Steel Insights, June 2017 by mjunction services ltd

Contents

6 | COVER STORY

20 National Steel Policy execution a key challenge: Ind-Ra 22 Dumping duty to create stable environment: ICRA

Ore beneficiation way forward as India targets 330 mt steel

23 Coking coal prices fizzle out in May

It is necessary to beneficiate low grade ore to sustain supplies as India targets 300 mt steel capacity.

24 New launches propel May auto sales 9% y-o-y 26 SAIL narrows net loss in FY17 27 Tata Steel narrows loss to `1,168 cr in Q4 28 JSPL commissions Odisha’s largest integrated steel plant 29 JSW Steel Q4 profit triples on higher prices 30 JSW Steel gets nod for `50,000-cr mega steel plant in Odisha 31 Corporate updates 32 Global crude steel output falls 2% in Apr 33 Traffic handled by major ports up 6% in April 34 Railways’ April iron ore handling up 9% y-o-y 35 Waste heat recovery system (WHRS) for sinter plants 37 India key to hiking global copper demand 39 Will OBOR narrow China-EU gap? 41 Excon 2017 to attract 1,000 exhibitors 42 New school of thought

19 | FEATURE

India now 2nd largest stainless steel producer India has emerged the second-largest stainless steel producer in the world after China.

38 | EXPERT SPEAK

Future looks rosy for housing sector Calendar 2017 had been ushered in with a glimmer of hope for home buyers and the stagnant residential market.

44 EnergyTech to tap overseas markets

47 | INTERVIEW

Kolkata Port plans dry port at Balagarh Kolkata Port, facing competition from new ports that are slated to come up, is bracing for a tough future with alternative plans.

51 | INTERVIEW

Unfair price competition a major challenge: OSM OSM Projects Private Limited is looking to tap newer markets within India as well as internationally.

4 Steel Insights, June 2017

Cover Story

Ore beneficiation way forward as India targets 330 mt steel Tamajit Pain

6 Steel Insights, June 2017

ndia’s iron ore output is estimated to have surged 22 percent, following lifting of the mining ban, to 185-190 million tons (mt) during financial year 2016-17 (FY17), from around 156 mt in FY16. Odisha is estimated to have produced 94 million tons, Chhattisgarh around 30 million tons and Karnataka around 25 million tons in the last fiscal. Other states like Jharkhand produced around 21 million tons and Madhya Pradesh, Maharashtra, Andhra Pradesh and Rajasthan produced around 6 million tons altogether, industry sources said. Major iron ore producers like NMDC produced around 34 million tons and Rungta Mines around 21 million tons while Serajuddin produced around 10 million tons, during FY17, sources said. Iron ore exports stood at around 25 million tons in FY17 as against 6 million tons in FY16 and imports remained stagnant at around 5.7 million tons in FY17 as against 5.6 million tons in FY16. “Exports from Goa rose manifold with the rise in ore prices and opening up of mines in the state,” said a source. Iron ore output is projected to grow to over 220 million tons (mt) in FY18, said an industry insider. In the current fiscal, Odisha alone is expected to produce around 100 million tons of the steelmaking raw material, said an official with a merchant mining company. However, it needs to be seen whether this higher output would result in a glut in supply or there will be enough consumption by the steel mills. In FY18, India’s iron ore exports are expected to rise, while mine production is set to cross 200 million tons, according to traders. Last year’s iron ore exports were estimated at 25 million tons of mostly lower grades, in the range of 52-58 percent Fe (iron) content. The market expects a significant increase in iron ore exports, going beyond 40 million tons this year as mines increase output.

