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EDITORIAL Dear readers, A lot is riding on hopes that the Indian economy will see a mild pick-up in growth in 2013-14. However, a stream of data released in the past few days belies hopes of a rapid improvement in the growth momentum. Car sales shrank in the last fiscal year, the first time this has happened in a decade. Air passenger traffic fell for the 10th consecutive month in February. Both are signs that at least some types of consumer demand are weakening in an economy that has already been hit hard by a collapse in private investment. The production numbers do not indicate an imminent turnaround either. The HSBC India Purchasing Managers’ Index (PMI) for March suggests that manufacturing output grew at its slowest pace in 16 months. The services PMI for the same month fell to its lowest level in 17 months. The eight core industries that account for more than a third of the index of industrial production fell 2.5% in February. And corporate financials continue to show signs of stress. Two credit rating agencies said there have been more downgrades rather than upgrades in the previous fiscal year though Crisil expects credit quality to improve in the coming quarters on the back of lower commodity prices and financing costs while ICRA is less optimistic. Much of this data does not inspire hope of rapid improvement in growth. And it comes at a time when there are huge pressures on the current account while consumer inflation is in double-digit territory.
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The final numbers of fiscal year 2013 are not yet out, but it seems very likely that India will report its worst performance in 20 years if one looks at the three main parameters of economic performance: growth, inflation and the current account balance. Fiscal year 2003 had slower growth but that was balanced by far lower inflation and a modest current account surplus. The big question then is whether matters will improve from here. Even though a mild cyclical uptick cannot be ruled out, the recent data releases are enough to temper any irrational optimism about a strong rebound. In this scenario, we at Steel Insights analyzed the precarious consumption growth pattern of steel at a time when the policy makers are eyeing massive capacity expansion plans. A deeper look showed that inclusive growth is the only solution to the problem. A last mile development can only turn around the prevailing depressed demand conditions. We also take a look as to why the steel makers in India are disturbed by the constant rise in steel imports from Japan and Korea? The edition also take forward the analysis on iron ore, wherein we find out that the days of massive profit making by miners is over as the regulators take on eagle’s eyes on illegal mining issue. This edition precedes ‘India Steel 2013’, an international Exhibition and Conference is being organized by Federation of Indian Chambers of Commerce and Industry (FICCI) in partnership with Ministry of Steel from April 11-13, 2013 at Mumbai, India. The endeavour, through this conglomeration of Government, policy makers, industrial leaders and potential investors from India and abroad is to discuss new growth drivers that are revolutionizing the steel industry in India and assess challenges and opportunities associated with new technologies and new growth frontiers. Happy reading!
(Rakesh Dubey) Steel Insights, April 2013
3
Contents 34 Kabelschlepp India plans to double revenue in next 5 yrs 36 Steel consuming sectors contract on slow growth 38 Auto industry pines for revival in 2013-14 40 Paucity of “bankable” projects major constraint to infra growth 41 Coking coal prices plunge in March 42 Ferro alloy market remains stable in March 44 Danieli to supply hot skin pass mill to Baotou 45 Konecranes launches world’s first hybrid reach stacker 46 Flexibility, safety in core making facilities 47 SAIL plans capex of `13,000 crore in FY14 48 Tata Steel, LIM tie up for Canadian iron ore projects 49 RINL records best ever sales in March 50 NINL commissions steel melting complex 51 Gerdau acquires Kalyani stake in steel JV 52 Kirloskar Bros inks pact with MED Egypt 53 Essar Steel arm in pellet offtake pact with ArcelorMittal 54 Steel cos in search of survival mantra 55 Iron ore handling by major ports down 54.7% in April-Feb 56 Railways iron ore handling falls 10.3% in February 58 Macroeconomic indicators of India 59 Global crude steel production down 5% m-o-m in Feb 60 Domestic long & flat markets 61 Domestic raw materials
4 Steel Insights, April 2013
6 | Cover Story
Only inclusive growth can spur demand Steel demand can be created only with overall development.
24 | SPECIAL FEATURE The days of cheap iron ore are over
The second article of the series examines the profit angle of Indian iron ore.
30 | SPECIAL FEATURE
CEPA pacts may be bane of local steel industry Cheap imports from Japan and Korea may kill the local industry.
43 | TECHNOLOGY
Danieli to supply 350-ton converter to Arcelor unit The new converter will have several technology innovations.
57 | LOGISTICS
Krishnapatnam Port expects to handle 21-22 mt in 2013-14 The CEO, Anil Yendluri, says coal handling is likely to be the port’s mainstay.
Cover Story
T
he close of 2012-13 belied all expectations of a revival in steel demand as all hopes came to a nought. And now it seems 201314 will also pose a huge challenge with demand languishing in line with flat economic growth patterns. In fact, a warning has emerged from none other than the vicechairman of Tata Steel, B. Muthuraman. He has forecast that the global steel industry will probably suffer an overall loss this year because demand is not strong enough to boost prices. He has also forecast continued consolidation in the steel sector, saying that concentration of companies “is a natural phenomenon, it will continue to happen. There are too many steel companies around the world.� He has said that since raw material prices are high, it does not leave enough margin for the steel companies and that situation is likely to continue for another two to three years. One thing becomes clear from this. Demand creation is imperative to pull up the sagging fortunes of the steel industry.
Only inclusive growth can spur demand Tamajit Pain
6 Steel Insights, April 2013
Cover Story In our last edition we observed how the draft National Steel Policy kept astronomically high capacity and production targets after carrying on a SWOT analysis. While the working group on steel expects capacity to be at 149 million tons (mt) by 2016-17, the steel policy is aiming at 300 mt of crude capacity by 2025-26. However, the draft policy is silent on real efforts for demand creation. The policy only refers to application of stainless steel in bridges, ports and railway coaches and use of high strength steel in automotive, appliance industries and high rise structures to mitigate natural calamities. But the policy makers need to understand that use of steel has a direct relationship with the overall social and economic development of the masses. Steel is a mass product and capacity expansion can easily become “mindless� unless there is a clear consumption pattern for the material produced. In this edition, we focus on how the policy makers need to re-orient their development priorities as steel demand depends on overall social growth and not only on specific demand creation efforts.
As the March figures get collated, steel ministry figures of April-February period of 2012-13 show that real consumption grew by 3.8 percent year-on-year to 66.59 million tons (mt) despite a crude steel production growth of 5.3 percent year-on-year at 71.47 mt. This shows that consumption is not Summary of April-February 201213 steel production & consumption April-February Qty (mt)
% change y-o-y
Crude steel
71.47
5.3
Hot metal
44.37
8.8
5.61
4.5
Pig iron
Finished steel (non-alloy + alloy) Production for sale
70.57
2.1
Import
7.26
15.1
Export
4.74
11.8
73.09
2.7
Availability Less: Variations in stock & double counting Real Consumption
6.5 66.59
Source: Ministry of Steel
8 Steel Insights, April 2013
(in '000 tons)
CATEGORY A. PIG IRON
3.8
Apparent Consumption Current Year
Apparent Consumption Variation over last year (%)
Last Year
5363
4623
16
B. SPONGE IRON (DRI)
18279
18005
1.5
C. SEMIS (for Sale)
28021
26168
7.1
26893
25569
5.2
4458
4577
-2.6
837
850
-1.5
32188
30996
3.8
D. FINISHED STEEL Non - Alloy 1. Bars & Rods 2. Structurals 3. Rly. Materials Total (1-3) 4. Plates 5. H.R.Coils \ Skelp
4288
4254
0.8
14863
15402
-3.5
6. H.R.Sheets
508
440
15.5
7. C.R.Sheets \ Coils
9055
7394
22.5
8. GP \ GC Sheets
4873
3999
21.9
9. Elec. Sheets
511
372
37.4
10. Tinplate (incl. ww)
347
337
3
1
5
1879
1334
40.9
58
56
3.6
36383
33593
8.3
11. TMBP 12. Pipes (Large Dia.) 13. Tin free steel Total (4 to 13)
Current real consumption
Particulars
Steel consumption pattern, April 2012 - February 2013
Less : Double Counting (Non-alloy)
6039
4896
62532
59693
4.8
14. Non-Flat
2660
2273
17
15. Flat
2612
3135
-16.7
Less : Double Counting (Alloy)
1214
939
TOTAL (Non-Alloy) Alloy
Total (Alloy) GRAND TOTAL
4058
4469
-9.2
66590
64162
3.8
Source: Ministry of Steel
growing as fast as the growth in production. Still India is a net importer of steel as it does not produce special grade steel required in specific industry applications. The most important question comes in here. Why is the country going in for a capacity of 300 mt when there is slow growth in consumption? Introspection
A thorough introspection is necessary to find out what is going wrong in the consumption space that is eating up the steel sector. A deeper look shows that almost all the steel consuming sectors like automobile, construction, capital good and consumer durables is showing negative growth trends
in line with the overall state of the economy and GDP growing at mere 4.5 percent in the third quarter of 2012-13. Infrastructure, a major consumer of steel, is also showing flat growth trends. But the intrinsic problem lies elsewhere. For this we need to examine the different components of infrastructure. Ports
India has a long coastline spanning 7516.6 km and is serviced by 13 major ports (12 government and 1 corporate) and 187 notified minor and intermediate ports. Major ports handle over 74 percent of all cargo traffic. While the Central Shipping Ministry
Cover Story
administers the major ports, the minor and intermediate ports are administered by the relevant departments or ministries in the nine coastal states of West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Maharashtra and Gujarat. The 12 Union government-controlled ports currently have a combined cargohandling capacity of 744.33 mt, while the non-major ports have a capacity of 483.10 mt. However, the volume of cargo handled by India’s state-owned ports declined by 2.58 percent in the year ended March 31, the second straight drop, as lower iron ore and fertilizer loadings hurt overall cargo shipments. The 12 ports handled a combined 545.68 mt of various commodities such as crude oil, petroleum products, iron ore, coal, container cargo and fertilizers in fiscal 2013, according to statistics of the Indian Ports Association (IPA), which represents the 12 ports. In fiscal 2012, the 12 ports loaded 560.137 mt, a drop of 1.73 percent over the previous year. “The 12 ports have been hit by a steep reduction in the loading of iron ore and fertilisers,” said A. Janardhana Rao, managing director of IPA. This clearly shows the mismatch in capacity creation and utilisation levels in the port sector resulting financial strain to the port trusts.
10 Steel Insights, April 2013
Airports & airlines
an airport has two prerequisites. First, it needs a strong anchor airline operating out of the airport, as Emirates does from Dubai or Deutsche Lufthansa AG from Frankfurt. Second, it needs seamless and integrated airport infrastructure so that an arriving domestic passenger need not commute too far to reach the international terminal. Indian airports are trying to build the latter capability, but where are the strong airlines? The largest, IndiGo, is not a network carrier; it believes in ferrying passengers from point to point. Jet Airways is next, but its plan to sell a 24 percent stake to Etihad Airways PJSC will see it shift its hub to Abu Dhabi, which Etihad uses as a hub. Air India continues to be buffeted by strong headwinds while the other domestic airlines are too small. The other big concern is cost. Many international airlines have pulled out of Indian airports citing high costs. The proposed joint venture between Malaysiabased low-fare airline AirAsia Bhd and the Tata Group recently said they will skip the high-cost Mumbai and Delhi airports once their AirAsia India takes off. Hypothetically, other airlines such as Qatar Airways and Singapore Airlines could redirect traffic to their own hubs in case they buy stakes in Indian airline companies. Joint ventures between foreign and domestic airlines could put pressure on expensive airports to reinvent themselves if they are to remain sustainable. Added to this is the shrinkage of air traffic in recent times due to the economic recession. Indian air passenger traffic shrunk for the 10th consecutive month, dropping 3.36 percent in February, according to data from the Directorate General of Civil Aviation (DGCA). Air traffic fell in most months of the last calendar year as high fares and a slowing economy dented demand. India’s domestic
Similar is the problem with airports and airlines. The big Indian airports are confronting an existential question. Private developers either modernised or built airports from scratch in Mumbai, Delhi, Bangalore and Hyderabad. The staterun Airports Authority of India modernised the airports in Chennai and Kolkata. Large amounts of money were spent, with the GMR Group and GVK Group each investing more than `12,000 crore each in the New Delhi and Mumbai airports, respectively. It was hoped that some of these airports would function as international hubs from where passengers are sent to other destinations. For example, Jet Airways (India) Ltd uses Mumbai as a hub to redistribute passengers. Dubai, Singapore, Doha, London, Frankfurt and Abu Dhabi have been successful hubs. Some Capacity utilisation at ports (Last 5 years) hubs in the region such as Dubai, Traffic handled Capacity Percent Singapore and Abu Dhabi do not Year (in million tons) (in million tons) utilisation (%) have a large domestic market, and would like to attract traffic 2000-01 281.10 291.45 96.44 from India. 2005-06 423.57 456.20 92.85 The decision to allow foreign 2006-07 463.78 504.75 91.88 airlines to own as much as 49 2007-08 519.31 532.07 97.60 percent of domestic carriers 2008-09 530.53 574.77 92.30 can upset the plans of the new airports to become strong hubs. 2009-10 561.09 616.73 90.98 To become an effective hub, Source: Ministry of Shipping
Cover Story
airlines carried 4.89 million passengers in February, compared with 5.06 million in the year earlier, DGCA data show. “Analysis of capacity and demand data on year-to-year basis indicates that both the capacity and demand showed declining trend,” DGCA said in its report for February. In February, IndiGo continued to be the largest airline by market share at 27.4 percent, followed by SpiceJet Ltd (20.4 percent), Jet Airways (India) Ltd (19.1 percent), Air India Ltd (18.9 percent), and GoAir (7.8 percent). Jet Airwayssubsidiary Jet Konnect had a 6.3 percent share. Together they had a 25.4 percent market share.
Airlines saddled with losses
India’s airline industry has lost more than $6.6 billion in five years, according to analyst estimates. Jet fuel accounts for about half of a carrier’s expenses. Moreover, India’s airports regulator last year approved to raise charges more than fourfold at the New Delhi facility, increasing costs. While about half-a-dozen operators took off in the past eight years as rising disposable incomes made air travel affordable to Indians, only IndiGo, a discount carrier, made a profit in the year ended March 31, according to government data. High taxes, inadequate infrastructure and a weaker rupee
Passengers carried by scheduled domestic airlines, Jan-Nov 2012
Source: DGCA
12 Steel Insights, April 2013
are some of the challenges airlines in India face, according to Aditya Ghosh, president of IndiGo. Jet Airways, the nation’s biggest listed carrier, has not made an annual group profit in five years, while losses at state-owned Air India have mounted since the government combined Indian Airlines with the flag carrier in 2007. SpiceJet, the nation’s only publicly traded budget airline, is headed for its second straight annual loss, according to analysts’ estimates. Kingfisher was saddled with `8,500 crore of debt before chairman Vijay Mallya decided to shut down operations last year. Jet Airways shares have declined 3 percent this year, while SpiceJet has dropped 35 percent. Roads & highways
India has an extensive road network of 3.3 million km – the second largest in the world. Roads carry about 61 percent of the freight and 85 percent of the passenger traffic. Highways/expressways constitute about 66,590 km (2 percent of all roads) and carry 40 percent of the road traffic. The ambitious National Highway Development Project (NHDP) of the government is at an advanced stage of implementation. Key subprojects under the NHDP include: ♦♦ The Golden Quadrilateral (GQ-5846 km of 4 lane highways) • North-South & East-West Corridors (NSEW-7142 kms of 4 lane highways) • Four-laning of 12,109 km under NHDP-III
Cover Story
♦♦ Programme for 6-laning of 6,500 km of National Highways under NHDP- V. As of December 2012, India had completed and placed in use over 19,200 km of recently built 4 or 6-lane highways connecting many of its major manufacturing centers, commercial and cultural centers. Road projects in bad shape
However, the growth story in the road sector is faced with roadblocks as the private sector is now shunning government’s road projects. The government which announced an ambitious target of $1 trillion of infrastructure spending is finding no takers for the 8,000 km of road projects to be awarded under the built, operate & transfer (BOT) mechanism this fiscal.
14 Steel Insights, April 2013
Interestingly, the National Highways Authority of India (NHAI), the nodal agency for awarding these road projects, witnessed phenomenal success in awarding over 8,000 km of road projects last year as 31 of the 51 road project were bagged at premium. Based on last year’s success, the government increased the target to award 8,800 km of road projects this year; however, NHAI so far was able to award only 700 km with less than four months remaining in the current fiscal. Two projects, worth about `2,450 crore, awarded last year to DSC Ltd and GannonDunkerley Co Ltd were terminated after failure to achieve financial closure. This was the first time that such termination had to be done due to failure of companies to achieve financial closure (tie up debt).
At a current pace of less than 5 km of road construction per day, the government is way behind its ambitious target of achieving 20 km of road construction per day for which it needs to award over 7,000 km of road projects each year. The reason: Availability of 50 road projects worth `50,000 crore totalling 5,000 km are on the block in the secondary market as the debt-laden infrastructure firms wants to get rid of these road projects that they bagged by aggressive bidding and are now finding it difficult to execute due to the depressed returns. Prime Minister Manmohan Singh reviewed the performance of the transport sector in a series of meetings recently and a recent PMO statement on targets for awarding road transport and highways project said, “The ministry will try its best to award road projects as per the original targets for FY 12-13 and will certainly cross 8,000 km of awards this year by March, 2013. Road projects of at least 3,000 km length will be awarded under OMT by March 2013.” This means that in the absence of takers for road projects under BOT basis, which requires companies to raise funds from the market, the government is planning to award 3,000 km of road projects on engineering procurement contract (EPC) basis, where government spends the entire money required to build roads. Leading infrastructure firms like L&T, GVK, GMR, IVRCL, Gammon Infrastructure, SREI Infrastructure, Gayatri Projects, Madhucon Projects, Ashoka Buildcon amongst others have meanwhile reportedly put their road assets on the block. Infra firms meanwhile are being chased by their lenders to sell assets any which way they can as the banks have stopped lending to the road sector with stringent lending norms scaring away private developers from investing in the highway projects. Over three dozen highway projects are awaiting financial closure. Railways
Indian Railways will complete its 160 years in April. The first train in India started on April 16, 1853. Owned and operated by the government of India through the Ministry of Railways, it is one of the world’s largest railway networks comprising 115,000 km of track over a route of 65,000 km and 7,500 stations. As of December 2012, it
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Cover Story transported over 25 million passengers daily (over 9 billion on an annual basis). In 2011, it carried over 8,900 million passenger annually or more than 24 million passengers daily (roughly half of which were suburban passengers) and 2.8 million tons of freight daily. However, all is not well with this great institution either. Till now some 17 million tons of coal lay on the ground at Mahanadi Coalfields, a Coal India Ltd subsidiary in Orissa. At a power plant, they could generate enough power to light up a city the size of Delhi for about eight months. It’s not an unusual sight: coal piled up for kilometres along railway lines near coalfields, waiting for the train - if there is one. At any given point in time, enough coal is piled up to power an entire state for almost a year. According to S. Narsing Rao, chairman and managing director of Coal India, which produces around 80 percent of the coal mined in the country , says new railway lines could make a 300-mt difference to the annual coal supply. It is ironic that shifting a resource from the point of production to the consumer is an issue in the country with the world’s fourth largest coal reserves and sixth largest iron ore reserves. India is the world’s third largest producer and consumer of coal. According to ICRA Management
Consulting Services (IMaCS), the power sector accounts for 70 to 72 percent of the country’s total demand for coal, steel for 11 percent, and cement for 5 percent. Most of the demand for imported coal comes from power and steel. Of Coal India’s supply, approximately 72 percent goes to the power sector, 1 percent to steel, and 1.5 percent to the cement industry. About a quarter of the supply goes to industries such as brickmaking, fertilisers, and paper. But coal is not the only commodity to suffer transport bottlenecks. Steel, iron ore, foodgrain, fertilisers and several other items are in the list. Economists and analysts feel the issue is not just of adding a line, but of continuous investment in strengthening the railway network so it can handle bigger loads. Also, poor facilities hamper operations. Loading and unloading require a paved platform with good lighting, security and space for trucks. The lack of some of these features increases the loading or unloading time by 25 to 50 percent. Because Indian roads cannot handle huge vehicles with a capacity of 40 or 50 tons, trucks are usually of nine-ton capacity, leading to congestion and gridlock. The lack of a sense of urgency, issues of forest diversion, land acquisition, law and order problems among others lead to delays in rail network expansion, industry experts say.
In 2011-12, roughly half of Coal India’s annual supply of 443 mt was transported by train. Another 26 percent was transported by road. Another 18 percent was moved using the ‘Merry-Go-Round’ system, which refers to exclusive rail services between a coal mine and power plant. The remainder – less than 3 percent of total supply – was transported by other means. As roads are far from adequate to haul large quantities of coal over long distances, the Railways are the only hope. Fuel transportation needs will only increase. Railway officials say there were approved projects worth over `140,000 crore but funding is a major issue. To address this, the railways are working on new funding models, and announced a plan last December in which one proposal was that the consumer – the coal company in this case – pays to build the line. The average cost of laying a railway line is `8 crore to `10 crore per kilometre. But this also seems unlikely as consumers of railway users are already bearing the cost of supply shortages by importing raw material like coal. Better railways could spur economic activity and cut import bills. But for now, millions of tons of coal wait by the train tracks. Rural roads
India has a road network of over 4,245,429 km in 2012, the third largest road network in the world. At 0.66 km of roads per square kilometer of land, the quantitative density of India’s road network is similar to that of the United States (0.65) and far higher than that of China (0.16) or Brazil (0.20). However, qualitatively India’s roads are a mix of modern highways and narrow, unpaved roads, and are undergoing drastic improvement. As of 2008, 49 percent – about 2.1 million km – of Indian roads were paved. Adjusted for its large population, India has less than 4 km of roads per 1,000 people, including all its paved and unpaved roads. In terms of quality, all season, 4 or more lane highways, India has less than 0.07 km of highways per 1,000 people, as of 2010. These are some of the lowest road and highway densities in the world. For the sake of a context, the United States has 21 km of roads per 1,000 people, while France about 15 km
16 Steel Insights, April 2013
Cover Story per 1,000 people – predominantly paved and high quality in both cases. In terms of all season, 4 or more lane highways, developed countries such as United States and France have a highway density per 1,000 people that is over 15 times as India. India in its past did not allocate enough resources to build or maintain its road network. This has changed since 1995, with major efforts currently underway to modernise the country’s road infrastructure. India plans to spend approximately $70 billion by 2013 to modernise its highway network. The rural roads in India form a substantial portion of the Indian road network. These roads are in poor shape, affecting the rural population’s quality of life and Indian farmer’s ability to transfer produce to market post-harvest. Over 30 percent of Indian farmer’s harvest spoils post-harvest because of the poor infrastructure. Many rural roads are of poor quality, potholed, and unable to withstand the loads of heavy farm equipment. These roads are also far from all season, good quality 2-lane or 4-lane highways, making economic resource flow slow, and logistical costs between different parts of India one of the highest in the world. For the development of these rural roads, Pradhan Mantri Gram Sadak Yojana (or “Prime Minister Rural Roads Scheme”), was launched in December 2000 by the Indian government to provide connectivity to unconnected rural habitations. The scheme envisions that these roads will be constructed and maintained by the village panchayats. Rural road network in India, trends over 10 years Kilometers in 2001
Kilometers Kilometers under as of May construction 2011 in 2011
Total rural roads
2.7 million
3.1 million
Paved, not maintained rural roads
0.5 million
Unpaved rural roads
2.2 million
0.1 million
1.9 million
Paved, maintained rural roads
728,871
53,634
New rural roads
322,900
82,743
Source: Insights Research
18 Steel Insights, April 2013
In some parts of India, where the government has attempted to manage it directly as a local social spending programme, this programme has produced limited results and no lasting change over 10 years, in either the quality or quantity of rural road network. In other parts of India, the Pradhan Mantri Gram Sadak Yojana and a sister programme named Bharat Nirman (or Build India) have privatised the rural road construction projects and deployed contractors. The effort has aimed to build all-season, single lane, paved asphalted roads that connect India’s rural and remote areas. A significant portion of funding for these projects has come from the World Bank and Asian Development Bank. Development priorities
Although India is one of the few countries that take the planning process seriously and offers plans for public participation, scrutiny and accountability, the policy objectives will be successful only if the development priorities are set right. According to Vinayak Chatterjee, infrastructure analyst and chairman of infrastructure consultancy firm Feedback Infrastructure, the sectors that can be called “inclusive” are those that touch the daily lives of the aam aadmi. These are railways, irrigation, water supply and sanitation and
electricity. Although electricity has been a success, all the other “inclusive” activities have demonstrated poor achievements. Water supply and sanitation is way off. Conversely, sectors considered relatively “elitist” like highways, telecommunications and airports are given priority. A review of the results of the Eleventh Plan (2007-12) and the Twelfth Plan (201217) projections provides some very useful insights. Need to eradicate basic needs to spur demand
Promotion of steel consumption by supporting R&D projects such as for product design and generic campaign in specific areas which help in addressing concerns related to environment, climate change, human health, housing for the masses and higher rural penetration for inclusive growth would not provide the net results until the social cycle is taken care of. India has amongst the lowest daily food calorie intake. This segment of population is destitute and will not contribute to steel demand. It is more likely to contribute to resistance to private and public sector acquiring mineral rich resources for commercial exploitation. Project implementation will also be difficult if there continues to be strong social
Cover Story Investments in infrastructure: A comparison of the Tenth, Eleventh and Twelfth Plans Sector
Tenth Plan (2002-07)
Eleventh Plan (2007-12)
Actual*
Projected*
Achieved*
% Achievement
Twelfth Plan (2012-17) Achievement at current prices**
Electricity (including renewable energy)
2.75
6.67
6.18
93
Roads & bridges
1.53
3.14
3.62
Telecommunications
1.45
2.58
3.09
Railways (including MRTS)
1.03
2.62
Mass rapid transit systems (MRTS)
-
Irrigation (including watersheds)
Projection**
6.9
15.02
115.2
4.53
9.69
120
3.85
9.44
1.95
75
2.01
5.22
-
-
-
0.42
1.24
1.21
2.53
1.96
77.3
2.43
5.04
Water supply and sanitation
0.61
1.44
0.97
68
1.21
2.55
Ports (including inland waterways)
0.22
0.88
0.36
40.4
0.45
1.98
Airports
0.07
0.31
0.29
95
0.36
0.88
Storage
0.06
0.22
0.14
63
0.18
0.58
Oil and gas pipelines
0.23
0.17
0.51
301
0.63
1.49
0.89
3.19
Renewable energy Grand Total (` lakh crore)
9.16
20.56
19.08
93
23.86
56.32
Grand Total ($ billion)
229@
514@
477@
93
477@@
1126@@
Investment as % of GDP
5.01
7.6
7.2
7.1
8.3
Share of Staes in total
36%
33%
29%
29%
23%
Share of private capital
22%
30%
37%
37%
48%
*` lakh crore at 2006-07 prices; ** ` lakh crore at current prices (`40=$1);
resistance for conversion of agricultural land to industrial land. Apart from restriction of huge exports of natural resources like iron ore and concentration of higher use of magnetite ore, it is to be ensured that mining leases fall on proper hands and production is regulated for proper use in the industry. Maybe the best way here would be to compare India’s situation with that of China’s. India’s high food inflation is a negative for the country’s sovereign ratings as it filters through the broader economy, with adverse consequences for growth and the large fiscal and current account deficits. Higher food prices can accelerate broader inflation by pushing up wages, while negatively impacting the government finances and reducing monetary policy flexibility. Although food inflation slowed down to 11.38 percent in February from 11.88 percent in January, it stayed in double digits for the third straight month, tempering expectations of any aggressive monetary easing. According to estimates, food accounts for more than 50
20 Steel Insights, April 2013
`50=$1
@@
percent of the average household spending in India, a worry for an economy that relies largely on private consumption. Sustained food inflation over several quarters also has the potential to push up wages, reducing the extent through which the central bank can lower interest rates, while reducing the competitiveness of exports and import-competing sectors. Food inflation also worsens the country’s budget deficit given that the government subsidizes prices for a large portion of the population. Increasing food supply could be a solution, but India is constrained by poor rural infrastructure, inefficient food distribution and storage systems and by agricultural productivity. The revelations, when compared with China, are interesting. Although both are large countries with similar sized populations and similar common food consumption habits, for starters, China has less area under cultivation, consumes less fertilizer and yet produces more. While India’s area under cultivation is
Source: Planning Commission - 12th Plan document
around 182 million hectares, total food grain production is around 250 mt in 2011-12. In comparison, China’s arable land is around 120-130 million hectares but total food grain production of China touched 571 mt in 2012. This clearly shows productivity of Indian agriculture is low as compared to the productivity at the global level. Estimates of yield of rice as of April 2011 in India was 3.2 tons per hectare as against 7.5 tons per hectare in the United States, 6.7 tons per hectare in China and an average of 4.3 tons per hectare for the world. Similar contrast in yields has also been observed in case of wheat and coarse cereals. But productivity also becomes important in India because roughly 50 percent of the population still derives their livelihood from agriculture. This can be attributed to structural weaknesses of the agriculture sector reflected in low level of public investment, exhaustion of the yield potential of new high yielding varieties of wheat and rice, unbalanced fertiliser use, low seed replacement rate, an
Cover Story inadequate incentive system and post-harvest value addition. Some of the other reasons that can be attributed to the low agricultural productivity in our country are: i) Lack of irrigation facilities in major part of the cultivated land; ii) Small and fragmented land holding with the cultivators; iii) Lack of timely availability of quality seeds, fertilizers for providing all major and minor nutrients for the crops and insecticides in many parts of the country. Thus instead of spending time on humongous infrastructure creation, the policy makers should spend time on eradication of hunger and poverty, which in turn would encourage education and lead to social alleviation of people and give them the opportunity to crave for better living standards. This ultimately would lead to resumption of stalled demand conditions in the economy. Only then would all sections of the society contribute to the steel demand in the country. Last but not the least, the performance
22 Steel Insights, April 2013
Growth of Yields and Productions in India - major Crops (percent)
1970s-80s
Population Growth
Yield Growth
Periods Rice
Wheat
Pulses
Foodgrains
Oilseeds
Sugarcane
Cotton
3.1
3.1
0.7
2.9
2.7
1.6
4.9
2.2
1990s-2010s
1.2
1.7
1.1
1.6
2.6
0.1
3.5
1.9
1968-70
7.9
11.2
13.9
8.1
7.8
7.2
2.4
2.2
2006-11
1.3
2.3
3.0
2.4
3.8
0.6
8.1
1.7
Periods
Population Growth
Production Growth
1970s-80s
4.0
5.1
1.5
3.3
4.4
3.4
6.1
2.2
1990s-2010s
1.4
2.6
1.5
1.6
3.6
1.9
5.3
1.9
1968-70
10.3
21.9
14.4
10.9
6.7
10.8
-6.0
2.2
2006-11
0.9
4.4
6.5
3.2
3.4
5.0
13.9
1.7
Source: RBI
parameters of the already existent infrastructure, like for example ports, need to be taken care of instead of going for “mindless” capacity creation efforts and spending millions. This will only stop wastage of public and private funds into loss making ventures. Unless all these factors are taken into consideration, the National Steel Policy or
for that matter any policy in its final version would be a futile exercise. As pointed out by Sushim Banerjee, director general at INSDAG, “The growth of Indian steel industry depends a lot on the policy support by the government particularly in fiscal areas and trade matters. This would create a facilitating environment for the Indian steel industry.”
SPECIAL feature
The days of cheap iron ore are over This is the second of a series of analytical articles on the iron ore sector which began with the March edition of Steel Insights. The readers are welcome to send in their feedback. Steel Insights may, at its discretion, publish the discussions for the benefit of a larger audience.
Steel Insights Bureau
I
n the March edition, we saw how iron ore, considered a dust lying in dumps and shunned by even steel mills, gained prominence over time with the emergence of China as a major buyer as it moved ahead with its steel capacity expansion programme. In this edition, we examine what will be the likely situation as we move forward in 2013-14, now that the days of unbridled profits are also over. According to industry insiders, India’s iron ore industry today is a pale shadow of what it was for much of the last decade.
24 Steel Insights, April 2013
Despite some recent forward movement on restarting iron ore mining in Karnataka, one of the key producer states, nothing much has happened. Only seven out of the 170 mines have reportedly started operations, bringing into the market about 10 million tons (mt) of the material. During the last decade, India’s iron ore miners became important global players in the export market, particularly China. In 2009-10, India was the third largest exporter of iron ore, next only to large global miners such as Vale, Rio Tinto and BHP Billiton. To meet the huge burgeoning demand, particularly from powerhouse China, many
domestic players capitalised on liberal government policies during the early 2000s and bought or leased new mines at relatively cheap prices, expanded production capacity and smiled all the way to the bank as profits skyrocketed. But the sheen quickly came off the industry and the smiles were wiped off as allegations of illegal mining, underreporting and skimming away of profits to the detriment of the government treasury surfaced in Karnataka in 2010. The fire generated in Karnataka quickly spread to other major mining States such as Odisha and Goa, forcing active intervention by state governments and judicial authorities. The comprehensive clean-up operation that consequently got underway resulted in a ban or curbs on iron ore mining in many states. The first ban was imposed in Karnataka in July 2011 and other states followed suit. For the industry, the double whammy of the mining ban and a sharp increase in export duty on iron ore fines (currently, 30 percent) killed its golden goose: exports. The high export duty has been compounded by the frequent sharp upward revisions in rail freight rates, making exports unviable for hinterland producers. Consequently, exports, which stood at 117 mt (53 percent of output)
SPECIAL feature in 2009-10, are expected to slump to virtually nothing (15-20 mt) in 2012-13. In most cases, miners from Australia, Brazil and, lately, South Africa have stepped in to fill the breach created by India’s forced exit and snatched market share. Hitherto, India’s iron ore exports were mainly in the form of fines, and primarily to China. Recently, as iron ore (62 percent Fe) spot prices soared to nearly $136/dry metric ton at CFR Tianjin port in March, up nearly $20/dmt from November, led by inventorybuild-up in China, India’s miners could only watch in dismay and rue the lost opportunity. The premium seen in prices of lower grade ore in China is believed to be a consequence of India’s absence from the market because many steel mills in China that use low grade iron ore imported the material from India. Inevitably, the mining ban has also resulted in supply constraints in the domestic iron ore market, which we believe, has kept domestic prices firm in 2012-13. In the domestic market, availability of iron ore has worsened since the Supreme Court imposed an interim ban on mining of iron ore in Karnataka on July 29, 2011, citing environmental degradation. In the secondhalf of 2012-13, owing to the government clampdown on illegal mining, production/ availability of iron ore from Odisha and Goa have got constrained. The mining ban and the government clampdown on illegal miners have led to a tight supply situation. Industry insiders believe that over the next two years, the demand-supply balance is expected to be tight with production of iron ore expected to be in the range of 125-145 mt, domestic demand being around 130-140 mt. On account of this tight balance, iron and steel companies are faced with an acute shortage of iron ore in 2013-14. Many faced closure, others experienced low utilisation levels in 2012-13. Consequently, miners are fetching better realisations in the domestic iron ore market, where prices have spiked significantly. The situation is expected to improve marginally in 2013-14. Prices will ease slightly as efforts are underway to alleviate the supply situation and gradually restore the industry to some degree of normalcy. New, more fair and transparent norms for iron ore mining are now being put in place in many states so that all stakeholders benefit, and the first results of these measures should
26 Steel Insights, April 2013
be visible in Karnataka sometime during the course of this year, in the form of improved supply. “We expect the domestic iron ore supply scenario to gradually improve over the medium term and come back to an even keel, but even then it is highly unlikely that the industry will recover in a hurry the exporter status that it enjoyed in its heydays,” said an official in a merchant mining company. The days of unbridled profits are perhaps over. India a net importer?
In an otherwise instructive guidance for all steel stakeholders, global rating agency Fitch Ratings in its 2013 outlook steel raw materials producers’ report said India stands the risks becoming a net importer of iron ore in 2013-14. This, by any yardstick, is a farfetched observation. Federation of Indian Mineral Industries (FIMI) president H.C. Daga, a no-taker of a possibility of this kind, says, “The ore supply situation has become tight in the wake of a ban on mining in Karnataka and Goa. In other states, normal excavation is being derailed following judicial and state orders. In a normal year like 2009-10, we produced 219 mt of ore, met full requirements of our steel industry and showed our capacity to meet any future domestic requirements without any cutback in exports.” Thanks to continuing mining restrictions in several places, now progressively loosened in Karnataka, Daga estimates the 2012-13 ore production will be between 110 mt and 120 mt, against 169 mt last year. Even then, meeting ore requirements of local steelmakers will not be an issue for two reasons. First, a good portion of the 75 mt of metal is made here by way of melting scrap. Second, mounting pithead stocks, largely a legacy of the past, need evacuation. In Odisha alone, such inventories around iron ore mines are close to 50 mt, say industry insiders. No doubt, mining restrictions in major iron ore bearing states have prevailed on Fitch Ratings to take such a view of the sector. In what is claimed to be an attempt to rid the sector of irregularities like digging
out more minerals than actually declared and violation of any statutory rules, the Odisha government has slapped fines of nearly `38,000 crore on 196 leaseholders. Hopefully, most of the cases would be ‘amicably’ settled through negotiations. In fact, the government has set the ball of negotiations rolling. The mining ban first came in Karnataka, where among others the country’s largest single location mill of 10 mt belonging to JSW Steel is located, coming into effect in July 2011. Subsequently, in Goa it sent some steelmakers scampering for ore. Because of its dependence on Karnataka mines for ore, JSW saw contraction in capacity use. Local ore supply tightness in some centres would explain some volumes of ore imports. At the same time, mining dislocations coming on top of a disturbingly high export duty of 30 percent and rail freight led to nosediving in ore exports. Iron ore fines, for which local demand has now only begun to grow and that also at a slow pace, have an overwhelmingly large share in our exports. According to mining officials, the import quantity involved is of much less concern than the precipitous fall in exports rising to 95.14 percent in October 2012 on a monthon-month basis. No wonder, that data compiled from various sources show India’s share of China’s ore imports in the first 11 months of 2012 fell to 4.9 percent from 11 percent in 2011 and a high of 21 percent in 2007. India’s major retreat from export aided Australia mainly to lift its share of Chinese iron ore seaborne trade to 47 percent, up from 43 percent in 2011. Supply drought from India is one important reason why spot ore prices climbed so strongly in December after sinking to a three-year low in September. As
SPECIAL feature is happening with growing intensity, China’s restocking and destocking of iron ore are driving world ore prices. This was much in evidence in the last quarter. At one point in December, Chinese port stocks of ore were down to a three-month low of around 70 mt and that triggered major buying by local traders and steelmakers. This took ore spot prices to $144.9 a ton end-December at China’s Tianjin port from about $88 a ton four-and-a-half months ago before retreating to $136 per ton now because of restrictions imposed on the country’s real estate sector. India’s iron ore crunch also offers a cautionary tale of the perils of resource nationalism, as other countries such as Indonesia consider following India’s export restrictions, the latest of which came when it raised duties to 30 percent at the start of last year. Indian exports have since fallen sharply, but domestic production has fallen too, meaning steelmakers without access to iron ore mines are also being forced to look abroad. Chances of supply restarting now rest with India’s slow-moving administrative system, which permitted limited mining in Karnataka to begin at the end of last year and will also review the continued ban in Goa soon. But other threats remain, even if activity slowly picks up in these areas, including demands for windfall profits taxes from other mining states and the more basic problem of corruption. Few analysts expect a recovery this year, but some are at least optimistic of an eventual upturn. “Our view is that India will work through these current challenges and find a solution,” says a senior executive at one trading house. But others fear that India’s iron ore slump may now become permanent. “From what we understand things are not really going to change any time soon,” says another figure from a large ore trader. Exports will remain close to zero for at least the next three to four years and potentially for the whole of the coming decade, the trader says. Either way, in the near term at least, India’s iron ore industry faces a torrid future.
“There will be no shortage of iron ore, even in 2020, when Indian steel production is projected to rise to 100 mta year,” Mines Minister Dinsha Patel said. “Indian steel production is about 67 mt to 70 mt a year. It requires 1.6 mt of ore to produce 1 mt of steel. Indian iron ore production was 210 mt in 2010 and came
down to 167 mt following a ban on mining in Karnataka. Even then there is no dearth of iron ore,” he said. Iron ore production in the country has been steadily falling in the wake of a ban imposed in the southern Indian province of Karnataka a year-and-a-half ago, and a similar ban across the western Indian coastal
NMDC iron ore price trends in 2012-13 The domestic and export prices of NMDC’s iron ore remained stable in 2012-13, according to the data released by the government. Sales under export agreements are done on Free on Board (FOB) port basis whereas domestic sales are done on Free on Rail (FOR) / Free on Truck (FOT) mine basis and as such these two types of prices are not directly comparable. NMDC prices in 2012-13 Domestic price (in Rs./Ton on FOR mine basis)
Period
Baila Lump
Baila Fines
Baila Lump
Baila Fines
Q1(April-June,2012)
5480
2800
146.90
135.20
Q2 (July-September,2012)
6190
3030
153.60
141.38
October, 2012
6070
2690
131.93
121.43
November, 2012
5380
2610
131.93
121.43
December, 2012
5380
2610
131.93
121.43
January, 2013
5060
2610
116.57
107.30
February, 2013
5060
2610
116.57
107.30
March, 2013
4950
2610
116.57
107.30
Source: Steel Ministry
NMDC Limited had entered into long term contracts with Japanese Steel Mills and POSCO, South Korea for export of iron ore from Bailadila Sector through MMTC Limited, for a period of three years from 2012-13 to 2014-15. NMDC exports to Japan Year
(in lakh tons)
Iron ore export to Japan by NMDC Limited
2009-10
21.81
2010-11
20.76
2011-12
0.69
2012-13 (Till February 2013)
11.05
Source: Indian Bureau of Mines
Iron ore supplies to various Chhattisgarh units Year
(In lakh tons)
Iron ore supplies to Chhattisgarh Units by NMDC
2009-10
17.1
Government denies shortage
2010-11
26.5
The Indian government has denied any scarcity in domestic availability of iron ore and refuted reports that the country would be a net importer by 2020.
2011-12
33.5
2012-13 (Till February 2013)
20.17
28 Steel Insights, April 2013
Export price (in US $ / DLT-FOB port basis)
Source: Indian Bureau of Mines
SPECIAL feature province of Goa in October 2012. Mining was currently permitted in Odisha but with severe restrictions on transportation. Indian iron ore exports during the tenmonth period between April 2012 and January 2013 were down 68% to 16.35 mt, compared to the corresponding previous period. According to officials, the government’s denial of the iron ore shortage for domestic steel production was prompted by a series of reports put forth by analysts over the past few months, which predicted that India would turn into a net importer of iron ore as early as the next fiscal year. Government sources said that the mining industry’s contention that the quantity of iron ore imports was higher than exports, indicating a shortage of raw material, was fallacious. It was pointed out that Indian exports consisted almost entirely of iron ore fines which were not used by domestic steel mills, while imports were largely of high-grade lumps. Since the two were not comparable, higher iron ore imports than exports did not have a major implication on domestic steel production since domestic availability of lumps, barring a few geographies, was not impacted.
State wise opening stock, production and requirement and surplus availability of iron ore State All India (Total) Andhra Pradesh
(Unit: Thousand Tons)
2011-12 Opening Stock
Production
Require-ment
Surplus (+/-)
120630
167289
110945
176974
878
1714
6030
-3438
Chhattisgarh
2642
30455
17769
15328
Goa
4309
33372
847
36834
Jharkhand
23900
18942
15574
27268
Karnataka
29614
13189
16930
25873
Maharashtra
245
1470
5598
-3883
Odisha
58333
67013
8877
116469
Others
709
1134
39320
-37477
Source: Mineral Conservation and Development Rules- Returns to IBM
The Mines Ministry also doubted the accuracy of export-import projections made by the FIMI, the mining industry lobby group. While it had forecast double-digit iron ore imports of between 10 mt to 12 mt during 2012-13, the actual figure was expected to be around 8 mt. As for exports, while the industry body had been forecasting a single-digit volume, the actual export in 2012-13 was expected to close between 17
mt and 18 mt. Patel said the Central Government has taken various measures to encourage beneficiation and pelletisation in the country. To encourage beneficiation and pelletisation, import duty on plants and equipment used for initial setting up and substantial expansion of beneficiation and pelletisation plants has been reduced from 7.5 percent to 2.5 percent in the General Budget for year 2012-13.
SPECIAL feature
CEPA pacts may be bane of local steel industry
Steel Insights Bureau
T
he Comprehensive Economic Partnership Agreement (CEPA) with Korea and Japan is turning out to be a curse in disguise for the Indian steel industry, which is already saddled with serious problems, such as mining and land acquisition. The Indian government entered into the CEPA with Korea in 2010 and Japan in 2011. Under its agreement with Korea, in the next eight years, India will eliminate duties on 75 percent of the products imported from Korea. Under a similar agreement with Japan, duties on 95 percent of the products imported from Japan will become zero in eight years. Many steel products such as hot and coal rolled coils, plates and coated products are part of the CEPAs. According to top steel industry officials, the cheap imports from the two countries will seriously affect the local steel industry as the
30 Steel Insights, April 2013
market now is weak and acts as a disincentive for foreign direct investment (FDI). Data showed that imports of hot rolled coil (HRC), a benchmark product, from South Korea surged 125 percent and 72 percent from Japan in 2011-12 over the previous year and the inflow is likely to continue. A number of Japanese companies, including Kobe, JFE, Sumitomo and Nippon, are in one way or the other connected with the Indian steel industry. The entry of Korean steel giant Posco, India’s largest source of FDI, will pose an even greater threat to the domestic steel industry. These companies, granted with various sops to sell their products, will flood the Indian market, and serve as a disincentive for these global steel giants to invest in India. “The trade pacts are not helping India, while affecting the industry adversely. Production and employment are taking place in those countries. We should encourage FDI instead,” said Jayant Acharya, director
of commercial & marketing of JSW Steel. For example, car maker Maruti Suzuki India Ltd (MSIL) has been importing steel from Japan and Korea long before the bilateral agreement came into existence. But it would stand to lose significantly if steel is put on the sensitive list for exclusion under the CEPA, as is demanded by the steel companies. Sources at the car maker say it has imported over 190,000 tons in 2010-11 and over 200,000 tons in 2011-12, which are about 29 percent and 28 percent of the total requirements. Import quantity is dependent on demand changes and not on the bilateral agreement. Steel industry representatives feel the onslaught of imports could lead to job losses in India. They noted that it might lead to idling of steel capacity as most of the plants without captive iron ore are operating at much less than full capacity. In the Budget for 2012-13, the central government had increased the import duty on most steel products from 5 percent to 7 percent, in view of the pressure the industry is facing. However, that does not affect the imports from Korea and Japan. Under the provisions of CEPA, the rate is subsidized at 3.125 percent for Korea, and 3.3 percent for Japan in 2012-13. According to Essar Steel executive director Vikram Amin, “There is a definite case to exclude steel products from the ambit of the Free Trade Agreement (FTA) with Korea and Japan. Considering the high value addition in the steel industry and employment generation potential, it makes immense sense to export steel rather than exporting iron ore and importing steel.” Steel industry representatives have lobbied with the Chambers of Commerce, which have already taken up the matter with the Indian government. According to Acharya, it should be a level playing field. While production cost in India is more or less at par with Korea or Japan, the financing cost is more conducive in those countries. JSW Steel was the first among domestic steel makers to come out in the open with such a demand, saying that taking advantages of the FTA, Japan and Korea are dumping steel products in India at a “very low price” since their own economies were not doing well.
SPECIAL feature Country-wise import of iron & steel via major Indian ports between April 2012-February 2013 in '000 tons
Carbon Steel
Alloy/ stainless
Japan
1299.12
124.4
8.02
2.08
0
0
Korea
1452.69
93.1
3.24
26.69
0.04
0
Country
Melting Scrap
Fittings
Pig iron
Sponge iron
HB Iron
Ferro alloys
Misc items
0
7.9
101.56
1543.08
0
9.82
86.43
1672.01
Carbon Steel (including seconds/defective)
Total
Quantity: ‘000 tons
Country
Semis (incl. RR Scrap)
Bars & Rods
Struct.
Rly. M atrls.
Plates
HR Shts
HR Coils/ Strips
CR Coils/ Sheets
GP / GC Coated
Elect. Sheets
TM BP
Tin Plates
Tin Plates W/W
Tin Free Steel
Pipes
TOTAL
JAPAN
41.71
37.03
15.21
0.06
91.18
5.96
567.41
300.07
159.5
50.46
0
14.17
0.81
13.72
1.83
1299.12
KOREA
87.67
26.39
2.43
0.01
130.11
6.69
396.37
575.59
137.58
75.26
0
10
0.33
1.72
2.54
1452.69
Source: Steel Ministry
However, according to industry experts, taking out any product from the FTA is possible, but it calls for an intense lobbying with facts and figures for proving the rationale of such a demand. India’s steel import stood at 6.83 million tons (mt) in 2011-12 and at 6.66 mt in 2010-11. The domestic steel industry is expecting in excess of 8 mt imports in the country during 2012-13, which is around 10 per cent of the total projected demand for 2012—13.
Till April-February period of 2012-13 steel imports to India stood at 7.26 mt, according to data from the steel ministry. An analysis of the data show that imports from Japan have risen by 71 per cent yearon-year to 1.42 mt and Korea by 33 per cent year-on-year to 1.54 mt during the AprilFebruary period of 2012-13. Data shows that cashing in on the duty benefits, Japan and Korea have also become the leading exporters of steel to India
replacing the traditional exporters European Union and Russia. Assocham raises ante
Steel products should be excluded from the ambit of FTA with Japan and Korea as these countries are flooding the Indian market, taking advantage of concessional duty rates at the cost of domestic firms, industry body Assocham said. Accusing the two nations of deviating from the spirit of FTA, the industry
SPECIAL feature body said for all ensuing and under discussion FTA proposals, India should not negotiate any duty concessions for steel products. “FTAs should be evolved on the spirit of complementing the need and necessities of partner economies rather than exploitation for self-centric objectives. Unfortunately, with large surplus floating steel capacity together with rising production and declining demand, both Japan and South Korea have amply utilised concessional duty rates under the CEPA FTA for salvaging part of their surplus thereby flooding exports to India,” Assocham secretary general D.S. Rawat said. There is a need to exclude steel products under Chapter 72 of International Trade Centre (ITC)) code from Indo-Korea and Indo-Japan CEPA to ensure sustainability of domestic steel industry, he added. In a letter to the Steel Ministry, Assocham
32 Steel Insights, April 2013
also requested it to reinstate import duty rates as per the normal prevailing import duty rates. Assocham also said the government should not negotiate any duty concessions for steel products with partner economies having surplus steel for all ensuing and under discussion FTA proposals. “It is imperative that FTAs should focus on investment into manufacturing sector along with infrastructure development in India instead of encouraging import of manufactured goods from partner economies to salvage their surplus into India,” Rawat said. “The FTAs should be evolved on the spirit of complementing the need and necessities of partner economies rather than exploitation for self-centric objectives,” he added. Further, Assocham has strongly recommended for exclusion of steel products
under Chapter 72 from negotiations of the ensuing Indo-Australian FTA. For all ensuing and “under discussion” FTA proposals, India should not negotiate any duty concessions for steel products under Chapter 72 with all the partner economies having surplus steel and/or the country is reeling under economic slowdown, it has said. The apex chamber has also specifically requested to the minister of commerce and industry to review the representations from Assocham sent last year on May 5 and August 6 along with the oral submissions to joint secretary-commerce (Foreign Trade). While Chinese steel makers have been traditional bugbears as far as domestic steel industry is concerned, the surge in imports this time is flowing from South Korean and to some extent Japanese steel makers.
SPECIAL feature Steel Minister disapproves
Initially disapproving of the demand for removal of steel from free trade pacts with Japan and South Korea, Steel Minister Beni Prasad Verma advised the industry to become more competitive by reducing cost of production. “I don’t know what the industry is clamouring for. They have to understand that when import duty would be near zero by 2025, they have to compete. You have to lower operation cost, raise competency level and deploy latest technology. Only then, your cost of production will come down,” Verma said. Verma said since India is a signatory to the WTO, it has to reduce import duty to near zero by 2025. It would be better if the domestic industry gears up from now on to achieve the competitiveness. “There is still a 3.5 percent duty on steel imports. So, the industries in India must gear up to competition because, today or tomorrow you will enter into that near zero phase,” he said. Moreover, India has an adverse balance
of trade between with both Japan and Korea leaving it with less bargaining power to lobby for a product removal from the FTA purview. “When you are contributing less (to a bilateral trade), your negotiating power is also less. When you are in surplus, you can say we want to put iron, steel and others out of the purview,” he said.
Top suppliers of electrical steel to India (April 2012-February 2013) 000 tons
Country
Quantity
Korea
75.26
Japan
50.46
Taiwan
45.54
Russia
42.84
National Steel policy promises monitoring
China
26.39
USA
25.53
However, later the government promised to monitor steel import tariffs and free trade agreements (FTAs) especially with nations with “mature steel industries” in the draft of the National Steel Policy 2012 released by the steel ministry. “While deciding on import tariff levels for steel, implications of possibilities of global oversupply due to slowdowns in major steel producing countries and predatory pricing shall be kept in sight,” the policy said. On the subject of FTAs, the policy said steel would not be included in the list of items for preferential or free tariff regime – especially when such agreements are being
Germany
9.82
France
8.08
UK
7.99
Belgium
7.57
Others
48.7
Total
348.18
Source: Steel Ministry
inked with partner nations hosting “strong and competitive steel industries.” Although Indian steelmakers have long been lamenting the surge in imports from Japan and Korea, it is unclear whether the existing FTAs with these nations would be revised.
Steel Insights, April 2013
33
interview
Kabelschlepp India plans to double revenue in next 5 years
When did you start your operations in India and how has been the journey through the years? Kabelschlepp has been operating in the Indian market since August 2006 and the journey so far has been satisfying. Though we could not grow the business the way we wanted, with two slowdowns in the last five years, the future seems to be promising. How much does the Indian unit contribute to the global revenue? The Indian unit at the moment contributes approximately around 5 percent of the global revenue of Tsubaki Kabelschlepp GmbH. We, at Kabelschlepp India, have only a limited product profile which we manufacture and sell to the Indian market. However, we are exploring the options internally to offer the entire product basket to the Indian market which consists of machine guardings, telescopic covers and flexible cables. What are the products that are on offer in India? We offer cable drag chains, Flexible cables
Tamajit Pain
K
abelschlepp GmbH, part of Waldrich-Siegen Germany, now Tsubaki Kabelschlepp GmbH, is the inventor of cable carriers or cable drag chain systems in the year 1954. Now with 60 years of experience in the design, manufacturing and application of cable carrier systems drag chain systems, Kabelschlepp leads the world market in innovation and technology with 13 subsidiary companies and 40 representations around the world. In an interaction with Steel Insights, the General Manager of Kabelschlepp India Private Limited, P.S. Ganesan, speaks on the company’s Indian operations and plans in India going forward. Excerpts:
34 Steel Insights, April 2013
interview Are these sourced indigenously or from your global plants? We source our entire product range from our mother plant in Germany, and we customise as per our customers’ requirement with local assembly and offer them for sale in India with engineering assistance which includes site survey, engineering support, product selection and execution. What is your market share in India?
P.S. Ganesan, GM, Kabelschlepp India Private Limited
in limited range, way wipers, Link apron covers, machine enclosures, Guardings, Chip protection and also transportation systems – in short we do everything around the machine.
We have approximately 20 percent of the market share for cable drag chain systems and very negligible share in flexible cables and machine protection systems as in these product lines we offer for sale in India a very limited range. We have already started working on a plan to offer the entire cable range which consists of highly flexible power and control cables, machine guarding systems etc. What is the approximate size of the industry that you are operating in India? The approximate estimated market size in
India for our range of products is worth $50 million and already there is market expansion happening with new and interesting applications for the products taking place and also by introducing new and cost effective products in the market in the last couple of years. Who are your competitors in India? There are no formidable competitors in India yet for our machine guarding systems and guide way protection systems except a handful of local/regional manufacturers. However, for Flexible cables and drag chain systems in plastic we have our competitors from Germany who also offer a similar product range. We have very special products for the steel industry for which we don’t have competition in India and we serve the requirements. What are your business expansion plans in 2013-14? We do not have any expansion plan for India in the next one or two years; however we are currently working on our five-year strategic plan starting 2015 for the Indian market which includes investment in augmenting our operational capabilities and product offerings. How do you want to increase market share and grow business in India in the next five years? We want to grow our business and market share aggressively in the Indian market in the next five years. Also, we want to double our revenue in the next five years and are directing efforts in that direction.
Call 9163348243 for more details
Steel Insights, April 2013
35
feature
Consuming sectors contract on slow growth Steel Insights Bureau
T
he Indian GDP grew at 4.5 percent year-on-year in the third quarter of 2012-13 mainly on the back of the financing, insurance, real estate and business services sectors which grew at 7.9 percent. Mining and quarrying sector growth dropped by 1.4 percent, while manufacturing increased by 2.5 percent. Construction also posted a positive growth of 5.8 percent. The IIP expanded by 2.4 percent in January 2013 as electricity grew by 6.4 percent and manufacturing expanded by 2.7 percent on year-on-year basis. Meanwhile, the mining sector continued to contract by 2.9 percent in the month. The PMI data indicates a further
Source: SIAM
expansion in manufacturing in February 2013 from January 2013. With a second rate cut of 25 basis points implemented by the RBI, industrial sector got the much Automobile Sector Growth (%) needed boost as liquidity potential increased in the market. The Wholesale Index price (WPI) rose by 6.8 percent in February 2013, while, consumer price index (CPI) grew by 10.9 percent in the month. Analysts expect inflation growth to Construction Sector Growth be at similar level in March-April 2013 as demand from the manufacturing sector increases slightly but gets negated by the stabilizing prices of the other two components: primary articles and fuel and power.
Source: CMIE
36 Steel Insights, April 2013
There is expectation that bank credit to commercial sectors would increase slightly in the coming months as investment sentiments improve. In line with the economic developments, the steel consuming sectors showed subdued growth. Automobile
The passenger vehicle sales declined 7 percent year-on-year on February 2013, largely due to a 70 percent decline in micro-segment. The commercial vehicle demand remained subdued and registered a 24 percent drop in production year-on-year in February 2013. Analysts see no imminent improvement till the new fiscal year. Initial trend showed sector growth is expected to remain under pressure in March 2013, and no significant improvement is expected till next financial year. Construction
The Budget (2013-14) proposed government issuance of infra-bond to the tune of `50,000 crore. Allocation of funds to the JNNURM programme has been doubled which will be the driver of urban projects. Budget proposes to set up an independent regulatory authority to fast track implementation of road construction. The `20,000 crore of stranded highway projects have been cleared by the Cabinet
feature Capital Goods Sector Growth (%)
Source: CMIE
Committee of Investment (CCI) after recent Supreme court ruling to delink environment and forest clearances for starting of projects. CCI has targeted to clear hurdles for infrastructure projects of `50,000 crore by March 31, 2013. However, the depressed demand has restricted the growth of cement industry to 4.6 percent from April 2012 to January 2013. The cement consumption is expected to grow in financial year 2013-14 due to government thrust on infrastructure spending as proposed in the budget. Real estate
Slow uptake of office space by information technology firms in India is beginning to cast a shadow over the country’s commercial real estate sector, data from property consultancy firms indicate. Figures provided by two property consultants — Cushman & Wakefield and DTZ — show that absorption of office space in 2012 across the top eight Indian cities stood at 29.05 million sq ft, a 23% decline over the previous year. Of this, the share of the IT sector, which accounted for 64% of the commercial space absorbed in 2009, dropped to 44% in 2012 at 13.22 million sq ft. It was 16.08 million sq ft in 2011. Some experts attribute this drop to the economic uncertainty in the West, which accounts for over 85 per cent of the revenues of India’s IT companies. A slowdown in these economies has forced several firms to go slow on their expansion plans, including taking up of office space. The lower demand has started to impact supply of office space across the country. According to Cushman & Wakefield, developers launched 35 million sq ft of new
Consumer Durables Sector Growth (%)
Source: CMIE
office space in 2012, representing a 10% year-on-year decline. For the fourth quarter of 2012, the figure was about 7.8 million sq ft, down almost 30% from the third. Capital goods
The capital goods sector has shown de-growth of 1.8 percent in January 2013 over January 2012. Import of capital goods has increased up to 6.2 percent over (April-January 201112. The key steel consuming capital goods have also shown de-growth in line with the overall sector. The improvement is likely over the medium term due to easing of interest rates and investment allowance allowed in the budget.
changes, the status quo will continue. The consumer demand is not expected to improve much in the coming months also. However, white goods sales increased in January 2013, due to the low base effect and the poor performance in December 2012. Sales are expected to be down for February due to the ‘budget expectations’. Industry experts said the budget has not reduced the excise duties on white goods as was hoped and the prices of the goods will continue to be higher.
C o n s u m e r durables
The consumer durables sector contracted by 0.9 percent in January 2013 compared to January 2012. This is the second consecutive contraction in this sector. According to industry experts, the inventory pileup with the producers has affected the production levels and with the budget not throwing in any big
Steel Insights, April 2013
37
feature
Auto industry pines for revival in 2013-14 banked on the Union Budget to get some fillip, the government grossly disappointed the sector through a hike in excise duty on special utility vehicles (SUVs), the best performing segment. Although the figures for March 2013 are yet to be published, industry think-tanks have already banished 2012-13 as one of the worst years in a decade. The hopes for a revival in the new calendar year were dashed
Steel Insights Bureau
A
fter a rather forgettable performance in 2012-13, the Indian auto sector is desperately looking for a demand revival in the new financial year starting April. The last fiscal has been a difficult one with most of the auto majors witnessing a slowdown in sales growth, and in some cases, a decline in numbers. While the industry
after January sales showed only marginal rise or negative growth for the major automakers. The trucks and buses segment sales declined by a whopping 40 percent. The industry body SIAM revised its growth projections more than once, every time coming out with a more conservative estimate. New launches made by carmakers received lukewarm response as the market failed to support sales amidst broad-based economic slowdown, high fuel prices and high inflation. Festive season and year-end discount offers also did not help much to revive the sagging growth in sales. The February numbers are much in line with January performance. Industry sources expect the subdued trend to continue in coming months. Adding to the slowdown in
Maruti sales up 3.3% in FY13
C
ar market leader Maruti Suzuki India Limited sold a total of 119,937 units in March 2013. This includes 12,047 units of exports. With this, the company closed the fiscal 2012-13 with total sales of 1,171,434 units, a growth of 3.3 percent over previous year. During the year, the company sold 1,051,046 units in the domestic market, a growth of 4.4 percent over the previous year.
M&M reports 10.6% growth in sales
Auto-maker Mahindra & Mahindra reported 10.62 percent increase in its total sales at 51,904 units in March 2013. The company had sold 46,919 units in the same month in 2012. For the entire 2012-13 financial year, the Mumbai-based utility vehicle major registered a rise of 16.60 percent in its total
Maruti sales in March 2013 Category : Subsegment
Models
A: Passenger cars : Mini
March 2013
2012
M800, Alto, A-Star, WagonR
45047
A: Passenger cars : Compact
Swift, Estilo, Ritz
A: Passenger cars : Super Compact
Dzire
A: Passenger cars : Mid-Size
SX4
A: Passenger cars : Executive
Kizashi
TOTAL A: PASSENGER CARS B: Utility vehicles
Gypsy, Grand Vitara, Ertiga*
C: Vans
Omni, Eeco
TOTAL: Domestic Sales Total Export Sales Total Sales (Domestic + Export)
38 Steel Insights, April 2013
Till March % Change
2012- 13
2011-12
% Change
52826
-14.7%
429569
491389
-12.6%
25868
27913
-7.3%
255302
235754
8.3%
20078
16451
22.0%
169571
110132
54.0%
903
1520
-40.6%
6707
17997
-62.7%
0
48
---
188
458
-59.0%
91896
98758
-6.9%
861337
855730
0.7%
6488
1530
324.1%
79192
6525
1113.7% -23.3%
9506
12436
-23.6%
110517
144061
107890
112724
-4.3%
1051046
1006316
4.4%
12047
13228
-8.9%
120388
127379
-5.5%
119937
125952
-4.8%
1171434
1133695
3.3%
sales at 563,373 units compared to 483,164 units in the previous fiscal. The company hopes to create excitement in the market during 2013-14, especially with the launch of its sub-four metre Verito and other offerings. In March this year, M&M’s domestic sales stood at 49,225 units as against 44,260 units in the same month last year, up 11.22 percent. Total sales of passenger vehicles stood at 25,847 units as against 22,961 units in March 2012, translating into 12.57 percent increase. The company, however, said sales of its three-wheelers declined by 5.07 percent to 4,831 units during March, 2013 from 5,089 units in the same month last year. Sales of the company’s Gio and Maxximo mini-trucks and other fourwheeler commercial vehicles went up by 17.12 percent last month to 17,212 units. Commercial vehicle sales from Mahindra Navistar Automotives Ltd stood at 1,335 units during the month as against 1,514 units in the same month a year ago, a fall of 11.82 percent. M&M’s exports rose marginally to 2,679 units during the month from 2,659 units in March 2012. In 2012-13, the company’s domestic sales went up by 16.94 percent to 530,915 units from 453,987 units in FY’12.
feature growth at (-)9.64 percent during this period. Two Wheelers registered a growth of only 3.85 percent during April-February 2013. Scooters, mopeds and motorcycles grew by 16.19 percent, 2.18 percent and 0.90 percent respectively over same period last year. However, in February 2013 only Scooters segment witnessed growth at 2.55 percent while, Motorcycles and mopeds declined by (-)4.48 and (-)0.25 percent respectively. Exports
domestic sales, the export performance has also been poor in recent months. Standing at this juncture, the automobile makers could do little but to wait for an overall turnaround in the economy and a reduction in interest rates, the sources said. February production
According to industry body SIAM, the cumulative production data for AprilFebruary 2013 shows production growth of only 2.18 percent over the same period last year. The industry produced 1,731,824 vehicles in February 2013 as against 1,791,795 in February 2012, which declined by (-) 3.35 percent. Domestic sales
The overall growth in domestic sales during April-February 2013 was 3.68 percent over the same period last year. While in February 2013, overall sales fell by (-)5.45 percent over February 2012. Passenger Vehicles segment grew at 4.07 percent during April-February 2013 over same period last year. Passenger Cars declined by (-)4.64 percent, Utility Vehicles grew by 54.46 percent and Vans grew only by 1.02 percent during April-February 2013 as compared to the same period last year. However, in February 2013 passenger car
sales further declined by (-)25.71 percent over February 2012. Total passenger vehicles sales also declined by (-)16.67 percent in February 2013 over same month last year. The overall Commercial Vehicles segment registered de-growth of (-)1.51 percent in AprilFebruary 2013 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) declined by (-)22.79 percent, Light Commercial Vehicles grew at 14.53 percent. In February 2013, M&HCVs sales further declined by (-)34.72 percent over February 2012. Three Wheelers sales grew by 5.05 percent in AprilFebruary 2013. Passenger Carriers grew by 8.89 percent during April-February 2013 and Goods Carriers registered de-
During April-February 2013, overall automobile exports registered de-growth of (-) 1.66 percent compared to the same period last year. Passenger Vehicles grew by 9.67 percent, while the other segments like Commercial Vehicles, Three Wheelers and Two Wheelers fell by (-)11.89 percent, (-)17.66 percent and (-)1.05 percent respectively. In February 2013 Passenger Vehicles and Two Wheelers grew by 32.05 and 14.21 percent respectively and Commercial Vehicles and Three Wheelers declined by (-)24.30 and (-)3.33 percent respectively. 
Steel Insights, April 2013
39
feature
Paucity of “bankable” projects major constraint to infra growth Steel Insights Bureau
L
ack of “bankable” projects is a bigger challenge than the paucity of funds for the government to meet the $1-trillion investment target for infrastructure in the Twelfth Plan, according to infrastructure sector analyst Vinayak Chatterjee. “The government has to come up with more projects to meet the ambitious target for infrastructure. Lack of bankable projects is the biggest problem in our country,” Chatterjee, chairman of infrastructure advisory firm Feedback Infra, said. Chatterjee was speaking at the CII annual regional meet in Kolkata. “The effective cause of concern is that people have not factored in the arithmetic of how much bankable projects are required to meet the $1-trillion investment target (in infrastructure),” he said. Chatterjee said the government needed to attract an investment of $200 billion per annum in infrastructure to achieve the investment target. While the government has sought greater private participation in infrastructure, it needs to hasten the approval of such projects. “The private sector cannot create bids (for
40 Steel Insights, April 2013
Vinayak Chatterjee speaking at the CII meet
infrastructure projects). It can only respond to the bids that come from the government,” Chatterjee pointed out. Of the projected `56.32 lakh crore investment during the Twelfth Plan period, about `29 lakh crore is likely to be invested by the government and the rest by the private sector. About 48 percent of the planned infrastructure investment in the Plan period is expected from private players. Chatterjee said the country would need much more projects in the pipeline every year to meet the investment target. “The other problem is that the creative energy is with the private sector. But the private sector cannot create the bids. It can only respond to the bids,” he observed. According to him, lack of tangible infrastructure projects along with lack of political and bureaucratic willingness, are the “effective constraints” rather than
dearth of capital, which had been the popular belief. He also called for setting up of an independent commission for renegotiation of public-private-partnership (PPP) projects in India for “transparency”. The country required an institutional and interventional framework for renegotiation of infra projects under PPP mode, he averred. A CII delegation, led by Chatterjee, made the suggestion to the Planning Commission recently. According to Chatterjee, there is adequate capital in the form of infrastructure debt funds, tax-free bonds and private equity funds to finance the projects. The Planning Commission had set infrastructure spending at $500 billion for the Eleventh Plan and could achieve 93 percent of the target, according to Chatterjee.
feature
Coking coal prices plunge in March Arindam Bandyopadhyay
A
fter a slight decline in February, seaborne coking coal prices plummeted in March, courtesy the lack of demand from Chinese market. Spot prices dropped as much as $7-14 per ton fob Australia for various grades, reversing much of the $10 per ton fob gain seen in January. Market sources too were of diverse views regarding the future movement of spot prices in coming weeks. The dramatic fall in March was largely attributed to the lack of Chinese buying interest and low overall sentiment. There were talks of sharp declines in steel, iron ore and met coke prices prompting Chinese buyers to back away from fresh inquiry. Reportedly, the country’s coking coal imports dropped around 25 percent month-onmonth in February and the same weak trend continued in March. This drop has affected both Mongolian and Australian exporters, sources said. Prices of hard coking coal declined $12 per ton fob Australia in March and stood at $156 per ton fob Australia as of March 27 ($168 per ton fob on February 28). If compared with the same period last year, hard coking coal prices were lower by $50 per ton fob Australia. Premium low-vol prices were lower by around $14 per ton fob Australia in March and quoted at $154.75 per ton fob Australia on March 27 ($168.5 per ton on February 28). Semi soft prices too plunged by $7 per ton fob Australia to $112.5 per ton fob Australia on March 27. The outlook for the primary steelmaking sector has remained subdued across the markets. In India, steel prices stayed low in March amid weak demand. There was no major support from the Union Budget 2013 and this affected the sentiment. Adding to this, there was reasonable inventory at many plants, industry sources said.
The market was divided in its views about the movement in coking coal prices. Some viewed the situation as greasy for the suppliers who may choose to reduce inventory in view of the drop in prices. This in turn may result in further slide in the prices. Meanwhile, Indian steelmaker SAIL has reached an agreement with BHP Billiton on Q2 coking coal contract at about $169.50 per ton. The company expects to procure slightly over 1 million tons (mt) of coking coal during the quarter, of which 12 vessels or about 0.6 mt is likely to be procured from BHP Billiton, a company source said. ICMW learnt that around 50 percent of the agreed quantity from BHP is likely to be procured by SAIL at quarterly fixed prices while the balance would be at monthly pricing. The monthly price for April has been fixed by BHP at about $170 per ton, industry sources said. While the Q2 contract price showed an improvement over Q1 prices, it is still far lower than the prices prevailing in the same period last year. Market sources said it will take some time before the prices actually register a significant recovery.
material from Australia hovered around $296 per ton cfr India, compared to $298 per ton cfr India quoted at end February. The import prices were in tow with the domestic prices which eased by around `600 per ton to `17,400 per ton (basic) on low demand prevailing in the market. Internationally, the met coke market was still doing the guessing work for the impact of China’s withdrawal of 40 percent export tax on met coke. Sources said that the decision was prompted by the poor steel market back home and also subdued coking coal prices. Following the tax withdrawal, China entered into a few spot deals at competitive rates. A leading coke maker in India said there would not be any immediate impact of China’s action on the market. Due to lower production of the material (restrained by environmental issues), the domestic demand will absorb a significant part of the supply. However, exports would move up from the country in the medium to long term, and this may influence prices in the international market.
Met coke prices
Price of imported metallurgical coke in India declined in March after improving slightly in the first fortnight. As of March 27, seaborne met coke prices for the
Steel Insights, April 2013
41
feature
Ferro alloy market remains stable in March
Tender from SAIL Steel Authority of India (SAIL), India’s largest steel maker in terms of quantity has invited sealed quotations from Indian and global suppliers for supply of 3,890 tons of Ferro Silicon (Silicon content Min 70%) and around 15,100 tons of High Grade Ferro Chrome. The tender will close on April 9, 2013. intensive industries like ferro alloys. “So, we expect that the market will definitely pick up in April,” sources said. Ferro manganese
Ferro manganese prices have corrected by `500 per ton in the domestic market and HC 70% is quoted at `54,000 per ton. According to sources, buying interest is not so high and the stock clearance drive has cut down prices a bit. But sources are quite optimistic for April that prices should remain firm. Power tariff in Chhattisgarh may move up by `1.20/unit, sources said. Ferro chrome
Steel Insights Bureau
T
he market for ferro alloys remained almost stable but prices corrected a bit as manufacturers were keen to clear stocks ahead of the financial year end. But expectations are high to see an upward trend in the next quarter due to raw material price hike and anticipated power tariff hike across India. Silico manganese
Domestic grade 60/14 traded at around `53,000-54,000 per ton, almost the same as the previous traded price. According to market sources, manufacturers are keen to clear stocks ahead of March end. But going
42 Steel Insights, April 2013
forward there may be a price hike in April as power tariff is expected to move up further by 20-25 paise per unit. Export grade 65/15 is quoted at $1100 per ton FOB Vizag. According to industry sources, Indian exporters are carrying sufficient stocks which they want to clear off by the March end. And, buyers want to reap benefit out of it and they have lowered their expectations further. So, market is stable with no big deals being concluded so far. On the future outlook, sources said there will be power shortage during summers and power tariff will also move up. For example in Vizag it is expected to move up by 30 percent and touch `6.2 per unit which will a major blow for the power
Looking at the current scenario, the market expects bids to touch a level of `74,00075,000 per ton. Price at which the previous tenders were settled were HCFC (4/8) Lumps at `71,165 per ton and HCFC (2/8) Lumps- `73,165 per ton Basic Ex-IFCAL, Jajpur, Odisha. In the international market, FeCr prices remained flat this week too. Indian producers were heard offering at HC FeCr at 102-103 cents/lb CIF Japan for 60% chrome, 3.5% silicon and 7-9% carbon material for loading in late March to April. But there were no deals reported at these rates. Market players at present are keeping a close watch on the announcement of the second quarter contract price negotiations between South African charge chrome producers and European mills. Producers are said to be asking for an increase in prices compared with Q1. The European Q1 contract price was settled at 112.50 cents/lb, up 2.5 cents/lb from the previous quarter.
TECHNOLOGY
Danieli to supply 350-ton converter for Arcelor unit
Steel Insights Bureau
A
rcelorMittal Poland has chosen Danieli to supply a 350-ton converter for its Huta Katowice plant. This new converter will be one of the largest worldwide and will have several technology innovations. According to company sources, Danieli is scheduled to supply this converter on turnkey basis in 16 months. The project was awarded by ArcelorMittal Poland earlier this year and as part of the project, Danieli will deliver on a turnkey basis the core components of a converter steelmaking shop. The components will include the vessel shell, the trunnion ring, and the suspension system, as well as main bearings. Additionally, the scope of supply includes a relining machine. The equipment has to be delivered to site by end of 2013. After pre-assembly on-site the installation is supposed to be finished within April 2014, the sources informed. The Linz-based group was founded in June 2011 to supply core components of a converter melt shop as well as complete converter steelmaking plants for integrated
plants, and has been working together with several experts to develop its own technology using internal experience that together enable us to offer state-of-the-art solutions. In Linz, specialists with long-term experience in the converter business as well as enthusiastic engineers form a very powerful and effective group for this business. This recent Danieli offshoot boasts several reference plants of its sister company Danieli Corus (Netherlands), specialized in the process technology (Level 2 model), using the Static-Dynamic Model-SDM software, developed together with Danieli Automation, and certain auxiliary devices, such as the sub-lances, recognized as among the best in the world. Danieli is a reliable and innovative equipment supplier for mechanical parts is combined now with Danieli Corus’ years of process experience and reference plants. With these references the door to the integrated plant market is wide open for Danieli since it now becomes a full-line supplier for converter steelmaking melt shops. This Polish project involves the replacement of the vessel, trunnion ring,
The converter speccifications
♦♦ Nominal heat size : 350 tons ♦♦ Total weight of the charge converter : 1500 tons (approx.) ♦♦ Vessel height : 11 meters ♦♦ Vessel diameter : 9.34 meters ♦♦ Vessel shell weight : 304 tons ♦♦ Trunnion ring diameter : 11.57 meters ♦♦ Trunnion ring length : 19.8 meters ♦♦ Trunnion ring weight : 230 tons and suspension system for one of the world’s largest converters. In particular, the suspension system is of utmost importance, and the new converter will be equipped with the new Danieli tie-rod suspension system. A critical aspect of Danieli’s converter equipment is that the core components (vessel shell, trunnion ring and suspension system) are manufactured in-house. So, this takes care of the entire supply chain – development, engineering, manufacturing, transport, installation and commissioning, as well as full quality control. This is a unique selling position and will become more and more important in the future, e.g. due to increasing requirements in Europe. The new vessel and trunnion ring will be manufactured in the company’s specialised pressure vessel workshops in Thailand. This workshop is certified according to ASME boiler and pressure vessel code, and already has experience with such equipment (up to a structural weight of 450t). The suspension system, which is also a key part of the equipment, will be manufactured directly in Danieli Buttrio workshop. However, all these parts are under full control of the Danieli quality system. Due to the huge dimensions of the parts, major weldments have to be completed onsite. This will be done by Danieli personnel and under Danieli quality control as well. Particularly, the installation is a key item for this project. The new converter No. 2 is one of the three existing converters in the steel plant. The dismantling and installation of the new converter equipment has to be done during full operating conditions. This means that when converter No. 1 and No. 3 are running at full production, the converter No. 2 has to be dismantled and the new equipment has to be installed, tested and commissioned, the sources added.
Steel Insights, April 2013
43
TECHNOLOGY
Danieli to supply hot skin-pass mill to Baotou Steel Insights Bureau
D
anieli will supply a 0.80 million tons per annum (mtpa) widest hot skin pass mill to Baotou Iron and Steel Group (Baogang), which will be installed at Baotou city, Inner Mongolia. According to company sources, commissioning is scheduled for the beginning of 2014. Baogang is an important iron and steel industrial site, and the biggest industrial Specifications
♦♦ A nnual production: 800,000 tpa ♦♦ Material : HR Coils ♦♦ Strip thickness : 1.2 – 6.35mm (skin pass mode), 1.2 – 12.7mm (dividing mode) ♦♦ Strip width : 830 – 2130mm ♦♦ Coil ID : 762mm ♦♦ Coil OD : 1000 – 2150mm ♦♦ Coil weight : 5 – 40tons Salient features
The main features of the hot skin pass mill are as follows: ♦♦ E ntry coil handling system, including walking-beam conveyors, coil car, coil preparation station, payoff reel and five-roll straightener; ♦♦ Four-high mill stand with long-life service work rolls, quick work-roll changing device, wedge for pass-line adjustment, backup roll change, and roll cleaning system; ♦♦ Delivery section consisting of hydraulic shear, strip inspection, tension reel, coil car, and two walking beams; ♦♦ Coil weighing station, circumferential and radial strapping, coil marker machine; and ♦♦ Equipment electrical control and automation system.
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enterprise in Inner Mongolia. With 10 mtpa of iron and steel capability, Baogang operates world-class production lines that produce hot and cold rolled strip, heavy plates, seamless pipes, rails, beams, bars and wire rods. The most important features of a hot skin-pass mill are concentrated in the mill stand and its technological equipment. The proposed unit is a single-stand fourhigh type and the mill stand will be equipped with top-mounted HAGC cylinders, sources informed. Pass-line adjustment is carried out with bottom electromechanical wedge
system. The main advantage of long-stroke HAGC compared to short-stroke version is the simpler mechanical design, together with electromechanical screw-down, without any loss in accuracy or performance. Also, the gap opening speed and the gap adjustment speed is higher with the long stroke arrangement. Positive and negative bending of work rolls is the main actuator for flatness control. In Danieli Wean United’s design, the WR bending cylinders are mounted in E-blocks. The E-blocks also accommodate the rail lifting cylinders.
TECHNOLOGY
Konecranes launches world’s first hybrid reach stacker
Electrification of driveline
In a conventional reach stacker, the driveline is a diesel/mechanical system consisting of a diesel engine, torque converter and transmission. The diesel engine produces the energy for propulsion. The flow of energy is mechanical and a quite complex mechanical gearbox is required. The energy generated by braking is converted into heat that is dissipated to the ambient and wasted. In the new Konecranes hybrid reach stacker, the driveline is a serial configured diesel/electric system consisting of a diesel engine, an electrical generator and an electrical traction motor. The diesel engine runs at constant RPM for optimum fuel efficiency and powers the generator. Propulsion is provided by an electric motor that is an integral part of the drive axle. This motor also generates electrical energy when braking, minimizing the need for mechanical braking and saving energy. Electrification of hydraulic lifting system
Steel Insights Bureau
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onecranes announced the introduction of the world’s first hybrid reach stacker - the SMV 4531 TB5 HLT for container handling, with a lifting capacity of 45 tons. It features a hybrid diesel/electric driveline, electrified hydraulic lifting system, and a super capacitor based energy storage. As per company sources, the innovative lift truck will cut fuel consumption and emissions with at least 30 percent while offering improved performance, acceleration and response to driver’s commands. “Konecranes is a pioneer and leader in lifting technology and service. Our new hybrid reach stacker is an exciting step forward for our industry and further proves that Konecranes is committed to offering its customers ecoefficient products and services,” said Lars Fredin, vice-president and head of Business Unit Lift Trucks, Konecranes.
Diesel fuel consumption
The new Konecranes hybrid reach stacker
will offer customers substantial cost and environmental benefits. Estimated fuel consumption at normal handling of fully loaded containers will be at least 30 percent lower than for equivalent diesel powered reach stackers. This is achieved by electrifying all flows of energy across the driveline, the hydraulic lifting system and the energy storage system. “Propulsion and lifting are powered by dedicated electric motors that all can operate in regenerative modes. The energy generated from braking and load lowering is recovered and stored for later re-use. This results in a substantial reduction in diesel fuel consumption and environmental impact. Meanwhile, productivity is increased in terms of quicker response and higher acceleration,” said Anders Nilsson, technical director, Konecranes Lift Trucks. “Potentially, the diesel engine of the hybrid reach stacker could be replaced by another source of electrical energy, as technology and price allow. Such examples may be fuel cells or an energy storage that can be recharged via a connection to the power grid,” Nilsson said.
In a conventional reach stacker, the diesel engine mechanically drives variable displacement piston pumps that provide the hydraulic energy for lifting and steering. The energy that is generated in lowering is dissipated to the ambient and wasted. Sources informed that in the new Konecranes hybrid reach stacker, the hydraulic pumps are electrically driven and electronically controlled. Dedicated electric motors drive the pumps that provide the hydraulic energy for lifting and steering. The speed of these pumps can be controlled independently of diesel engine speed. More importantly, the return flow from the hydraulic cylinders is not converted into heat, but fed backwards through the pumps which now act as hydraulic motors, thus regenerating electrical energy. Electrical energy storage
A traditional reach stacker has conventional batteries for starting the engine and powering the electrical systems including lights. The new Konecranes hybrid reach stacker has a super capacitor system for energy storage that is connected to the truck’s electrics. This system stores electrical energy, which can be recovered for later reuse at times of peak power demand.
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TECHNOLOGY
Flexibility, safety in core making facilities Jürgen Becker
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he work in core making facilities for casting moulds is often extremely hazardous to health and environment since the harmful and toxic chemical ethyldimethylamine is commonly added to the core sand. This fluid speeds up the curing process of the cores. The ethyldimethylamine tanks are mostly fed by a hose line. When replacing empty containers the hose is unscrewed and removed so that remaining quantities of the hazardous fluid may easily escape, forcing the user to wear cumbersome protective clothing while replacing the tanks. Walther-Prazision from Carl Kurt Walther GmbH & Co. KG, provides a safe, environment-friendly and clean solution: clean break couplings of the BF series. The couplings of this series meet highest demands on operating safety, residual leakage and reliability. The patented adaptor guide and the ball face front surfaces on the coupling halves ensure easy connection and seal off the coupling before the valves open. Additionally, the special valve design makes for a perfect clean break effect as there is no “dead volume”! In a field test at a well-known manufacturer we demonstrated the advantages of these couplings. Up to now all of their core making facilities have been fitted with couplings of the BF series. The replacement of chemical containers has thus become a clean job.
Thanks to this development, damage to health or the environment is finally a thing of the past!! Emergency separation couplings on the ladle valves of continuous casting plants Slabs, billets and other steel products are manufactured in steel mills with continuous casting facilities and ladle turrets. In continuous casting molten steel is continuously poured from the foundry ladle over a tundish into the ingot mould. If a foundry ladle is empty except for the residual slag, the ladle valve shuts off the steel flow into the tundish. Now the ladle turret moves the next ladle over the tundish, the ladle valve is opened and the steel continues to flow. The ladle valve situated under the foundry ladle is operated by a hydraulic cylinder. After a crane has hooked the full foundry ladle into the ladle turret, and shortly before the empty ladle is to be removed, the hydraulic cylinder is generally removed from and attached to the ladle valve by hand. In the event of an operating error or in an emergency it is often no longer possible to release the hydraulic cylinder under the foundry ladle manually. If, in such a case, the crane removes the foundry ladle from the ladle turret and the cylinder is still attached
Benefits of the BF series at a glance ♦♦ Quick replacement of tanks; ♦♦ Leakage-free connection; no escape of fluid; ♦♦ No health hazards; ♦♦ No environmental pollution; ♦♦ Smooth surfaces make it easy to clean; ♦♦ One-hand operation; ♦♦ Reliable and long-lasting due to modified seal materials; ♦♦ No protective clothing required. to the ladle, the hose lines or pipes leading to the cylinder control are destroyed or severely damaged. There is also a risk of fire due to leaking hydraulic oil.
Ball face clean break coupling BF series
To avoid such dangers, the coupling manufacturer WALTHER-PRÄZISION developed a special emergency separation system. This system comprises of two identical couplings with a 45° angled connection. Additionally, the two couplings HP-010-Y26 and 12-010-Y10 are mechanically coded in a way that they may not be connected with one another. A confusion of flow and return line is thus prevented. Manufactured from high-quality steel, the couplings easily resist temperatures up to 150 °C and working pressures up to 200 bar in this harsh environment. Using this system pays off even after one failure. Jürgen Becker is export manager of Carl Kurt Walther GmbH & Co. KG-Germany.
Emergency separation couplings HP-010-Y26 and 12-010-Y10
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Note: The views expressed here are those of the author and not of Steel Insights. The publication does not take any responsibility for the article in part or in full.
Corporate
SAIL plans capex of `13,000 crore in FY ’14
Steel Insights Bureau
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teel Authority of India Limited (SAIL), the largest state owned steelmaking company of India, plans to spend `13,000 crore next fiscal to part fund ongoing expansion which will take its installed capacity to over 24 million tons per annum (mtpa). This proposed investment represents an increase of `1,000 crore than SAIL is expected to put in the current fiscal but `1,500 crore lower than the budgetary estimate for the current fiscal, the 2013-14 Budget documents revealed. The entire expenditure proposed for the next fiscal will be funded by SAIL from its internal resources. SAIL has 14 mtpa steelmaking capacity and post-expansion costing a total of `72,000 crore, it will go up to 24 mtpa. Out of the `13,000 crore capex for next fiscal Bhilai Steel Plant (BSP) is proposed to get the highest share at `5,900 crore for installation of a 700 ton per day oxygen plant a hot metal de-sulphurisation unit and a railway track. The second highest fund allocation has been envisaged for Rourkela Steel Plant (RSP) in which a total of `2,400 crore would be spent for expansion and a 700 oxygen plant and a coke oven gas holder among others.
A sum of `1,800 crore has been earmarked for expansion of SAIL’s IISCO Steel Plant and rebuilding a coke oven battery. The Bokaro Steel Plant of the company would get `1,425 crore for expansion and setting up of a steel processing unit at Bettiah among others. An outlay of `900 crore has been proposed to be spent towards capacity expansion at SAIL’s Durgapur Steel Plant and installation of a steel processing unit at Kangra. SAIL also plans to invest `25 crore and `45 crore at Alloy Steels Plant and Salem Steel Plant respectively. The remaining `505 crore has been provided for its raw material division Central Units of the firm and Chandrapur Ferro Alloy Plant for various ongoing and new schemes. BSP capacity
Steel Minister Beni Prasad Verma has said that, modernisation and expansion of Bhilai Steel plant (BSP) is under progress and once completed the installed crude steel capacity will increase from 3.93 mtpa to 7.00 mtpa. Steel Melting Shop – I (SMS-I) is planned to be phased out after completion and stabilisation of New Steel Melting Shop being installed under modernisation and expansion plan. Verma said the total quantity of magnesite likely to be used by the Bhilai Steel Plant in
SAIL to enhance capacity of Gua mines Steel Minister Beni Prasad Verma has said that Steel Authority of India Limited (SAIL) has planned to enhance production capacity of Gua iron ore mine to 10 million tons per annum (mtpa) from the existing 2.4 mtpa. Verma informed the proposal for capacity expansion and setting up of 12.5 mtpa beneficiation and 4 mtpa pellet plant was approved ‘in-principle’ by SAIL Board at a cost of `2,952 crore with an implementation schedule of 36 months. Tender for expansion of Gua mine along with setting up of beneficiation plant (10 mtpa) and pellet plant (4 mtpa) is in advance stage of finalisation. SAIL is also in the process of obtaining necessary approvals and statutory clearances for the project. Verma said, Gua mine started operations in 1919 and was a captive mine of IISCO (till its merger into SAIL in 2006). Gua mine used to supply iron ore to IISCO Steel Plant at Burnpur. Due to non-availability of sinter making facility at Burnpur, the fines generated in the due course of production got accumulated in the mine and remained unutilised. After merger of IISCO into SAIL there is no addition of fines to the dump as freshly generated fines from the mining process is being consumed in other steel plants of SAIL. Installation of the beneficiation and pellet plant at Gua will enable utilisation of fines dumped over the years. 2013-14 would be around 10,000 ton. There is only one grade of magnesite i.e. Dead Burnt Magnesite (DBM) and the sizes of DBM in the same grade are different. Bhilai Steel Plant procure magnesite in the form of DBM only. Supplies of DBM are being arranged from Almora Magnesite Ltd. (Joint Venture of UPSIDC, Tata Steel and SAIL). The minister said the crude steel production capacity of Bhilai Steel Plant (BSP) in 2012-13 is 3.925 mt which is same in comparison to that of the last ten years. The production of crude steel at BSP has always been above the rated capacity of plant.
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Corporate
Tata Steel, LIM tie up for Canadian iron ore projects Steel Insights Bureau
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anada’s Labrador Iron Mines Holdings has entered into a framework cooperation arrangement with Tata Steel including the sale of a 51 percent stake in the Howse iron ore deposit for C$30 million ($29.24 million) cash. Labrador Iron Mines (LIM) and Tata Steel Minerals Canada (TSMC) will jointly develop rail and port infrastructure facilities in Schefferville and Sept-Îles, Québec, a company statement said. Both LIM and TSMC operate adjacent DSO iron ore projects in the Province of Newfoundland and Labrador and in the Province of Quebec, near Menehik, Labrador and Schefferville Quebec, and both utilise and intend to utilise the same rail and port infrastructure. Definite agreements to formalise this arrangement for co-operation over various aspects of their iron ore operations in the Labrador Trough are set to follow in due
Chhattisgarh project inches forward The government of Chhattisgarh has already acquired land for proposed 5 million tons per annum (mtpa) integrated steel plant of Tata Steel Ltd in the state, an official of ministry of steel has said. “Land has been acquired by the state government for Tata Steel’s Chhattisgarh project, while prospecting license for iron ore has been granted for Bailadila-I deposits,” the official said, adding, the project has also got approval for drawing water from Sabri River. Ministry of Railways has also granted in principle approval for railway corridor for the project while public hearing for environment clearance has been successfully conducted, the official added.
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course. The companies’ iron ore mines are situated in the provinces of Newfoundland and Labrador and Québec. The strategic relationship will include multi-part co-operation agreements in areas of logistics, property rationalisation and various ancillary mutual support and potential offtake arrangements. As part of the logistics agreements, the companies shall formalise arrangements for development of the rebuilt rail line that will pass through LIM’s Silver Yards facilities from TSMC’s new Timmins Area processing plant to the TSH main rail line. As part of the strategic relationship, LIM and TSMC have agreed to enter into a transaction for the development of LIM’s Howse deposit and TSMC’s Timmins 4 deposit. LIM shall sell a 51 percent interest in its Howse deposit to TSMC. The Howse deposit, located about 25 kilometres north of LIM’s James Mine and Silver Yards processing plant, has a historical resource of 28 million tons and is part of LIM’s proposed Stage 3 project, currently expected to be developed about 2020. It is expected that significant cost savings and synergies can be achieved by processing Howse ore through TSMC’s adjacent Timmins Area plant. As part of the proposed multi-part cooperation arrangements as above, and fulfillment of certain conditions precedent, LIM will receive a cash injection of $30 million. LIM may also acquire up to 100 percent interest in TSMC’s ‘Timmins 4’ deposit, located about 2 kilometres from Howse, at a consideration of $3 million payable from sales of ‘Timmins 4’ ore at $2
per tons. In future, TSMC has an option to infuse up to $25 million in the Howse project to further increase its interest in the Howse deposit to 70 percent. Tata Steel has a 27 percent stake in New Millennium Iron Corp which has a number of mining projects in the region. TSMC owns 80 percent of New Millennium’s direct shipping ore (DSO) project which should produce 6 million tons/year of sinter fines when fully commissioned. “The proposed arrangement with LIM is expected to enhance the raw material security for the group and streamline the logistics of the DSO project,” Tata Steel managing director H.M. Nerurkar said. Commenting on this development, LIM’s Chairman and Chief Executive Officer John Kearney said, “This is a transformational arrangement for LIM that has the potential to provide significant cost synergies, position LIM to address key logistics and infrastructure issues and expedite the development of LIM’s Howse deposit.” “The $30 million in cash proceeds from the proposed arrangements will be used by LIM to fund its working capital, capital expenditure and exploration requirements for the 2013 operating season,” he added. The companies are to formalise arrangements for development of a railway line that will pass through LIM’s Silver Yards facilities and connect TSMC’s new processing plant to the main line. TSMC has an option to pay a further $25 million to further increase its interest in the Howse deposit to 70 percent. Howse is estimated to contain 28 mt of iron ore.
Corporate
RINL records best ever sales in March
AP Choudhary, CMD, RINL addressing the gathering as Directors and CVO of RINL applause.
Sanjukta Ganguly
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ashtriya Ispat Nigam Limited (RINL), the leading steelmaker of India, has recorded the best ever monthly sales of `2,136 crore in March 2013 with a cumulative sales of `13,650 crore in 2012-13, a company statement said. Exports of the company stood at `601 crore, registering a growth of 45 percent and rural sales improved by 15 percent while the the distribution network of the company was widened further with a growth of 54 percent, whereas the sale of branded products grew by 6 percent. In fact, growth was recorded in production of hot metal and iron & steel with a cumulative production of 3.81 million tons (mt) and 3.4 mt, respectively. Coke and coke products registered the best production since inception and the production of dolomite from the captive mines clocked 2 percent growth. The gross lime production was also the best since inception, the statement said. Captive power generation of RINL stood at 211 MW during 2012-13 which is the highest in the last five years. This, in fact, helped the company to maintain the production level despite power restrictions imposed by the State Grid during the last eight months. RINL is fully prepared to meet the growing requirement of power with the commissioning of the expansion units, with
minimum support of the State Grid during the year 2013-14, company sources said. RINL also registered improved performance in various techno-economic parameters with 8 percent growth in labour productivity, 6 percent improvement in specific water consumption, 4 percent growth in sinter productivity, 12 percent growth in average converter life and many other parameters. The capex expenditure was around `1,300 crore in 2012-13 whereas the company paid `1,652 crore during the year 2012-13 to the Government of India towards redemption of preferential equity and payment of dividend. In 2013-14, RINL has targeted a growth of 20 to 25 percent in various areas, considering production from the new expansion units. CMD exhorted the RINL collective to gear up for the best ever performance in 201314 in all areas of operation. RINL, which is known for its quality, in order to improve its brand image further, has declared the year 2013-14 as the “Year of Quality”. Umesh Chandra, director (operations) of RINL said, “RINL has prepared a road map to set up an exclusive R&D centre in VSP very soon.” “Efforts are on to enhance the Blast Furnace 3 production by reducing coke rate and also by introducing Pulverized Coal Injection which will lead to reduction in cost of production,” he added. SBI loan
State Bank of India (SBI) has sanctioned `2,650 crore to RINL to fund its expansion
program. The SBI authorities met the management of RINL to complete formalities to hand over the loan amount, according to a statement. Pratip Chaudhuri, chairman, State Bank of India, during his maiden visit to RINL, said the corporate loan to RINL has been sanctioned for its capex programme. Steel is a cyclical and capital intensive business, utmost care to be given in its financial management, he observed. While welcoming Chaudhuri, A.P. Choudhary, CMD, RINL said that the company being only a shore-based has great potential to go up to 20 mtpa in a single location heading towards a Maharatna Company soon. RINL would be investing around `5000 crore to increase the capacity in the next three to five years. A cheque for `500 crore towards part disbursement of loan was handed over by chairman, SBI to CMD, RINL. Merger suggestion
A parliamentary panel has again asked the government to consider its proposal of merging Rashtriya Ispat Nigam and Steel Authority of India. A Committee on Public Undertaking has said in a recent report said that, “While reiterating their recommendation on revisiting the proposal for merger of RINL with SAIL the Committee desire the government to clearly specify its stand on the issue and apprise it on the same.” The merger would help the two state run steel makers to acquire global size of operation it had earlier observed. The panel had also said that the merger would also enable them to synergise operations and bring down the cost of production. MoU with Steel Ministry
D.R.S. Chaudhary, Secretary, Ministry of Steel and A.P. Choudhary, CMD, RINL have signed an MoU for 2013-14, which envisages a growth of 24 percent in production, 19 percent in sales and 30 percent gross margin over the likely achievement during 2012-13. The focus in 2013-14 would be on enhancing the production from the new units. The new Blast Furnace has already produced 1 million tons (mt) of hot metal which would be doubled in 2013-14 and several new products have also been planned in the ensuing year, RINL said in a statement.
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Corporate
NINL commissions steel melting complex Steel Insights Bureau
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eelachal Ispat Nigam Limited (NINL), a joint venture company of MMTC, a government of India enterprise and IPICOL, a government S.P. Patnaik, MD, of Odisha enterprise, has NINL commissioned its stateof-the-art and fully automated BOF shop and continuous casting plant recently, the company said in a statement. The company has commissioned its one 110 tons capacity LD converter, one argon rinsing station and 6 strand continuous billet caster, the technology of which was supplied by SMS-Siemag, Germany and SMSConcast, the world leader in steel melting technology, HEC, Ranchi, a leader in crane technology and BHEL-Bangalore, a leading company in automation of system. MECON, India’s largest metallurgical consultancy company, has provided consultancy and project management services. In fact, very recently, NINL has also commissioned another state-of-the-art unit i.e a 418 tons
Casting at Continuous billet caster
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Blowing of converter
per day (tpd) oxygen plant with the help of LINDE, Germany. Speaking on the occasion, managing director of NINL S.P. Patnaik said, “This is a historic and proud moment for the company. With production of steel billet now NINL has become a full-fledged integrated steel plant.” Patnaik complimented the technology supplier, SMS-Siemag, SMS-Concast, Switzerland & HEC-India, executing agencies like Gayatry Project Ltd, HSCL, MICCO, Mukand, RIPPL, BHEL, and the project management team of NINL including the representatives of unions and association and the consultant MECON. On smooth and safe commissioning of SMS, he complemented the whole project
team and all the contractors for sticking to the safety norms and also offered gratitude to all past MDs and Chairmen for their efforts at different stages. Patnaik specially mentioned the contribution made by the present NINL board members and chairman D.S. Dhesi for continuous support and guidance. “The production of value added product like billet as compared to pig iron, gives much better sales realisations and so, company’s financial performance will go up in future days. In India and as well as in world, steel billet demand is much higher than pig iron. NINL has MoU with its promoter company, MMTC for marketing of all its products including billets and pig iron,” said S.P. Padhi, director (finance) of NINL. The company’s joint managing director, P.K. Mishra said that, with the commissioning of SMS, NINL expects to achieve its rated capacity of 1.1 million tons (mt) of hot metal very soon which was earlier restricted due to low demand of pig casting. He said, with operational discipline at SMS, NINL is expected to be a low cost producer of steel very soon, thereby can meet the demand of domestic as well as export market. According to information available with Steel Insights, NINL is also gearing up to operationalise its captive mines and launch its ambition plan of a second blast furnace, second coke oven battery and suitable capacity thermal power plant. The company has already planned to take its capacity to 3 mt and then to 5 mt in phases.
Corporate
Gerdau acquires Kalyani stake in steel JV
Visa Steel, SunCoke formalise JV Steel Insights Bureau
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Steel Insights Bureau
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erdau, a leading multinational steel company, has said it has acquired the remaining stake of its joint venture partner Kalyani Steels at its first plant in India for an undisclosed sum. The plant, which is located in Andhra Pradesh’s Tadipatri, has an installed capacity of 300,000 tons of special steels, mainly focused on the automotive market. Recently, the plant has started operations of its blast furnace, melt shop, sinter plant, power plant and rolling mill. The company, which is a leading producer of long steel in the Americas and one of the largest suppliers of special long steel in the world, also said that it is renaming the venture from Kalyani Gerdau to Gerdau. “This is a new and very important chapter in Gerdau’s history. As we begin our 112th year of business, the start of the production of special steel in India represents our expansion to an important country, with an impressive cultural richness, good economic
prospective and very dedicated people”, said André B. Gerdau Johannpeter, Gerdau’s CEO. “This move paves way for Gerdau to come to India and cater to the domestic market to the benefit of our customers and improve over all standards in quality of steels manufactured in the country”, said Arvind Mathur, Executive DirectorIndia for Gerdau. In 2007, Gerdau had entered into a joint venture (JV) with Kalyani Steels to acquire SJK Steel Plant Ltd with an equal partnership of 45 percent each to form a JV. The company has been increasing its equity in the JV since then through making capital investments and now holds about 99.5 percent stake in the venture. Gerdau, the leading long steel producer in Americas, has industrial operations in 14 countries with operations in the Americas, Europe and Asia, which together represent a capacity of more than 25 million tons. The company is listed on the stock exchanges of Sao Paulo, New York and Madrid.
isa Steel has announced the official formation of a joint venture with US listed SunCoke Energy in which US-listed SunCoke Energy has invested `368 crore for 49 percent stake. The deal is part of VISA Steel & Power’s debt restructuring plans and the company is expected to use about twothirds of the money received from SunCoke to retire part of its debt. The company said in a statement that the JV, VISA SunCoke Limited, has been formalised and Visa Steel will hold a 51 percent stake while SunCoke Energy will hold the remaining 49 percent. The joint venture comprises a 400,000 tons per annum (tpa) heat recovery coke plant and associated steam generation units at Kalinganagar in Odisha. VISA SunCoke chairman Vishal Agarwal said the company was aiming to ramp up its capacity to 1.5 million tons (mt) in the next five years. “We would look at various options for this, whether through greenfield or brownfield projects or even acquisitions,” he added. According to Agarwal, coal sourcing was not a problem since the company would be importing the raw material. “We are buying coking coal from companies such as Australia’s BHP and importing it through the Paradip port,” he added. He did not say how much investment the company had planned for the expansion. “It is too early. We would study each option on a case by case basis,” he informed. Agarwal also said this would not impact VISA SunCoke’s pricing. “Most of the domestic steelmakers, barring Tata Steel and SAIL, are importing. What matters is optimising the manufacturing process by blending with softer variety of coal. We have one of the best technologies from China for this.” Both Visa Steel and Sun Coke will have equal representation in the board of the JV company. Also as part of the group’s debt recast, VISA Steel has formed a joint venture with leading Chinese steelmaker Baosteel. This venture, VISA Bao, would focus on speciality steel.
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Corporate
Metals analysis tool from Thermo Fisher Steel Insights Bureau
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hermo Fisher Scientific Inc., a leading name in serving science, has introduced the Thermo Scientific ARL iSpark OES spectrometer, an instrument designed to provide precise, accurate and reliable metals analysis. The ARL iSpark spectrometer, designed for high-speed, high-throughput analysis, helps metallurgists achieve higher productivity and quality and deliver savings on operational cost, as per a statement from the company. “The ARL iSpark offers metallurgists fast analysis, which increases efficiency and
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reduces costs, especially when working with molten metals,” said Dr Ravi Yellepeddi, director of marketing, Thermo Fisher. “Higher accuracy reduces raw materials waste and improves production quality by enabling metallurgists to confirm precise concentrations of elements, down to parts per million,” he added. Optical emission spectrometry, which analyzes the emitted light from spark excitation of a metallic sample, is one of the most reliable and accurate means of characterising the composition of metals and alloys. ARL iSpark integrates the PMT and CCD detection technologies to provide high performance analysis while maintaining versatility to cover a wide range of elements. ARL iSpark spectrometer is factory-calibrated to the user’s specifications, allowing it to reliably quantify the specific elements of interest to each facility. ARL iSpark series is designed to provide optimum solutions to primary metal producers, medium to high level metal processors and foundries, recyclers and central laboratories as well as contract/ analytical service labs. The ARL iSpark OES spectrometer also includes a simplified, operator-level user interface, designed to allow non-scientists to operate the device while more advanced features are available for laboratory and QC/QA managers, the statement added.
Kirloskar Brothers inks pact with MED Steel Insights Bureau
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irloskar Brothers Limited (KBL), a leading global fluid management company signed a Memorandum of Understanding (MoU) with the Mechanical and Electrical Department (MED), Ministry of Water Resource and Irrigation, government of Egypt, to build and upgrade the skill sets of the MED’s engineers and technicians. The MoU was signed in Delhi between Sanjay Kirloskar, chairman & managing director of KBL and Dr Mostafa Abu Zeid, chairman MED, ministry of irrigation, government of Egypt on behalf of their respective organisations. The President of Egypt and Anand Sharma, Union Minister for Trade & Commerce, government of India graced the occasion. With presence in Egypt for over four decades, KBL has a very large population of their pumps in Egypt. The main aim of this programme is to train the mechanical engineers and technicians of MED on various aspects of pump installation, pump operations, pump maintenance and trouble shooting. KBL will conduct a fullfledged training together with workshops where MED engineers will be imparted theoretical and practical training and it will commence from May 2013. On the occasion, Dr Zeid said, “Our government has been associated with KBL for various irrigation projects through the Mechanical & Electrical Department (MED). We are proud to take this association further and use KBL’ expertise to develop the skill sets of our workforce. Over 21000 MED engineers will benefit from this training programme in next one year.” Kirloskar said, “Our company has a historic association with Egypt and we are very proud of our relationship with MED. This MOU shall enhance the efforts of KBL to bring appropriate, affordable and adaptable solutions to improve irrigation program in Egypt.”
Corporate
Essar Steel arm in pellet offtake pact with ArcelorMittal
Steel Insights Bureau
E
ssar Steel Minnesota LLC, the US arm of Essar Steel Ltd, has recently entered into a long term iron ore pellet off-take agreement with ArcelorMittal’s US company, an official of Essar Steel said. The term of the agreement is 10 years and the supply of pellets is expected to commence during the second half of ESML’s fiscal year ending March 31, 2014. As per the agreement, Essar Steel will supply 3.5 million tons (mt) of standard and fluxed iron ore pellets annually to ArcelorMittal’s North American operations. Essar’s US entity has about 2.0 billion tons of measured, indicated and inferred magnetite resources of which about 1.7 billion tons are proven and probable reserves, the official
said. In addition, the company has about 290 mt of hematite resources. Essar Minnesota is presently constructing a 7 million tons per annum (mtpa) iron ore pellet plant at Nashwauk in Northern Minnesota at an investment of $1.7 bllion. Madhu Vuppuluri, president and CEO of ESML said, “This off-take agreement demonstrates the marketability of ESML’s high quality products to third parties in addition to Essar Steel Algoma.” He added that ESML’s diverse product portfolio will include standard, flux and DR grade pellets, and ESML will be the only producer capable of producing all three types of pellets in Unites States. John Brett, executive vice-president for Finance, Planning and Procurement of ArcelorMittal, USA, said: “We are pleased to
Land availability a major issue for Mittal's Odisha project Land availability is still a major issue for the proposed 12 million tons per annum (mtpa) greenfield project of ArcelorMittal in Odisha, an official of Ministry of Steel has said. The company had signed an MoU with the Odisha government in 2006 to set up the plant. However, ArcelorMittal’s Jharkhand project of the same capacity appears to have made some progress, the offical said. “Land acquisition is under way for the Jharkhand project of ArcelorMittal, the MoU for which was signed in 2005,” the official added. enter into this long term off take agreement with ESML.” “This off-take agreement is consistent with our strategy of securing long term supply of critical raw materials within the region, and it provides material that meets the stringent standards of our blast furnaces. ESML’s ability to provide different types of pellets provides us the flexibility to utilize the product at multiple furnaces,” he added. Essar Steel Minnesota LLC is a private resources company engaged in the development and mining of iron ore. ESML’s iron ore operations are located in the western end of the Mesabi Iron Range in Minnesota, strategically close to critical infrastructure, including rail, port, and surface connectivity systems. The Company is engaged in the construction of a mine, concentrator and a 7 million tons per annum iron ore pellet plant. On the other hand, ArcelorMittal is the world's leading integrated steel and mining company, with a presence in more than 60 countries. The company is a leading player in the global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and distribution networks. With an industrial presence in over 20 countries spanning four continents, ArcelorMittal covers all of the key steel markets, from emerging to mature.
Steel Insights, April 2013
53
SOCIAL BUZZ
Steel cos in search of survival mantra
Members of the portal can source buyers and sellers globally and also post their Buy/ Sell requirement in the Market Place Online. Members can also source or post Services, Recruitment, Plant & Machinery, News, Events & Conferences, Advertisement and many more services expected in future based on steel Industry globally.
Steel Insights has started a group on LinkedIn called India Steel Market Watch (ISMW). The readers are welcome to join the group and participate in daily conversations and surveys conducted by ISMW on the online forum. Steel Insights may, at its discretion, publish the results of such surveys and discussions for the benefit of a larger audience.
U.S. Steel’s European plant
Steel Insights Bureau
T
he survival woes in global steel sector are bringing unprecedented changes to the way the steel business is done across the markets. Old perceptions and marketing tools are giving way to new innovative channels. Intense competition is changing the rules of the game. The industry is breaking stereotypes, thereby providing a new model of growth in a recession hit market. The readers’ forum on ISMW is always updated with such changing dynamics and is often found appreciative of the industry’s zeal to survive and keep growing. Electrosteel’s Chinese bet
In what could be a first in India, Electrosteel Steels has set up its new plant in Bokaro with Chinese expertise. This, according to some members of ISMW, could set a precedent in the Indian industry which still looks at brand China with a little concern. According to reports, the company has engaged Chinese steel major Laiwu Steel Group to construct the plant and maintain it for at least two years till production is ramped up to capacity. Almost 95 percent of the equipment was imported from China. The steel plant is not just the first in India to be built entirely with Chinese collaboration, but also probably the first to be constructed by a Chinese workforce – almost 2,000 Chinese
54 Steel Insights, April 2013
workers built it. The plant has a capacity of 2.5 million tons a year. AV Shah, chief sales and marketing officer, Electrosteel Steels, said the company would add another million tons of capacity to the plant. “Traditionally, Indian steel companies have relied on German suppliers for equipment and technology to set up plants. Had we followed the same route, the equipment alone would have cost us at least 30 percent more,” Shah was quoted as saying. Understandably, cost was of primary concern for the company in the midst of slowdown. At the time of rising debts, slowing demand and scarce raw materials, saving Rs 4,250 crore was no mean feat. Besides, the speedy implementation (for which the Chinese have gained reputation) was a major catch. However, this could well set a precedent or prove to be a desperate move, depending on the outcome of the project. Meanwhile, the Indian industry and its representatives on the ISMW platform prefer to wait and watch. India’s steel portal
In line with the industry’s demand for new survival tools, India’s Sharoff group of company has launched a Steel Portal www. steelneeds.com for the benefit of the steel fraternity globally.
Meanwhile, US Steel Corp had threatened to sell its last European plant in Slovakia, much to the dismay of the Slovak government. Later on, the company and Slovakian Prime Minister Robert Fico announced a meeting to discuss a deal that could maintain company ownership of the Kosice plant, which was bought in 2000. Media reports said that the two sides were negotiating an extension of tax breaks put into place at the time of the sale. Earlier, US Steel sold a Serbian mill back to that country’s government for $1 in January 2012. Commenting on the issue, Thomas J Coyne Jr, owner, T.C. Inc., Portland, said “If one looks at the market on a local point of view, a steel mill in Europe has got to compete with Middle East mills being built like hotcakes, African resource exploitation and soon to be competing in steel products, European slow down and over capacity, and the never ending environmental changes to regulations and costs for mills to upgrade. In my view and on a worldwide basis, the “save the planet and the people”, is a rough road for all production facilities and instead of shutting down mills and governments putting up with all the problems of this, that cost should be reviewed and if it matches the cost of a plant upgrading, the governments should invest that money in loans at least with some payback from profits. With a secure agreement on both sides it should keep people employed, businesses running and a little side effect of pride in “made here”.”
logistics
Iron ore handling by major ports down 54.7% in April-February Steel Insights Bureau
M
ovement of iron ore through the 12 major Indian ports dropped as much as 54.75 percent to 25.44 million tons (mt) in the April-February period against 56.22 mt in the same period last year. This huge plunge happened due to restrictions imposed on mining and a hike in export duty on iron ore. According to data released by the Indian Ports Association (IPA), Vishakhapatnam port handled the highest volume of 11.13 mt of iron ore in April-February. This volume, however, was about 13.25 percent lower than
the iron ore traffic moved through the port in the same period last year. According to the data, the ports handled a total of 25.97 mt of coking coal in AprilFebruary period, Traffic handled at major ports similar as compared (During Apr-Feb, 2013* vis-a-vis Apr-Feb, 2012) with the same period (*) Tentative (in '000 tons) last year. April to February traffic During the % Variation against Ports prev. year traffic period, the ports 2013* 2012 handled a total of KOLKATA 497.97 mt of traffic Kolkata Dock System 10645 11142 -4.46 during the period, Haldia Dock Complex 25122 28623 -12.23 about 2.52 percent lower than 510.82 mt TOTAL: KOLKATA 35767 39765 -10.05 recorded during the PARADIP 51415 49844 3.15 same period last year. VISAKHAPATNAM 53944 62184 -13.25 Movement of ENNORE 16155 13580 18.96 container traffic in terms of tonnage fell CHENNAI 48658 51300 -5.15 in the April-February V.O. CHIDAMBARANAR 25635 25148 1.94 period, while that of COCHIN 18160 18165 -0.03 TEUs also dropped NEW MANGALORE 33615 29765 12.93 during the period. The major ports MORMUGAO 16714 35239 -52.57 handled 109.17 MUMBAI 53001 50223 5.53 mt of tonnage and JNPT 58824 60225 -2.33 7.03 million TEUs KANDLA 86082 75390 14.18 in April-February period compared to TOTAL: 497970 510828 -2.52 109.51 mt of tonnage Source: IPA
and 7.11 million TEUs in the same period last year. Among the major ports, Paradip port had the distinction of handling the highest volume of thermal coal of around 19.12 mt in April-February period. Visakhapatnam port handled the highest quantity of 6.25 mt of coking coal during the period. Movement of coking coal through Paradip, Kolkata, Visakhapatnam and Chennai ports declined during the period when compared to the corresponding period last year. Six major ports showed negative growth in traffic handling during the April-February period of the current fiscal, while the remaining six showed positive growth on a year-on-year basis. In terms of growth, Ennore port topped the list with 18.96 percent increase in cargo throughput. V.O. Chidambaranar port’s growth was lowest at about 2.35 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of 86.08 mt recorded for the period. The Mormugao port registered the highest decline of 52.57 percent in traffic handling during the period due to a fall in iron ore export.
Steel Insights, April 2013
55
Logistics
Railways iron ore handling falls 10.3% in February Steel Insights Bureau
T
he Indian Railways transported 8.98 million tons (mt) of iron ore in February 2013, down 10.3 percent from 10.02 mt the month before, according to information available with Steel Insights. Revenue from transportation of iron ore for exports, steel plants and for other domestic user in February fell to `616.12
crore, down 8.16 percent from `670.85 crore in January. The Railways also transported 41.35 mt of coal in February 2013, down 10.34 percent from 46.12 mt in January 2013. Revenue earnings from transportation of coal also fell to `3,041.45 crore in February from `3,457.96 crore in January. The transportation in February was lower due to the fact that it had only 28 working
Commodity-wise revenue Commodity
Quantity (in mt) Feb’12
Earning (in ` cr)
Feb’13
Feb’12
Feb’13
Coal i) for steel plants
3.8
4.04
177.43
ii) for washeries
0.12
0.12
0.98
1.61
27.13
26.05
1,758.83
2,078.29
iii) for thermal power houses iv) for public use v) Total Raw material for steel plants except iron ore
217.54
9.16
11.14
567.1
744.01
40.21
41.35
2,504.34
3,041.45
1.21
1.36
94.54
115.49
2.23
2.22
298.46
356.98
Pig iron and finished steel i) from steel plants ii) from other points
0.71
0.76
52.47
75.78
iii) Total
2.94
2.98
350.93
432.76
i) for export
0.05
0.51
12.65
128.57
ii) for steel plants
5.12
4.4
214.84
202.67
Iron ore
iii) for other domestic users
2.94
4.07
191.23
284.88
iv) Total
8.11
8.98
418.72
616.12
Cement
9.29
8.86
587.4
715.83
Foodgrains
4.26
4.54
451.06
651.34
Fertilizers
4.74
3.08
382.84
304.17
Mineral oil (POL)
3.29
3.16
304.78
363.7
0.85
0.78
76.94
88.54 265.97
Container service i) Domestic containers
2.4
2.62
213.19
iii) Total
ii) EXIM containers
3.25
3.4
290.13
354.51
Balance other goods
6.46
5.89
447.95
517.72
83.76
83.6
5,832.69
7,113.09
Total revenue earning traffic Source: Indian Railways
56 Steel Insights, April 2013
days compared to 31 days in January and also because production as well as loading was affected to some extent on February 21-22 due to an all India general strike called by central trade unions, industry sources said. However, the transportation of coal in February this year was up more than 1.14 mt compared with 40.21 mt transported in February 2012 despite the fact that it had 29 working days in 2012. Compared to only 1.14 mt increase in transportation of coal, the railways revenue surged by a staggering 21.45 percent to `3,041.45 crore in February 2013 compared with `2,504.34 crore in February 2012. Overall, the Indian Railways’ revenue earnings from commodity-wise freight traffic fell month-on-month in February, mainly due to lower transportation of coal and iron ore, but surged year-on-year largely due to increase in freight. Revenue earnings from commodity-wise freight traffic during February 2013 stood at `7,113.09 crore, down 9.99 percent compared with `7,903.35 crore earned in January. Revenue from transportation of cement in February stood at `715.83 (8.86 mt) as compared to `745.23 (9.64 mt) in January, while that from food grains transportation fell to `651.34 (4.54 mt) in February from `660.77 (4.65 mt) in January. The Railways revenue from transportation of fertilizers in February plunged to `304.17 crore (3.08 mt) from `485.74 crore (4.45 mt) in January. Revenue from transportation of petroleum oil and lubricant (POL) in February stood at `363.7 (3.16 mt), while the same from pig iron and finished steel from steel plants and other points was `432.76 crore (2.98 mt). Revenue from container services was `354.51 crore (3.4 mt) and from transportation of other goods was `517.72 crore (5.89 mt).
Logistics
Krishnapatnam Port expects to handle 21-22 mt coal in 2013-14 Rakesh Dubey
K
rishnapatnam Port (KPCL), the leading port in India’s eastern coast, is expecting to register a significant growth in coal handling during the financial year 2013Anil Yendluri, CEO, 14, a top official said. KPCL “We ended the financial year 2012-13 with total coal handling of around 16.00 million tons (mt) compared with around 11 mt in 2011-12 and expect to handle over 21-22 mt coal in 201314,” the port’s CEO Anil Yendluri said in an interaction with the media. He indicated that coal handling is likely to be the mainstay of Krishnapatnam port, which was conceived largely to handle iron ore cargo meant for export, but said that they would focus adequately for growing cargo of agri-commodities, fertilizer, edible oil, granite and Bariles (barium sulphate) as well. The port, which was conceived largely to handle iron ore export cargo, had not handled a single ton of export cargo of iron ore during the past about 18 months, but it had handled 140,000 tons of imported iron ore in 2012-13, he said. Asked whether he expects resumption of export cargo of iron ore in coming months, the CEO refused to comment saying it will all depend on government policies. “Despite not handling iron ore, we are growing and this was possible because of our customer centric approach,” Yendluri said. “Our total cargo handling in 2013-14 is likely to cross 30 mt registering a growth of more than 42 percent over 21.12 mt handled in 2012-13,” Yendluri said, adding, the port had handled 15.40 mt of cargo in 2011-12.
Though the balance sheet of the port is not yet ready, the CEO expects that the revenue of the port in 2012-13 would be around `930-940 crore compared with `630 crore in 2011-12. “Our profitability should also rise significantly because margins are high in bulk cargo,” he added. The CEO said the port’s customer centric approach had helped it register nearly 40 percent growth in 2012-13 and their intention will be to remain as proactive and professional as possible so that the users get value for their money in coming years as well. The CEO said the second phase of expansion that entails investment of about `5,900 crore is likely to be completed within a year with the commissioning of the 11th berth. “Thereafter, the third phase of expansion will begin and once that is complete, the port will have a total of 42 berths with total handling capacity of 200 million tons, including containers, which will make it the biggest port in the country,” he said. The port has so far invested about `,1400 crore in the first phase, around `5,000 crore in the second and plans to invest another about `10,600 crore in the next 10 years, including expanding container terminal facilities, which was dedicated to the nation on April 2. “Right now we have 10 berths, including two berths for container handling. We will be building at least one berth each year and plan to come up with a total 42 berths during the next 10 years subject to market conditions,” Yendluri said, adding, “growth of the port will be in sync with the growth of the country.” To a query, he said their current container handling capacity is 1.2 million TEUs, which would be increased to 6 million TEUs. “We want to make the best container terminal in the East coast of India. JNPT is there on the
West coast of India as historically India’s exports were largely to Europe and Middle East countries, but with Asian and South East Asian countries growing rapidly interAsian and intra-Asian trade is galloping. So the role of east coast ports will be important in coming years,” he said. “The container terminal at the port adds to its numerous strengths like – maximum efficiency, minimum dwell time and maximum safety, thus making it one of the first and most modern ports in the world,” Yendluri said. “We can load and unload a container vessel within a few hours. We currently have five cranes, each of which can make 45 moves per hour,” he said. The Port’s advisor, Vinita Venkatesh, said the port’s container terminal is strategically placed to act not only as trans-shipment, next to Singapore and Colombo ports, but also provide cargo to calling vessels. “The containers from Haldia, Chittagong etc, which was currently trans-shipped to Colombo or Singapore can now come to Krishnapatnam port for trans-shipment to other places because of good network of liners,” Venkatesh said. “Maersk is providing direct service to China. The Mediterranean Shipping Company has started calling their own vessels at Krishnapatnam and in addition, the largest container feeder companies in the Bay of Bengal area – Bengal Tiger Line, FAR Shipping and Express Feedeers are also offering services from here,” she said. She claimed that Krishnapatnam port not only provides draft of 18.5 metre for bulk cargo vessels at its 8 existing berths, but 13.5 metre draft for container vessels at its two berths. “We also provide the ease of operations at the port whereby both the marine services to the vessels as well as stevedoring and other port services are handled by a single operator,” Venkatesh added. Asked about the saving to users of their container terminal, the port’s advisor said, in comparison with Chennai port, the saving in handling one 20 TEU container at the port would be around $230 per box. “This is a good saving, which does not include cost efficiency in delays,” she added. Krishnapatnam port is also working on setting up LNG and POL terminals besides a car terminal, which is in early stages.
Steel Insights, April 2013
57
macro outlook
Macroeconomic indicators of India Steel Insights Bureau
Foreign Exchange Assets
294000
85
64
80
60
292000
70
52
65
48 44
60
40
55
EURO
GBP
YEN
1600000
The INR became weak in March but managed to pare its losses slightly towards the end of the month mainly due to a recovery in domestic shares and sale of USD by exporters. The INR fell towards the middle of the month as withdrawal of a key ally from the ruling coalition and the cautious tone of the Reserve Bank of India on monetary policy developed negative market sentiments.
1500000
288000
USD
Source: rbi
1550000
290000
1450000
284000
1400000
Inflation rate in India
23-Mar-12 7-Apr-12 22-Apr-12 7-May-12 22-May-12 6-Jun-12 21-Jun-12 6-Jul-12 21-Jul-12 5-Aug-12 20-Aug-12 4-Sep-12 19-Sep-12 4-Oct-12 19-Oct-12 3-Nov-12 18-Nov-12 3-Dec-12 18-Dec-12 2-Jan-13 17-Jan-13 1-Feb-13 16-Feb-13 3-Mar-13 18-Mar-13
286000
11.00%
6.84%
7.00%
6.62%
7.31%
7.24%
7.32%
8.07%
8.01%
7.52%
7.58%
8.00%
7.55%
India’s foreign exchange reserves rose for the second consecutive week, going up by $1.05 billion to $293.37 billion for the week ended March 22 on a rise in the core currency assets. Foreign currency assets, a major component of the forex reserves, were up by $1.06 billion to $260.41 billion during the week while gold reserves remained unchanged at $26.292 billion. However, SDRs decreased by $7.5 million to $4.34 billion during the week under review, while reserves with the IMF went down by $4.1 million to $2.31 billion during the week. The total reserves had risen by nearly $1.96 million to $292.3 billion in the previous reporting week wherein FCA rose by $1.97 billion at $259.35 billion.
7.50%
9.00%
7.69%
10.00%
in Rupees crore
Source: rbi
6.00% 5.00%
Source : OEA, GoI, Ministry of Commerce & Industry
India’s headline inflation picked up in February on higher fuel costs. WPI based inflation rose to 6.84 percent from 6.62 percent in January 2013. Again, December 2012 figures got revised to 7.31 percent. Manufacturing goods inflation dropped to 4.51 percent in February from 4.81 percent a month ago and non-food manufacturing inflation, slowed to 3.8 percent in February.
Wholesale price index (Selected categories)
Index of Industrial Production 205 185
All Commodities Manufactured Products Basic Metals Alloys & Metal Products
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
165
Feb-12
230 220 210 200 190 180 170 160 150 140 130 120 110
75
56
1650000
in Rs crore
in million $
68
1700000
296000
in Million $
90
7.56%
298000
72
INR vs GBP & YEN
INR vs USD & EURO
INR movement against select major currencies
Primary Articles Fuel & Power Steel
Source : OEA, GoI, Ministry of Commerce & Industry
India’s wholesale price index (WPI) (Base 2004-05=100) stood at 170.2 in February 2013 almost similar to 169 recorded in the previous month. WPI for December this year was however revised to 168.8 this month. The index for primary articles group increased by 9.7 percent to 222.7 from 203 in February the previous year. The index for manufactured products group also rose by 4.51 percent to 148.2 from 141.8 in February 2012. Fuel and power index rose 10.47 percent to 195.2 from last year while index for basic metals and metal alloys rose by 1.85 percent to 165 for the month. Steel index however remained unchanged.
58 Steel Insights, April 2013
145 125 105 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Mining & Quarrying
Manufacturing
Electricity
General Index
Source : Govt. of India, MoSPI
India’s index of industrial production rose in January after falling continuously for three months. Production at factories, mines and utilities grew 2.4 percent in January from a year earlier, as per government data. India’s IIP is expected to end the year at 1.5-2.0 percent. Manufacturing output, which contributes about 15 percent to overall gross domestic product (GDP), grew 2.7 percent in January from a year earlier.
market report
Global crude steel production down 5% m-o-m in Feb Chandrika Mitra
W
orld crude steel production for the 63 countries reporting to the World Steel Association (Worldsteel) fell by 5.03 percent to 123.258 million tons (mt) in February 2013 as compared to that reported in January 2013 at 129.780 mt. However, crude steel production for February 2013 was higher by 1.83 percent compared to 121.037 mt in February 2012. In February 2013, Asia produced 82.928 mt of crude steel, an increase of 6.75 percent over February 2012. The EU produced 13.384 mt of crude steel in February 2013, down by 5.56 percent compared to the same month of 2012. North America’s crude steel production in February 2013 was 9,240 mt, 9.33 percent lower than the corresponding month of 2012. China, the single largest producer,
produced 61.830 mt of crude steel in February this year, an increase of 10.64 percent as compared to the corresponding period in 2012, when production stood at 55.883 mt. However, m-o-m production saw a fall of 2.82 percent as compared to January 2013’s produce of 63.622 mt. Elsewhere in Asia, Japan produced 8.317 mt of crude steel in February 2013, a decrease of 3.43 percent compared to the same month last year. India’s production for February 2013 stood at 6.2 mt, up 2.67 percent compared to February 2012. South Korea produced 4.981 mt during the same period, an 8.43 percent decrease on the same month 2012. In the EU, Germany produced 3.4 mt of crude steel in February 2013, a decrease of 3.7 percent on February 2012. Italy’s crude steel production was 2.1 mt, down by 15.0 percent compared to February 2012. France’s crude steel production was 1.3 mt, a decrease of 0.8 percent on February 2012. Spain
produced 1.2 mt of crude steel, 1.7 percent lower than February 2012. In February 2013, Russia produced 5.16 mt of crude steel, a decrease of 11.89 percent compared to the same month last year. Ukraine’s crude steel production for February 2013 was 2.48 mt, 1.32 percent less than February 2012. In February 2013, Brazil produced 2.6 mt of crude steel production, a decrease of 6.2 percent compared to the same month last year. Turkey’s crude steel production for February 2013 was 2.7 mt, a decrease of 3.9 percent compared to February 2012. The US produced 6.7 mt of crude steel in February 2013, down by 11.8 percent on February 2012. The crude steel capacity utilization ratio for the 63 countries in February 2013 rose to 80.5 percent from 76.7 percent in January 2013. Compared to February 2012, it is 0.8 percentage point lower. It is to be noted that the March 2012 to December 2012 data covers 62 countries while March 2011 to December 2011 contains 64 countries. In January and February 2012, only 59 countries are covered as three African countries, Algeria, Libya and Morocco while two Middle East countries Iran and Qatar did not provide monthly production statistics. In January and February 2013 around 63 countries were covered.
World crude steel production Feb-12 European Union (27) Other Europe C.I.S. (6)
Mar-12
in ‘000 tons
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Feb 13/ Feb 12 (% Change)
14,173
15,729
14,949
15,415
14,716
14,228
12,028
14,301
14,161
13,595
11,975
13,661
13,384
-5.56%
2,899
3,335
3,081
3,282
3,151
3,264
3,175
3,186
3,020
3,142
2,991
3,006
2,787
-3.88%
8,918
9,865
9,570
9,615
9,243
9,172
9,250
9,280
8,933
8,904
8,925
8,913
8,055
-9.68%
North America
10,191
10,850
10,684
10,772
9,780
10,014
10,348
9,592
9,582
9,511
10,087
10,225
9,240
-9.33%
South America
3,780
4,303
4,074
3,945
3,829
3,937
3,836
3,835
4,185
3,873
3,603
3,661
3,421
-9.50%
Africa
1,273
1,359
1,221
1,289
1,223
1,166
1,213
1,153
1,196
1,151
1,217
1,280
1,123
-11.79%
Middle East
1,661
1,625
1,736
1,705
1,674
1,404
1,589
1,642
1,634
1,659
1,640
1,771
1,814
9.21%
Africa/Middle East
2,934
2,984
2,957
2,994
2,897
2,570
2,803
2,795
2,830
2,810
2,857
3,051
2,937
0.10%
China
55,883
61,581
60,575
61,234
60,213
61,693
58,703
57,946
59,096
57,471
57,656
63,622
61,830
10.64%
India
6,039
6,253
6,360
6,593
6,375
6,359
6,476
6,299
6,604
6,400
6,600
6,766
6,200
2.67%
Japan
8,612
9,324
9,077
9,224
9,198
9,251
9,207
8,802
8,836
8,505
8,569
8,863
8,317
-3.43%
South Korea
5,439
6,095
5,915
6,032
5,764
5,907
5,632
5,661
5,651
5,640
5,811
5,751
4,981
-8.43%
Taiwan, China
1,714
1,855
1,783
1,804
1,781
1,761
1,730
1,440
1,675
1,664
1,770
1,770
1,600
-6.67%
77,688
85,108
83,710
84,887
83,330
84,971
81,747
80,147
81,862
79,681
80,406
86,772
82,928
6.75%
454
463
485
477
485
494
519
511
504
473
450
491
505
11.32%
65,154
71,056
68,934
70,153
67,218
66,957
65,004
65,702
65,979
64,519
63,637
66,158
61,428
-5.72%
121,037
132,637
129,509
131,387
127,431
128,650
123,707
123,648
125,075
121,990
121,293
129,780
123,258
1.83%
Asia Oceania Rest of the world except China World Source: WSA
Steel Insights, April 2013
59
Market Report
Domestic long & flat markets
Low demand, cash crunch keep markets slow Finished steel market subdued
Steel Insights Bureau
T
he domestic long steel market remained sluggish and moved slowly in March. The weakness in demand and buyers unwillingness to make purchases before the end of the year led to the depressed market conditions. Cash crunch in the market also limited the buying capacity. This resulted in low level of transactions in the market. The finished steel market softened on weak demand and falling ingot prices. There was hardly any demand, from stockiest or traders. RBI’s efforts to push in liquidity by reducing the repo rate by 25 basis points also failed to inject vitality in the market as most of the banks did not revise the base rate downwards.
The finished market was quiet in March as on one hand falling ingot prices impacted the market, while on the other hand, closing of the financial year were making steel trading activities dull. The transaction activities were dull amidst liquidity tightness in the market and buyers were uninterested to make any purchases at the moment. TMT prices witnessed a drop in the range of Rs 200-500/ ton across India. Outlook
The market is likely to remain weak. The buyers will be busy and will not build inventory. In addition to this cash crunch will keep them away from the market.
The producers were unable to hold onto their prices as the demand was slack and with the buyers seen lifting material as per their requirements. Further, the producers were also willing to sell materials to clear stock before closing their books, thus the prices were impacted witnessing a drop. Meanwhile, the import offers has seen a dip with the drop in the international prices. However, due to the weakness in demand at the domestic front the enquiries were low but with the declines in the Chinese export offers would pressure Indian mills to effect similar cuts in both their domestic and export markets. Offer prices in the market for HRC, 3mm thick and above, continued to average Rs 34,000-34,500/ton ex-works. Domestic HR coil prices (HRC - 2.5mm – cold rolling) Date
Kolkata
Kanpur
Delhi
01-Mar-13
35090
36790
36530
08-Mar-13
35090
36790
35460
15-Mar-13
35090
36790
35630
21-Mar-13
35260
36790
35630
26-Mar-13
35260
36790
35630
The above prices are in `/ton (basic)
Flat steel market Billets sluggish
The semi-finished market was sluggish on weak demand in finished steel. Further the weak ingot market and closing of the financial year the manufacturers in an attempt to clear stocks before the end of financial year lowered their prices.
Source: Insights Research
The domestic market was sluggish in March on practically non-existent demand. The buyers were busy closing their books. Further, with existing cash crunch in the market the buyers buying capacity was limited. There was widespread pessimism in the market regarding the future trend.
Ingot Price Trend Places
Mar 28
Mar 26
Mar 25
Mar 23
Mar 22
Mar 21
Mar 20
Mar 19
Raipur
NA
28400
28400
28400
28400
28450
28450
28500
Durgapur
NA
27560
27470
27560
27640
27810
27730
28070
Mandi Gobindgarh
NA
32250
32050
32200
32400
32500
32500
32400
Prices in `/ton is basic
TMT prices at Raipur 04-Mar-13
11-Mar-13
18-Mar-13
23-Mar-13
26-Mar-13
AC-TMT
Dates
32800
33100
32800
32410
32410
AC-TURBO
33000
33410
33000
33000
32810
NIRMAN
32800
33000
32800
32400
32400
HARIOM
-
-
-
-
32400
SUPER
32600
32900
32700
32400
32600
The above prices are in `/ton (basic)
60 Steel Insights, April 2013
Source: Insights Research
Sources said that the price declines in Chinese domestic and export offers would pressure Indian mills to effect similar cuts in both their domestic and export markets. Indian domestic prices are equivalent to an import parity of $583-592/ton CFR. Export offers from traders for Chinese-origin 3mm thick and above HRC averaged $610/ton CFR, sources said. The gap between domestic and international prices is narrowing swiftly, sources said. Outlook
In this situation, some suspect that mills might once gain attempt to lift prices next month in order to offset additional costs arising from higher rail freight rates effective April 1. However, the chances of that are weak as domestic prices might have to fall in line with the price declines in international markets to check imports. Thus there is an expectation of a range bound movement in the prices given the closure of financial year. 
Market Report Scrap import market as on March 26, 2013
Domestic raw materials
Weak steel market keeps inputs quiet
PORTS
ORIGIN
UK, EUROPE, Dubai
NHAVA SHEVA
KANDLA
US
GRADE
PRICE
SHREDDED
415
HMS( 80:20)
400-405
HMS( 80:20)
400-405
HMS (80:20)
380-385
Prices are in USD/ton (CFR prices), USD = Rs 54.34
Steel Insights Bureau
T
he domestic scrap steel market was largely quiet in March both in the buying and selling front. The buying and selling hovered between the weak to null regions. Further weakness in the ingot market impacted the scrap prices. Liquidity problem exists in March end of the year which led to frail buying and selling activities in the market.
In Mumbai, scrap prices for HMS 80:20 remained steady at the level of Rs 22500/ton (prices are basic, ED & taxes extra). In case of imported scrap, the offers for shredded scrap imported from Europe and US region stood at $415/ton CFR Nhava Sheva. For HMS 1&2 (80:20) import offers was at the level of $400-405/ton CFR Nhava Sheva.
Raipur
Rourkela
1-Mar-13
20300
18300
Pig iron
8-Mar-13
20200
18200
The domestic pig iron market scenario was
15-Mar-13
20200
18300
18-Mar-13
20100
18300
22-Mar-13
19900
-
26-Mar-13
19800
18200
N1 Grade (Steel Grade) Pig Iron (Retail by Road delivery)
N2 Grade (Foundry Grade) Pig Iron (for road dispatches) (Si 1.25-1.79%)
1st – 15th Nov, 2012
24000
24500
15th Nov - 14th Dec, 2012
23500
24300
19th Dec 2012 – 4th Jan, 2013
22500
23000
7th Jan – 17th Jan, 2013
22000
22500
18th Jan – 31st Jan, 2013
22000
22500
1st Feb – 28th Feb, 2013
22000
22500
1st Mar – 29th Mar, 2013
NINL will not be offering NI grade for the domestic buyers
23000
The above prices in `/ton (basic)
Sponge iron prices Date
Pig iron prices of NINL Time Period
sluggish amidst a weak steel market. In view with this, NINL, has further lowered its foundry grade pig iron’s price by Rs 500/ ton to Rs 22,500/ton (basic) in the mid of the month. Meanwhile, NINL has restarted offering steel grade pig at Rs 22,500/ton w.e.f March 21, 2013. The company has not been offering steel grade material to domestic buyers since the beginning of the month. NINL has also offered 60,000 tons of steel grade pig iron to international buyers, through exports tender. RINL has also offered 4,000 tons of steel grade pig iron in the domestic market from Ludhiana in an attempt to liquidate the stock before March 31.
Source: NINL Price Circulars
Price in `/ton (basic) Source: Insights Research
Sponge iron
Indian sponge iron manufacturers do not see any major correction in prices going forward. In the past one month major markets like Raipur, Hyderabad, Rourkela and Durgapur witnessed change of around Rs 200-400 per ton. However, analysts feel there is no room for further reduction of prices going forward.
Steel Insights, April 2013
61
PRICE DATA
Indicative market price for February 2013 Steel Insights Bureau
Sl. No.
ITEM
Kolkata
Delhi
Mumbai
Chennai
1
PIG IRON
31500
31500
30200
35700
2
BILLETS 100 MM
40180
40120
42060
40820
3
BLOOMS 150X150 MM
38970
38960
40760
39330
4
PENCIL INGOTS
35200
32200
35200
35700
5
WIRE RODS 6 MM
45440
46920
47730
46830
6
WIRE RODS 8 MM
45160
46290
46960
46370
7
ROUNDS 12 MM
45310
45510
45660
46150
8
ROUNDS 16 MM
45310
45440
45600
46150
9
ROUNDS 25 MM
44970
45440
45620
46070
10
TOR STEEL 10 MM
47090
47610
47700
47490
11
TOR STEEL 12 MM
47460
47430
48200
48350
12
TOR STEEL 25 MM
47190
47600
48020
48260
13
ANGLES 50X50X6 MM
46840
46460
47990
48000
14
ANGLES 75X75X6 MM
45900
45800
46860
47050
15
JOISTS 125X70 MM
46220
46630
47740
47910
16
JOISTS 200X100 MM
46310
46810
47930
47910
17
CHANNELS 75X40 MM
46770
47710
47570
47580
18
CHANNELS 150X75 MM
45930
47000
46950
47040
19
PLATES 6 MM
47620
49470
49370
50080
20
PLATES 10 MM
47620
49470
49340
50080
21
PLATES 12 MM
48190
50000
49840
50650
22
PLATES 25 MM
48750
50520
50360
51250
23
H. R. COILS 2.00 MM
46640
48700
49540
49250
24
H. R. COILS 2.50 MM
45510
47640
48470
48180
25
H. R. COILS 3.15 MM
45490
47640
48470
48180
26
C. R. COILS 0.63 MM
51230
52380
53110
53630
27
C. R. COILS 1.00 MM
50130
52280
52340
52710
28
G. P. SHEETS 0.40 MM
55480
57430
56680
60100
29
G. P. SHEETS 0.63 MM
53470
54280
54200
59190
30
G. C. SHEETS 0.40 MM
54280
56600
54640
59710
31
G. C. SHEETS 0.63 MM
53560
54380
54370
59600
32
MELTING SCRAP H M S - I
26500
27000
31700
25200
33
MELTING SCRAP H M S - II
26000
27000
28600
24150
34
SPONGE IRON (COAL BASED)
23500
25600
28900
19950
NOTE: (1) All prices are in Rs./Tonne and has been compiled on the basis of average of Main & Others producers’ price. (2) Prices are inclusive of Excise Duty & Sales / Vat Tax (3) All prices are as on 16 day of every month (4) Prices are indicative.
62 Steel Insights, April 2013
PRODUCTION DATA
Production, imports, exports, availability & apparent consumption (provisional) April - February 2013 Steel Insights Bureau (in ‘000 tons)
FINISHED STEEL PRODUCERS
Non-Alloy Steel (Carbon) 2012 - 13 (Prov.)
2011 - 12 (Final)
Alloy Steel
% Variation
SAIL
8870
8569
3.5
RINL
2444
2578
TSL
5755
2012 - 13 (Prov.)
2011 - 12 (Final)
2011 - 12 (Final)
% Variation
4.2
-5.2
2444
2578
-5.2
4981
15.5
5755
4981
15.5
17069
16128
5.8
17313
16305
6.2
ESSAR
5710
5620
1.6
38
5710
5658
0.9
JSW ISPAL
3142
2777
13.1
85
3142
2862
9.8
JSWL
9627
8611
11.8
10662
9502
12.2
JSPL
1966
2035
-3.4
1966
2035
-3.4
(b) Prod. of Other Producers $
20445
19043
7.4
1035
1014
2.0
21480
20057
7.1
Others
37099
37054
0.1
3411
3586
-4.9
40510
40640
-0.3
Less : IPT/Own Consumption
8296
7609
435
304
8731
7913
(c) Total Production for Sale
66317
64616
2.6
4255
4473
-4.9
70572
69089
2.1
(d) Imports $
5689
4994
13.9
1579
1322
19.4
7268
6316
15.1
(e) Exports $
4189
3891
7.7
560
357
56.9
4749
4248
11.8
67817
65719
3.2
5274
5438
-3.0
73091
71157
2.7
-754
1130
2
30
-752
1160
68571
64589
5272
5408
73843
69997
6039
4896
1214
939
7253
5835
62532
59693
4058
4469
66590
64162
(e) Availability (c+d-e) (f) Variation in Stock (g) Apparent Consumption (e-f) Less : Double Counting Real Consumption Source: Steel Ministry
64 Steel Insights, April 2013
6.2
4.8
1035
177
891
37.9
2012 - 13 (Prov.)
8746
244
177
% Variation
9114
(a) Prod. of Main Producers
244
Total
37.9
16.2
-2.5
-9.2
3.8
price trend
Ferro alloys & metals price trends Steel Insights Bureau Ferro alloys & Metals
March'13
February'13
January'13
Ex-works Rs/ ton Ferro Silicon (Si - 70%) 72750
71750
71750
Ex-works Rs/ ton HC Ferro Chrome (Cr - 60%) 74500
71500
70500
Ex-works Rs/ ton HC Ferro Manganese (Mn - 70%) 53500
52500
53750
Ex-works Rs/ ton Silico Manganese (Mn - 60%, Si - 14%) 54500
53500
54500
Ex-works Rs/ ton MC Ferro Manganese ( Mn - 70%, C -1.5) 76500
76500
76500
Ex-works Rs/ kg Ferro Vanadium 845
863
960
Ex-works Rs/ kg Ferro Moly (Mo - 60% min) 1010
1045
1015
Ex-works Rs/ ton Ferro Titanium (Ti - 30%) 155500
155500
155500
Steel Insights, April 2013
65
Iron Ore data
Iron ore export data for February 2013 Steel Insights Bureau Port
Destination Country
Date
Fe Content
Unit Price (in Rs/ton)
Quantity (in tons.)
IRON ORE FINES FE 55%
55
3,128
23,000
IRON ORE FINES FE 55%
55
3,960
1,000
IRON ORE FINES (FE 55%)
55
4,785
3,000
IRON ORE FINES FE 55%
55
2,984
3,250
IRON ORE FINES FE 63.5%
63.5
7,432
20,000
IRON ORE FINES (FE 55%)
55
4,785
2,520
IRON ORE FINES FE 55%
55
4,232
7,500
IRON ORE FINES FE 56% BASIS
56
4,492
2,000
IRON ORE FINES FE 56% BASIS (FE-55%)
55
4,638
4,500
IRON ORE FINES FE 56% BASIS
56
4,638
6,500
IRON ORE FINES (FE 55%)
55
4,785
1,400
IRON ORE FINES (FE 55% BASIS/55%MIN)
55
3,798
20,000
IRON ORE FINES FE 55%
55
3,798
10,600
IRON ORE FINES FE 57% BASIS
57
4,685
11,000
IRON ORE FINES FE 58%
58
5,644
1,400
IRON ORE FINES (FE-55%)
55
2,658
700
IRON ORE FINES FE 54%
54
4,095
10,000
IRON ORE FINES FE 61%
61
6,563
1,500
IRON ORE FINES FE 61%
61
6,563
2,000
15-Feb-13 IRON ORE FINES FE 54%
54
3,728
18,000
IRON ORE FINES (FE 55% )
55
4,785
1,080
IRON ORE FINES FE 54%
54
3,728
2,000
IRON ORE FINES (FE- 55%)
55
2,415
840
63.5
7,350
5,000
IRON ORE FINES FE 63.5%
63.5
7,350
15,000
23-Feb-13 IRON ORE FINES (FE-55%)
55
2,479
840
25-Feb-13 IRON ORE FINES (FE 54%)
54
4,172
6,000
55.25
4,754
14,100
2-Feb-13
4-Feb-13 6-Feb-13
7-Feb-13
8-Feb-13
9-Feb-13
KOLKATA
CHINA
12-Feb-13
14-Feb-13
19-Feb-13
Product Category
22-Feb-13 IRON ORE FINES 63.5%
26-Feb-13 IRON ORE FINES FE 55.25% BASIS KOLKATA Total
PARADIP
CHINA
66 Steel Insights, April 2013
194,730 6-Feb-13
IRON ORE FINES
4,638
50,000
7-Feb-13
IRON ORE FINES
4,841
5,000
8-Feb-13
IRON ORE FINES
4,489
6,185
11-Feb-13 IRON ORE FINES
8,740
5,500
Iron Ore data Iron ore export data for February 2013, Contd... Port
PARADIP
Destination Country
CHINA
Date
Product Category
Fe Content
Unit Price (in Rs/ton)
Quantity (in tons.)
12-Feb-13 IRON ORE FINES
5,506
2,500
14-Feb-13 IRON ORE FINES
5,204
32,500
18-Feb-13 IRON ORE FINES
5,506
2,500
19-Feb-13 IRON ORE FINES
4,725
38,000
20-Feb-13 IRON ORE FINES
4,033
24,236
25-Feb-13 IRON ORE FINES
4,851
2,052
27-Feb-13 IRON ORE FINES
6,500
38,500
PARADIP Total
206,973 1-Feb-13
IRON ORE FINES OF FE 55.5%
55.5
3,608
44,160
IRON ORE FINES OF FE 55.5% & SUPPLEMENTARY
55.5
3,635
230
6-Feb-13
IRON ORE FINES FE 55% BASIS
55
3,689
7,360
7-Feb-13
IRON ORE FINES (FE CETENT 55%)
55
4,069
13,485
63.5
7,307
54,280
52
2,930
26,128
57
5,288
2,372
IRON ORE FINES FE 56%
56
5,078
2,200
IRON ORE FINES (57% FE BASIS REJECTION BELOW 55% FE)
57
5,154
6,300
IRON ORE FINES (63.5% FE CONTENT)
63.5
7,072
476
IRON ORE FINES (63.5% FE CONTENT)
63.5
7,193
33,120
59
6,116
25,200
IRON ORE FINES OF FE CONTENT 58%
58
5,561
14,050
23-Feb-13 IRON ORE FINES (63.5% FE CONTENT)
63.5
7,193
552
62
6,969
38,640
55
4,515
11,300
IRON ORE FINES (62% FE CONTENT)
62
6,969
11,040
IRON ORE FINES (57% FE CONTENT)
57
6,038
3,800
IRON ORE FINES (62% FE CONTENT)
62
6,969
409
IRON ORE FINES (57% FE BASIS REJECTION BELOW 55% FE)
57
5,408
7,200
IRON ORE FINES FE CONTENT 55%
55
4,725
14,301
IRON ORE 65% FE (FINES)
65
5,729
75,888
11-Feb-13 IRON ORE 65% FE (FINES)
65
5,729
44,349
13-Feb-13 IRON ORE 65% FE (S/LUMPS)
65
6,224
18,525
IRON ORE 65% FE (FINES)
65
5,544
47,274
IRON ORE 65% FE (S/LUMPS)
65
6,023
29,933
11-Feb-13 IRON ORE FINES (63.5% FE CONTENT) IRON ORE FINES (52% FE CONTENT) 12-Feb-13 IRON ORE FINES (57% FE BASIS REJECTION BELOW 55% FE)
13-Feb-13 CHINA
18-Feb-13 IRON ORE FINES (FE 59.00% BASIS) VIZAG
IRON ORE FINES (62% FE CONTENT) 25-Feb-13 IRON ORE FINES FE 55%
26-Feb-13
28-Feb-13 4-Feb-13
JAPAN
27-Feb-13 VIZAG Total
532,572
Grand Total
934,275
Steel Insights, April 2013
67
Iron Ore data
Iron ore import data for February 2013 Steel Insights Bureau Port
Category
Date
Country Of Origin
Item Description
Unit Price (in Rs.)
Unit Price (in $)
Quantity (in tons)
04/Feb/13
MALI
IRON ORE LUMPS
6,027
109
5,000
05/Feb/13
MALI
IRON ORE LUMPS (FE 63.50%)
6,538
118
1,870
08/Feb/13
MALI
IRON ORE LUMPS
6,538
122
1,972
12/Feb/13
MALI
IRON ORE LUMPS
6,538
122
1,972
18/Feb/13
MALI
IRON ORE LUMPS
6,330
118
1,972
20/Feb/13
MALI
IRON ORE LUMPS
6,330
118
1,972
26/Feb/13
MALI
IRON ORE LUMPS
6,496
118
3,944
01/Feb/13
BAHRAIN
IRON ORE PELLETS
9,149
166
1,500
02/Feb/13
BAHRAIN
IRON ORE PELLETS
8,924
162
5,000
BAHRAIN
IRON ORE PELLETS
8,902
161
2,000
FINLAND
IRON ORE PELLETS (BF ACID PELLETS 65)
8,059
146
5,000
RUSSIA
IRON ORE PELLETS
8,264
150
5,000
08/Feb/13
BAHRAIN
IRON ORE PELLETS
8,928
167
2,750
11/Feb/13
BAHRAIN
IRON ORE PELLETS
8,924
167
5,000
12/Feb/13
BAHRAIN
IRON ORE PELLETS
8,924
167
5,000
13/Feb/13
FINLAND
IRON ORE PELLETS (BF ACID PELLETS 65)
7,805
146
5,000
BAHRAIN
IRON ORE PELLETS
8,860
166
3,229
RUSSIA
IRON ORE PELLETS
8,004
150
5,000
BAHRAIN
IRON ORE PELLETS
8,764
164
5,500
AUSTRALIA
IRON ORE PELLETS
9,099
170
5,000
BAHRAIN
IRON ORE PELLETS
8,620
161
2,000
BAHRAIN
IRON ORE PELLETS
8,672
162
5,000
RUSSIA
IRON ORE PELLETS
8,212
150
5,000
UKRAINE
IRON ORE PELLETS
7,926
144
10,000
FINLAND
IRON ORE PELLETS (BF ACID PELLETS 65)
8,009
146
10,000
BAHRAIN
IRON ORE PELLETS
8,846
161
2,000
FINLAND
IRON ORE PELLETS (BF ACID PELLETS 65)
8,009
146
10,000
146
117,681
141
5,000
MUNDRA Total
141
5,000
Grand Total
146
122,681
LUMPS
05/Feb/13
KANDLA
PELLETS
14/Feb/13 18/Feb/13 19/Feb/13 20/Feb/13 25/Feb/13
26/Feb/13
27/Feb/13
KANDLA Total MUNDRA
PELLETS
68 Steel Insights, April 2013
13/Feb/13
AUSTRALIA
IRON ORE PELLETS
7,569
Iron Ore data
Iron Ore Export out of major Indian ports Apr ’12 - Feb ’13 Apr'12
May'12
Jun'12
Jul’12
Aug'12
Sept'12
Oct'12
Nov'12
Dec'12
Jan'13
Feb'13
PORTWISE TOTAL
Chennai
0
0
0
0
0
0
0
0
0
52,000
0
52,000
Ennore
0
0
0
0
0
0
0
0
0
0
0
0
NA
NA
NA
NA
113,275
13,798
27,324
0
0
13,075
0
167,471
Kandla
0
185,374
0
93,756
68,000
64,346
230,829
63,638
202,609
91,264
0
999,816
Kolkata
155,000
129,284
267,145
149,774
79,342
24,000
83,224
102,889
121,800
190,059
194,730
1,497,247
NA
NA
NA
NA
NA
NA
NA
0
0
0
0
0
Mangalore
224,326
352,000
0
98,127
53,040
10,956
44,588
105,914
282,568
219,064
212,387
1,602,970
Mormugao
3,083,000
3,075,539
708,356
NA
50,112
0
0
0
0
0
0
6,917,007
Paradip
127,250
51,080
138,670
292,880
181,798
53,585
40,000
53,000
114,835
85,610
206,973
1,345,681
Tuticorin
0
0
0
0
0
0
0
0
0
0
0
0
Vizag
1,163,000
344,871
278,334
688,712
368,707
119,992
255,594
86,836
321,410
562,125
532,572
4,722,153
Monthwise Total
4,752,576
4,138,148
1,392,505
1,323,248
914,274
286,677
681,559
412,277
1,043,223
1,213,197
1,146,662
17,304,346
Port
Gangavaram
Krishnapatnam
Iron Ore Import through Major Indian Ports Sept ‘12 To Feb ‘13
Iron Ore Export through Major Indian Ports Sept ‘12 to Feb ‘13
Steel Insights, April 2013
69
Tear along the dotted line
Tear along the dotted line
70 Steel Insights, April 2013