking plus thermal coal mines are on offer.

24 | FEATURE

MECON invites application for specialty steel PLI scheme March 29 fixed as last date to submit applications.

31 | INTERNATIONAL

China to focus on iron ore mining, energy use cut in steelmaking Raw Material Industry Development Plan released.

42 | CORPORATE

AM/NS gets state nod for 24 mtpa Odisha project Plant to use green-tech and make value-added items.

COVER STORY

Total recall:

Covid shadow on demand revival Sumit Moitra and Tamajit Pain

6 Steel Insights, January 2022

COVER STORY

C

alendar 2021 was marked by several ups and downs for Indian steel mills.

Even as steel prices skyrocketed bringing in handsome profits for them, the second Covid surge and ensuing oxygen crisis stifled crude steel production.

Domestic demand revival helped steelmakers concentrate more on highmargin local demand ignoring export opportunities at cheaper rates.

At the later part of the year, Chinese export rebate cancellation opened up new opportunities even as Indian mills exhausted and exceeded their Europe exports quotas in the first five month of the year to stay afloat during the Covid surge.

The European Commission extended safeguard measures for another three years bringing in new challenges.

Auto production was hit by the semiconductor shortage while mills intermittently raised prices, in tandem with their export prospects.

Even as the steel sector closed 2021 with new hope for the New Year, resurgence in the mutated varieties of the virus has dampened the spirit.

According to analysts, average steel realization in the third quarter increased marginally by 1-3 percent or `850 to `2,000 a ton over the previous year.

The price increase was higher for longs than for flats as decade high price gap between two contracted during the quarter, analysts said.

On the global front, decline in consumption and correction in steel prices due to slowdown in the real estate market has made Chinese steel sector vulnerable at a time when the world’s largest steel producing country cuts back on its output to ensure a blue sky.

United States, on the other hand, is pumping in 1 trillion dollar into infrastructure spending which is expected to substantially boost country’s steel consumption thereby keeping steel prices firm in the US market.

India has announced several infrastructure spending initiatives which have turned into the steelmakers only hope for demand

sustenance during uncertainty over private sector spending.

Price movement

Indian steel prices started rising from the second half of May 2021, led by China’s cancelling of the 13 percent rebate on exports of 146 products, including Hot Rolled Coils, wire rods, rebar, galvanised sheets and others.

This move pushed up global flat steel prices by around $100/ton and Indian domestic prices too on the back of greater export opportunities.

The Chinese move, along with increased export volumes to Europe, helped to raise trade-level domestic HRC rates from April onwards.

Prices, which had been hovering in a moderate range of `54,000/ton around February-March 2021, started a northward journey from April that culminated at a record `70,900/ton in November 2021.

The pent-up demand peaked in the JuneSeptember 2021 quarter pushing up both HRC and CRC prices to record levels.

Prices started dipping around July, dragged down by monsoon when demand traditionally dampens but picked up from October, buoyed by an upturn in global prices and consumption, but dropped off later in the year in line with global steel prices, especially in China.

Beyond China, buoyancy in demand and tight supply conditions have kept the steel prices elevated, with USA steel prices remaining firm at nearly $1,950 per ton in December after rallying from $550 per ton in June 2020 to $2150 per ton in October 2021.

Similarly, European steel prices despite correction after sharp rally from $450 per ton in June 2020 to $1400 per ton in June 2021, continued to trade firm at above $1000 per ton amidst resurgent steel consumption.

Domestic demand remain subdued

Steel demand for the past few months has remained tepid after domestic steel prices touched their highest levels in October 2021.

To entice buying interest, major steel mills cut list prices for December 2021

“Indian steel sector is slated to post doubledigit demand growth of 15-17 percent in fiscal 2022 after dropping by 6 percent in fiscal 2021 With respect to steel end use segments, the double-digit recovery expected in FY22 is to be driven by 16-18 percent rise from infra, healthy rise in housing led by real estate construction and 12-15 percent increase in auto production.”

JSPL deliveries. However, this sluggishness in demand is expected to be continued till January 2022.

India’s Industrial Production Index (IIP) grew by just 3.2 percent y-o-y in October at the slowest pace in eight months, data released by the Ministry of Statistics and Programme Implementation shows.

The output of the manufacturing sector, which accounts for over three-fourth of the total weight of the index, grew by a mere 2 percent y-o-y in October.

The demand recovery is still being seen as tentative as the Omicron variant of Covid-19 could be a disruptor in the coming months.