Cover Story Traders said iron ore prices were low in India, about $20 per ton at pit head and $40 per ton at ports, making it viable to export the mineral to major mills in China where current prices are around $58 per ton. High prices (peaking at $95 recently), makes it viable for India to export the ore, especially the higher grade with above 58 percent Fe content, which is levied a 30 percent export tax, said traders. India has imposed a 30 percent export tax on iron ore with 58 percent and above Fe content. However, high cost of inland transportation between mines and ports is a major hindrance. The traders said Chinese mills would want to increase higher grade Indian ore imports, especially that with more than 58 percent Fe content. Most of the Indian exports to China are of 52-58 percent Fe content ore which are blended and processed into steel. However, the rising rupee is posing problem for exporters. The currency has risen over 5 percent since January to around `64.46 per dollar. With higher iron ore production of around 180-185 per ton last year, miners would be left holding surplus pithead stocks as most domestic steel mills were not equipped to use fines as feedstock in their blast furnaces. India exported a mere 5.4-milion tons of ore in 2015-16 after a previous high of 127 million tons achieved in 2011-12, but which went up to around 25 million tons in 201617. Licences up for renewal

Even as India braces for over 200 million tons of iron ore production in FY17, licences for mines producing 80-85 million tons of iron

ore annually would expire by March 2020, industry sources said. This 80 mt supply could be in danger, as no formalities have been started for extending the lease or validity. With steel companies in expansion mode, supply concerns could emerge. The deficit in domestic ore supply after March 2020 is seen at around 80 mt and this could put the brakes on expansion in steel making; the government targets an ambitious 300 mt annual output by 2030. In Odisha, the largest ore-producing state, 17 mines are set to run out of operations. Their combined annual capacity is 66 mt. The state’s iron ore is predominantly used in value addition within the country, as opposed to the export-oriented ore in Goa and Karnataka. “We had earlier requested the Government of India to extend the validity of such mines. There will be chaos if these get thrown out of operation. Steel plants without captive ore sources will suffer the most; they will have to fall back on imports,” said R K Sharma, Secretary-General, Federation of Indian Mineral Industries (FIMI). Domestic iron ore requirement is estimated to touch 234 mt by 2020, and escalate to 447 mt by 2030, when the aim is to reach steel production volume of 300 mt. Under the amended Mines and Minerals (Development & Regulation) Act, the validity of the existing merchant mines has been extended till end-March, 2020 and of captive leases till 2030. Blocks going for auction need to, under the rules, be explored at least up to the G2 level; most of the leases expiring in 2020 have not been renewed. Rule 22 of the Mineral Auction Rules, 2015, stipulates completion of detailed exploration at the G1 level and that a detailed feasibility report of the entire area under the mining lease must be prepared.

Govt to auction 71 mineral blocks

Meanwhile, the government has identified 71 major mineral blocks in seven states that will be auctioned during current financial year. In an official statement, the Ministry of Mines said, “These blocks include 6 (2 gold, 4 cement grade limestone) in Andhra Pradesh, 11 (4 bauxite, 7 limestone) in Chhattisgarh, 12 blocks (3 bauxite, 9 limestone) in Gujarat, 9 blocks (1 bauxite, 3 limestone, 1 gold, 1 graphite, 2 emerald and 1 iron ore) in Jharkhand, 18 blocks (4 bauxite, 7 limestone, 1 gold, 1 graphite, 2 manganese, 2 iron ore and 2 copper) in Maharashtra, 7 blocks (1 limestone, 1 graphite and 5 iron ore) in Odisha and 8 blocks (7 limestone and 1 copper) in Rajasthan.” The Centre was apprised of this decision by the states during a meeting of the Coordination-Cum-Empowered Committee (CCEC) of the major mineral producing states in New Delhi. Representatives from 17 states were present at the meeting. The discussion mainly focused on the states’ preparedness with regard to e-auction of mineral blocks in 2017-18. Mines Secretary Arun Kumar said a large number of merchant mining leases have elapsed due to Section 10A (2) (c) of the Mines and Minerals (Development & Regulation) Act, 1957. These mines should Iron ore production in FY17 in million tons State

Quantity

Odisha

Chhattisgarh

Karnataka

Jharkhand

Maharashtra AP

India’s iron ore production & consumption (in million tons)

190

Rajasthan Source: Industry sources & Insights Research

Year

Iron ore production

Iron ore consumption

Crude steel production

Per capita steel consumption (kg)

