Steel Insights, March 2019 by mjunction services ltd

Contents 17 Domestic scrap prices likely to stay firm in March 18 Pig iron prices likely to stay firm in March 19 Jan sponge iron output falls y-o-y, m-o-m 20 India’s January crude steel output down y-o-y, up m-o-m 23 India importing maximum steel from Korea 25 Demand for higher steel grades to fuel imports in 2019 28 FIMI seeks abolition of export duty on 62% Fe ore 29 Car sales slow down in February 32 Domestic iron ore prices to rise in 2019 33 Feb spot coking coal prices up on firm demand 34 Govt stressing on quality control in steel 36 India would be largest growth market for coal by 2040: Report 39 Global crude steel output marginally down in Jan 40 Traffic handled by major ports up 3% in April-January 41 Railways’ Jan iron-ore handling down 6% y-o-y 42 Jupiter acquires CEBBCO, eyes road mobility segment 43 Tata Steel sells indirect subsidiary Black Ginger 44 SAIL’s Q3 net rises to `616.30 cr on higher income 45 JSW, Duferco ink five-year agreement 46 Corporate 48 Digitalisation the way forward in procurement 49 Ferro alloy data 50 Price data 51 Production data 54 Consumption data 55 Import data

6 | COVER STORY Safety latch

15 | COVER STORY

Despite a strong regulatory framework, India’s steel industry has not yet achieved zero accident level. What should be the way forward?

‘Accident stats must be compiled on uniform definition basis’ Due to unique dangers in mining, workers need extensive safety training, says Ranjit Ravindran, Business Head, MCE, Voltas

21 | Feature

Transit hubs on stainless steel radar ISSDA highlights that stainless steel, thanks to its qualities, has been the benchmark in several global infrastructural projects

26 | Feature

Demand spurs steel price hike Strong growth in demand for steel as well as a rise in iron ore prices are pushing up steel prices

31 | Feature

Iron ore output may touch record 225 mt in FY20 Merchant miners step on the production accelerator ahead of the expiry of their mining leases by March 31, 2020 Publisher’s Statement

Statement about ownership and other particulars about Steel Insights required to be published under Rule 8 of the Registration of Newspapers (Central) Rule, 1956. 1. Place of publication

: Kolkata

2. Periodicity of publication : Monthly

FORM IV (See Rule 8) Whether citizen of India Address

3. Printer’s Name Whether citizen of India

: Amit Surana : Yes

4. Publisher’s Name Whether citizen of India Address

: Amit Surana : Yes : Tata Centre, 43 J L Nehru Road, Kolkata 700071

5. Editor’s Name

: Tamajit Pain

Dated: March 2018

4 Steel Insights, March 2019

: Yes : Tata Centre, 43 J L Nehru Road, Kolkata 700071

Names and addresses of : mjunction services ltd individuals who own the Tata Centre, 43 J L Nehru Road, Kolkata 700071 newspaper and partners or shareholders holding more than one per cent of the total capital

I, Amit Surana, hereby declare that the particulars given above are true to the best of my knowledge and belief. Sd/Amit Surana Publisher

Cover Story

Safety latch

What does steel sector need to do to decrease hazard risks? Madhumita Mookerji & Ritwik Sinha