Steel Insights, January 2022

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FEATURE

Coal Ministry puts 206 mt of coking coal reserve under 4th tranche

Steel Insights Bureau

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total of 2 pure coking coal mines and 2 coking coal plus thermal coal mines are on offer out of 99 mines put up by the Coal Ministry under the 4th tranche of auction of commercial mines under the Mines and Minerals (Development and Regulations) Act. Altogether 206 million tons (mt) of coking coal reserve is on offer while the reserve of the 2 combo mines is 573 mt, as per the presentation made by CMPDI. After the successful auction of 30 coal mines in the first two tranches and upon receipt of 53 bids for 20 coal mines under tranche 13 of CM(SP) Act and tranche 3 of MMDR Act, Ministry of Coal has now launched the auction process of 24 new coal mines (9 new mines under Tranche 14 of CM(SP) Act and 15 new mines under the Tranche 4 of MMDR Act).

With coal mines rolling over from third round of commercial auctions and second attempt of second tranche of commercial auctions, there shall be a total of 99 coal mines on offer.

Out of the 99 coal mines: 59 coal mines are fully explored while 40 mines are partially explored.

Apart from 24 new mines, 75 mines are being rolled over from previous tranches.

Mines are spread across 8 coal bearing states.

These mines are spread across eight coal bearing states of Jharkhand, Chhattisgarh, Odisha, Madhya Pradesh, Maharashtra, West Bengal, Andhra Pradesh and Telangana.

Under the 3rd tranche of auction launched earlier, 37 companies have bid for 20 mines against 88 mines on offer. Major bidders are JSPL, Vedanta, Tangedco, Dalmia Cement, Sunflag Iron & Steel, JSW, Nalco among others. The auction would be held from January 7.

Minister of Coal Pralhad Joshi launched the 4th tranche of auction of 99 coal mines on December 16 including 24 new mines in an event in New Delhi.

Launching the latest tranche, the Minister called upon the investors who have already completed successful bidding of coal mines to start production at the earliest for greater self-reliance in this sector.

Joshi also urged the officials to identify more coal blocks for auctioning.

There wouldn’t be any dearth of demand, Joshi pointed out arguing that for at least 30 to 40 years, coal will continue to be crucial in India’s energy sector.

The Minister urged investors to step up participation in the fully transparent auction process evolved by the Coal Ministry.

The list of mines has been finalised post detailed deliberations and mines falling under protected areas, wildlife sanctuaries, critical habitats, having forest cover greater than 40 percent, heavily built-up area etc. have been excluded, the Minister added.

The commencement of sale of tender document started on December 16.

The auction shall be held online through a transparent 2 stage process, on the basis of percentage revenue share.

SBI Capital Markets, sole transaction advisor to Ministry of Coal for the commercial coal mine auction, had devised the methodology and is assisting the Ministry in conduct of the auction.

Further incentives for bidders in the works

Further incentives are being contemplated by the Ministry of Coal with focus on sustainability, the Ministry indicated during the event.

Key features of the proposed 4th tranche of auction include introduction of National Coal Index, ease in participation with no restriction for prior coal mining experience, full flexibility in coal utilisation, optimised payment structures, efficiency promotion through incentives for early production and use of clean coal technology.

New provisions in Standard Coal Mine Development and Production Agreement

Sustainable and mechanised operations y Successful Bidder shall implement mechanised coal extraction, transport and evacuation in coal mine y Shall strive to minimise carbon footprints from operations and promote sustainability

Steel Insights, January 2022

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FEATURE

MECON invites application for specialty steel PLI scheme Product category details

Steel Insights Bureau

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tate-owned MECON Ltd, on behalf of the Steel Ministry has started accepting applications from investors looking to invest under the productionlinked incentive (PLI) scheme for specialty steel.

As per disclosure in the MECON-run website, March 29 has been fixed as the last date to submit the applications.

On July 22, 2021, the Union Cabinet chaired by Prime Minister Narendra Modi had approved a `6,322-crore PLI scheme to boost production of speciality steel in India, targeting investment of about `40,000 crore and and generating 5.25 lakh job opportunities.

The outlay of `6,322 will be released over a period of 5 years.

The scheme will also help the nation save `33,000 crore foreign exchange annually for import of speciality steel.

The scheme was notified by the government on October 22 and uploaded on the website of the Ministry of Steel and was opened up for applications on December 29.