2011-12

167.29

100.57

73.79

2012-13

135.85

103.39

78.3

Company-wise production

2013-14

152.18

103.73

81.69

NMDC - Chhattisgarh

2014-15

128.91

115.67

88.98

NMDC - Karnataka

2015-16

155.9

116.71 (estimate)

89.78

Rungta Mines

2016-17

190 (estimate)

126.67 (estimate)

97.44

Serajuddin

Source: Ministry data & Insights Research

Major iron ore producers Quantity in million tons

Source: Industry sources & Insights Research

Steel Insights, June 2017

feature

India now 2nd-largest stainless steel producer Steel Insights Bureau

ndia has emerged as the second-largest stainless steel producer in the world after China. India overtook Japan as the secondbiggest producer in 2016, according to data released by the International Stainless Steel Forum (ISSF) at its annual conference held on May 14-19, 2017 at Tokyo, Japan. The ISSF is a non-profit research and development organisation which was founded in 1996 and which serves as the focal point for the international stainless steel industry. India’s stainless steel production rose to 3.32 million ton in 2016 showing an impressive growth of about 9 percent over 3 million tons it produced in 2015. K K Pahuja, President, Indian Stainless Steel Development Association (ISSDA), said: “This is a great moment for the Indian stainless steel industry. ISSDA urges continuous policy support from the government to take the Indian stainless steel industry to newer heights. ISSDA will

continue to work with all stakeholders to promote stainless steel-based solutions for sustainability and growth.” ISSDA is India’s apex stainless steel industry association and has been leading key industry initiatives and causes to enhance domestic demand, especially in architecture, building and construction, automotive, railways and transport together with the process industry. Leading Indian stainless steel players include SAIL- Salem, Jindal Stainless, BRG, Viraj Profiles Ltd, Sunflag Iron & Steel and Panchmahal Steel. Several government initiatives like ‘Make in India’, Smart Cities, focus on improving sanitation and waste management facilities, building new infrastructure etc is likely to give a strong push to the stainless-steel industry in future, Pahuja said. “The National Steel Policy released by the Ministry of Steel will give impetus for long-term benefits. Increase in exports of stainless steel from India to the world market, especially Europe and the Americas, has established that Indian producers are capable of producing quality material from

their latest state-of-the-art mills, meeting stringent quality parameters,” he said. ISSDA is India’s apex stainless steel industry association which has been leading key industry initiatives and causes to enhance domestic demand in architecture, building and construction, automotive, railways and transport together with the process industry. Chaudhary Birender Singh, Minister for Steel, said the Indian steel industry is at the cusp of a significant change by becoming the second-largest stainless steel producer in the world, leaving behind Japan. He said that the steel sector is only an example of all-round development in India. Meanwhile, in April, India produced 8.065 mt of crude steel, registering a growth of 4.8 percent against 7.694 mt in the same month a year ago. China’s crude steel production rose by 4.9 percent at 72.8 mt in April this year compared to 69.30 mt in the year-ago month. Japan’s output stood at 8.75 mt in April this year as compared to 8.5 mt in the corresponding month a year earlier. Also, India’s crude steel output rose 7.1 percent to 33.159 mt in the first 4 months of 2017, as against 30.963 mt in the year-ago period, according to global industry body Worldsteel. China, the world’s largest producer of the metal, saw a 4.6 percent rise in production at 273.870 mt. Second-largest producer Japan witnessed a 1.9 percent growth at 34.982 mt during the January-April period this year, the latest report of Worldsteel said.

Steel Insights, June 2017

RESPONSIBLE BUSINESS

New school of thought Tata Steel and TERI join hands in a take-off on COP 21 to initiate a project where the steel major‘s employees and schoolchildren in its mill areas are conjoined in an arc of environmental knowledge empowerment.

unique contributions. Every country is supposed to indicate the contributors and what it will do to mitigate the impact on environment,” says Chaudhary. Developed countries, on account of their evolved economies, tend to pollute more as well, and had thus come on strongly at the Paris climate meet. The emerging economies, on the other hand, decided to have a cap or a target on the carbon intensity of their respective countries. In this entire initiative, GoI, on its part, will adopt some measures, asking corporations to set targets for carbon emissions and energy consumption etc. How green is my valley?

Madhumita Mookerji

ow environmentally conscious are we in our day-to-day lives? We often take weighty conservation pledges on Earth Day, Environment Day… but how often do we actually carry out those promise to make this world a better place to live in? Tata Steel, in a unique pledge, in conjunction with The Energy Research Institute (TERI), has decided to do just that, reduce individual carbon footprints through the Green School Project (GSP) that will eventually lead to a future of larger environmental conscious. GSP, it seems, has created a class of its own. Chanakya Chaudhary, Group Director (Corporate Communication & Regulatory Affairs), Tata Steel, informs that GSP is

42 Steel Insights, June 2017

not limited to schools alone but is a crucible for empowering all employees of Tata Steel with environment-related knowledge in the first phase which has now been extended, in the next phase, to schools in the areas the company operates in. He also elaborated that GSP does not come under the company’s corporate social responsibility banner but is rather a unique take-off on the United Nations Climate Change Conference (COP 21) held in Paris in December 2015 where signatories reached a landmark agreement, reaffirming, among other promises, the goal of limiting global temperature increase well below 2 degrees Celsius, while urging efforts to limit the increase to 1.5 degrees. “The Government of India was very proactive at the COP 21 meet. By virtue of the agreement signed at this summit, each country is committed through nationally determined contributors (NDC) to make

“Before embarking on the GSP, we mulled as to what we, as Tata Steel employees and also as a good corporate governance company, could do. Against this backdrop, we came up with the Green School Project idea. It was launched in September 2016 in the Mumbai head-office by our group executive director. Working towards this end, we created a microsite where we uploaded every week an interesting Green fact, culled from a book called Parampara which had been distributed by the Government of India at the COP 21 in Paris. This book gives an insight into how India has always been conscious of preserving Nature. For instance, India has been using clay cups for drinking tea or eating out of banana leaf plates or using herbal medicines way before others did!” elaborates Chaudhury. He stresses that as a responsible corporate citizen, Tata Steel is expected to undertake environmental awareness programmes visà-vis improving the efficiencies of its plants. In fact, where the latter is concerned, there is already a department of climate change and environment within the company which looks at trackers like energy consumption, emissions etc. Monthly reports are prepared on these and targets set to reduce the same to lower the carbon footprint in the entire steel manufacturing process. However, this is business-as-usual for Tata Steel and not linked to the GSP. But the company wondered, is that enough? And that is where GSP made an entry. “The Green School Project is not just linked to schools. It is also a school for creating awareness about the environment for Tata Steel employees,” Chaudhary emphasises.

Interview

Unfair price competition a major challenge: OSM

SM Projects Private Limited, which is a manufacturer, exporter, supplier and service provider of bulk material handling systems, coal handling systems, ash handling and HCSD systems etc, is looking to expand its market within the domestic space as well as internationally. It is also looking to develop an international trading house to take its business interest overseas, especially in the western countries so that its vision of becoming a global company within a period of 5 years can be achieved, Surender Sharma, Chairman & Managing Director, tells Tamajit Pain.

How do you compare your product offerings with other foreign companies seeking a pie of the Indian market scenario? The Indian market is highly competitive and very price sensitive. Hence, for any foreign player it is a difficult proposition to be part of the Indian market. Our offerings are fairly competitive, qualitative and more importantly our products are reliable and timely service always ensures that we get a competitive edge over international players. Moreover we are also competing in international markets and winning orders through open tenders. At present we have export orders in South Asian countries like Indonesia, Sri Lanka, Thailand, Tanzania and Vietnam. Which sector is the main demand driver of growth for OSM Projects? Could you give the sector wise break-up of revenues? OSM Projects caters to almost all the

Steel Insights, June 2017

66 Steel Insights, June 2017

Tear along the dotted line