6 Steel Insights, March 2019

Cover Story

t around 11.30 on a Tuesday morning in October last year, a massive gas explosion at the Bhilai Steel Plant claimed the lives of 12 workers, injuring 20 more. It had been reported at that time that the injured had more than 80 percent burns. Bhilai Steel Plant is a subsidiary of domestic steel behemoth the Steel Authority of India (SAIL). In July of last year a poisonous gas leak at Gerdau Steel India Limited’s steel plant in the Tadepatri division of Anantapur district in Andhra Pradesh killed six workers while five more were injured. Gerdau is a leading producer of long steels in the US and one of the largest suppliers of special steels in the world. In a reply given in the Lok Sabha, the Union Steel Minister, stated that SAIL suffered from 20 fatalities due to accidents in its plants in 2015, 11 in 2016, and 16 in 2017. Besides these fatal accidents, it had also suffered other reportable accidents: 53 in 2015, 31 in 2016 and 35 in 2017. Overall, the number of industrial accidents at steel plants has come down in India as proven by data but the country has not yet reached a stage of nil casualties. As per information culled from the Lok Sabha archives, the number of fatal and non-fatal steel plant accidents in India has reduced from 23 in 2006 to eight in 2017. But, in-between, there have been years which have thrown up gloomier figures. For instance, the year 2012 seemed to have been a particularly bad one with nine unfortunate events occurring at Bokaro Steel Plant in Jharkhand and 25 at Rashtriya Ispat Nigam Limited (RINL), as per the data. In fact, in a note in 2014, the Press Information Bureau of the government had informed that accidents at different public sector steel plants of SAIL and Rashtriya Ispat Nigam Limited (RINL) had occurred due to reasons such as fall from height, gas poisoning, electrocution, burn injury, fire/explosion etc. There has been no loss of property on account of these accidents in steel plants of SAIL. In RINL, in one major accident on June 13, 2012, damage of property was about `8.71 crore, it was learnt. The steel minister at that time (around 2012), Beni Prasad Verma, had said in a written reply to the Rajya Sabha that steel being a deregulated sector, there are a large number of steel factories/plants in the country. Therefore, in regard to the private

steel sector, the requisite data/information is not maintained by the Ministry of Steel. Safety is an area that is, as per information, monitored at the highest level of a company’s management to provide impetus on inculcating awareness related to it and improving human behaviour towards the same. Safety, it is said, is discussed as the first item in all appropriate forums, and directions are issued for adoption of all requisite measures to bring continuous improvement in safety standards. And yet, as per a 2015 note by the NGO, Centre for Science & Environment, the fatality rate in the steel sector is one of the highest in the world, around 50 in a year. Why is it that despite being accorded the status of one of the highest priority areas in the management, safety somehow loses its importance in India at the plant/mine level? Soundaram Ramanathan, Deputy Programme Manager, Energy Unit, CSE, avers: “May be negligence, availability of human capital in plenty. And, maybe, we tend to discount the value.” A CSE report in 2015 had highlighted poor safety conditions in steel plants. “Two mishaps in a row at the Bhilai and Visakhapatnam steel plants show no corrective measures have been taken,” the article had said. As per an overseas media report in 2018, shortly after the Bhilai Steel Plant accident, although the private sector in India is making significant strides in terms of both quality, safety and good governance, the state sector continues to lag behind. In 2017, the British Safety Council estimated 48,000 people die annually in occupational accidents in India, often as a result of poor regulatory oversight, as per a Financial Times report. In developing countries, most workrelated accidents and illnesses occur

in primary industries such as mining, construction, metallurgical, including steel, power etc. India is no exception. Low literacy and poor awareness level on safety parameters among employees lead to high fatality rates and major catastrophes. Ranjit Ravindran, Business Head, Mining & Construction Equipment, Voltas Limited, said: “While open cast mines are generally known to be safer than underground mines, the Indian open cast mines are shown to be at least as hazardous to the workers as the Indian underground mines. The official statistics in India show that average fatality rates and the number of serious accidents have been coming down — the Directorate General of Mines Safety figures suggest annual fatality rate is 0.21 in India (taking into account the total number of mines), down from 0.36 about five years ago. But that is cold comfort for policymakers considering that an average seven lives were lost in 2015 for extracting 100 million tons of coal. Considering last fiscal’s coal production target of 700 million tons, that works out to nearly 50 (lives lost?) for 12 months.” Food for thought, indeed. Reasons for accidents

But what makes steel plants hazardous? The CSE article had said that the 2015 accident at the Bhilai plant had happened because of a blast in the gas cleaning plant area. Blast furnace gas is produced at a melted iron-making unit called the blast furnace. This waste gas is poisonous, containing a mixture of 26 percent carbon monoxide and 4 percent hydrogen; with nitrogen and carbon dioxide making up the rest. As it is an energy-rich gas, it is collected from the top of the blast furnace and water-cooled and cleaned in the gas cleaning plant. The cleaned gas is used

Number of persons injured/died in steel plants (SAIL/RINL) in India (2008 to 2011) Year

Steel Authority of India Limited (SAIL)

Rashtriya Ispat Nigam Limited (RINL)

Injured

Died

Injured

Died

2008

161

2009

121

2010

109

2011

Source : Rajya Sabha Starred Question No. 211, dated on 10.03.2011

Steel Insights, March 2019

Cover Story

â&#x20AC;&#x2DC;Accident stats must be compiled on uniform definition basisâ&#x20AC;&#x2122;

he mining industry in general is a hazardous one and all manufacturing plants, including a steel plant, come with their own hazards. It is found that Indian mines have considerably higher accident and fatality rates compared to those in the US and South Africa. Because of the unique dangers in mining operations, workers need extensive safety training, Ranjit Ravindran, Business Head, Mining & Construction Equipment, Voltas Limited, tells Ritwik Sinha. Excerpts from an interview:

Safety is monitored at the highest level of management to provide impetus on inculcating safety awareness and improving human behaviour towards safety. Safety is discussed as the first item in all appropriate forums, and directions are issued for adoption of all requisite measures to bring continuous improvement in safety standards. And yet, as per sources, the fatality rate in the steel sector is one of the highest in the world, around 50 in a year. Why is it that despite being accorded the status of one of the highest priority areas in the management, safety somehow loses

its importance in India at the plant/mine level? The mining industry is known worldwide for its highly risky and hazardous working environment. Technological advancement in ore extraction techniques for enhancing of production levels has caused further concern for safety in this industry. Research so far in the area of safety has revealed that the majority of incidents in hazardous industries takes place because of human error, the control of which would enhance safety levels in working sites to a considerable extent.

Steel Insights, March 2019

FEATURE

Transit hubs on stainless steel radar

Ritwik Sinha

yeing a growth rate of around 10 percent per annum, the Indian Stainless Steel Development Association (ISSDA), the apex body representing the stainless steel industry in India, is advocating the adoption of global infrastructural standards by using stainless steel for transit hubs. The apex body of the stainless steel industry in India is highlighting that stainless steel usage has been the benchmark in several sustainable infrastructural projects worldwide and persuaded all stakeholders to take a cue from these international transit hubs. “Its exceptional characteristics make stainless steel the best fit for constructing transit hubs in India. Its durability, minimal maintenance and sustainability make it stand out among other materials in such areas of high footfalls. With the booming pace of

infrastructural development, incorporation of stainless steel is a must for efficient, safe and durable transit infrastructure. A shift from old structural buildings to reliable and sustainable stainless steel infrastructure is the need of the hour,” said K K Pahuja, President, ISSDA. With a CAGR of 8-9 percent over the last decade, India is the second largest and the fastest growing market for stainless steel. At present, India’s total stainless steel melt production stands at around 3.6 million tons for both long and flat products. Internationally, the practice of stainless steel usage has changed the speed of infrastructure modernisation. Transit infrastructure, ranging from railway stations, subway stations, and airports to ticket counters, elevators and barriers, has extensive potential for using stainless steel. The use of stainless steel in passenger coaches is a common practice in developed economies such as the US, Canada, Brazil, Japan, Korea

& Australia and many East Asian countries. Other than trains, even buses and trams extensively use stainless steels in their outer panels. Stainless steel coaches also ensure safety and reliability through super fire and corrosion resistance. It is unlikely that the railway passengers will ever wear seat belts, so the interiors of modern rail coaches are carefully designed to have minimum of hard surfaces or projections that can damage a flying body. Like modern cars, ends of the rail coaches are now designed to absorb the impact energy if any collision occurs. This is where stainless steel offers a distinct advantage to carriage designers. “The Indian Railways comprises a total of 8,613 stations. Out of these, more than 1,000 stations have the potential to be redeveloped using stainless steel. Within the next 15-20 years and with a huge investment of nearly `4 lakh crore, Indian Railways (IR) can be one of the biggest consumers of stainless steel, if the industry comes up with sustainable solutions,” said S K Lohia, Managing Director & CEO, Indian Railway Stations Development Corporation. Further, there is also a huge scope of usage of stainless steel in the construction of coaches and wagons. Presently, the annual requirement for Railways is around 1.25 to 1.5 lakh tons (lt). There are around 65,000 coaches of IR, of which only around 5,000 are of stainless steel. Currently, stainless steel is only used in making coaches of the Rajdhani, Shatabdi and other premium trains, which are also known as Linke Hofmann Busch (LHB) coaches, which is a German design being adopted by IR. Hence, the total coaches using stainless steel in Railways is less than 10 percent. Adoption of stainless steel has recently started in airports, including stainless steel roofing solutions providing light, airy structures and less obstructed views. Testimony to this approach is the first stainless steel roof over a terminal of a new airport in China. A 0.5 mm thick stainless material has been developed to withstand strong winds, torrential rain and marine corrosion. Some other airports sporting stainless steel are Aeropeurta de Barajas, Spain, Dallas Fort Worth International airport, US and Suvarnabhumi Airport, Thailand. The Singapore expo MRT station,

Steel Insights, March 2019

FEATURE

Demand spurs steel price hike

Steel Insights Bureau

trong demand growth in the domestic market, steel producers are set to hike product prices by `1,000 a ton from March 1. This will be the third rise in prices since February 1, 2019. “There is a growing demand for steel across sectors, and so all large producers are going ahead with a yet another price hike,” said an industry source in the knowledge of the development. Domestic primary steel producers had upped prices of the commodity by ` 750 per ton from February 1, 2018. This had been the first hike in domestic steel prices since October, 2018. “Domestic steel prices were in the range of `42,000-`44,000 per ton depending upon various products. The hike in prices across products is about `750 per ton,” industry

26 Steel Insights, March 2019

sources had said a month ago. Tata Steel, Sajjan Jindal-led JSW Steel, state-owned Steel Authority of India (SAIL), Naveen Jindal-led Jindal Steel & Power, and Rashtriya Ispat Nigam Limited are among top steel producers in the country and they had raised product prices by `750 a ton on February 1 after a gap of four months, and followed it up with another `1,000 hike in the third week of February. Besides a spurt in demand, industry players attribute the increase in steel prices to a 17 percent increase in iron ore prices by NMDC. Among the large steel producers, JSW Steel is the only player that buys ore from state-owned NMDC, while most other producers have captive source of ore. Besides, a majority of NMDC’s iron ore is lifted by the domestic sponge iron industry.

The consumption of finished steel in India grew 7.9 percent during AprilDecember, 2018 as against 7.5 percent in the corresponding period a year ago, a CARE Ratings report said. “There is no appetite to absorb so many price hikes but there is no option. With imports curtailed, consumers have no choice but to rely on domestic steel,” said a Mumbaibased dealer. On the other hand, domestic steel prices are likely to remain 5 percent lower (on an average) on a year-on-year basis during FY20, considering that the input cost remains stable, said CARE ratings. However, an increase in domestic consumption during FY20 is expected to restrict any sharp fall in domestic steel prices, it said. “Domestic consumption of steel is expected to rise in the range of 5.5-7.5 percent during FY20. We believe the consumption of long steel products to grow at a faster pace compared to flat steel products during the year mainly on account of the government’s focus on India’s infrastructure, said CARE Ratings. For FY19, the revised capital expenditure by the Union government was higher by 20.3 percent to `3.2 trillion y-o-y; `3.4 trillion has been allocated by it towards capital expenditure for FY20. Globally, steel prices have risen on account of rise in iron ore prices, a key raw material used in the making of steel. The $40 per ton hike in global steel prices has prompted domestic steel producers to raise prices in the domestic market even as local iron ore prices remain weak as against global ore. The global steel price trend is also firm due to falling production in China. Iron ore prices rose in the global markets after an accident in Brazil, one of the major exporters in the World. The global industry expected the demand to go up from next week, which would support a positive price outlook for the industry. Back home, the scenario is different. Over the last five months, miners including state owned miner NMDC have been reducing prices. NMDC had cut prices by 30 percent since October. Domestic iron ore miners in Chhattisgarh are seeing their leases coming to end next year and hence miners are trying to extract as much iron ore as possible. This has led to surplus in the market placing pressure on ore prices domestically.

58 Steel Insights, March 2019

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