Coated/ Plated Steel Products

High Strength Wear resistant Steel

Specialty Rails

Alloy Steel Products and Steel wires

Electrical Steel

1

Galvanneal/ GI-Auto-Gr

2

Tin mill Products

3(a)

Coated/ Plated products of Metallic

3(b)

Al-Zn coated (Galvalume)

4

Colour Coated

5(a)

HR Coil, Sheets and Plates API Gr 52 = X <=70

5(b)

HR Coil, Sheets and Plates API Gr>X-70

5(c)

High Tensile Sheets, Coil, Plates, YS>=450

6

Auto Gr Steel AHSS (CRCA)

7(a)

Boiler Quality, Pressure Vessels

7(b)

QT/ Abrasion Resistance and Wear

8(a)

Asymmetric Rails

8(b)

Head Hardened rails

9(a)

Alloy Steel: Tool and Die Steel

9(b)

Alloy Steel: Valve Steel

10

Alloy Steel: Bearina Steel

11

Automotive Powertrain steel

12

Preciprtation Hardened Stainless Steel

13

Tyre Bead wire

14

C- Class Zinc Coated Wire

15

Zinc-Aluminium Coated Wire

16

Tvre Cord (Brass Coated)

17

Oil Tempered Spring Steel Wire

18

Cold Rolled Grain Oriented (CRGO)

19

Cold Rolled Non-Grain Oriented (CRNO)

The five categories of speciality steel that have been included in the PLI scheme are:

Application process flow

♦ ♦ ♦ ♦ ♦

Coated/Plated Steel Products High Strength/Wear Resistant Steel Specialty Rails Alloy Steel Products and Steel Wires Electrical steel

The scheme will provide productionlinked incentive to companies registered under the Companies Act, 2013 after qualifying through the application process and achieve committed incremental production prescribed for each product sub-category and make minimum prescribed investment in creating new capacity for manufacturing the applied sub-category product.

Gazette notification for modification in PLI scheme

In a notification dated July 29, 2021 of Ministry of Steel published in the Gazette of India, some amendments were made.

Table-1 of para 3 was revised as under: PLI Slab

FY24

FY25

FY26

FY27

FY28

PLI-A (%)

4

5

5

4

3

PLI-B (%)

8

9

10

9

7

PLI-C (%)

12

15

15

13

11

In para 9.1, following two lines of the para are revised as under: ♦ (a) The release of incentive will be from FY25 to 2030-31 ♦ (b) The period of 5 years will commence from FY24 (PLI to be released in FY25) Table-2 at para 11.1 of scheme document is revised as under: FY

Outlay (in crore)

FY25

775

FY26

1,088

FY27

1,394

FY28

1,377

FY29

1,293

FY30

222

FY31

173

Total

6,322

Following the announcement of the scheme, state-owned steelmaker SAIL has said it would consider availing the benefits when it draws up its next round of capex plans while private players like JSPL and Tata Steel have also indicated they were contemplating registering for the PLI scheme.

24 Steel Insights, January 2022

INTERNATIONAL

China to focus on iron ore mining, energy use cut in steelmaking

Press conference of China’s Ministry of Industry and Information Technology to introduce the development plan of the raw material industry during the 14th plan period. Chen Kelong, Director of the Department of Raw Materials Industry of the Ministry of Industry and Information Technology, Deputy Directors Chang Guowu and Feng Meng, and Xie Bin, Director of the New Materials Division attended the event.

Steel Insights Bureau

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hina plans to mine more iron ore and bring down energy consumption in the steel sector by 2 percent from current levels and go for green development of raw materials on an urgent basis during the country’s 14th five-year period (20212025), according to a strategy document, ‘Raw Material Industry Development Plan’, brought out by its Ministry of Industry and Information Technology (MIIT).

China plans to promote more domestic exploration of iron ore and consumption of scrap to reduce reliance on imports, according to the report.

The strategy document plans to raise self-sufficiency in raw materials significantly by raising supply of scrap steel to more than 30 percent, encouraging domestic mining and reducing steelmaking capacity.

“The raw material industry is the foundation of the real economy and a basic industry that supports the development of the national economy. It is a key area [for China] to gain international competitive

advantages,” said the plan jointly drafted by MIIT and the Ministry of Natural Resources.

The plan also aims to reduce carbon emissions in the aluminum sector by 5 percent by 2025.

“The comprehensive energy consumption of producing 1 ton of crude steel will be reduced by 2 percent. Energy consumption used per unit of clinker - an intermediary cement product - will be reduced by 3.7 percent. Carbon emissions from producing aluminum by electrolysis will fall by 5 percent,” Chen Kelong, Director of the Department of Raw Materials Industry of the Ministry of Industry and Information Technology, said.

“Overall, both the intensity and total volume of pollutant emissions in key industries will be reduced. In addition, the utilization rate of industrial waste and other solid waste will be further improved,” he added.

The country’s demand for bulk raw materials, including steel, primary aluminum, and cement, will progressively hit a peak and decline, the document said.

“The role of the main battlefield of industrial green and low-carbon development is high.

The key supporting role of technological competition is to accelerate the realisation of high-quality development.”

Chen Kelong, Director, Department of Raw Materials Industry Initiating green and safe development of its raw materials industry was vital in the wake of China’s ambitious carbon targets and constraints on its resources and ecology, MIIT said in the document.

Major modernisation projects

As per the plan document, the key tasks and major projects can be summed up as ‘5 modernisations and 5 projects’.

The five modernisations initiatives are: ♦ high-end supply ♦ structural rationalisation ♦ green development ♦ digital transformation ♦ system security

Steel Insights, January 2022

31

CORPORATE

AM/NS gets state nod for 24 mtpa Odisha project Steel Insights Bureau

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M/NS India has received the approval of Odisha government’s High-Level Clearance Authority (HLCA) under the chairmanship of Chief Minister Naveen Patnaik for the proposed 24 million tons per annum (mtpa) integrated steel plant at Kendrapara district to be set up at an investment of `1,02,275 crore.

“The project will create significant number of indirect employment through ancillary and downstream industries. The facility will produce various grades of steel

and value added downstream products,” the state government said.

The facility will also produce 18.75 million tons of cement per year, making it one of the largest cement plants in the country.

The company plans to develop a downstream industry park to promote the MSMEs and help import substitution while it will give huge boost to ancillary manufacturing.

“The approved project is the largest project in manufacturing sector in the country.

A number of international equipment manufacturers will be stakeholders in this

project,” the state government added. The project will be completed in a phased manner over a period of seven years.

The company earlier this year signed a Memorandum of Understanding for setting up a 12-mt steel plant in Kendrapara, for an investment of `50,000 crore.

The 24-mtpa integrated steel plant would make various grades of steel through green steelmaking technology and also high value-added downstream products.

This would promote several ancillary manufacturing facilities creating manufacturing hubs centering the steel facility.

The various facilities owned by AM/NS across India are: ♦ 8.6 mtpa integrated steel plant at Hazira ♦ 8.0 mtpa beneficiation plant at Dabuna, Odisha ♦ 2 x 6 mtpa pellet plants at Paradeep, Odisha, linked via a slurry pipeline to the Dabuna beneficiation plant. ♦ 8 mtpy Beneficiation Plant at Kirandul, Chhattisgarh ♦ 7.2 mtpa pellet plant at Vizag linked via slurry pipeline with the beneficiation plant at Kirandul, Chhattisgarh ♦ 0.7 mtpa Cold Rolling Complex including pickling, cold rolling, galvanising and colour coating facilities at Pune, Maharashtra.

The pellet plants at Vizag and Paradeep produce Direct Reduction (DR) grade and Blast Furnace (BF) grade pellets respectively.

The entire production of DR grade pellets is consumed by the natural gas-based DR plant at Hazira, whilst a significant portion of the BF grade pellets is consumed by the BF and COREX units at Hazira, with the balance BF grade pellets being sold in the market.

Development of riverine jetty of 4.5 mtpa at Jagatsinghpur

AM/NS intends to augment the capacity of iron ore pellet production from 6 mtpa to 12 mtpa in their pellet plant at Paradeep.

42 Steel Insights, January 2022

CORPORATE

JSPL expansion project to begin in September in phases

JSPL Chairman Naveen Jindal making presentation of future plans to Steel Minister Ram Chandra Prasad Singh.

Steel Insights Bureau

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indal Steel & Power Chairman Naveen Jindal recently made presentations about its ongoing expansion project to the Steel Minister Ram Chandra Prasad Singh and

to the Odisha government officials during separate meetings.

“I give him my best wishes for his JSP’s vision of 2030 and all co-operation by the Ministry,” the Steel Minister tweeted following the meeting at New Delhi.

Jindal also briefed the Odisha government on the progress made on the company’s plan to expand the capacity of its existing steel plant in Angul.

As per a separate presentation made to investors on December 31, JSPL said the project to raise steel capacity from 9.6 million tons (mt) to 15.9 mt (a growth of 66 percent) through brownfield expansion will be commissioned in a modular fashion from September 2022 to February 2025.

“The 6.3 mt expansion is proposed at a modest capex of $400/ton, among the lowest in the industry, driven by its Blast Furnace and Electric Arc Furnace,” JSPL said in its presentation.

The expansion also includes investment in cost saving projects like pellet plant, slurry pipeline, etc.

While steel capacity will increase by 66 percent, pellet output will go up by 133 percent and will be commissioned in a modular fashion from September 2022 to February 2025.

This will help cash-flow self-fund the project.

Post the expansion project, the company will evolve into JSPL 2.0 with the following strengths: ♦ Steel capacity expansion by 66 percent and pellet by 133 percent ♦ Pure-play steel player disinvestment of power biz

following

Major projects’ timeline

Steel Insights, January 2022

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66 Steel Insights, January 2022