Steel Insights, October 2018 by mjunction services ltd

Contents 28 How can Indian steel safeguard itself in a protectionist era? 33 Domestic scrap prices to stay range-bound in October 34 Basic grade pig iron prices likely to stay depressed in Oct 35 Sponge iron production in south under pressure 36 India’s Aug crude output rises 3.7% 39 India’s iron ore output to increase in FY19 40 Motown on a bumpy ride this September 43 Sept seaborne coking coal offers up on Chinese demand 44 Copper industry facing imports onslaught 46 Centre assures support to ferro alloys industry 47 India is brightest spot for steel sector till 2019 48 Tata Steel signs agreement to acquire Usha Martin’s steel biz 49 SAIL achieves record 15.021 mt crude output in FY18 50 Corporate 52 ISA to unveil first global conclave in India 53 SteelMin to propose increase in import duty on products 54 Global crude steel output dips 2% in Aug m-o-m 55 Traffic handled by major ports up 5% in April-August 56 Indian Railways’ Aug iron ore handling down 10% y-o-y 57 Price data 58 Production data 61 Consumption data 62 Import data 64 Export data

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6 | COVER STORY Long products rise from construction rubble

20 | INTERVIEW

Long products is expected to grow 8-10 percent for the rest of fiscal 2018-19, with consumption picking up post-monsoon.

‘Macneill Engineering aims to touch `550 cr by 2030’ The company is weighing foray into water transport. Also sales boost can come from forklifts, e-rickshaws.

23 | INTERVIEW

Stainless steel ideal for water management solutions in India

25 | Looking Ahead

Corrosion-resistance, durability, lower lifecycle and maintenance costs make stainless steel ideal for water solutions.

Showing the ropes

Engineering and aerial transportation stalwart Shekhar Chakravarty stresses on small washeries as the way forward for India’s coal industry.

37 | Feature

‘Demand-led growth model better for 300 mt steel capacity’ Another way of expansion would be consolidation, says Anand Sen, President, TQM & Steel Business, Tata Steel.

Cover Story

Long products rise from construction rubble 8-10 percent growth likely for the rest of fiscal 2018-19. Madhumita Mookerji

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Cover Story

ndia, being a developing economy (where typically the focus on infrastructure growth is strong), the long and the short of the matter is that the country has a more dominant role played by longs over flats in steel. Long products have been primarily driven by the growth in the construction and infrastructure sectors and, to some extent, by the automotive and engineering industries as well. But, primarily, construction activities in roads and bridges are boosting this category in India at present, thanks to the government’s emphasis on infrastructure construction. During 2017-18, the long products share in India came to around 43 percent of the total production of finished steel. However, the share of long products in total apparent steel consumption (net of double counting) comes to 50 percent. The secondary players in India have the predominant share of the long products market (around 67 percent) and the balance 33 percent of the market is supplied by the integrated steel producers like Steel Authority of India (SAIL), Rashtriya Ispat Nigam Limited (RINL), Tata Steel, JSW Steel and Jindal Steel & Power (JSPL). India has a production target of 300 mt of crude steel by 2030-31 (FY31). And the share of long products in that corpus is slated to be around 150 mt within this given time frame. Experts are betting big on infrastructure development, going forward, and they say this would definitely have a positive impact on the long side. The demand for finished steel by FY31 has been estimated at 230 mt, where the share of long products has been projected at around 55 percent. India had produced 102.33 million tons of crude steel in financial year 2017-18. Finished steel production volume in India during the year was at 104.97 mt. Share of long products in the finished steel production pie in this fiscal was 43 percent, as per data.

Out of the total production of 45 mt of long products in FY18, the share of integrated steel players was 32 percent and the balance 68 percent came from other players in the small and medium enterprises (SME) sector, sources say. In the year 2011-12, long products constituted only 25 percent of the total production of integrated steel plants. This improved to 30 percent in 2012-13. Among the steel producers in India, RINL, Visakhapatnam is a 100 percent long products plant. The Durgapur and Burnpur plants of the SAIL are 100 percent producers of long products too. Durgapur Steel Plant (DSP) is targeting hot metal production of more than 2.6 million tons (mt) in FY19. DSP made record hot metal production of 2.318 tons in financial year 2016-17 which is 111 percent of the rated capacity. Crude steel and saleable steel productions were at 2.042 tons and 1.932 tons respectively in FY17. DSP is mainly a semis plant and currently its semis quantity is close to 70 percent of its total saleable steel. It also has a merchant mill producing TMT bars. “These products have a good market and are selling very well. The feed material of this mill was 100 sq mm billets. Recently, we have converted the mill to use 125 sq mm billets as the input feed material in place of 100 sq mm billets with our in-house efforts,” Arun Kumar Rath, Chief Executive Officer, DSP, told Steel Insights sometime back. Meanwhile, after undergoing its modernisation-cum-expansion programme, the crude steel capacity of IISCO Burnpur has been raised to 2.5 million tons per year. Tata Steel, JSW and JSPL manufacture both long and flat product categories with a higher proportion of flats. Tata Steel, which recently acquired the insolvent Bhushan Steel, has a total capacity of about 12 mt and aims to become a 22-23 mt capacity company

During 2017-18, the long products share in India came to around 43 percent of the total production of finished steel. However, the share of long products in total apparent steel consumption (net of double counting) comes to 50 percent. The secondary players in India have the predominant share of the long products market (around 67 percent) and the balance 33 percent is supplied by the integrated steel producers

through both organic and inorganic routes. It produces about 3 mt of long products while the remaining chunk of its current capacity comprises flat and value-added products. In fact, the company, it is believed, is putting a thrust on longs production considering the stress put on infrastructure development by the government. Reasons for long growth

Steel Insights research reveals that non-alloy long products consumption grew 2.6 percent in FY18 to 43.63 million tons (mt) against 42.54 million tons seen in the same period of the previous fiscal. Production grew in the same period to 45.01 mt. During April-August, 2018, long product sales in the country reached 18.73 mt. The factors that are primarily leading to the consumption growth in long products categories are: ♦♦ Growing investment in the infrastructure sector. The gross fixed capital formation is a percentage of GDP which was nearly stagnant at 28.5 percent for the last two years but it has gone up to 29.1 percent in the first quarter (Q1) of the current fiscal (April-June). ♦♦ The consumption growth in long products in roadways, railways (for manufacturer of wagon and coaches) and TMT for other infrastructure development, the affordable housing sector, development/expansion of new airports, ports, construction of flyovers and bridges in urban infrastructure have all led to the growth of this category of steel in the country. ♦♦ The demand for rails by Indian Railways has gone up significantly due to more emphasis on track renewal (4,000 km is being renewed in this year), new railway lines, expansion of Dedicated Freight Corridors (DFC) and Metro Rail. ♦♦ The rising trend in disposable income in the middle income group has led to a buoyancy in the real estate share market. The construction of housing in both rural and urban areas has also gone up. Infra, construction to lengthen long story

The infrastructure and construction sectors are the biggest consumers of steel in India. The construction sector, in fact, accounts for

Steel Insights, October 2018

INTERVIEW

Stainless steel ideal for water management

ith almost 40-50 percent of water lost due to faulty distribution systems and reports suggesting that water supply is expected to fall 50 percent below demand by 2030, it is high time that all existing and new water management networks are replaced with stainless steel as the only raw material, K K Pahuja, President, Indian Stainless Steel Development Association (ISSDA), tells Ritwik Sinha. Excerpts from an interview:

Why is stainless steel (SS) considered to be the appropriate material for water management? What edge does SS has over other materials (plastic) which are currently being used? Stainless steel is corrosion-resistant, durable, hygienic, has a lower life-cycle cost and maintenance cost and is 100 percent recyclable. It is also less susceptible to cracking compared to competing materials. It is also corrosion-resistant, thus obviating the need for painting or other protective layers. Stainless steel is exceptionally wearresistant. It has a hard, smooth surface, making it more difficult for bacteria to adhere and grow, thus making it very hygienic. Stainless steel, therefore, plays a key role in the production, preparation and transport of food and drink for 100 years. Further, it is chemically inert, meaning that it does not react with the food or drinks with which it comes into contact. For the purpose of transporting water, the ideal solution is to use stainless steel as corrugated pipes. The introduction of corrugated pipes minimises the risk of leaks by reducing the number of welded joints that would otherwise be necessary.

Over its entire life-cycle, stainless steel has one of the lightest environmental impacts of all known engineering materials. Stainless steel has a higher initial investment cost than many of its competing materials. However, when viewed across the full extent of its projected useful life, and noting that it requires very little maintenance and repairs, it is a less expensive option. What is the status of the projects ISSDA and the ministry is working hand-in-hand on for shifting the age-old sewerage and water management facilities to stainless steel? By when can we expect the first stage of implementation of the same? We, at ISSDA, have launched a major initiative on developing stainless-steel based solutions for various water management applications. This has two aspects: the first part is to expand the scope of existing applications, where stainless steel has already been adopted in some parts of the country, such as water tankers. Our effort is to carry the cases of success of such applications to other users in other regions and address any technical issues that may be faced by the users, such as suitable grade selection etc. The other aspect is the new applications,

which have been successfully adopted elsewhere in the world, and to bring that knowledge to potential users in India. For example, we started with stainless steel service pipelines, which have been adopted by cities like Tokyo and Seoul to prevent water loss due to corroded pipelines. The treated water loss in these cities used to be 30-40 percent, like what we are facing in most Indian metropolises. Replacement by stainless steel service pipelines helped to reduce this to 2-3 percent, thus resolving the water crisis being faced earlier in these cities. Another new application is the overhead water tanks widely used across the world but we, in India, still use harmful plastics. Waste water treatment and 100 percent water recycling is another important area to be addressed. We are not at the stage of any specific project at present, which concerned government agencies should be taking up. We are working with departments like Central Public Works Department (CPWD), to assist with relevant technical details to enable them to incorporate stainless steel-based solutions in their manuals and thus facilitate the taking up of suitable projects. We are also working with

Steel Insights, October 2018

Looking Ahead

Showing the ropes

Engineering and aerial transportation stalwart Shekhar Chakravarty stresses on small washeries as the way forward for India’s coal industry Madhumita Mookerji

urrounded by his drawings, sketches and the memories on which he built his present company, Conveyor & Ropeway Services Pvt Ltd, sits octogenarian Shekhar Chakravarty, the Managing Director of the company. A pioneer in coal washing, being the first in India to introduce modular coal washing in the early 1980s at one of Bharat Coking Coal’s (BCCL’s) mines under the Indira Gandhi Science & Technology Grant, Chakravarty has another first to his credit, the CURVO Ropeway.

This is an innovating concept, whereby, for the first time in the history of aerial ropeway transportation, the same can curve or bend instead of moving in a linear manner and thus can be considered as an alternate means of urban transportation. Early days

A chat with Chakravarty at his office in Kolkata, located on busy Park Street, takes me back to his early days. He dwells at length on how, being a science graduate, he had honed his engineering skills through an apprenticeship at mechanical works and

the design office at Jessop & Company in the 1950s, learnings that stood him in good stead, leading him to become the pioneer that he is today. He recalls how hands-on he had been at Jessop. He operated a 14-pound hammer, did filing and machining. In the foundry shops, he mixed sand with cowdung. The latter was especially used in dry sand moulding. In the fifth year, his salary was a modest `72 per month. On completion of apprenticeship, finding him capable to be a member of Jessop, the company offered him a permanent job at a princely salary of `400! By that time, he had received his engineering diploma in Associate Member of Institution of Engineers (AMIE) part A and B while actually doing his apprenticeship. He recalls fondly at that time, a lot of the technical competence of Jessop vastly

Steel Insights, October 2018

FEATURE

‘Demand-led growth model better for 300 mt steel capacity’ Tamajit Pain

emand-led growth should be a better growth model than supplyled growth model as India targets 300 million tons of steel by 2030, according to Anand Sen, President, TQM and Steel Business, Tata Steel. Sen was speaking at the Steel Tech seminar on “Technologies & Process Routes For Attaining 300 mtpa Steelmaking Capacity in India by 2030”.

The steel industry has an immense impact on the Indian economy. It makes up 2-3 percent of the gross domestic product (GDP), provides employment and helps in creation of a network or infrastructure which is of essential importance to the economy of a country, Sen said. “If we look at the demand side of 300 million tons then we can see that India’s population will be growing at 1.6x times in the next 10-12 years and power consumption will be growing at 2.8x times,” he said.

The other positives which will drive demand for steel include growth of per capita income, growth of traffic including air traffic among others, he said, adding that these are all important parameters that will aid growth of steel consumption within the country. On the supply side, around 51 million tons (mt) of steel goes into infrastructure – and this is set to grow 2.7x times over the years. Automobile consumes 8 million tons of steel – and this is set to grow 3.4x times over the years, Sen said.

Steel Insights, October 2018

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Tear along the dotted line