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EDITORIAL Dear Readers, At the outset let me wish you a very happy and prosperous New Year. As we begin 2013 Indian prime steel mills have increased prices of both flat and long products by Rs 750-1000 per ton. JSW Steel has raised steel prices by about 2 percent. Similarly, Essar and SAIL have also reportedly increased prices by similar amounts. Flat product market in India has borne the brunt over the past 2 years owing to poor demand and influx of material from Japan and Korea. Even though Indian mills have tried to break the impasse by hiking prices intermittently it has been more of parity capitalization exercise with depreciating rupee rather than strengthening of core fundamentals. Even now some mills are opting for rebates to clear their inventories. Long product market has been relatively mobile with undulations depending on seasonality and market sentiment. Q3 and Q4 is traditionally the period of increased construction and consumption. Q4 sees the race for completion of projects culminating in increased activity. Apart from these factors the long product market is dependent on imported scrap as well. Weakening rupee and seasonal shortage of scrap in Europe and USA has bloated the cost. Power tariff in most locations in India has been hiked substantially during the past six months. Non availability of power culminating in poor capacity utilization has impacted the secondary sector in more than one ways. Iron ore shortage is unrelenting and more so with current hike in international iron ore price domestic lump prices are firm thereby hitting the profitability of secondary sector and mills without captive mines. Even though the gap between secondary and primary price of TMT had narrowed to Rs 3500-4000 per ton from typical Rs 50006000 per ton levels secondary sector has been forced to hike price by Rs 1000 per ton in some locations to adjust the cost push. January to March quarter is warming up to be evenly pitched battle between primary and secondary producers. Certainly credit easing by RBI during this period would catalyze an otherwise monotonous growth pattern. In this issue of Steel Insights, we try to find out how the year 2012 was for the steel industry and what lies ahead in 2013. Like all industries, the steel industry also went through severe demand crunch. Adding to the woes, investigations on illegal mining led to severe iron ore shortage impacting small and medium units and prime mills alike. Prime steel mills were even forced to import iron ore, the material which is available in abundance in India, to tide over the crisis. Cheap finished steel imports from Japan and Korea also played havoc. However, the year 2013 has brought with it renewed hopes of an economic revival after the prolonged recession. The year began with reports of US lawmakers approving a plan to prevent the “fiscal cliff ” and consequent recession. The edition also carries a special focus on the sponge iron industry wherein vice president, marketing & corporate affairs, Monnet Ispat & Energy, Amitabh S. Mudgal explains how the industry is coping with overcapacity, skyrocketing input prices and iron ore shortage. We also have a special feature on the pellet making industry.
Happy reading! Steel Insights, January 2013
3
Contents 30 Iron ore shortage hits medium, small steel companies 31 Karnataka steel mills urge opening up of ore mines 34 Spot coking coal prices ease in December 35 China removes 40% export tax on met coke 36 India’s steel imports up 23% till November 38 Auto sector ends 2012 on weak note, expects flat growth in 2013 40 Ferro alloy prices unlikely to recover soon 42 Tata Steel branded SiMn taps 10-12% market share 44 RINL commences work on captive power unit 45 Essar Steel supplies plates to subsea tankages in North Sea 46 BSP exceeds annual plan targets for Nov 47 SAIL cuts GC sheet prices in December 51 Third Siemens continuous slab caster goes into operation at Dragon Steel 52 2013 sends mixed signals for steel community 53 Iron ore handling by ports down 53% in Apr-Nov 54 Railways iron ore handling down in Nov 55 Macroeconomic indicators of India 56 Global crude steel production drops m-o-m in Nov 57 Domestic flat & long markets 58 Domestic raw materials 60 Price data 62 Production data
6 | Cover Story
Steel mills pin hope on revival in 2013 Industry hopes demand growth in the range of 5-7% to 77 mt in 2013.
28 | INTERVIEW
Steel demand recovery can help sponge iron sector: Monnet Ispat Angul unit will take Monnet’s steelmaking capacity to 3.5 mtpa by 2014-15.
32 | FEATURE
Pelletisation: in high demand Steel mill’s dependence on pellets as raw material will increase manifold in 2-3 years.
43 | Corporate
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48 | Technology
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4 Steel Insights, January 2013
Cover Story
Steel mills pin hope on revival in 2013 Tamajit Pain
T
he year gone by was a rough ride year for India, which had to negotiate the choppy waters of domestic politics and face one of the worst power cut situations in its history. Continuing from the year 2011, corruption
6 Steel Insights, January 2013
continued to be a focus issue this year too. The Comptroller and Auditor General of India sparked off a major row by questioning the manner of government’s allocation of coal blocks to private parties that resulted in a loss of revenue. The Parliament witnessed disruptions with the Opposition attacking the government on key policy issues like FDI in retail, which ultimately got passed. The
Trinamool Congress withdrew support to the UPA over the reforms in the FDI. The Cabinet itself faced a reshuffle twice this year, the first when Finance Minister Pranab Mukherjee became the President of the country in July with the then Home Minister P. Chidambaram being given the finance portfolio. The northern electricity grid failed, leading to one of the worst blackouts faced by the country.
Cover Story Trends
The steel sector, which contributes to nearly 2 percent of the GDP and employs over 500,000 people, achieved major milestones during the year. The country became the fourth largest producer of crude steel in the world as against the eighth position in 2003 and is expected to become the second largest producer of crude steel in the world by 2015. It continued to maintain its lead position as the world’s largest producer of Direct Reduced Iron (DRI) or sponge iron. The per capita steel consumption has risen from 38 kg in 200506 to 59 kg in 2011-12. Capacity for crude steel production expanded from 51.17 million tons per annum (mtpa) in 2005-06 to 89.29 mtpa in 201112. Crude steel production grew at 8 percent annually (CAGR) from 46.46 million tons (mt) in 2005-06 to 73.79 mt in 2011-12. Production for sale of finished steel stood at 73.42 mt in 2011-12 as against 46.57 mt in 2005-06, an average annual (CAGR) growth of 7.9 percent. Real consumption of finished steel has grown at a CAGR of 9.4 percent during the last six years. Domestic real steel consumption was at 70.92 mt and increased by 6.8 percent on a year-on-year basis. Export of finished steel during 2011-12 stood at 4.04 mt while import during 2011-12 stood at 6.83 mt. Major development initiatives
During the year, the Indian government took a number of steps to sustain the growth of this core sector.
8 Steel Insights, January 2013
In order to conserve iron ore resources of the country for long term domestic value addition, export duty on all varieties of iron ore (except pellets) was increased from 20 percent to 30 percent ad valorem with effect from December 30, 2011. Chrome is used in steel manufacturing and export duty on chrome ore and concentrates was enhanced to 30 percent ad valorem with effect from March 17, 2012. To encourage beneficiation and pelletisation of iron ore fines in the country, basic customs duty on the plants and equipment required for initial setting up or substantial expansion of iron ore pellets plants and iron ore beneficiation plants was reduced from 7.5/5 percent to 2.5 percent with effect from March 17, 2012. An action plan for ISO:9001 certification for the Steel Ministry was prepared. Progress in April-Nov of 2012-13
Production of crude steel during April November 2012 was at 51.64 mt, a growth of 5.7 percent compared to April - November of 2011. During the period Steel Authority of India (SAIL), Rashtriya Ispat Nigam Limited (RINL) and Tata Steel produced 16.17 mt during the April-November period compared to 15.54 mt produced in the same period last year. JSW Steel, JSW Ispat, Essar and Jindal Steel & Power Ltd (JSPL) produced 12.24 mt compared to 10.83 mt in the same period last year. Total finished steel (alloy + non-alloy) production during April-November 2012 stood at 49.98 mt, a growth of 3.4 percent
compared to last year, in which contribution of the non-alloy steel segment stood at 46.78 mt, while the rest was the contribution of the alloy steel segment (including stainless steel). Exports stood at 3.30 mt during AprilNovember 2012, a growth of 21.6 percent compared to last year, in which contribution of the non-alloy steel segment stood at 2.922 mt (growth of near 20.2 percent), while the rest was the share of the alloy steel segment (including stainless steel). Imports stood at 5.10 mt during the period, a growth of 21.4 percent compared to last year, in which contribution of the nonalloy steel segment stood at 3.925 mt (growth of 23 percent), while the rest was the share of the alloy steel segment (including stainless steel). India remained a net importer of steel during April-November 2012. Real consumption stood at 48.43 mt, a growth of 4.2 percent compared to last year. Expansion & modernisation
According to data available with Steel Insights, prime steel makers are set to add around 24 mtpa capacity through brownfield expansions by 2017-18 involving huge investments. According to a Steel Ministry data, the current capacity of the ten major Indian steel makers stands at 54.5 mtpa and this will go up to 78.5 mtpa by 2017-18 with the ongoing capacity expansions at their existing plant locations. Over half of the proposed expansions will come from the two state run firms SAIL and RINL. It normally takes about `4,000 crore investment to hike steel capacity by 1 mt. SAIL’s capacity expansion in all of its 5 major plants will take its capacity to 21.40 mtpa from 12.84 mtpa now. SAIL has undertaken expansion and modernization of its integrated steel plants at Bhilai, Bokaro, Rourkela, Durgapur, Burnpur and Salem. In the current phase, the crude steel capacity is being enhanced from 12.84 mtpa to 21.4 mtpa. The indicative investment for current phase is about `61,870 crore. In addition, `10,000 crore (approximately) has been earmarked for expansion and modernization of SAIL mines. Rashtriya Ispat Nigam Limited (RINL) has also almost completed expansion from the existing 3 mtpa to 6.3 mtpa of liquid steel at a cost of `12,291 crore.
Cover Story Projected Crude Steel Capacity Year-Wise till Terminal Year of the 12th Plan State
2010-11
SAIL
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
12.84
13
15.27
20.75
20.75
20.75
20.75
2.82
2.82
6
6
7
7
7
2
3
3
6.8
7.629.22
10
10
10
10
1
3.05
5.5
6
Vizag Steel Plant (RINL)
Andhra Pradesh
NMDC Nagarnar
Chhattisgarh
Tata Steel, Jamshedpur
Jharkhand
Tata Steel, Kalinganagar
Orissa
JSW Vijayanagar
Karnataka
6.8
8.93
10
10
10
12
12
ESSAR Steel
Gujarat
4.6
6.3
8.5
8.5
9
10
10
JSPL Raigarh
Chhattisgarh
2.4
3
3
3.5
4
4
4
JSPL Angul
Orissa
1.5
2
2
3
4
ElectroSteel Steel Limited, Siyaljori Bokaro
Jharkhand
1.7
2.2
2.2
2.2
2.2
Bhushan Steel Limited Angul-Dhenkanal
Orissa
1.5
2.3
2.3
4
5.2
5.2
5.2
Jindal Stainless
Orissa
0.6
0.8
0.8
0.8
0.8
Others
Multi-Location
32.5
34.13
35.83
37.91
39.79
41.77
43.85
Tata Steel Gopalpur
Orissa
2
2
4
JSW SALEM
Tamil Nadu
1
1
1
1
1
1.6
1.9
JSW ISPAT
Maharashtra
3.3
3.3
3.3
3.3
3.3
4
4.5
1.5
2
3
3.5
2.5
2.5
2.5
2.5
2.5
JSPL Pattratu
Chhattisgarh
POSCO INDIA
Orissa
4
Bhushan Power & Steel, Sambalpur
Orissa
1.2
1.8
Uttam Galva
Maharashtra
0.8
1.1
Monnet Isapat, Raigarh
Chhattisgarh
0.3
0.6
0.9
1.5
1.5
1.5
1.5
Visa Steel, Kalinganagar
Orissa
0.5
0.5
0.9
1.5
1.5
1.5
1.5
Others- Medium Scale (Jai Balaji, Kalyani, Mukand, MSPL, Brhamini etc)
Multi-Location
1.5
2
2.5
2.5
4
4
4.5
78.06
89.00
103.80
117.56
126.19
135.52
140.00
Total (Firm Projcets) Additional Capacity not firm but possible
0.00
0.00
1.71
2.90
6.40
10.10
17.60
Realizable Capacity considering Possible Slippages
78.06
89.00
104.66
119.01
129.39
140.57
149.00
Note: Expansions shown in shaded region are not firm and therfore Realizable capacity has been caculated as - Realizable Capacity=Capacity from Firm Projects + Additional Capacity from Not firm Projects*0.5 Source: Steel Working Group
Tata Steel’s capacity will increase, through brown field expansions, at its Jamshedpur facility to 9.7 mtpa from 6.8 mtpa now. Capacity of JSW Steel would also go up to 16.5 mtpa per annum from 14.3 mtpa at present. However, Essar Steel, which has recently increased its capacity at its Hazira plant to 10 mtpa, however, is not going for a further increase. Among the firms having lower capacity presently, Jindal Steel and Power’s capacity through brown field expansions will go up by 0.75 mtpa to 4.25 mtpa by the fiscal 2017-18. Significant among the greenfield expansions include that of NMDC Ltd, which is setting up a 3 mtpa green field Integrated Steel Plant at Nagarnar, District -Bastar, Chhattisgarh.
10 Steel Insights, January 2013
Joint venture initiatives
A number of joint collaboration initiatives were taken up by the Indian government and the private sector steel companies during 2012 to fast track the growth of the sector. Union Steel Minister Beni Prasad Verma visited Afghanistan in April 2012 and a MoU on co-operation in the field of steel sector was signed with Minister of Mines, Afghanistan. Earlier, the SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, had won the status of ‘Preferred Bidder’ for blocks B, C and D of the mines, with an estimated reserve of 1.28 billion tons of high-grade magnetite iron ore (with 62-64 percent Fe content). The consortium will now have the opportunity to
enter into a Hajigak Project Contract with the Ministry of Mines, Afghanistan after formal negotiations, and to receive a licence to further explore, develop and exploit the Hajigak iron ore deposits. A delegation led by Verma visited Japan in July 2012 and signed an MoA with Kobe Steel Limited, Japan for ITmK3 technology. It envisages installation of a 0.5-mt ITmk3 technology based plant at Alloy Steel Plant, Durgapur. This unit will produce premium grade iron nuggets from iron ore fines and non-coking coal. A term sheet outlining the terms of the proposed Joint Venture Agreement (JVA) has been signed with Kobe Steel. A joint venture company “SAILKobe Iron India Private Limited” has been incorporated on May 25, 2012.
Cover Story NMDC has acquired 50 percent equity in Legacy Iron Ore Limited, Australia at a total investment of about Aus $18.89 million. Rashtriya Ispat Nigam Limited (RINL), Visakhapatnam Steel Plant and Power Grid Corporation of India Limited signed a Memorandum of Understanding (MoU) to set up a Joint Venture Company for manufacturing of Transmission Line Towers and Tower Parts. RINL has signed an MoU with NMDC for setting up of a pellet plant of 4 mtpa at Visakhapatnam and for laying of slurry pipeline from Bailadila to Visakhapatnam. RINL and Powergrid signed an MoU on July 27, 2012 with an intention to incorporate a joint venture company for setting up a plant of viable size to produce CRGO/CRNO steel at Visakhapatnam. India’s leading steel maker, JSW Steel Ltd and Japan’s JFE Steel Corporation announced a joint agreement signed where JFE will provide technology for the production of non-oriented electrical steel sheets (CRNGO) at the JSW’s Vijayanagar plant in Karnataka. By leveraging JFE Steel’s well-established manufacturing technology for electrical steel, shall produce CRNGO grade electrical steel and supply to its customers, including local companies as well as Japanese, European and US-affiliated companies doing business in India. Research & development
A roadmap for Research and Development (R & D) for Indian iron and steel industries was prepared by the Ministry of Steel with the aim to highlight the gaps in R & D and Technology as well as sensitise the steel industry to draw up a suitable action plan or strategy to invest on R&D and technology upgradation programme. Under the Plan Fund Scheme, 08 Research and Development (R & D) projects were approved in different areas in iron and steel sector with particular emphasis on utilisation of low grade resources by developing suitable upgradation techniques. Under the Steel Development Fund Scheme, 68 research and development (R & D) projects have been approved in different areas of basic and applied research in iron and steel sector. During the Twelfth Plan (2012-13 to 2016-17), the Planning Commission has allocated `200 crore for research and development in the iron and steel sector.
12 Steel Insights, January 2013
Challenges
However, even as the industry went step by step to reach new heights of production and consumption, it was faced with numerous challenges both on the international and domestic fronts. The first and foremost of the challenges was to counter cheap imports from Korea, Japan and China. Secondly, the issue of iron ore shortage due to investigations of illegal mining haunted the steel mills even though the country is known to have abundant resource in the mines of states of Karnataka, Goa and Odisha. Thirdly, brownfield and greenfield projects faced the hurdle of land acquisition. Last but not the least was the problem of low quality of material produced in the country and lack of available technology to produce some special grades of steel in a much efficient manner. Although primary steel mills try and innovate or import newer technologies, secondary steel mills, which produce about 45 percent of the crude steel produced in India, do not have the resources or ability to adopt newer technologies to increase efficiency. Added to the woes are the other ancillary problems like power shortage and lack of skilled labour. Import
Imports followed a different growth path. Progressive reduction in customs duty levels after deregulation led to an imports surge. India became a net importer of steel even before the commencement of Eleventh Plan period and net imports have fluctuated between a low of 1.40 mt in 2008-09 to
4.13 mt in 2009-10. It is important to note that there has been a change in the relative movements of exports and imports in the last three to four years. India’s steel import stood at 6.83 mt in 2011-12. These developments would imply that the rise in imports is, to a very large extent, the result of increased domestic demand for mainly special grades of steel and not of erosion in the competitiveness of Indian steel industry. The reduction in import duty rates was undertaken to provide domestic steel users easier access to global supplies and thereby stem the abnormal rise in domestic prices and also to avoid possibilities of a supply shortfall in the domestic market. Domestic prices are now being determined by international prices as expected in a free and open market situation. In fact, progressive reduction in custom duty rates has over the years reduced the margin between the landed cost of imports and the domestic market prices. Despite the recent slowdown in domestic demand, imports had been growing yearon-year mainly because of non-availability of special grades of steel from within the country. Free trade agreements with Japan and Korea have also influenced imports recently. There has been a clamour from the industry to the government to re-examine the free trade agreements with these countries by none other than JSW Steel chairman and managing director Sajjan Jindal. “India has an FTA with Japan and South Korea. The economies of these two are not doing well, especially Japan. So, they are sort of exporting a lot of steel into India at a very
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Cover Story low price, taking advantage of such FTAs,” said Jindal. There had been a 300 percent increase in imports of steel in just one year from these countries, he said. It was time the government took a close look at the situation and did the needful by taking steel out of the purview of the FTA, he added. Essar Steel executive director (strategy and business development) Vikram Amin said, “There is a definite case to exclude steel products from the ambit of the FTA with Korea and Japan.” But the steel ministry rejected the proposal. Disapproving 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 operations 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. Some analysts are of the view that the long gestation of land acquisition process
is delaying the process of capacity addition and thereby leading to imports. For example the first phase of Tata Steel’s Kalinganagar project would have been onstream with the 3-mt first phase of the 6-mt Odisha project. This no doubt would have made some imports redundant. Imports of certain grades of specialty steel, like grain-oriented flat rolled electrical steel requiring use of technology held closely by some offshore groups, will still be unavoidable. At the same time, once Tata Steel’s 3-mt Jamshedpur mill expansion is over, much of our auto grade flat steel imports will be substituted. Some industry experts are of the view that Indian steel import spurt is, however, no cause for much of concern. Japan and South Korea are taking advantage of the low import duty of of three percent because of their free trade agreements with India. Imports from China and other countries face the deterrence of 7.5 percent duty. However, the uneasiness about Chinese surplus capacity and the pains it could inflict
Import/Export Duty in Steel Sector (2012-13) Sl. No.
CTH No.
Existing Custom Duty 2012-13
1
Pig iron
Item
72.01
5%
2
Semis
72.07
5%
3
Bars & Rods
72.13
5%
4
Structurals
72.16
5%
5
HR Sheets/plates (Non Alloy)
72.11
7.5%
6
HR Coils (Non Alloy)
72.08
7.5%
7
CR Coils/sheets (Non Alloy)
72.09
7.5%
8
GP/GC Sheets (Non Alloy)
72.10
7.5%
9
HRGO/HRNGO (Non Alloy)
72.08 72.11
7.5%
72.10 72.12
10%
10
HR/CR alloy steel (flat rolled) other than items of Headings No. 72253090, 72254019, 722550 and 72259900
11
Flat Rolled Alloy products of heading 7225 3090, 72254019, 722550 and 72259900
12
Tinplates W/W and TFS seconds
13
Defectives CR/coils
72.09
10%
14
Stainless steel HR coils for coin blanks
72.19
5%
15
Melting scrap (iron, steel & stainless steel)
72.04
0%
16
Re-rollable scrap
72.07
5%
17
Ships for breaking
89.08
5%
18
Iron ore
26.01
2.5%
19
Coking coal of ash content below 12%
27.01
0%
20
Coking coal of ash content above 12%
-
0%
21
Steam Coal
27.01
0%
22
Metcoke
27.04
0%
Source: Steel Ministry
14 Steel Insights, January 2013
Cover Story Import of iron & steel through major Indian ports Quantity in ‘000 tons
CATEGORY
Non-Alloy (Prime & Defective) Apr - Nov 12 (P)
Apr - Nov 11
Growth %
STEEL SEMIS Billets,Slabs,etc.
299.4
207.1
44.6
Re-rollable Scrap
164.9
116.8
41.2
363.0
247.1
46.9
STRUCTURALS
57.5
29.0
97.9
RLY. MATERIALS
11.9
6.9
432.5
283.0
52.8
516.6
358.6
44.1
FINISHED STEEL Non-Flat Products BARS & RODS
TOTAL Non-Flat Flat Products PLATES
82.1
39.4
HR COIL/STRIP
HR SHEETS
1080.7
866.2
CR COIL/SHEETS
24.8
1001.7
1021.5
-1.9
GP/GC SHEETS/COIL
289.6
232.1
24.8
ELECT. SHEETS
249.2
174.3
42.9
0.7
1.1
-39.1
97.9
76.2
28.4
TMBP TIN PLATES TIN PLATES W/W
28.9
18.8
54.0
TIN FREE STEEL
43.7
32.5
34.4
98.6
86.1
14.5
TOTAL Flat
PIPES
3489.6
2906.7
20.1
TOTAL Finished Steel (NonAlloy)
3922.1
3189.7
23.0
TOTAL Steel (Non Alloy)
4386.4
3513.6
24.8
1176.7
1012.4
16.2
Alloy/Stainless Steel Finished Steel Semis
14.1
4.5
211.0
TOTAL Steel (ALLOY)
1190.8
1016.9
17.1
TOTAL Finished Steel (Alloy + Non-Alloy)
5098.8
4202.1
21.3
TOTAL Steel (Alloy + Non Alloy)
5577.2
4530.5
23.1
245.2
411.6
-40.4
Other Steel Items FITTINGS MISC. STEEL ITEMS
1370.6
1202.2
14.0
SCRAP
5281.8
3442.0
53.5
Iron PIG IRON
9.2
5.2
76.9
SPONGE IRON
0.2
0.1
200.0
H.B. IRON
0.1
Ferro-Alloy
127.1
100.4
26.5
12611.3
9691.9
30.1
GRAND TOTAL Source: Steel Ministry
16 Steel Insights, January 2013
on another country’s steel industry, haunt many of our steelmakers. China, the world’s largest producer and user of steel, made 683.26 mt in 2011. In the April-November period of 2012 the country produced 651.12 mt of crude steel. According to World Steel Association, steel demand in China is expected to increase by 2.5 percent to 639.5 mt in 2012 after 6.2 percent growth in 2011, thus posing concern for Indian steel mills. But the World Steel Association has shown light at the end of the tunnel for the Indian steel mills by saying that in 2013, government stimulus measures are likely to moderately improve the economic situation. Thus China’s apparent steel use is expected to rise by 3.1 percent and will reach 659.2 mt in 2013. Iron ore shortage
The year 2012 was a landmark year for the iron ore industry in India. The country’s clampdown on illegal mining has cut output and exports and obliged steel mills to import a material the country has in abundance. The ban has come at a fortuitous time for global miners seeking alternatives for their growing supplies as appetite from top buyer China slowed. The action that started on July 26, 2010 with the banning of the shipments out of Karnataka resulted in severe shortage of iron ore for small and medium units in the state and also established steel mills based out of the state like JSW Steel Ltd. Meanwhile, in 2011, the Railways announced an increase in freight costs on iron ore for export of 50 percent to `1,500 per ton. Freight rates are hiked again, this time by `100 per ton to `1,600 per ton. Indian Railways also imposed a “busy season” charge of 7 percent on iron ore freight rates from April 1 to June 30 and from October 1 to March 31. The charge was estimated to equate to about `150-200 per ton. In order to preserve the steelmaking raw material to get exported from India, the government inflicted a severe blow to the exporters by hiking export duties on iron ore to 20 percent from 5 percent for fines and from 15 percent for lumps in its annual Budget. Even as the Supreme Court partially lifted the ban in Karnataka by allowing NMDC to mine 1 mt per month from its mine in the state and e-auction of the pithead stocks in the state to tide over the shortage, Chhattisgarh and Odisha government joined the chorus seeking export ban by stopping issue of export permits. The situation reached such an extent that JSW had to operate its Vijayanagar plant at 30-40 percent capacity utilisation levels in the first half of 2012, which was later rectified to 75-85 percent levels in later half of 2012. However, in 2012, the Supreme Court partially allowed the restart of Category A mines or mines of more than 50 hectares in Karnataka but Odisha mulled a 4 percent cut in its output to curb illegal mining. Goa also considered an 18 percent reduction in its output because of limited infrastructure to handle supplies. As the year progressed the Supreme Court allowed 18 mines to resume iron ore mining in Karnataka state after a suspension of over a year but Goa halted iron ore mining after an expert panel formed by the Union government found “serious illegalities and irregularities” in mining operations.
Cover Story Iron ore production, consumption and export data Export
Production (in million tons)
Domestic Consumption (in million tons)
Quantity (in million tons)
Value (in `crore)
2009-10
218.55
90.62
117.37
41794.85
2010-11
208.00
111.40
97.66
41295.86
2011-12 (provisional)
169.66
116.30
61.80
Not available
Year
Source: For finished steel - Joint Plant Committee; Ministry of Steel, For production and consumption of iron ore – IBM, Ministry of Mines; For export of iron ore – MMTC, Department of Commerce.
Next state targeted
The mining bans in Goa and Karnataka, which at one point shut all mines in the two states, could now spread to the eastern state of Odisha, which was visited by the Shah Commission. Towards the end of 2012, the Odisha government decided to preserve iron ore for captive use. Odisha’s state government has fined several mining companies nearly `68,000 crore for excessive mining of iron ore over the past 10 years. However, none of those fined has been paid up so far. A major difference from Goa and Karnataka is that Odisha’s ore is high grade and intended for the domestic steel industry rather than export. If mining in Odisha is stopped, Indian steelmakers may need to import 30 mt of high-grade ore a year, industry experts opined. As we enter 2013, the Odisha government is preparing to start electronic auctions for iron ore in the new financial year, aiming for “equitable distribution” in addition to greater transparency. But this may not necessarily increase supplies of the key steel-making ingredient given the 55 mt production cap in the largest iron ore producing state. “The provisions of the e-auction are under consideration; what final shape it will take we don’t know yet. But the objective is to have equitable distribution of iron ore,” said D.K. Mohanty, director of mines in Odisha’s steel and mines ministry. JSW Steel, one the biggest buyers in e-auctions in Karnataka, said supply, pricing and quality were the major issues surrounding e-auctions. “Today, there is a suppressed supply of iron ore and e-auctions don’t help,” said Seshagiri Rao, joint managing director and group chief financial officer of JSW Steel. “Price discovery is difficult and there are quality issues,” he added. Meanwhile, India’s efforts to clamp
18 Steel Insights, January 2013
down on illegal mining have handed a lifeline to global iron ore giants. Steps taken by federal and state authorities to clean up the mining and export of iron ore have slashed shipments and forcing steel mills to import a raw material the country has in abundance. The world’s biggest producers Vale, Rio Tinto and BHP Billiton have taken some of India’s market share in China, Japan and South Korea, and now are even eyeing exports to their erstwhile competitor. Smaller miners like Australia’s Fortescue Metals Group also benefit, as they supply the lower-grade ore that competes directly with India in the Chinese market. India’s campaign to end illegal mining— which authorities say has cost Goa and Karnataka states around `51,000 crore in lost revenue in the last decade—has cut its iron ore output by more than 20 percent in the year to March and its exports by almost double that. Annual exports, which in the past decade peaked at nearly 106 mt, may dwindle to as low as 5 mt over the next year, analysts say. In January-October, India’s shipments to its biggest market stood at 32.6 million tonnes, down nearly half from a year ago, Chinese customs data showed, with South Africa edging it out as the No. 3 supplier. Shipments from Australia and Brazil were up 20 percent and 12 percent, respectively. India as a buyer
The flipside is that India is also starting to ship in iron ore in significant quantities. India is estimated to have imported 9 mt of iron ore so far in the fiscal year, an official in an iron ore mining company said adding that India could ship in 15 mt for the full year. Importers include big producers Essar Steel, Bhushan Steel Ltd and JSW Steel Ltd, the official said.
For the next fiscal year, India’s iron ore exports may be no more than 15 mt, while imports could climb to 20-25 mt, the official said, making the country a net importer for the first time ever and hurting the competitiveness of its steel producers. “Being an iron ore-rich country like India, it does not make sense to be producing steel on the basis of imported iron ore. It does not work out economically for the steelmakers,” said an analyst in a Mumbai based brokerage. Of the 800 iron ore leases in the country, only around 300 are operational, said a senior mines ministry official, adding that the supply squeeze should be short-lived. “Systems are being tightened at statelevel... but once the system stabilizes, the supply crunch will ease out,” said the official, who declined to be named as he is not authorized to speak to the media. Land
Another roadblock in the way of sustained growth of the steel industry is that of land. Major greenfield projects of Posco and ArcelorMittal are held up because of lack of a proper land policy in India. It is for sure that industry cannot be set up in air and requires huge tracts of continuous land which is difficult if not impossible in a country like India with a huge population base and fragmented land ownership. Tata Steel’s Kaliganagar project, which is set to see its first phase on onstream in 2014 end, was held up for long due to land related issues. In 2012, the groundwork for the Land Acquisition, Rehabilitation and Resettlement Bill has been made. Now in 2013 it is to be seen what are the final changes to the land bill? India’s cabinet on December 13 approved changes clarifying the century-old law governing purchase of land for industry
Cover Story and highways, making it mandatory for the buyers to win the approval of 80 percent of landholders, Parliamentary Affairs Minister Kamal Nath said. For public-private partnership projects, 70 percent need to give consent, he said. People within the steel industry feel some concerns need to be addressed with regard to the bill, which has become a necessity for greenfield projects. While the Land Bill could be enacted after the Cabinet approves it, the legislation must come into effect only prospectively and with advance notification of the cut-off date. This is critical to ensure that projects currently under implementation are not adversely affected. The industry feels that the government’s role in land acquisition by industry is necessary. In a densely populated country like India, the government must have a facilitating role in land acquisition for industry. In some cases where large pieces of land need to be acquired, there may be a problem of a marginal number of land owners who hold out. The Bill also requires a clear definition of ‘public purpose’. As we understand it, land requirements for large projects, such as the National Investment and Manufacturing Zones and the Delhi-Mumbai Industrial Corridor, would be included in the scope of ‘public purpose’. As proposed in the Bill, it would become mandatory for the acquirer of land to seek the consent of 80 percent of the affected
20 Steel Insights, January 2013
people who would be potentially displaced. The industry has been seeking dilution of this norm to 66 percent as the task of seeking consent would still remain onerous. At the same time, it is necessary to convey certainty of land use changes. A comprehensive and holistic view is needed before the Bill is passed, for, otherwise, the ramifications may cost the nation dear, according to national industry associations with whom Steel Insights spoke. Steel consuming sectors
Automobile The automobile sector showed sluggish
trends in 2012 with both production and sales slumping as post festive demand failed to persist. Low buyer interest was attributed to high loan rates, fuel prices, inflation and economic slowdown. Industry analysts say American and European companies try to push inventories (year end sales) through lucrative schemes and this may lead to demand recovery from Jan in the event that the RBI slashes interest rates. The weakness was prevalent across the product segments with the medium and heavy commercial vehicle (MHCV) segment being the most impacted. However, utility vehicles (UV) and light commercial vehicles (LCV) defied the general slowdown and sustained their growth momentum. Going ahead, many analysts believe the demand scenario to remain challenging in January-March quarter of 2012-13 as slowdown in economic growth coupled with higher interest rates and fuel expenses continue to dampen consumer sentiments. “We believe the long-term structural growth drivers of the Indian automobile industry such as GDP growth (leading to increasing affluence of rural and urban consumers), favorable demographics, low penetration levels, entry of global players and easy availability of finance are intact, which should support a 10-12 percent CAGR in auto volumes over fiscal 2012-14,” Angel Broking said in a note.
Cover Story
Construction Construction sector growth had been faltering from 12.8 percent in 2005-2006 to 5.3 percent in 2011-12. However, in the second quarter of 2012-13, construction sector growth picked up to 6.7 percent. According to analyst reports, construction activity is set to pick up pace from January 2013 as the traditional construction season sets in and improvements in the overall economic outlook for the country also aid the growth of the sector. However, lack of easy credit will continue to push down the sector growth, especially in the infrastructure and commercial segments. Capital goods The sector grew at 7.5 percent in the last three months of 2012 on a very low base. However, with construction activity set to rise in the January-March quarter of 201213, the sector can also expect a growth push from January onwards, analysts said. However as investment sentiments in the economy stay reluctant, growth expected to be restricted, industry sources said. With the government keen on implementing measures to fast track the revival of the sector, growth friendly policies can be expected from the end of 2012-13, sources say. Consumer durables The consumer durables sector saw healthy growth by 16.5 percent in the last three
22 Steel Insights, January 2013
months of 2012. Growth was attributed to the festive season sales. However, high interest rates did act as a barrier to potentially higher sales, industry sources said. Analysts expect growth rate to stay consistent in Q3 as rural demand increases following a moderately successful monsoon. White goods continued to grow at healthier rates relative to last year. However, the sales and consequent growth is expected to slowdown in January 2013 post the Diwali season, sources said. 2013: A year of hope
The year 2013 has brought with it renewed hopes of an economic revival after the
prolonged recession. The year began with reports of US lawmakers approving a plan to prevent huge tax increases and delay spending cuts that together would have pushed the world’s largest economy off the “fiscal cliff ” and into a likely recession. World Steel Association (WSA), which organised its annual conference in India in 2012, forecasts that global apparent steel use will increase by 2.1 percent in 2012, which is considerably lower than the 6.2 percent growth achieved in 2011. In 2013, world steel demand will grow by 3.2 percent and reach a record high of 1,455 mt. “Earlier this year (2012) we were seeing some signs of recovery from the slowdown of the last quarter of 2011 and we expected a better second half performance in 2012. However, the economic situation deteriorated during the second quarter of this year due to continued uncertainty arising from the debt crisis in euro zone and a sharper than expected slowdown in China. These factors have weighed heavily on business confidence and manufacturing activities around the world. As a result momentum in both the developed and emerging part of the world weakened considerably,” Worldsteel Economics Committee chairman Hans Jürgen Kerkhoff said. “However, we expect the situation to gradually improve in 2013 on the basis that the euro zone crisis can be contained, the US successfully deals with the fiscal tightening due in 2013 and the economic stimuli measures secure a soft landing in China. Since the 2008 economic crisis, uncertainty
Cover Story
and volatility has become the norm for the steel industry but it is worth noting that world steel demand has maintained positive growth despite all the headwinds and lingering difficulties,” he said. Steel demand in China is expected to increase by 2.5 percent to 639.5 mt in 2012 after 6.2 percent growth in 2011. In 2013, government stimulus measures are likely to moderately improve the economic situation. This follows sluggish exports resulting from the global economic slowdown. Thus China’s apparent steel use is expected to rise by 3.1 percent and will reach 659.2 mt in 2013, the association opined. Similarly, due to both unfavourable domestic and external economic conditions, India’s steel demand growth is projected to slow down to 5.5 percent in 2012 and 5 percent in 2013. Apparent steel use will reach 73.6 mt in 2012 and 77.3 mt in 2013. This coincided with the views of Tata Steel managing director H.M. Nerurkar. He said the total demand for steel in the current fiscal (2012-13) is likely to grow by 5.5 percent to around 75 mt. The demand growth rate may be better next fiscal at around 7 percent bouyed by economic growth fuelled by reforms announced by the government, Nerurkar said in an e-mailed statement. “In the fiscal 2012-2013, growth in domestic steel demand is expected to be around five and a half percent. Total demand
24 Steel Insights, January 2013
is expected to be around 75 mt, up from 71 million ton in 2011-2012,” he said. “In 2013-14, demand is expected to be higher at around 7 percent. Reforms announced by the government will provide a fillip to growth in the economy,” he added. Tata Steel expects a modest two and a half percent growth in Europe next fiscal. Europe is slated to register a negative growth this year. Nerurkar said the formation of the Cabinet Committee on Investment for single-window clearance for mega projects would generate activity in the power and roadways sectors, among others. “The expected lowering of interest rates by RBI in January will provide impetus to the manufacturing and consumer durables sectors, among others. The full impact of
all these will be felt in 2013-14,” he said. The Tata Steel Managing Director said with the ongoing greenfield and brownfield expansions, India is expected to become the world’s second largest producer of crude steel in the next two years. Ankit Miglani, deputy managing director of Uttam Galva Steels is of the opinion that the steel demand is likely to grow by around 10 percent in the next financial year. “We are expecting a 10 percent growth in the steel demand in the next financial year (FY’14),” he said recently. Total steel demand in the country was 71 mt in FY2012, which is likely to be around 75 mt in the current financial year (FY2013). Referring to steel pricing, he said “Global prices of steel will depend on the possibility of a stimulus package given by the Chinese government after the new regime takes over." The global market is hopeful of a stimulus package for boosting infrastructure in the Chinese economy by its government, which if happens will drive the steel prices. India’s steel ministry is of the view that demand for the alloy will quicken after the Union government eased infrastructure investment rules to revive an economy that’s expanding at the slowest pace in a decade. Consumption will probably increase 8 percent in the three months to March 31 and in the year from April 1, said a steel ministry official on condition of anonymity. The Union government last month unveiled plans to accelerate infrastructure approvals and make it easier to acquire land for factories, aiming to garner $1 trillion of investments in roads, ports and power plants by 2017. “The reforms will provide a fillip to the
Cover Story economy,” Nerurkar said in the e-mail. “A single-window clearance for mega projects will generate activity in the power and roadways sectors” which coupled with the predicted reduction in borrowing costs this month will provide impetus to manufacturing and consumer durables, he said. Optimism about the policy changes and lower interest rates has driven up steel shares in the past month. Tata Steel shares moved up 11 percent in December, the biggest monthly gain since January, while Steel Authority, the nation’s second-largest producer, jumped 12 percent. JSW Steel, which is facing an iron ore shortage at its main factory in South India, increased 9.3 percent in the period. Tata Steel and Steel Authority don’t face raw material shortages because they own iron ore mines. What to watch out for in 2013
With the industry vouching for a 7-10 percent growth in 2013-14 and if the working group on steel estimates of 10.3 percent demand in the Twelfth Plan period are to be believed then by the terminal year of plan period the country’s steel demand is expected to be around 113 mt by 2016-17. This would require a crude steel capacity of 142 mt by 2016-17 and likewise requirement of raw material inputs. However, all the estimates depend on the: ♦♦ Actual extent of land already acquired for the new units; ♦♦ Availability of investible funds with the respective enterprises to support the planned increase in existing capacity; ♦♦ Availability of infrastructural network at the project site; and ♦♦ Availability of key raw material linkages. Therefore, in 2013, a few projects require utmost attention apart from new ones if any that may come into effect during the period.
Estimated Demand and Capacity Creation (in million tons) S. No. 1.
Item
2010-11
Demand for Carbon Steel
Unit
2.
Demand for Alloy/Stainless Steel
3.47
5.0
Total Domestic Demand for Steel
65.61
113.3
4.
Net Export
5.
Production (net of double counting)
(-)3.34
2.0
62.27
115.3
6.
Category-Wise Consumption (Carbon Steel) Total Long
31.16
54.3
Total Flat
30.99
54.0
Total Carbon Steel
62.14
108.3
-
142.3
78.0
149.0
7.
Total Requirement of crude steel
8.
Likely Capacity of Crude Steel
Source: Steel Working Group
These include the final commissioning of Tata Steel’s capacity expansion project in Jamshedpur to 9.8 mt and the progress of its erection work at Kalinganagar, Gopalpur and Saraikela. The second project that needs attention is that of SAIL, which plans to reach a 17-18 mtpa capacity levels in 2013 to its ultimate level of 21 mt capacity expansion plan. In November of 2012, the environment ministry approved a plan for a JSW Steel unit to raise capacity by 67 percent to 5 mt and build an adjacent pellet facility. Parent JSW Steel plans to triple capacity to 40 mt by 2020. It needs to be seen how the private sector steel with low raw material securitisation levels plans its expansion. JSW Steel and Japan JFE Steel’s collaboration on technology for nonoriented electrical steel sheets (CRNGO) at its Vijayanagar plant is a welcome step. By leveraging JFE Steel’s well-established manufacturing technology for electrical steel, shall produce CRNGO grade electrical steel and supply to its customers, including local companies as well as Japanese, European and
Estimated Estimated Consumption 2011-12 Consumption 2016-17
Additional Requirement by 2016-17
Coking Coal
Million Tons
43.2
90.2
47.0
Non-coking Coal
Million Tons
35.3
28.4
-
Iron Ore
Million Tons
115.0
206.2
91.2
Natural Gas
MMSCMD
7.2
13.541
6.341
Ferro Alloys
In ’000 tons
2152
3673
1521
Refractories
Million Tons
1.29
1.97
0.69
26 Steel Insights, January 2013
108.3
3.
Estimated Requirement of Raw Materials and Other Inputs by 2016-17 Input Materials
2016-17 62.14
US-affiliated companies doing business in India. This will make import of electrical steel sheet products redundant JSW Steel shall be in a position to cater to fast growing consumer and industrial applications market. JSW Steel plans to start up its new annealing and coating line for electrical steel sheets in latter half of 2014. The initial annual output is projected to be 200,000 tons, which will be increased to 0.6 mt per year in phases. The company will also take sight on the production of Cold Rolled Grain Oriented (CRGO) grade in future. Implemented in phased manner, JSW envisages becoming the largest Electrical Steel Producer in the country. Similarly, Essar Steel’s announcement of sizeable orders from Middle East and Africa for manufacturing of API (American Petroleum Institute) grade steel pipes worth `400 crore is a welcome step and shows how the Indian steel mills are maturing and adopting newer technologies to gear up for the future. This takes the total order book of the pipe mill to approximately `1000 crore indicating strong order inflow for the company. However, all said and done it is imperative for the country to resolve its iron ore crisis by making the closed mines operational and by giving faster environmental clearances for new mining areas, said an industry expert. Apart from adopting newer technologies for special grade steel, the country should concrete steps to beneficiate iron ore and set up pellet plants for much higher use of the steel making raw material, said a Mumbai based analyst.
interview
Only steel demand recovery can help sponge iron sector: Monnet Ispat Sanjukta Ganguly
W
ith overcapacity and skyrocketing input prices playing havoc with the sponge iron industry throughout the country, these are tough times for the manufacturers. Amid such sluggish market conditions, only change of policies can provide some ray of hope, said senior vice president, marketing & corporate affairs, Monnet Ispat & Energy, Amitabh S. Mudgal, in a candid interview to Steel Insights. Excerpts: India produced 22 million tons of DRI in 2011, a drop of 1.45 mt or 7 percent from 2010. But the country still remains the world’s largest producer by a wide margin. What are the main factors for the drop in production? What will be the production in 2012? The Indian sponge iron industry witnessed continued growth in the last decade. It has grown at a CAGR of 16.5 percent between 2004 to 2010 while the growth in the world has been at 4.31 percent only during the same period which led to a major difference in the DRI production year by year. Today India is contributing about 33 percent to the world’s total DRI production of 73.32 million tons (mt) at 21.9 mt, followed by Iran’s 10.37 mt and Mexico’s 5.85 mt in CY 2011. This tremendous growth was mainly because of abundant availability of iron ore and non-coking coal along with the demand for finished steel in India. The DRI industry in India, however, is now at a critical juncture. The industry has
28 Steel Insights, January 2013
been adversely affected by non-availability as well as rising price of raw materials like iron ore, coal and gas. Also, the demand for finished steel has dropped and is not able to keep pace with the rising cost of inputs, putting negative pressure on the bottomline. We expect to close CY 2012 at approximately 18 mt only. What is India’s current DRI production capacity? How much of the production capacity is being utilised at present? What are the reasons for current low capacity utilisation? The current DRI production capacity in the country is 35.3 mt while the utilisation is about 60 percent in 2011-12, down from 66.56 percent in 2010-11. As I already mentioned, non-availability of iron ore, noncoking coal and gas resulted in depressing performance of sponge iron plants. The recent closure of iron ore mines in the states of Karnataka, Goa and Odisha, has been the proverbial nail in the coffin. As per information available, 80 percent of the sponge iron units are closed in the state of Karnataka only. Similarly units in other states are also suffering from raw material scarcity, price rise and sluggish market.
Any technology which can use iron ore fines as direct feedstock should be encouraged. More R&D should be done in uses of fines and inferior grade coal.
What is the current cost structure for coal based and gas based producers? The cost of sponge iron is directly proportionate to the landed cost Amitabh S. Mudgal, Sr. VP, of iron ore and Marketing & Corporate Affairs, coal/gas being Monnet Ispat & Energy used. The cost structure differs, depending upon various factors like source of raw material – captive/imported, quality and quantity of raw material and distance from mines and the port. Some small kiln producers are using iron ore fines and low grade coal. Their cost will be very low compared to an established plant using lumps and good grade of coal. Government restrictions made iron ore and natural gas supplies to the sponge iron sector difficult. Do you agree? Yes, there is an acute shortage of raw material. Sponge iron producers are dependent on the private miners or PSUs like NMDC and OMC for supply as most of them are not allotted captive mines and are compelled to pay high prices. Today all the coal and gas based plants are suffering from non-availability of iron ore. Private mines production in Karnataka, Goa and Odisha have dropped significantly while PSUs like NMDC continue to focus on their long term export commitment. OMC in Odisha has restrictive sale quantity for within and outside the state. Coal as we all know is in short supply and only 50 percent of FSA quantity is made available to sponge iron producers. In case of natural gas, the government has given priority to the power and fertiliser sectors. Further these units are unable to use imported LNG because its prices are four times higher than the prevailing domestic prices. What are the main problems being faced in procurement of coal or gas? Sponge iron is not in the priority list of the government of India. Coal is allocated by the way of captive blocks/linkages and
interview companies which do not have captive source or FSA are bound to use imported coal. Recent policy changes in Indonesia to encourage domestic uses and depreciation of the rupee has restricted the option of imported coal too. Similarly, gas based units are also not able to utilise the installed capacity and are operating at 53 percent level, as the government has cut the supply of gas to 1.86 MMSCMD from assured supply of 5.46 MMSCMD from D6 of Krishna Godawari basin and diverted it to the power and fertiliser sectors. India has become the leading producer of DRI over the past decade due to production in a large number of small coal based rotary kilns. However, the need for better quality DRI is driving shaft furnace alternatives such as MXCOL® and Corex/Midrex. Do you agree? By all means we must encourage new technology to make the process fast and more economic without compromising the quality. Present technologies available are also competent enough to produce good quality DRI though they are restrictive in terms of use of iron ore fines that are abundantly available. Any technology which can use iron ore fines as direct feedstock should be encouraged. More R&D should be done in uses of fines and inferior grade coal.
It is also said that coal-based sponge iron has some inherent disadvantages like high phosphorus that affects the quality of steel. What is being done or should be done to overcome this problem? It will not be appropriate to say that coalbased sponge iron has disadvantage of high phosphorus. The phosphorus content in DRI is totally dependent on the quality of iron ore being fed in the kiln and not on the process itself. More and more iron ore beneficiation plants is the requirement of the day to reduce phosphorus content in iron ore feed into the kiln. With smaller amounts of natural gas anticipated for industry use, coal-based technology options are currently being pursued by a few India steelmakers. What is the status of these projects? Currently India has 25.79 million tons (mt) of coal-based and 9.6 mt of gas-based installed capacity of sponge iron. The gasbased route of production has remained confined to the existing three units only due to non-availability of gas, and since there is no new source of gas, the growth of gasbased plants is not expected and we are left with the coal-based route only. Many new projects of 1-3 mt capacities of steel like Bhushan, JSPL and Monnet have come up using DRI and hot metal route.
What are the prevailing domestic market prices? Where are the prices headed currently? Is production growing or receding? Currently the prices stand at `20,000 per ton ex works and are at rock bottom. Any improvement in finished steel demand cycle will enable price to improve. Does your company have any expansion plans? Monnet Ispat & Energy Limited (MIEL) is India’s second largest sponge iron manufacturing company with an annual production of 1 million tons per annum (mtpa) from its ISO 9001-2000 certified integrated plants at Raipur and Raigarh in Chhattisgarh. Our BF & EAF are getting commissioned now at Raigarh which will increase the steelmaking capacity of the group to 1.8 mtpa in 2013-14. A greenfield unit is coming up at Angul, Orissa that will ramp up the steelmaking capacity to 3.5 mtpa by 2014-15 through DRI and hot metal route. What do you think would be a long-term solution to your problem and that of industry in general? There has been so much of political hue and cry on the issue of FDI in retail. While FDI is a welcome step, we as a country are ignoring that we are actually losing a big chunk of foreign exchange in terms of cost of imports. While India has the fourth largest coal and fifth largest iron ore reserves in the world, we still import about 100 mt of coal in 2011-12. The total expenditure incurred on import of coal during the last three years is $32 billion. Similarly we have imported 20 mt steel in the last three years with an outgo of $17 billion. The time has come for our ‘thinktank’ to plan policies which can be implemented in synergy with the states to augment growth of industries. We must immediately open our mining industry. It will not only attract FDI but will increase production, thereby making raw materials available in abundance at a much lower price and will also stop the outgo of foreign exchange on account of import.
Steel Insights, January 2013
29
feature
Iron ore shortage hits medium, small steel companies Steel Insights Bureau
T
he shortage of iron ore continued to hit steel companies in the small and medium segments in December. According to recent data by the steel ministry, finished steel production grew by 3.4 percent in the April-November period to 49.98 million tons (mt) with production by major producers like RINL, Essar and JSPL declining during the period. Many companies are operating at 6065 percent capacity and given the demand they should ideally operate at 80-85 percent. But iron ore shortage is holding them back, industry sources said. Meanwhile, Odisha has decided to reserve 50 percent ore for domestic industries. The Odisha government's latest diktat on reservation of ore for domestic users has added to the woes of companies in eastern and central India. While the clampdown in Goa has hit exports, those in Karnataka and Odisha have primarily hit domestic steel players. The woes are not restricted to availability alone; an overall shortage in the market has raised prices. Lump ore prices range between `4,500 and `7,500 a ton, while globally, prices are hovering at $125 per ton, sources said. The government's bid to curb illegal mining has resulted in a steep fall in iron ore production. From 208 mt in 2010-11, production is expected to fall about 100 mt this year. Provisional figures from the Indian Bureau of Mines indicate production during April-October stood at 92.1 mt, down from the 113.7 mt India produced over the same period last fiscal year. The fall in ore output was due chiefly to the bans on mining in the southern states of Karnataka and Goa, and restrictions on mining in other states such as Odisha in eastern India. SAIL and Tata Steel are insulated from
30 Steel Insights, January 2013
raw material shortage, as these companies have captive mines. JSW Steel, which has a plant in Karnataka, has seen its production rise 23.7 percent. A company official, however, said while capacity had increased to 11 mt this year from 7.8 mt, the plant was running at lower utilisation, owing to increased capacity. Currently, JSW Steel’s capacity utilisation stands at 70 percent. According to the Karnataka Iron and Steel Manufacturers' Association (Kisma), at 80-85 percent capacity utilisation, the total iron ore requirement of the iron and steel industry in the region is about 33 mt a year. The association claims on an average, integrated steel plants are running at 68 percent capacity, while sponge and pig iron units are running at 27 percent and 21 percent, respectively. Among the major producers, Essar Steel saw a decline of 4.4 percent in production, while JSPL saw a 6.8 percent fall. Rashtriya Ispat Nigam's production fell 5.9 percent. However, this was due to factors other than raw material shortage. “Andhra Pradesh has been going through a severe power shortage, which affected RINL’s plant. However, it’s likely to ease in November,” industry sources said. Ban impacts India’s position
The ban is the second by India’s Supreme Court following the one in 2011 in Karnataka that began eroding the nation’s credibility as a supplier, shoring up prices for the ore and handing additional sales opportunities to companies such as Rio Tinto Group Plc (RIO) and BHP Billiton Ltd (BHP), Australia’s two biggest iron ore exporters to China. Shares of BHP Billiton, Rio Tinto and Fortescue Metals Group, Australia’s thirdbiggest exporter of the ore, jumped 2-5 percent in the last five months. Australia supplied 318 mt, or 47 percent of China’s imports in the first 11 months of
last year, up from 43 percent in 2011 and about 35 percent in 2007. India exported 33.1 mt in the first 11 months, for a 4.9 percent market share, down from 11 percent in 2011 and 21 percent in 2007, industry analysts said. ‘Unstable supplies’
Indian supplies are often unstable with the export bans imposed by the government. Chinese buyers bought a lot from India in 2008-2009, now they use Australian and Brazilian supplies instead. The shortage hit several steelmakers. JSW Steel Ltd cut output to 30 percent of capacity at its biggest plant in 2011. It has since increased production to 70 percent after the court allowed auctions of stockpiled ore. Tata Steel Ltd. (TATA) and Steel Authority of India Ltd. (SAIL), the nation’s two biggest producers, have their own iron ore mines. Investigations by the Justice M.B. Shah Commission of Inquiry, appointed by the federal mines ministry, said companies in Goa exported about $6.4 billion of illegally mined ore. The Supreme Court, which began hearing the Goa government’s plea to lift the ban on December 7, will likely resume proceedings at the end of January. As supplies from India fall, China’s demand continues to grow. The country’s iron ore imports, estimated at 718 mt in 2012, may climb to 770 mt this year, industry feels. Expanding probe
The Shah Commission is now broadening its probe, surveying mines in Odisha, where a concerned state government has stopped issuing transport permits for mines that produce ore for trading, That has led to mines stopping work and supply shortages for steel mills. Karnataka and Goa, two of the three biggest iron ore producers in India, accounted for 37 percent of the country’s peak output of 218.6 mt in the year ended March 2010. Production fell to 169.7 mt last fiscal, the lowest in six years. The bans are forcing India, which has enough iron ore reserves to meet its needs for at least four decades, to import the material. Imports may reach a record 5 mt in 2012 as companies such as JSW Steel and Essar Steel Ltd. seek supplies, analysts feel.
feature
Karnataka steel mills urge opening up of ore mines Steel Insights Bureau
T
he Karnataka Iron and Steel Manufacturers’ Association (KISMA), a body of steel and pellet makers from Karnataka, has urged the Karnataka government to expedite the process of opening up of Category A and B mines in the state to ensure regular supply of iron ore to the ore-starved industry. A KISMA delegation led by Vinod Nowal, director and CEO, JSW Steel, met Karnataka chief secretary S.V. Ranganath and Union Steel secretary and submitted a representation seeking early resumption of mining and redressal of several other issues. The delegation has urged the state government to facilitate allocation of captive
An iron ore mine at Bellary, Karnataka
mines, long-term linkages to the steel industry and expedite resumption of the mining operations at the earliest. It has also sought expedition of resumption operations of remaining Category A mines and opening of Category C mines. The Supreme Court has permitted opening of Category A and A1 mines in April 2012. However, till date, only three mines have resumed operations with a permissible annual production of 1.4 million tons (mt). “Opening of Category B mines is very vital for the steel industry in this region whereas road map for opening the Category B mines is absolutely unclear. Also it is necessary to expedite the process of renewal of expired leases,” KISMA said in its appeal to the government.
Though Supreme Court allowed NMDC to produce 1 mt per month, it could never achieve so much in any month so far. Instead, its production has further come down to around 450,000 tons in October 2012 though its lumps e-auction prices almost doubled. With the current production from NMDC mines will not exceed 20 mt as against the industry requirements of 33 mt, KISMA said. “In view of above when NMDC is not able to produce as permitted and stockpiles are exhausted and category ‘A’ mines have not yet resumed operations, the future of Iron and Steel industry in Karnataka region is very grim and bleak and more steel plants will close down in coming days if iron ore is not made available to meet its day to day requirement,” the appeal said. Out of the total 13 mining leases cleared by CEC, only 11 leases can resume the mining operations. As on date, only three mining leases with the annual permissible quantity of 1.40 million ton have resumed the mining operations. Out of category ‘A’ mines cleared by CEC, seven mining leases are yet to start the mining operations having the annual permissible production of 3.16 mt. All these leases are awaiting approval of the mining plan by IBM (which is under various stages of processing). Subsequent to approval of the mining plan, the leaseholders will have to get the consent to operate from the Karnataka State Pollution Control Board and submit the details of all the statutory clearances to the Monitoring Committee for permission to resume the mining operations, KISMA said.
Steel Insights, January 2013
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feature
Pelletisation: in high demand
Essar plant at Paradip
Steel Insights Bureau
E
ver since the cost of calibrated ore has shot up, the steel industry has started looking for various alternatives to sustain market conditions. Utilisation of low-grade iron ore and generated iron ore fines through pelletisation route are being considered as some of the efficient alternatives by experts. Pellets are superior feed material compared to calibrated ore and have the following benefits over the latter: ♦♦ Utilisation of waste ore & lean ore as cheaper & abundant raw material; ♦♦ Higher tumbling index and low abrasion index; ♦♦ Good porosity; ♦♦ Better reducibility; ♦♦ Choice of size; ♦♦ Built-in flux; ♦♦ Higher bulk density compared to sinter; ♦♦ Improved productivity; ♦♦ Reduced coal consumption; ♦♦ Use of magnetite ore in DRI kiln.
32 Steel Insights, January 2013
The profitability of pelletisation can be established by simply converting the above mentioned advantages into monetary benefits, according to industry experts. For projects above 2 million tons per annum (mtpa) capacity, proven technology for hematite ore pelletisation is readily available from western world and few plants are already operating successfully in India. For smaller plants many Indian entrepreneurs have been looking at Chinese suppliers and evaluating various technologies available in China, where hundreds of similar plants are operating, however, under very different circumstances. This is also the primary reason that pelletisation plants could not come up as envisaged. India’s situation is quite different from that of the Chinese pelletisation industry and the Chinese technology and design institutes are still in the process of establishing the knowhow for pelletising hematite ore. In China, the feed material to almost all plants is magnetite ore concentrate fines available from mining companies and pelletisation of magnetite ore is easier. Also, almost all the
Chinese pellet plants are located in the blast furnace area, and they use blast furnace gas as main fuel. The demand and supply has changed the scenario of availability of quality ore fines. Three to four years back generated quality ore fines of above 63% Fe grade were considered and identified as typical feed material for pellet plants. In the last four years, the demand of the fines from overseas has been so high that both price and availability of this quality have become questionable. Most entrepreneurs today looking at setting up small and medium size plants have realised that pelletisation projects have to be planned on low-grade iron ore below 58% Fe. This can only be achieved only after beneficiating low grade ore, and that has made beneficiation process an important issue. However, industry has to find more efficient and cost effective methods to utilise tailings rather than dumping. Since most of the pellet projects under consideration are going to be independent units or part of DRI plants, the selection of economical and efficient energy source is an important issue like oil, gas, imported low ash coal, indigenous low ash coal, producer gas etc. The economics of use of these fuels is very much dependent on the process technology used and the location of the plant. Major elements of comparison between the China and India lies in that India’s requirement of pellets are mostly for sponge iron application that too in rotary DRI kilns. Therefore, the quality of pellets for use in rotary DRI kiln need not be the same as blast furnaces requirement. There are several process technologies and systems available for iron ore pelletisation. The selection of right technology for a particular situation can make lot of difference in every respect. Following are the various technologies adopted for pelletisation: ♦♦ Vertical shaft kilns of capacity 33,000 to 600,000 tpa; ♦♦ Vertical shaft kilns inclined and circular cross section for capacity 200,000 to 700,000 tpa; ♦♦ Travel grate, rotary kiln & circular cooler for capacity 200,000 to 5,000,000 tpa; ♦♦ Integrated pellet and DRI plant for capacity 60,000 tpa – Disposal of
feature Major Pellet Plants in India Name of the plant
Capacity (MMTPA)
Essar Steel*
14.0
JSW, Toranagallu
9.2
JSPL, Odisha
4.5
KIOCL, Mangalore
3.5
Mandovi Pellets, Goa
2.5
Bharat Mines, Karnataka
1.2
Tata Steel (under commissioning)
6.00
BRPL (Stemcor - Under commissioning)
4.00
Bhushan steel & Power (under construction)
4.00
slimes Fuels Selection of pellet quality Technology selection for pelletisation has 270,000 tpa; ♦♦ Steel belt sintering technology for capacity 80,000 to 2 million tpa; ♦♦ Long Straight Moving Grate for capacity - in practice preferred for 2 mtpa and above; ♦♦ Batch processing kilns for very small capacity. Now improved process technique is available where the heat requirement is as low as 120 – 130 K Cal/Kg. It is also possible to make an integrated pellet and DRI plant where the project cost and energy consumption is reduced drastically. Pellet making capacity
India’s current pellet capacity is around 3036 mt and it is likely to go up to 50 mt in another one or two years. India is targeting pellet capacity of 80 mt by 2015-16. This includes capacities of Essar (12 mt), Tata (4 mt), BRPL (4 mt), Shyam Siel (1-1.5 mt), Bhushan (2 mt), Abhijeet Group, JSW (5-9 mt) and MSP (1.2 mt), according to industry experts.
Experts feel along with pellet capacity the country needs beneficiation capacity to properly use iron ore.
India is targeting a pellet capacity of 80 mt by 2015-16, according to experts and this includes capacities of Essar, Tata, BRPL, Shyam Siel, Bhushan, Abhijeet Group, JSW and MSP. However, industry experts said most of the pellet plants are coming up without any beneficiation capacity. Only Essar has 12 mtpa beneficiation plant in Dabuna – within close proximity of major mining sites. This will help the project to use low grade iron ore fines that are unused and not easily consumable and keep the environmental impact to a minimum with the use of slurry pipeline. SAIL, Tata and OMC mines have also planned their mines operation with cut off at 56 percent Fe content. According to rough estimates, around 200 mt of low grade iron ore are lying in dumps and cannot be utilised because of lack of beneficiation technologies. Therefore, experts feel along with pellet capacity the country needs beneficiation capacity to properly use iron ore. Outlook
According to industry experts, steel mills dependence on pellets as a raw material is set to increase manifold in the next two-three years, due to shortage of high-grade iron ore in India. About 70 percent of steel production capacity would depend upon pellets as the only source of raw material in the next two years. Currently, 55 percent of steel is produced through pellets in the country. In terms of crude steel production, all captive mills are now setting up their pellet plants and their utilisation ratio for pellets is close to 70 percent on an average. Essar and JSW have nearly 100 percent utilisation capacity of iron ore fines after being converted into pellets. Steel Authority of India Ltd (SAIL), Tata Steel and Rashtriya Ispat Nigam Ltd are at 75-80 percent. SAIL
and RINL would, in due course, get their own pellet plants. So would NMDC, for the same reason. The importance of pellets have also increased manifold because of lack of lumps (high grade of iron ore, with over 63 percent of iron content) since the Supreme Court suspended excavation of iron ore in Karnataka, followed by investigations on existing mines in Goa and Odisha, as per market insiders. Consequently, independent steel mills that were using only high-grade lumps for manufacturing steel have reduced their capacity utilisation. Independent mills do not have integrated iron ore mines’ support and, hence, depend on the open market for raw material procurement. Large steel mills, in contrast, enjoy the backing of ore mines and did not face a supply squeeze. In the absence of mining activity, the availability of lumps remained an issue. Due to the government’s sudden increase in export duty to 30 percent and rail freight charges almost 10 times higher for exports than local charges, shipment has become unviable. Consequently, low grade iron ore continues to be available to the tune of around 150 million tons, produced and stocked before suspension of mining in various states, sources said. To utilise this stockpile, steel mills are expanding through backward integration, by setting up pellet plants to convert it into pellets with around 95 percent of iron content. Meanwhile, the demand for pellets has increased from steel mills, resulting in its price rising uninterruptedly. This is likely to continue, on rising steel production. India’s crude steel production is estimated to increase to 95 mt by 2015. This indicates close to 100 mt of iron ore would be required for active production, taking into account utilisation capacity at 60 percent and direct crude steel production from fines and lumps at 70 percent. The dependence of the direct steel sector on pellets has also been increasing, following a majority of captive steel plants setting up their own pelletising facilities. Also, the mills’ dependence on sponge iron has increased from less than 20 percent in 2010 to more than 45 percent in 2012. Analysts forecast their dependence on sponge iron to rise to over 65 percent in the next two years.
Steel Insights, January 2013
33
feature
Spot coking coal prices ease in December Steel Insights Bureau
S
pot coking coal prices marginally eased in December as the market in China and India remained quiet with lack of significant movement in demand, according to market sources. There was low demand in China as mills sought to avoid cargoes arriving during national holidays in early February, sources said. Traders found it difficult to sell cargoes because of the buying reluctance in China. Market participants are waiting until after the Chinese New Year. Some sources said healthy stock levels at Chinese ports could dampen appetite for cargoes even after buyers return from their holidays. However, the steel production outlook was generally positive in China. Premium low-vol HCCs traded at around $159.60 per ton fob Australia on December 28, down from $161per ton fob on November 30. However, semi soft prices firmed up to around $117 per ton fob on December 28, up from $110.50 per ton fob on November 30.
34 Steel Insights, January 2013
In India, there are reports of an offer for Mozambique mid-vol HCC at Rs 9,500/ton ex-stock, equating to $168 per ton cfr India. However, there was no confirmation of any transaction taking place. Sources say in India the reality on the ground is that there is no visible change in demand and prices. Q1 contract at $165/ton
Leading miner Anglo American has settled both hard coking coal and PCI coal contracts with South Korean steelmaker Posco for the first quarter of 2013 at $165 per ton and $124 per ton respectively, industry sources said. “The contract price for Q1 of 2013 is slightly lower than Q4 2012 contract price of $170 per ton for hard coking coal and $125 per ton for PCI,” the sources said. Earlier, BHP Billiton-Mitsubishi Alliance had settled hard coking coal contract deals with Nippon Steel and other steel makers at $165 per ton. In October-December quarter, BHP Billiton-Mitsubishi Alliance has signed coking coal contract with Japan’s Nippon Steel at $170 per ton fob Australia, down $55/ ton from the Q3 2012 price of $225 per ton.
The settlement price of $165 per ton fob is the lowest since the fiscal year of 20092010, when the annual contract was settled at $129 per ton. However, it is more than $6 per ton higher than current spot prices, which is hovering around $159 per ton for premium low-vol. Met coke
Low ash metallurgical coke prices fell significantly in December on low demand and fears of oversupply because of China scrapping export tax on coke in 2013, market sources informed. Prices were quoted at $291 per ton cfr India on December 28 compared to $300 per ton cfr India on November 30. The fall in the met coke prices was mainly because of low demand from Indian steel makers, who are faced with low liquidity situation because of poor end product demand conditions. Reports that China will scrap 40 percent export tax on coke in 2013 also impacted sentiment as this will increase availability of the material worldwide and put pressure on prices. The country exported 960,000 tons of coke during the first 11 months of 2012. China’s coke production remains high at 407.36 mt for the first 11 months, which yields an annualised rate of 444.39 mt. Meanwhile, in India, coke prices hovered around `17,000 per ton ex-plant in the eastern region with few takers for the material.
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China removes 40% export tax on met coke
market, but in the international market as well as China is a very big supplier of coke to the world market,” said Nirmal Agarwal, director of Adhunik Group. “I think the price of imported met coke will fall to around $260 per ton cfr India soon from current levels of around $290 per ton cfr India,” he said. “Not only met coke prices will soften, but we assume that coking coal prices too would soften from current levels of around $157 per ton in the spot market and will also lead to softening of quarterly contracted prices in the second quarter of 2013 to around $150 per ton from Q1 levels of around $160 per ton,” Agarwal said. However, a section of industry, including coke makers, feel that market has already discounted the Chinese move and there is no further scope for fall in met coke prices. China’s steam coal demand limited
Steel Insights Bureau
G
iving in to pressure from the World Trade Organisation (WTO), the Chinese government has finally taken the decision to do away with the export tax on metallurgical coke. After initial doubts, the finance ministry released the list of export and import taxes on various products for 2013. The list was released on December 17 did not include met coke as an item. China had imposed 40 percent export tax on met coke in late 2008, as part of a broader policy to restrict export of raw materials from the country. The measure came to good use as the country exported only 960,000 tons of met coke during the first 11 months of 2012. This resulted in an annualised rate of 1.05 million tons (mt) for 2012, down 91.3 percent from that recorded in 2008. China’s met coke production stood as high as 407.36 mt for the first 11 months, which yields an annualised rate of 444.39 mt, according to customs data. In fact, so far this year in 2012-13, exports represent only 0.2 percent of China’s production. “A cut on the tax is expected, but a removal shows the government’s resolution.
China is under pressure from the World Trade Organisation and the overcapacity of the industry needs an outlet as well,” an industry analyst in Beijing said. The WTO backed claims brought by USA, the European Union (EU) and Mexico that Chinese export tariffs and quotas on a range of raw materials including bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorous and zinc broke WTO rules and distorted global markets. Talks of cutting or removal of the export tax first surfaced in August, 2008. However, WTO rulings against China’s alleged restrictions on the export of raw materials took quite long and gave it until the end of the year to act. Decision to benefit steel makers
China’s decision to withdraw export duty on met coke is expected to increase the availability of the material in the world market besides putting pressure on prices and both these will benefit steel makers, particularly those in India, an official of a Kolkata-based steel maker told Steel Insights. “The decision of China will lead to sharp fall in coke prices not only in the Indian
Meanwhile, Chinese thermal coal market remained largely inactive with no deals reported during mid-December as traders started to wind down for the holiday season amid muted demand from end-users. “Although some of our utility customers have some demand for lower calorific value Indonesian thermal coal, the downstream coal market is basically quiet at the moment,” a Shandong-based trader was quoted as saying. In fact, a Jiangsu-based trader was in the market for 5,500 kcal/kg NAR Australian or South African coal at no higher than $83.50 per ton CFR for early January delivery, according to a market report. Several traders said that availability in the Newcastle 5,500 kcal/kg NAR market was tightening, with not many cargoes on offer this month. Rather, Chinese domestic supplies are a more attractive alternative for buyers and are abundantly covering demand at the moment in China. As such, Australian sellers were still eyeing the South Korean market, where buyers’ bids were significantly higher than their Chinese counterparts at $86-87 per ton CFR, the report said. Sliding Chinese domestic thermal coal prices are making buyers hesitant to conclude deals for imported coal, according to information available with Steel Insights. Chinese buyers are still looking for cargoes but are not ready to pay above the local price, market sources said.
Steel Insights, January 2013
35
feature Provisional countrywise imports in Apr-Nov (in ‘000 tons)
India’s steel imports up 23% till November
Apr-Nov 12
Apr-Nov 11
China
Country
1203.45
1115.17
Growth % 8
Japan
825.59
553.84
49
Korea
1014.86
768.7
32
Russia
434.77
254.04
71
Ukraine
251.08
308.89
-19
Others
1847.46
1529.97
21
Total
5577.21
4530.61
23
Imports from Russia stood at 434,770 tons during April-November 2012, compared to 254,040 tons in the same period previous year. Earlier, steel imports by India was up 38 percent year-on-year in the first six months (April-September) of 2012-13, with China remaining the top sourcing destination followed by Korea and Japan. The other major exporters to India during the period were Russia and Ukraine. The steel ministry releases the revised provisional data at the month end after the release of the preliminary provisional data at the beginning of the month. HR coils/strips imports
Steel Insights Bureau
S
teel imports by India during the first eight months (April-November) of 2012-13 have increased by 23 percent to 5,577,210 tons, compared to 4,530,610 tons imported during the same period previous year, according to provisional data released by the steel ministry. China remained the top steel sourcing country for India in April-November period. Total imports from the neighbouring country were 1,203,450 tons, about 8 percent higher than 1,115,170 tons imported during the same period previous year. As per the data, China was followed by
36 Steel Insights, January 2013
Korea, Japan, Russia and Ukraine among others. The highest growth of imports was recorded for Russia, around 71 percent.
HR coils/strips made up most of the flat steel imports into India during April-November 2012, according to the data released by the ministry. Imports of the items sttod at 1,080,700 tons during the first eight months of the current year, compared to 866,200 tons in the same period previous year. This was followed by import of CR Coil/ sheets, plates, GP/GC sheet/coil and elect sheets, the data showed. Import of plates showed a high growth of 44 percent during the period.
Provisional steel production, import, export, consumption for November vs October (in ‘000 tons) Item Steel Production Import Export Availability (1+2-3) Variation in stock Apparent consumption
12-Nov
12-Oct
% Variation
11-Nov
%Variation
6220
6414
-3
5866
6
710
456
55.7
935
-24.1
458
477
-4
271
69
6472
6393
1.2
6530
-0.9
-1.1
6090
-2
5626
65
-83
6407
6476
Double Counting
562
514
Real consumption
5845
5962
440 5.2
464 3.9
feature
India’s per capita steel consumption at 59 kg India’s per capita consumption of steel has gone up to 59 kg as of 2012 from around 45.8 kg in 2007, according to Steel Minister Beni Prasad Verma. The minister said that the government has identified the rural market as one of the areas where the potential of steel consumption can be enhanced further. Accordingly, the ministry of steel has launched a campaign for popularising usage of steel in those areas. The Institute of Steel Development and Growth (INSDAG) has been frequently conducting training programmes to create awareness about the use of steel. The main producers have already established a wide network of rural dealers/distributors so as to make steel available in the remote corners of the country. INSDAG is also working on revised designs of pre fabricated/semi fabricated applications as well as increasing
India’s Nov steel consumption down, import up m-o-m
India’s steel (real) consumption fell by 2 percent month-on-month in November 2012 when compared with October, the latest provisional steel ministry data showed. The data showed that on year-on-year basis consumption was up 3.9 percent. Real consumption stood at 5,845,000 tons during Break-up of imports by items (in ‘000 tons) Product Plates HR Sheets
Apr-Nov 2012
Apr-Nov 2011
Growth %
516.6
358.6
44.1
82.1
39.4
108.38
HR Coil/Strip
1080.7
866.2
24.8
CR Coil/Sheets
1001.7
1021.5
-1.9
GP/GC Sheet/Coil
289.6
232.1
24.8
Elect Sheets
249.2
174.3
42.9
0.7
1.1
-39.1
Tin plates
97.9
76.2
28.4
Tin plates w/w
28.9
18.8
54
Tin free steel
43.7
32.5
34.4
Pipes
98.6
86.1
14.5
Total
3489.6
2906.7
20.1
TMBP
aesthetics of steel used in various projects, the minister said. INSDAG has been asked to publish brochures on the use of steel in the regional languages also in order to popularise its usage. To assess the pattern and trends of steel consumption in rural India, an all India survey was commissioned recently. A report of the study on assessment of steel demand in rural India has been received. Along with rural areas, Verma said, necessary action has since been initiated to increase and popularise consumption of steel in other areas of the country. Meanwhile, lack of support from almost all the state governments have led to shelving of the concept of Ultra Mega Steel Plants (UMSP) in the country, the minister said.
“The response from state governments on the concept of UMSP has not been encouraging. Ministry of Steel does not have any regulatory or statutory powers in this regard. It acts basically as a facilitator or coordinator. In view of the response of the State Governments, the implementation of the concept of UMSP has not been found feasible,” Verma said in a written reply in Parliament. He further pointed out that the states like Gujarat, Goa, Uttar Pradesh, Punjab, Kerala and West Bengal have not supported the concept of setting up of UMSP. The main facilities required for setting up of steel plants are land, iron ore linkage, coking coal, power and water, and these are either under the purview of other ministries of Government of India (ministry of mines, coal, environment & forests) or concerned state governments.
November 2012, compared to 5,626,000 tons in November 2011 and 5,962,000 tons in October 2012. In the AprilNovember period, (real) consumption rose 4.2 percent to 48.43 million tons (mt) compared to 46.47 mt in the same period previous year. A p p a r e n t consumption during November 2012 was 6,407,000 tons, down by 1.1 percent compared to 6,476,000 tons during October 2012, but higher by 5.2 percent compared to 6,090,000 tons during November 2011, the data showed.
Steel Insights, January 2013
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feature
Auto sector ends 2012 on weak note, expects flat growth in 2013
The low key performance of the automobile industry, meanwhile, has affected the flat steel segment in India. The cold rolled coil prices have remained sluggish on low auto sector demand and import arrivals. There has also been demand for the removal of flat steel import from Korea and Japan under the free trade agreement (FTA). Although the government did not respond to the call, the import booking for hot rolled coil (HRC) has seen a drop in recent months, primarily due to the depreciation of rupee versus US dollar. On a medium to long term scenario, the industry feels India needs to develop capacity to produce speciality steel to substitute imports by the auto sector. Sales growth
Arindam Bandyopadhyay
F
or the Indian automobile industry, the year 2012 will be best described as a dampener. High interest rates, hike in fuel costs and general economic uncertainty got the better of the discounts and promotional schemes which many of the automakers resorted to at the end of the year. While there was some response from the market to the discount schemes, it was not sufficient to give the expected boost to the topline. Barring the short spurt received from festival sales in October 2012, the year had largely seen a lackluster demand and stalled growth in domestic sales as well as exports. Most of the companies are not very optimistic about the new year too. There
38 Steel Insights, January 2013
have been reports in media on a price hike in January and this, if implemented, may result in further extension of the downbeat mood of the market. Amid such a gloomy scenario, the automakers are reportedly banking on new launches to charge up the market in 2013. Around 30 new launches are expected to hit the roads in 2013 from the stables of leading carmakers including Maruti Suzuki, Tata Motors, Hyundai, Ford, Fiat, Mercedes Benz, Nissan and BMW. Industry sources, however, remain sceptical about the impact of these launches on the overall sales performance during the year. “Unless there is a broad-based improvement in the economic climate, the automobile sector is not going to retain the high growth rates seen in recent years,� the sources said.
While December numbers showed a little jump in sales for some of the major players, overall industry figures were available till November 2012. According to data released by the Society of Indian Automobile Manufacturers (SIAM), the industry produced 1,646,495 vehicles in November 2012 as against 1,816,977 in November 2011, a decline of over 9 percent. The overall growth in domestic sales during April-November 2012 was 4.80 percent over the same period last year. However, in November 2012 overall sales grew only marginally by 1.79 percent over November 2011. Passenger Vehicles segment grew at 9.62 percent during April-November 2012 over same period last year. Passenger Cars grew marginally by 1.28 percent, Utility Vehicles grew by 61.69 percent and Vans grew by 1.04 percent during April-November 2012 as compared to same period last year. However, in November 2012 passenger car sales fell by (-8.25) percent over November 2011. Total passenger vehicles sales grew by only 3.86 percent in November 2012 over same month last year. The overall Commercial Vehicles segment registered growth of 2.73 percent in April-November 2012 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered decline at (-16.34) percent, Light Commercial Vehicles grew at 16.98 percent.
feature
Maruti November sales up 12.5%
Maruti Suzuki India Limited has sold a total of 103,200 vehicles (including 12,318 units for export) in November 2012, recording a rise of 12.5% in sales from 91,772 vehicles sold during the corresponding month of the previous year, the company said in a statement. Maruti Suzuki India’s export also rose by 38.4% in November 2012 to 12,318 units from 8,902 units in the year-ago period, the company statement said. On a year-on-year basis, during the first eight months (April-November) of the current financial year, the company’s total auto sales rose by 7.5% and stood at 732,580 as compared 681,200 vehicles sold during the corresponding period of 2011-12. Mahindra posts 18% growth
Mahindra & Mahindra Ltd. (M&M Ltd.), India’s leading SUV manufacturer, has recorded 18% rise in its auto sales numbers, which stood at 48,143 in November 2012 against 40,722 units in November last year, the company said in a release. The company’s domestic sales stood at 46,755 during the month, against 38,159
In November 2012 M&HCVs sales declined by (-33.22) percent over November 2011. Three Wheelers sales grew by 4.84 percent in April-November 2012. Passenger Carriers grew by 8.82 percent during April-November 2012 and Goods Carriers registered de-growth at (-10.28) percent during this period. Two Wheelers registered a growth of only 4.05 percent during April-November 2012. Scooters, mopeds and motorcycles
units during November 2011, recording an increase of 23%. The Passenger Vehicles segment registered a growth of 38%, having sold 24604 in November 2012, as against 17813 during November 2011, the statement added. The recently announced GDP numbers are in line with expectations and we do not foresee any immediate impact on the monetary policy. Till there is a decrease in interest rates for corporate or retail credits, financing rates will remain high for auto customers which is a cause of concern,” said Pravin Shah, Chief Executive, Automotive Division, Mahindra & Mahindra.
“However we expect interest rates to reduce during the last quarter of the current financial year. We are happy to maintain our growth trend on the back of our portfolio of products especially the Quanto which has crossed more than 12,000 bookings in just over two months,” he added. Tata Motors sales drop
Tata Motors posted a 13.43% fall in total sales, including exports, at 66,500 vehicles for November 2012, compared with 76,823 units sold during the same month a year ago.
grew by 20.06 percent, 2.92 percent and 0.29 percent respectively over same period last year. However, in November 2012 Scooters, Mopeds and Motorcycles grew by 6.64 percent, -2.15 percent and 0.05 percent respectively over same period last year. Exports
During April-November 2012, overall automobile exports registered de-growth of (-4.57) percent compared to the same
The company in a statement said that the company’s domestic sales of commercial and passenger vehicles fell to 62,354 units during the month under review, compared with 72,474 units sold during the same period a year ago. The cumulative sales for the fiscal rose to 548,168 vehicles.
The company’s commercial vehicles sales in the domestic market stood at 44,323 in November (44,732 vehicles), while light commercial vehicle (LCV) sales were at 34,828 units (28,673 vehicles). The medium and heavy commercial vehicle sales (M&HCV) fell to 9,495 units (16,064). Cumulative sales of commercial vehicles in the domestic market for the fiscal were at 342,855 units, cumulative LCV sales were at 243,543 and M&HCV at 99,312 units. The Tata group company’s passenger vehicles sales stood at 18,031 units in November, compared with 27,735 vehicles sold during the same month a year ago. Tata Motors exported 4,146 vehicles in November 2012, compared to 4,349 vehicles exported during the same period a year ago, while cumulative exports for the fiscal stood at 35,521 units (39,598 units).
period last year. Passenger Vehicles grew by 8.03 percent, while the other segments like Commercial Vehicles, Three Wheelers and Two Wheelers fell by -1.37 percent, -23.72 percent and -4.20 percent respectively. In November 2012 Passenger Vehicles segment grew by 24.24 due to growth in Passenger Cars segment, while Commercial Vehicles, Three Wheelers and Two wheelers declined by -21.50 percent, -3.65 percent and -7.29 percent respectively.
Steel Insights, January 2013
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feature
Ferro alloy prices unlikely to recover soon Rakesh Dubey
T
he weakness in ferro alloy prices in India that has happened largely due to weakness in export demand, is unlikely to recover in the next couple of months. In fact, the possibility of improvement thereafter also looks remote, an official of a leading ferro alloys maker told Steel Insights. “I don’t see prices recovering unless there is a fundamental change in demand and I do not see that happening in the next one year,” the official said. “Unless the plants shut down or production is less than the demand, I do not see any reason why the prices of ferro alloys should go up,” he said. Another official of another company felt that there could be artificial firmness in prices for a short period because of production cuts resorted to by some producers due to losses being incurred by them, but the moment the prices goes up, the closed capacities again come back to production and again prices turns soft. “In view of this, it can be said that firmness in ferro alloy prices will be seen but it will be at a low level with minor fluctuations,” he said. Already, a number of steel as well as ferro alloy plants in India are operating at much lower capacities and there are regular reports of some plant or the other – both steel and ferro alloys – slashing production. “However, the reports of cut in production have not affected the prices significantly because of lack in demand,” the official said. Weak trend persists
Most ferro alloy makers in India are currently passing through a difficult financial position because of a significant fall in prices in recent months and increase in power cost. “Most of the ferro alloy makers are operating at less than 50 percent capacity utilisation because of weak demand and low
40 Steel Insights, January 2013
prices and almost all of them are incurring cash losses,” an industry source said. Lack of demand for their products, both in domestic and export markets, coupled with a weak price trend and higher cost of power and manganese ore are primarily responsible for losses being incurred by producers. “Despite incurring cash losses, there is pressure on them to still operate because they have no other option other than to wait for opportune times,” the source said. Meanwhile, a number of Indian ferro chrome makers have increased prices during the week beginning December 24 on expectation of increased demand from China. The prices were increased marginally to around 90 cents per pound from a low of 88 cents per pound as on December 19. “However, this nominal increase is unlikely to improve our prospect because margins are wafer this or almost not there even at current levels,” the source said.
Meanwhile, the BHP Billiton has increased prices of manganese ore to $5.5 per DMT for February shipments from $5.2 per DMT for January 2013 shipments. Manganese alloys
The prices of manganese alloys is completely dependent on carbon steel and in carbon steel market everything points to a negative trend, including a low demand in China. The current price of ferro manganese (70 grade) is about $900 per ton fob while that of Silico Manganese (60 grade) is about $920 to $930 per ton, almost unchanged during the past few months. India is one of the biggest exporters of manganese alloys – Ferro Manganese and Silico Manganese – as it still remains competitive despite importing manganese ore from South Africa and Australia. The competitive advantage to Indian manganese alloy makers, despite higher
feature Indicative prices as on Dec 27 Name of Alloy
Price (in $/tn) FOB India
SiMn 65%
1050
SiMn 60%
930
FeCr
90 cents/lb
FeSi 75%
1450
Mangnese Ore
$5.5 per DMT (for Feb Shipment)
power costs, comes from cheap labour and its ability to blend imported manganese ore with domestic ore, as Steel Insights understands, even as some people feel that non-compliance of pollution norms helps them to remain competitive in the export market. But right now everything looks bleak as far as the manganese alloys market is concerned because both domestic as well as export demand is subdued. The Indian demand for manganese alloys has turned weak after the new mining laws came into force in Odisha recently. A new directive from the ministry department of Odisha where maximum iron ore is found, states that iron ore cannot be sold on merchant basis. This provision is likely to severely hamper the prospects of a majority of steel makers in India, particularly those who do not have raw material linkages. India’s 70 percent production of steel comes from unorganised sectors such as DRI plants, ingots, billets and rolling mills, and they do not have mine linkages. In such a situation, if the mines are directed not to sell their ore on merchant basis, a steel maker is not left with any option but to close down his unit, automatically bringing down ferro alloy demand. Manganese ore
The prices of manganese ore have not fallen in recent months as the leading producer, BHP Billiton, which sets the benchmark, had been rolling over the prices, although the leading miner is under pressure from consumers to cut prices. “The likes of BHP are not cutting prices because they assume that doing that will not lead to increase in sales volume in current market situation,” the official said. Chrome alloys
The situation is not much different as far as chrome alloy makers of India are concerned.
The main market for Indian ferro chrome makers is China, Japan and South Korea and the current economic situation in all the three countries is not that good. In any case, Indian companies were not sending much ferro chrome to Europe even though small quantities were occasionally sent to the US. Japan is in bad shape because of appreciation in their currency (Yen) in recent times. Since Japan is an export driven economy and since they are not been able to export, their capacity utilisation is very low or about 60-70 percent, which provides little opportunity for export from India. As far as Korea is concerned, it was doing well till the first half of 2012 and it had some plans of increasing production of stainless steel, but from the latter half of the year they started going down and their capacity utilisation too started coming down eventually. And China, which was kind of pulling the world, has also become uncertain because of the inflation problem and leadership issues. There was a bit of uncertainty as to what would be the new policy of the new government and then how long it will take the new policy to come up and whether China is now in a position to bring economic and financial packages that they had brought last time. There is not much confidence as to whether the kind of stimulus package which they had brought last time can be brought this time as well. Besides inflation and political uncertainty, China is also reportedly facing pressure on fiscal deficit front because of their economic growth, which used to move around 17-18 percent till a few years ago, has now fallen to single digit, he said. At present China is importing chrome ore as well as charge chrome from South Africa in huge quantities and the current situation is such that China has become a bigger producer of chrome alloys compared with South Africa, riding on some inherent advantages like availability of coal and coke, among others. “This (China becoming bigger producer than South Africa) has been possible because China has the advantage of being able to use low grade chrome ore. In addition, they have developed a new technology wherein they can use UG2, which is rejects from plutonium mines in South Africa,” an industry official said.
The UG2 is overburden of plutonium mining and is waste, which the Chinese have started buying and doing some sintering and using it to make ferro chrome. Because of this, to a great extent, the prices of ferro chrome are getting determined by the Chinese cost of production. “At least as per our calculation, the cost of production of China is lower by about 10 cents compared to what it used to be one year ago,” an industry expert claimed. “To my mind, the current situation in the ferro chrome market is worse than in 200809, but since it has not happened suddenly, people have not yet understood how deep the demand cut is,” the official felt. No impact of output cut in SA
A number of ferro chrome makers in South Africa had recently been forced to stop or cut down production due to lower availability of power once again from December, but that has not led to firmness in prices of the stainless steel making raw material because of continued weak demand, according to information available with Steel Insights. Because of continued availability of ferro chrome in China at a lower rate, the recent reports about cut in production in South Africa due to power shortage has not led to any improvement in prices. In spite of a sharp fall in total production of ferro chrome due to power restriction in South Africa, the overall availability of the material is still higher than the demand and as such prices have not firmed up, industry sources said. South African ferro chrome makers had been going for production cut or production stoppage earlier also, but that used to be once in a year and that was considered normal, but this time they have done this twice in a year. South Africa is a power deficit country and thus its main power generator – Eskom – used to ask power guzzling industries like Ferro Chrome to stop production and pay some monetary compensation. But that used to happen in their winter months as power requirement during winter months in South Africa goes up. However, this year, Eskom has asked ferro chrome makers to stop or cut production earlier between June and August and then again they had done so in December.
Steel Insights, January 2013
41
feature
Tata Steel branded SiMn taps 10-12% market share Steel Insights Bureau
T
he Ferro Alloys and Minerals Division (FAMD) of Tata Steel Ltd, which had in August 2012 forayed into branded Silico Manganese (SiMn) production – Tata SilicoMag – has so far managed to tap around 10-12 percent of the entire domestic market, an industry source claimed. “The company is selling around 100125 tons of its branded SiMn per month at present, which is around 10-12 percent of the current official market volume of about 1,000 tons per month,” the source said. The FAMD when it launched the product had set a target to tap at least 25 percent of the market share in branded SiMn. The domestic market of SiMn was estimated to be around 2500 tons per month when company had decided to enter the market with their branded products, but since the launch, a large number of steel makers, especially in the non-integrated steel plant (non-ISP) segment, had reduced their production in view of weak market conditions. “In view of the fact that some of the customers, whom the company had started selling its branded SiMn, are not producing as per earlier plans, FAMD’s sales too had not grown as per expectation,” the source said. In the latest mapping, the market size of SiMn was estimated to be not more than 1000
42 Steel Insights, January 2013
tons per month. “If one looks that way, then in three months, garnering 10-12 percent market share is not bad,” the source added. According to him, the FAMD is getting repeat buyers for its customised SiMn that comes with restricted carbon, sulphur and phosphorus and is being manufactured at outsourced plants at Durgapur in West Bengal, which is the main belt as far as rebars, billets and ingots are concerned and also the production centre for ferro alloys in eastern India. Meanwhile, a section of SiMn traders, based out of Kolkata, complained that FAMD has severely impacted their market volumes. FAMD of Tata Steel has a manganese alloys plants in Joda, Odisha and it has also some out with exclusive conversion agreements with some other units. In November, it was reported that Tata Steel had taken up two ferro alloy plants – Sonic Ispat and Ispat Damodar – from Haldia Steels Ltd for doing conversion. Regarding these two plants, the source said that Tata Steel has entered into a full, exclusive conversion agreement for three, initially for one year but extendable for another two years, with Sonic and Damodar. As per the agreements, Tata Steel officials are present at these two plants and take responsibility of planning the production and despatches and is monitored by SAP, while the raw material is supplied by the company. According to information available with Steel Insights, the total ferro chrome production capacity of Tata Steel is currently pegged at around 240,000 tons, including 130,000 tons of outsourcing through conversion and 110,000 tons on its own. It also makes around 170,000 tons per annum of manganese alloys (FeMn and SiMn), of which 120,000 tons is outsourced while 50,000 tons is manufactured at their own plant. Of the total production of
manganese alloys, around 84,000 tons is used for captive consumption in India while around 24,000 tons is sent to overseas subsidiaries, including 8,000 tons to its Thailand subsidiary NatSteel. The balance of about 4,000 to 5,000 tons is sold in the domestic as well as export markets in the ratio of 50:50. Tata Steel had earlier announced plans to set up ferro alloy plants in Nayagarh (manganese alloys) and Gopalpur (ferro chrome), both in Odisha. The Gopalpur plant will ultimately have a capacity to produce 255,000 tons of ferro chrome in two phases (55,000 tons in first phase) and it would probably be the biggest single location plant in Asia. The construction of the first phase of Gopalpur is likely to start as soon as all the equipment has arrived and the company has received environmental clearances for the project. Preliminary jobs for site clearances are underway at Nayagarh. Accordingly, 55,000 tons of ferro chrome and silico manganese each are expected to be operational in Gopalpur and Nayagarh respectively by 2014. Post completion of new projects, Tata Steel’s ferro chrome making capacity will double to around 500,000 tons per annum and that of silico manganese is likely to go up to 110,000 tons per annum. According to information provided on the company’s website, FAMD is the market leader of chrome in India and is among the top six chrome alloy producers in the world, with operations spanning two continents. It is also the leading manganese alloy producer in India and is a leading supplier of dolomite and pyroxenite. FAMD produces and supplies charge chrome, high carbon ferro chrome, high carbon silico manganese, high carbon manganese, chrome concentrate, pyroxenite and dolomite. FAMD operates the largest chromite mine and the largest reserves of high grade manganese ore in India. It has state of the art chrome beneficiation and ferro alloy plants in Bamnipal, Joda and Attaghar, Cuttack (as a wholly owned subsidiary, TS Alloys Ltd. ) besides rendering marketing services for Tata Steel Kwa Zulu Natal Pty Ltd. (TSKZN – a Subsidiary of TSL in Richards Bay, South Africa). In 2011-12, FAMD achieved year-onyear growth of 17 percent in ferro alloy sales. Going forward, there are plans to augment the production of ferro alloys.
Corporate
JSW Steel-JFE pact for CRNGO production tech
JSW Steel crude steel output at 6.03 lakh tons in Nov JSW Steel Limited’s monthly crude steel production stood at 6.03 lakh tons in November 2012. The break-up of production is as follows: Production
Product
Aerial view of JSW plant
Steel Insights Bureau
I
ndia’s leading steel maker JSW Steel Ltd, belonging to the `60,000-crore JSW group, has signed a joint venture agreement with Japan’s JFE Steel Corporation, whereby JFE will provide technology for the production of nonoriented electrical steel sheets (CRNGO) at the JSW’s Vijayanagar plant in Karnataka, according to information available with Steel Insights. By leveraging JFE Steel’s well-established manufacturing technology for electrical steel, JSW will produce CRNGO grade electrical steel and supply to its customers, including local companies as well as Japanese, European and US-affiliated companies doing business in India, JSW said in a statement. The electrical steel sheet products are primarily imported into India due to technological constraints and JSW Steel shall be in a position to cater to the fast growing consumer and industrial applications market. JSW Steel plans to start up its new annealing and coating line for electrical
steel sheets in latter half of 2014. The initial annual output is projected to be 200,000 tons, which will be increased to 0.6 million tons per year in phases. The company will also take sight on the production of Cold Rolled Grain Oriented (CRGO) grade in future. Implemented in phased manner, JSW envisages becoming the largest Electrical Steel Producer in the country. JSW Steel is engaged in manufacturing of flat and long products such as HR coils, CR coils, galvanised/galvalume products, colour coated products, auto grade/white goods grade CRCA Steel, bars and rods. In fact, the company has one of the largest galvanising and colour coating production capacities in the country and is the largest exporter of galvanised products with presence in over 100 countries across five continents. JFE Steel Corporation, one of the world’s leading integrated steel producers, which was established through the consolidation of NKK Corporation and Kawasaki Steel Corporation in 2003, operates several steelworks in Japan and numerous branch offices and affiliates throughout the world. JFE Steel leverages world-class technologies
Nov’12
Nov’11
Growth
Crude Steel
6.03
6.01
Rolled Products: Flat
5.15
4.28
20%
Rolled Products: Long
1.67
1.29
30%
The company had shut down one of its Corex furnaces for capital repairs and capacity enhancement in October, which is expected to resume operations in January 2013, a company statement said. The capacity utilisation for the balance units has come down to around 70 percent at Vijayanagar works due to acute shortage and inferior quality of iron ore in e-auctions. In fact, the company expects availability of iron ore to improve on commencement of mining in all category “A” Mines (four mines in category “A” are operational) and increase in production from NMDC mines (currently producing only 450,000 tons per month), the statement further added. and know-how to produce a wide range of products based on its ‘Only One, Number One’ strategy of focusing on unique and bestin-class products. The company reported consolidated sales of 2,714.477 billion yen (US$ 29.609 billion) and consolidated crude steel output of 29.24 million tons in the fiscal year ended March 2012. In fact, JFE Steel owns a 16.17 percent share in JSW Steel Limited, an equity-method affiliate, the company statement added.
Steel Insights, January 2013
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Corporate
RINL commences work on captive power unit Steel Insights Bureau
R
ashtriya Ispat Nigam Limited’s (RINL) Visakhapatnam Steel Plant (VSP), a leading steel manufacturing company of India, has commenced the structural erection work, equipment erection of Boiler and other civil works at the company’s 120 MW Blast Furnace gas based Captive Power Plant-II as part of its 6.3-mtpa expansion project, according to information available with Steel Insights. According to a company statement, A.P. Choudhary, CMD of RINL-VSP, recently launched the works related to the power plant being built at an estimated cost of `677 crore. This is a unique power plant which will utilise 100 percent blast furnace gas for power generation, making it environmentfriendly, the statement said. Speaking on the occasion, Choudhary said that this is a milestone in the expansion process and very important for VSP to meet its power requirements. He said that the new power plant is environment friendly and
pollution free by using 100 percent BF gas for generation of power. Choudhary also mentioned that RINL is planning to add another 120 MW of power to the present capacity by using NEDO technology, commissioning of Turbo Generator-5 very shortly, taking the total power generation capacity of RINL to around 400 MW. RINL has to be selfsufficient in power generation, a critical area for survival and growth of the company, he added. In fact, Choudhary stressed the need for timely completion of the project by 2013 while taking all safety precautions and practices, so as to minimise dependency on the grid, while minimising the pollution and carbon consumption. Choudhary added that special attention has to be given with regard to safety aspects since the works are being carried out at high altitudes. He urged union leaders to suggest additional safety measures if any required to improve the safety environment at construction sites.
Sri AP Choudhary, CMD, RINL speaking at the function as Directors, CVO and other dignitaries are looking on. (Top insert) Structural Erection works.
44 Steel Insights, January 2013
Oxygen PRS work begins The erection works of Oxygen Pressure Reducing Station (PRS) for Steel Melt Shop-2 at Rashtriya Ispat Nigam Limited (RINL) was flagged off by A.P. Choudhary, CMD of RINL, a company statement said on January 2. The PRS will supply oxygen to the new Steel Melt Shop LD Convertor. Laying of pipelines for blowing and cleaning the existing oxygen lines has been taken up by British Oxygen Company (BOC) as part of the erection work of Oxygen PRS, the statement added. Supplies for expansion
Almost all supplies in both the Special Bar Mill and Structural Mill of Stage-II expansion of Visakhapatnam Steel Plant (VSP) has been completed, steel minister Beni Prasad Verma has said. In a written reply in Parliament, Verma said major civil and structural works of StageII expansion are complete and the equipment erection is in progress while several related units such as water system, power system etc. are getting commissioned matching the requirement. The process of expansion of VSP’s production capacity to 6.3 mtpa against original capacity of 3 mtpa of liquid steel is to be completed in two stages. Installation of new Blast Furnace and Steel Melting Shop to produce additional 2.8 mtpa of liquid steel along with addition of new Wire Rod Mill to produce 0.60 mtpa of finished product has been carried out in Stage-I of expansion. Under Stage-II expansion two new Finishing Mills – Special Bar Mill and Structural Mill – to produce additional 1.45 mtpa of finished steel has been carried out. Verma said that works like setting up of Blast Furnace, Turbo Blower-4, Oxygen Plant etc under Stage-I expansion has already been commissioned along with auxiliary systems while the balance units are planned to be commissioned progressively by end of the current financial year.
Corporate
Essar Steel supplies plates to subsea tankages in North Sea
Making of steel plate molten iron on conveyor inside steel plant
Steel Insights Bureau
E
ssar Steel India, a fully integrated flat carbon steel manufacturer – from iron ore to ready-to-market products – with a current capacity of 14 million tons per annum (mtpa), has supplied 9,000 tons of high quality steel plates for a subsea tankage project being executed in the North Sea for Premier Oil, UK by Dry Docks World Dubai, the company said in a statement. The plates will be used in building oil and gas reservoirs in the sea bed at a depth of 130 metres below sea level at a temperature lower than (-40) degree Celsius, the statement said. These steel plates which conform to NACE MR 0175 and ISO 15156:2 2009 standard, have been tested for Hydrogen Induced Cracks to ensure the ductility and impact resistance. This puts Essar Steel in the elite league of global steel makers who have developed such capabilities. The steel is designed to withstand harsh operating conditions and are maintenance-free with a life of over 50 years, the statement added.
”The successful execution of this order bears testimony to the capabilities of Essar Steel to manufacture steel conforming to highest international standards,” said Dilip Oommen, CEO & MD, Essar Steel India. ”Developing these grades is the result of our drive to continually excel in our efforts to become a well-known high quality steel producer,” he added. In the last six months, India imported 165,000 tons of similar grade steel for different applications. They are largely exported after converting them into pipes. Conforming to the highest global standard, it has been tested for hydrogen-induced cracks to ensure the ductility and impact resistance. With growing competition and slowing demand for conventional sectors, steel companies are focusing on high value quality products to make their presence felt and boost their profitability. The Essar Steel plate mill in Hazira, Gujarat, has an annual capacity of 1.5 million tons capable of producing up to five-metre wide plates.
Essar Ports commissions 16-mtpa terminal at Paradip Essar Ports Limited, one of the leading private sector ports in India and part of the Essar Group, has commissioned its 16 million tons per annum (mtpa) dry bulk terminal at Paradip, taking the aggregate handling capacity of Essar Ports to 104 mtpa, the company said in a statement. This terminal is primarily meant to handle iron ore and dry bulk cargo, the statement said. The project involved upgradation and mechanisation of the existing 230m long CQ3 berth at Paradip with installation of a fully mechanised ship loading system with a capacity of 5,000 tons per hour. It is an all-weather terminal with a capability to handle large ships. The terminal is connected to the stockyard by a 9km long conveyor system having a capacity of 5,000 tons per hour. The stockyard has been equipped with two reclaimers with a capacity of 2500 tons per hour each. “This is our first project on the east coast of India and is a modern facility with best in class capabilities,” Rajiv Agarwal, managing director of Essar Ports, said. “The terminal will help achieve better handling rates, improve efficiencies with faster turn-around time for ships and would benefit the Paradip Port and its customers,” he added. Paradip Port Trust has granted a licence to operate the terminal till 2020 with a provision to extend the license period by further five years. The terminal will handle iron ore pellets for its anchor customer, Essar Steel, which has commissioned a pellet plant of 6 mtpa and is in advanced stages of construction of the second unit of 6 mtpa taking the total pelletisation capacity to 12 mtpa. The terminal would also be used by other users for the movement of their dry bulk cargos, the statement further added.
Steel Insights, January 2013
45
Corporate
BSP exceeds annual plan targets for Nov Steel Insights Bureau
C
ontinuing to operate well above the rated capacity in all major areas of production, Steel Authority of India Limited’s (SAIL) Bhilai Steel Plant (BSP) has in the three-quarter period of current fiscal year 2012-13 from April to December 2012 recorded some new highs in production and productivity figures and has also registered growth and improvement in several areas of performance over the corresponding period in last fiscal year, the company said in a statement. While maintaining its production above the annual business plan (ABP) targets, the plant has registered a growth of 4.1 percent, 5.3 percent and 5.3 percent in hot metal, crude steel and saleable steel production, respectively during April-December 2012, over the corresponding period of last fiscal year.
46 Steel Insights, January 2013
The plant produced 3.98 million tons (mt) of hot metal, 3.83 mt of crude steel and 3.32 mt of saleable steel during the nine-month period. The plant’s iron ore production was 4.1 percent higher than the corresponding period of the last fiscal. During December 2012, production of 26 mtr rail at rail & structural mill was achieved at 32,078 tons, which is best ever monthly performance surpassing the previous best of 31,914 tons, achieved in the month of September 2009. In hot metal, crude steel and saleable steel production during the month stood at 96.4 percent, 98.2 percent and 107.4 percent of ABP, respectively. The Plant surpassed its ABP targets for the month of December 2012 in total sinter production, production of crude steel at SMS 1, ingots rolled at BBM, production of billets at CBM, production of heavy structurals at RSM, production of light
structurals and total production of merchant products from merchant mill, production of high tensile plates, production of finished plates, export loading of plates and wire rods, production of total finished steel and total saleable steel production. During the nine-month period (AprilDecember) of the current fiscal year, the plant recorded the best ever production of 117,300 tons of high tensile plates for home sales as against previous best of 107,300 tons in April to December 2008, best ever loading of 109,200 tons of long rails as against previous best of 99,400 tons in April to December 2011 and best ever labour productivity of 331.4 tons/man/year as against previous best of 322.6 in April to December 2010. According to information available with Steel Insights, processing of 10,896 heats through ladle furnace, processing of 9965 heats through RH Degasser and total processing of 13,523 heats through secondary route were all best ever performances recorded for the period as against previous best figures of 10,562 heats in 2011, 8253 heats in 2010 and 11,842 heats in year 2008, respectively. In production of wire rods and light structural, the plant recorded growth of 10.5 percent and 54 percent, respectively.
Corporate
SAIL cuts GC sheet prices in December Steel Insights Bureau
S
AIL has cut prices of Jyoti GC Sheets from BSP and RSP plants in December 2012, according to the company’s published price list.
However, the variations were different for different branch locations. The prices were lower in the range of `800-1,600 per ton for products from BSL and `300-1700 per ton for products from RSP from the last published prices of August 2012.
According to analysts, the reduction in prices was the result of slow demand conditions prevailing in the market. SAIL cuts TMT prices in December
SAIL has reduced prices of TMT bars in December 2012 when compared to its prices in August 2012, according to its published price list. The prices were lower in the range of Rs 3,200-4,300/ton in its different branch locations in December when compared with the last published prices of August. Slow demand conditions prevailing in the market has led to lower pricing by the steel mills, analysts feel.
MRP (INCLUDING TAXES) FOR SAIL JYOTI GC SHEET - IS 277 CL VIII MRP for December 2012 (Rs/ton) Region
State / UT
GCS-BSL 0.5 mm
WB-1
EASTERN
0.63 mm 52300
0.5 mm 53600
Region
State / UT
0.63 mm
GCS-BSL 0.5 mm
GCS-RSP
0.63 mm
0.5 mm
0.63 mm
51900
MAHARASTRA 1
59,100
57300
58000
56200
MAHARASTRA 1
60,800
59000
59600
57800
WB-2
55,600
53800
55100
53400
ORISSA-1
55,700
54000
54200
52400
ORISSA-2
54,600
52800
53000
51300
BIHAR
55,100
53400
55100
53300
JHARKHAND
54,000
52200
54100
52300
ASSAM
55,900
54100
55400
53600
MEGHALAYA
57,100
55300
56600
54800 WESTERN
MAHARASTRA 2
57,200
55500
55900
54100
MAHARASTRA 2
57,800
56000
56400
54600
MAHARASTRA 2
58,300
56500
56900
55100
MAHARASTRA 2
58,900
57100
57500
55700
GOA
60,000
58200
58600
56900
GUJRAT
59,000
57300
57900
56200
CHATTISGARH
57300
55500
56000
54200
MP-1
58600
56800
57400
55600
NAGALAND
61,100
59300
60600
58900
MANIPUR
62,200
60400
61700
59900
MIZORAM
59,000
57300
58500
56800
ARUNACHAL
56,900
55100
56400
54600
MP-1
58600
56800
57400
55600
57200
MP-2
59000
57200
58100
5630
TRIPURA
NORTHERN
54,100
MRP for December 2012 (Rs/ton)
GCS-RSP
59,500
57700
59000
SIKKIM
58,400
56600
58000
56200
RAJASTHAN-1
55700
53900
55600
53800
DELHI
54,200
52400
54700
53000
RAJASTHAN-2
55900
54100
54900
53200
HARYANA
54,700
52900
55300
53500
UP
54,700
52900
55300
53500
DADAR & NAGAR HAVELI
58300
56600
57000
55200
UP
54,700
52900
55300
53500
TN-1, PONDI-1
57600
55900
56400
54700
UP
53,800
52000
54300
52600
TN-2, PONDI-1
58600
56900
57300
55500
PUNJAB
55,500
53800
55800
54100
PUNJAB
55,500
53800
55800
54100
KERALA-1, PONDI-3
59100
57400
57800
56100
PUNJAB
55,500
53800
55800
54100
KERALA-2
59800
58000
58500
56700
CHANDIGARH
54,600
52900
55200
53500
AP-1
57600
55900
56000
54200
SOUTHERN
HIMACHAL
56,300
54500
56900
55100
AP-2, PONDI-2
55900
54100
54600
52900
UTARANCHAL
54,700
52900
55500
53700
AP-2, PONDI-2
56900
55100
55500
53800
J&K2
58,600
56900
59000
57200
J&K1
56,400
54700
57300
55500
ANDAMAN & NICOBAR
62300
60500
61100
59300
J&K3
61,400
59600
62300
60500
KARNATAKA
58000
56300
56900
55200
Source: SAIL
Steel Insights, January 2013
47
TECHNOLOGY
Danieli’s unit for NMDC will have all modern features
for LPG gas cylinders in addition to the commercial, DD, EDD, Auto Grades, DP, IF, TRIP, Silicon steel grades, etc.
Sanat K. Bhaumik, Senior VP (flat products), Danieli India
Why do you call it the most modern thin slab casting and rolling plant in India? Since its first pioneering pilot plant in 1985, Danieli has always tried to implement solutions which combine the best of both thin slab casting and rolling and conventional HSM technologies. Danieli’s fTSR plants overcome the quality and productivity limitations but retain the CAPEX and OPEX advantages of thin slab casting and rolling technology. The fTSR plant for NMDC will incorporate all technological features of latest generation thin slab casting and rolling process. These features are mainly in the caster design and configuration of the hot strip mill. What are the special features for Danieli’s thin slab caster? Slabs coming out of Thin Slab Casters (TSC)
I
Tamajit Pain
ndia is all set to get its first and most modern fTSR (Flexible Thin Slab Rolling) plant with latest technological features to produce 2.90 million tons per annum (mtpa) hot rolled coils using two strands. The product mix includes most of the steel grades which are produced by a convention hot strip mill. This plant for NMDC will be supplied on full turnkey basis by a Danieli-led consortium. Steel Insights met the senior vice-president (flat products) of Danieli India, Sanat Bhaumik, to know more about their first and India’s most modern fTSR plant.
48 Steel Insights, January 2013
Excerpts: Danieli signed a turnkey contract to implement a 2.9-mtpa capacity thin slab casing rolling plant in India. Can you please tell us about this plant? NMDC and Danieli have recently signed a contract to install this flexible Thin Slab Rolling (fTSR) plant in the Nagarnar area of Chhattisgarh state. This will be the most modern fTSR plant in India for production of hot rolled steel coils. This plant will have a production capacity of 2.9-mtpa using 2-strand casting lines plus 2 roughing & 4 finishing mill stands with a provision to add the fifth finishing stand in future. The product mix will include steel grades for boiler quality pressure vessels, pipe grades up to API X80, hot rolled coils
In the thin slab caster (TSC) area the main special feature is the design of the caster itself. Danieli will provide the TSC with vertical curved design with its Dynamic Soft Reduction process. This feature will allow adapting a dedicated roll diagram to cope up with both internal cleanliness and proper ferrostatic pressure during the casing process. In addition, Danieli patented long funnel H2 mould ensures reduction of the stress on the slab during the solidification phase, which is the key factor to cast crack sensitive grades like real peritectic grades. Application of Dynamic Soft Reduction (DSR) is a key factor in ensuring optimal internal quality, under all casting conditions, and not only in a limited range of operative conditions. The Air Mist secondary cooling which allows to fine tune the thermal profile of the slab during solidification in a dynamic way of the casting conditions (such as casting speed, superheat, etc.) with the maximum
Technology such as ferritic rolling and thermo mechanical rolling, typically adopted in conventional Hot Strip Mills. This fTSR plant for NMDC will have also have separation between the roughing stands and finishing mill stands. It will be equipped with 2 RM and 4 FM stands with a future provision for adding the 5th finishing stand. How will such HSM configuration benefit the plant?
Downcoiler Area
control range. Danieli’s thin slab caster also incorporates the unique feature of Independent machine closed circuit cooling for all sensitive elements of the caster (bearings, supports, etc) to monitor and control the temperature of all maintenance sensitive components of the caster regardless the casting speed and reduces the maintenance issues. Can you mention some of the specific advantages of your vertical curved design slab casters over the vertical design supplied by SMS for their CSP plants? Instead of comparing with others, I would prefer to speak about the most salient features of Danieli’s vertical curved thin slab casters which have the following major advantages over the vertical design followed by others:
individually without disturbing other segments in the line ♦♦ D ynamic Soft Reduction reduces centre line segregation and helps in refining grain size. You have also mentioned about hot strip mill configuration. How is it different from other TSCR plants in the country? Starting from its first applications of TSR (Thin Slab Rolling) plants, where all rolling stands are arranged in a single Finishing Mill train operating in tandem, Danieli implemented several mill stands arrangements with separation between Roughing Stands and Finishing stands, in order to apply advanced rolling practices,
Separation between the RM and FM trains allows installation of some strategic equipment like intermediate cooling, crop shear and an onboard descaler before the finishing mill. The intermediate cooling section will allow thermo-mechanical rolling or finish rolling of transfer bar with lower temperature. The crop shear can be used to cut the head end of the transfer bar for smooth threading through the finishing mill which reduces the cobble rate particularly during production of thinner gauges. Furthermore, the distance between R2 and F1 ensures higher strip internal quality because adequate recrystalization time is available between R2 and F1 passes. This is a must for rolling API grades. Danieli and SMS have their first pilot plants almost during same time. But the reference installations of CSP by SMS worldwide are almost double of Danieli’s TSCR plants. What are the main reasons? It is true that the total number of TSCR
♦♦ N o limitation on metallurgical length (9 – 20 meters). ♦♦ H igher casting speeds achievable (up to 8.0mpm). Casting speed is the key point for productivity, safety and quality. ♦♦ A llows casting of thicker slabs which is beneficial for quality and productivity ♦♦ C asting at lower speed for some crack sensitive grades and also to avoid risk of breakouts (safer operation) ♦♦ Lower overall height (< 7.5 meter head) ♦♦ F lexible speed of operation (2.5mpm to 8.0mpm) with no limitation of thickness ♦♦ Each
segment
can
be
2 Roughing + 4 Finishing HSM Mill Stands
removed
Steel Insights, January 2013
49
Technology plants supplied by Danieli is less than plants supplied by one of our competitors. But if you look into the reference installations during the last 10 years, they are almost equal and if you look beyond and compare last five years’ installations, Danieli plants outnumber such installations. This is where Danieli’s continuous efforts to bridge the gap between TSCR and conventional HSM taste success. Compared to CSP technology of SMS and ESP of Siemens VAI, what are different solutions of Danieli with respect to thin slab casting and rolling plants? Once again I shall refrain from comparing Danieli technology with others but Danieli has developed a complete portfolio of plant layouts adopting Thin Slab Casting and Rolling technologies, each of them are conceived to guarantee the optimal CAPEX and OPEX parameters befitting with specific market requirements of the customers, in terms of productivity, steel grades and product mix. These solutions include Thin Slab Rolling (TSR), flexible Thin Slab Rolling (fTSR), Quality Strip Production (QSP) and Extra Thin Rolling (ETR) plants. All these solutions are targeted to achieve maximum productivity, product quality with modular concept to allow future expansion. Coil Storage Area
50 Steel Insights, January 2013
Where are such plants installed? The only TSR plant is installed in Esfahan Steel (Iran) and the ETR in POSCO (Korea). Danieli has a number fTSR installations in Dong Bu (Korea), Tong Hua, Benxi & Bao Steel (China), MMK (Turkey), Severstal Lucchini (Italy) as well as QSP in Essar Algoma (Canada), North Star BHP (USA), Ezz Steel (Egypt) and OMK (Russia). Will NMDC’s plant be similar to any of these? The NMDC plant will incorporate all the latest technological features of Danieli’s fTSR plants. If you ask me a near identical configuration, I would like to say the fTSR plant at MMK, Turkey which was commissioned during middle of 2011, will be quite similar except that the NMDC plant will incorporate two separate thin slab casters compared to single caster with two casting stands in Turkey plant. Tell us about some landmarks achieved by Danieli’s thin slab casting and rolling plants. There are many such landmarks, out of which I would like to specially mention about some plants. Essar Algoma DSPC, Canada was the first plant in the world to cast real peritectic grades since 1997 in a
thin slab casting facility. Tangshan Iron and Steel, China is the first plant in the world overcoming the 3.0-mtpa productivity in 2005 (with 2 strands in operation). Benxi Iron and Steel in China pioneered the production of high Silicon grades since 2008. Posco CEM Plant in Korea is the first ultra high speed thin slab caster (>7.5mpm) in operation since 2009. Do you think TSCR plants will be able produce replace conventional HSM to produce all grades and quality of hot rolled coils? Yes. In fact all research activities in Danieli for TSCR technology are targeted to achieve this goal. A lot of progress has been made over the years after the first TSR plant installed at Esfahan Steel, Iran in 1989 with production capacity of only 0.8-mtpa for single strand casting line. Today the ETR in POSCO, CEM plant can produce 2.0-mtpa for a single strand casting line. Similarly, TSR in 1989 produced only commercial quality hot rolled coils and gradually more grades were produced in Danieli’s subsequent plants – peritectic in 1997, HSLA in 2000, API grades in 2005, Silicon steel (up to 3.2% Si) in 2009, Arctic API in 2010 and AHSS in 2011. Continuous efforts by a dedicated technology team are underway to reach the ultimate target but it will take time.
Technology
Third Siemens continuous slab caster goes into operation at Dragon Steel
SMS Siemag to modernise RINL converter Steel Insights Bureau
R
Steel Insights Bureau
S
iemens VAI Metals Technologies, one of the leading metal technology providers globally, has put a new continuous casting plant into operation recently at the Taiwanese steelmaker Dragon Steel Co., according to information available with Steel Insights. The two-strand caster was installed at the Taichung, