Steel Insights, March 2022

CONTENTS 14 “CIL faces more severe challenge from private miners than RE”: CMD 16 Steel pipe industry to thrive with demand from oil & gas, water, gas infra push 21 Imported scrap prices rally, trades slow down 22 India pig iron production down y-o-y in January 23 January sponge iron production up 2.1% y-o-y 24 January crude steel production up 4.7% y-o-y 25 Steelmakers eye abandoned mines of Coal India 27 India Hydrogen Alliance plans GW-scale hubs 29 Domestic iron ore prices rise 30 Govt issues draft rules for vehicle scrapping facility 31 Seaborne coking coal offers rise in February 32 February sales not promising enough, commercial vehicles shine 34 Iron ore handled by major ports down 27% till January 35 Indian Railways’ iron ore handling up 9% till January 36 Global crude steel output down 2.3% in January m-o-m 37 China revises steel capacity swap scheme 41 Rio Tinto to progressively raise capex 45 JSW Steel downstream biz to turn Net Zero by 2030 47 Corporate Update 49 Government update 51 Import Export data 55 Price trends 56 Ferro Alloy data 57 Production data 59 Consumption data 60 Import data 61 Export data

6 | COVER STORY

Geopolitics pricks steel fortunes Impact of global conflict on steel sector.

12 | EVENT

“Pvt miners will get sufficient time to recover investments”: Coal secy Coal demand is expected to touch 1.5 billion tons by 2030.

18 | EVENT

New blast furnaces make steelmakers met coal dependent Process improvement to cut emission: experts

40 | INTERNATIONAL

Baowu plans decarbonisation projects to meet 2030 target Starts work on hydrogen-based shaft furnace.

43 | CORPORATE

”Tata Group is committed to Tata Steel in a big way.” Chairman Tata Steel to double India capacity by 2030.

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

1.

Place of publication

: Kolkata

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Periodicity of publication

: Monthly

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Printer’s Name Whether citizen of India

: Amit Surana : Yes

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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 2022

4 Steel Insights, March 2022

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: 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

GEOPOLITICS PRICKS STEEL FORTUNES Sumit Maitra

6 Steel Insights, March 2022

COVER STORY

T

he ongoing geopolitical crisis continues to generate seismic aftershocks across the globe hurting commodity markets and industries.

The invading country Russia being highly energy resource-rich, now subjected to global sanctions triggering s slew of counter measures, the impact on global economy has been harsh so far.

And the future looks uncertain with the conflict yet to get resolved as rival global camps get loosely formed upping the stakes in growing hostilities between new economic alliances.

Indian steel industry is strongly linked to the global economy in its dependency on imported inputs be it coking coal or nickel, and on export opportunities.

Along with rise in prices, supplies are also turning erratic.

This has forced Rashtriya Ispat Nigam Ltd to shut down one of its blast furnaces due to lack of coking coal stocks while Tata Steel, which sources 10-15 percent of its coal requirements from Russia for use in pulverised coal injection, is looking at alternative sources.

On the brighter side, domestic steelmakers are looking at renewed export opportunities in Europe and elsewhere where rising energy costs are driving production to uneconomic levels and in the traditional markets for India where Russia was active.

Sanctions disrupt energy supplies, prices

As supplies from Russia and Ukraine get disrupted, alternative sourcing, delays in establishing new sources, delays and uncertainties in payments and consequent deferrals in shipment releases are driving up costs to producers of metals.

With Russian coal accounting for close to 30 percent of imports done by European steelmakers and more than 60 percent of European thermal coal imports, trade disruption with Russia is driving up costs of steelmaking in Europe.

From January till the first week of March, Australian Hard Coking Coal prices went up 57 percent while Pulverized Coal Injection

Among other uncertainties that the world is currently facing, we are witnessing never-seen-before spikes in prices of Nickel. As a proactive step to address volatility and contain risk, we continue to follow a prudent risk management policy to sync our sales order and raw material booking on a real time basis through increased coordination between our supply chain stakeholders.

Abhyuday Jindal

market and lead to significant increase in the PCI coal prices. Post announcement of sanctions, PCI coal jumped $20/t and is poised for a further rally in the near term.

To partly absorb these input cost pressures, domestic steel mills announced price hikes in February 2022, helped by a sequential uptick in domestic steel demand.

While sanctions on other economic transactions were imposed, the energy flow between Russia and rest of the world has so far remained out of its ambit.

“International sanctions on Russia have almost all included specific exemptions to allow trade in energy to continue. Russia is too important to world oil, gas and coal supplies, and to European gas and coal markets in particular, for its exports to be cut off without causing severe hardship.

So even as the fighting in Ukraine has intensified, flows of Russian energy exports have continued,” said Ed Crooks of Wood Mackenzie in a report.

But the conflict is impacting global logistics movement and cross-border transactions between Russia and rest of the world, which are impacting energy and commodity prices.

“Rising input costs to sequentially reduce steel spreads in Q4 OF FY22,” ICRA said.

MD, JSL

(PCI) coal prices have gone up by 84 percent.

Thermal coal prices have almost doubled with April futures for Newcastle benchmark thermal coal hitting $446 on March 1.

Even at such high prices, availability remains a concern.

In January, RINL had to shut down one of its blast furnaces due to lack of coking coal, said Ajit Saxena, Director, Operations at RINL. “Russia-Ukraine conflict is likely to keep input costs at elevated levels for some time till raw material trade flows readjust following the imposition of sanctions on Russia,” ICRA said in a report.

Russia is the second largest supplier of PCI coal after Australia.

Sanctions on Russia will impact this

Sanctions on Russia could open new export opportunities for Indian steel mills in geographies like Europe, the Middle East and the USA; however, steelmakers could experience input cost pressures in the near term as Russia remains a key supplier of many steelmaking raw materials.

ICRA

Steel Insights, March 2022

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EVENT

“Private miners will get sufficient time to recover investments”: Coal secy

Steel Insights Bureau

D

espite the clamour for renewable energy, there would be enough demand for coal for at least another 15 years, which is a sufficiently long period for miners to recover their investments, Anil Kumar Jain, Coal Secretary said at the inaugural session of 15th Indian Coal Markets Conference organised by mjunction services.

“The window is at least 15 years, which is a sufficiently long period for miners to recover their investments,” Jain said.

According to his assessment, coal demand is expected to touch 1.5 billion tons by 2030.

To encourage commercial mining, there is a need to reduce the burden on taxes and duties on coal, believes M Nagaraju, Additional Secretary and nominated authority of Ministry of Coal.

12 Steel Insights, March 2022

“We need to look at tariffs more seriously to promote commercial mining at all levels from payment of royalties to transportation which makes coal a costly commodity in the country,” he said during a special session.

Coal to play major role in power

Rising demand for electricity has now put the onus back on coal to meet country’s primary energy need with the share of coal in primary energy basket expected to rise to 48 percent in FY22 from 44 percent in FY20.

“By 2030, demand of coal would be somewhere between 1200 mt and 1300 mt,” he said.

While domestic demand for energy demand is growing, there is also a pressing need to turn self-sufficient in energy supply considering the current global geo-political scenario.

“Energy security is also important along

“The window is at least 15 years, which is a sufficiently long period for miners to recover their investments.”

Anil Kumar Jain, Coal Secretary with food and national security considering the politics relating to energy scarcity that we are witnessing. Russia-Ukraine war has again raised the issue on import of energy,” he said.

For share of renewable energy to rise, there is a need to develop efficient storage mechanism for such energy as the peak demand for energy in the country rises at the time of the day when solar energy become weaker.

“Unless storage system for renewable develops very fast and very efficiently, I don’t think demand for coal is likely to reduce in coming years,” Agrawal said.

Also, RE generation is not growing at a rate projected earlier and may end this year with a share of 11 percent against 16 percent of the energy basket as estimated in National Energy Policy of FY21.

‘The way RE is growing, my estimate is that there could be energy shortages and blackouts by FY25 and it might not be possible for thermal energy to meet the demand,” Agrawal warned.

Coal will continue to be a dominant part of power generation in 2040, responsible for 25-33 percent of electricity supply in India, said Niladri Bhattacharjee, Partner & Colead, Metals & Mining at KPMG. “Incremental coal requirement will come mostly from non-regulated sector.

New demand will come from electrification

EVENT

New blast furnaces make steelmakers met coal dependent Steel Insights Bureau

M

ost of country’s fresh steel capacity is coming up through the Blast Furnace (BF) route and not via the more environment-friendly Electric Arc Furnace (EAF) route which will make it harder for the domestic steel sector to get rid of met coal.

Steelmaking is highly carbon intensive due to requirements for fossil fuels, mainly coking coal, both as feedstock and energy source.

With 90 percent of that coking coal likely to get imported, the current high prices and supply restrictions have put major challenges before domestic steel makers.

Steelmaking through this route generates about 2.3 tons of CO2 per ton of crude steel for all direct and indirect emissions.

The current levels of energy consumption and CO2 emissions in the Indian steel industry are much higher than the world average due to weaknesses in raw materials and energy as well as technological deficiencies.

As production by BF route is expected to go up, by 2030, import of coking coal is expected to rise two-hold to 120 mt.

With 60 percent to 80 percent of the cost of hot metal being contributed by met coal, wildly fluctuating prices in recent times due to geo-political conflicts and supply bottlenecks have created significant risk to the bottomlines of the steelmakers.

Way out is urgent significant research and investments in the use of alternative fuels like hydrogen and, at the same, adopting the EAF and scrap use in an aggressive way, industry leaders said while

18 Steel Insights, March 2022

Most of the steel capacities are coming up through the BF route due to cost competitiveness while 60 percent of current production comes from that route. So long as this BF technology route continues, the requirement for met coal will continue to be there.

Anil Chaudhary

Group CEO, metals and mining, Essar Capital

speaking at the second day of the 15th Indian Coal Markets Conference organised by mjunction services.

“Most of the steel capacities are coming up through the BF route due to cost competitiveness while 60 percent of current production comes from that route. So long as this BF technology route continues, the requirement for met coal will continue to be there,” Anil Chaudhary, Group CEO, metals and mining, Essar Capital and former Chairman, SAIL, said.

“As a developing country, India has set an ambitious target to more than double its steel production up to 300 million tons in 2030. A

Price and availability trends over the recent past have been a source of serious concern. With an uphill task of 300 mt of steel production of crude steel capacity as envisaged in National Steel policy, uncertainties looms large.

Ajit Saxena

Director, Operations, RINL

significant share of the growth is based on BF ironmaking and coal-based DRI production, in other words, utilising fossil coal as the primary energy source. This makes the CO2 challenge extremely hard,” said Vidya Prasad, Chief, DRI, Tata Steel Meramandali.

BF’s economies of scale

Even by 2065-2070, when the country is expected to achieve Net Zero target, Chaudhary sees the country continuing to produce 50 percent to 60 percent of steel production from the BF route due to economies of scale available through the BF route compared to the DRI or EAF route.

There is a $100 cost differential between the BF and EAF routes to steelmaking which needs to be bridged, said Somesh Biswas, Chief, Corporate Sustainability, Tata Steel.

However, BF route is losing its cost effectiveness due to historic volatility in met coal prices swinging from a low of $73 per ton to a high $550 a ton over a span of 10 years from 2011 to 2020, Chaudhary said.

The carbon intensity of EAF route is higher in India as the domestic steel makers mostly use hot metal from mini-blast furnace

FEATURE

India Hydrogen Alliance plans GW-scale hubs Steel Insights Bureau

I

ndia Hydrogen Alliance (IH2A) has proposed Giga Watt-scale hubs through a H2Bharat public-private taskforce with the aim of identifying at least 5 large hubs in India. IH2A, the industry-led energy transition coalition has submitted a 6-point agenda to the government for creating a domestic H2 supply chain and to build hydrogen systems at scale.

The submission was made jointly on March 4 by IH2A steering committee co-leads, Chart Industries and Reliance Industries, to the NITI Aayog and Ministry of New and Renewable E nergy (MNRE).

Niti Aayog is planning to bring down cost of hydrogen to $2.5 per Kilogram by 2025.

“Our aim is to bring down the cost of green hydrogen to $2.5 per Kilogram by 2022 and $1 per kilogram by 2030. This is possible only by creating size and scale of hydrogen manufacturing,” Amitav Kant, CEO, Niti Aayog said recently while addressing a workshop organised by IH2A. The IH2A recommendations covers the following six points: ♦ The government should immediately constitute a Public-Private Bharat H2 Taskforce to prepare a milestone-based national hydrogen roadmap and build a hydrogen economy at scale.

♦ The Bharat H2 Taskforce and roadmap should aim to tap India’s potential to create a national electrolyser installed capacity of 15-20 GW and promote domestic manufacturing through a National Electrolyser Manufacturing Mission, aligned with the government’s FAME II Scheme. ♦ India should create a national H2themed Energy Transition Fund, with co-funding partnerships with sovereign partners, multi-lateral agencies, clean energy funds and industry, with the aim to raise $1 billion by 2030 for deployment towards national hydrogen projects of a certain scale. ♦ A uniform set of globally harmonised and inter-operable Bharat H2 standards for hydrogen storage, transport and dispensation need to be finalized quickly, so that hydrogen adoption is accelerated across different sectors and use-cases. ♦ India should prioritise pre-feasibility studies of at least 10 national Bharat H2 Hydrogen Valleys or H2 Hubs - largescale demonstration stage projects with participation from industry consortia, incentives and off-take agreements guaranteed by the government. ♦ India should form a Bharat H2 Industrial Group to leverage hydrogen for decarbonisation efforts in steel, refineries, fertilizers and cement industrial clusters,

“Our aim is to bring down the cost of green hydrogen to $2.5/kg by 2022 and $1/ kg by 2030. This is possible only by creating size and scale of hydrogen manufacturing.”

Amitav Kant, CEO, Niti Aayog and a separate Bharat H2 Heavy-Duty Freight Transport Group for hydrogen commercialisation in railways, trucking, and shipping, recognizing the different hydrogen infrastructure requirements in both groups.

“Building a domestic ‘Make in India’ hydrogen supply chain will require a set of concerted actions to build hydrogen systems at scale. The first step would be to create a public-private hydrogen taskforce that sets the right national ambition and scale,” Jillian Evanko, CEO and President of Chart Industries said.

A national electrolyser manufacturing mission and ten Hydrogen Valley projects by 2030 will bring India within the global hydrogen value-chain, he said.

As funding would remain a challenge,

Public and private funding for Gen1 projects

Steel Insights, March 2022

27

INTERNATIONAL

Baowu plans decarbonisation projects to meet 2030 target Steel Insights Bureau

W

orld’s largest steelmaker, Baowu Group, which in December rolled out its roadmap to cut carbon emissions from steelmaking by 30 percent from 2020 to 2035, and achieve carbon neutrality by 2050, has recently taken several steps to give concrete shape to its plans.

Carbon-free steelmaking pilot project

Baowu arm Bayi steel has recently signed a contract with Xinjiang’s local government in Hejing county to build the world’s first short process steelmaking carbon-free factory demonstration line in Xinjiang.

“The two parties will take advantages of Hejing county’s recourses and technological, financial and management strengths of Bayi steel to promote the development of green energy and improve Bayi steel’s comprehensive competitiveness,” Baowu said in a release.

In December, Bayi Steel started construction of the third phase of its hydrogen-rich carbon cycle blast furnace.

“The hydrogen-rich carbon cycle blast furnace of Bayi Iron & Steel is an open, largescale, industrial-level innovation test platform that is built by Baowu. It has successfully completed the first two stages of industrial tests and made a series of breakthroughs such as ultra-high oxygen-rich smelting with 50 percent oxygen in blast furnace, injection of decarbonised gas into blast furnace for the first time in the world, industrialisation test of hydrogen-rich smelting innovation technology, the realization of carbon reduction ratio of 15 percent, etc., taking the lead in major technological breakthroughs in global low-carbon metallurgical innovation,” the company said in a release.

40 Steel Insights, March 2022

Signing of agreement between Baosteel and Shell China

Tie-up with Shell for hydrogen, CCUS

Baosteel and Shell China have agreed to strengthen their cooperation over green and low-carbon projects.

Baosteel and Shell signed two cooperative agreements including an enterprise framework cooperation agreement on green steel products supply and a master agreement on emission trading, symbolising that the cooperation between both parties of lowcarbon development advances to a new level.

Through the joint working mechanism between Baosteel and Shell, both of them will not only maintain cooperation in the areas of green steel products, low-carbon transportation and lubricant, but also will achieve a breakthrough of cooperation of hydrogen energy and Carbon Capture Utilisation and Storage (CCUS), Baosteel said.

Work begins on hydrogen-based shaft furnace

On February 15, the construction of a hydrogen-based shaft furnace of Baosteel Zhanjiang Iron & Steel Zero-Carbon demonstration plant started.

The project is China’s first million-ton hydrogen-based shaft furnace, it is also the first direct reduction production line integrating hydrogen and coke oven gas for industrialized production, marking a major step taken by the group towards building an efficient green carbon steel manufacturing base.

Global low-carbon innovation alliance

In November, the Global Low-Carbon Metallurgical Innovation (GLCMI) alliance was initiated by Baowu and co-sponsored by several global steel industry and ecosystem partners. The alliance is jointly established by 62 companies, universities, and scientific research institutions from 15 countries in the world.

Its members include internationally renowned companies such as ArcelorMittal, ThyssenKrupp, Tata, BHP, Rio Tinto and others.

“Members of the alliance will follow the principles of openness, vision sharing and intellectual property protection, actively respond to climate change, and work together for the future of the steel industry and for the benefit of mankind,” the alliance said in a release.

CORPORATE

JSW Steel downstream biz to turn Net Zero by 2030 Steel Insights Bureau

J

SW Steel’s downstream operations of JSW Steel Coated Products would turn carbon neutral by 2030, Prabodha Acharya, Chief Sustainability Officer, JSW Group said while addressing a session of 15th Indian Coal Markets Conference organised by mjunction services.

“By 2030, our ambition is to use renewable energy for steelmaking and turn Net Zero in our downstream facilities,” Acharya said.

JSW targets to reduce specific Green House Gas emissions from its three integrated steel plants to less than 1.95 tCO2/ tcs by 2030, he said.

Using more scrap, eliminate thermal coal use by 2030, reducing coke use and cutting down on emission in transportation through use of pipe conveyors are some of the other steps being contemplated by JSW Steel to move towards carbon neutrality, he said.

Key interventions

y Maximisation of waste heat and Waste

y

y

y y y

Energy utilisation through adoption BATs like TRT and CDQ Energy Transition through Renewable Energy in Steel Making and eliminate use of thermal coal by 2030.

Reducing coke use through beneficiated iron ore use, increasing Pulverised Coal Injection and Natural Gas in BFs Use of additional 10 percent of scrap by 2030.

Logistics initiatives such as pipe conveyors Creating carbon sinks

Being a member of the India H2 Alliance, JSW Steel is in the process of setting up a hydrogen-based pilot project at Vijayanagar, he said.

The alliance members like Tata Steel, JSW, ArcelorMittal, Reliance and Adani, among others, are working on at least 5 large Giga Watt-scale plants supported by the government which will bring down costs of green hydrogen to $2.5/kg in 2022.

Derivation of carbon emission (Scope 1 & Scope 2) target for 2030

JSW is also working on carbon capture and has implemented carbon capture and utilisation (CCU) technology at JSW Salav Works.

The CCU project helps absorb 85-95 percent of CO2 emissions from the source.

CO2 purity level of up to 99.5 percent is being achieved.

The initiative is scalable across the energy system and enables emission reduction, he said.

JSW is collaborating with Larsen & Toubro to evaluate various CCUS technologies while it has signed agreement with Royal Dutch Shell to evaluate and develop options to improve energy efficiencies, optimise carbon products demand, and explore decarbonisation technologies.

JSW Group joins World Business Council for Sustainable Development

JSW Group has joined over 200 companies as the newest member of the World Business Council for Sustainable Development (WBCSD).

JSW will be represented in WBCSD by Seshagiri Rao, Joint Managing Director and Group CFO, who also sits on the Board of Directors of JSW Steel.

He will also take part in the WBCSD CFO network, which is driving higher ESG

Steel Insights, March 2022

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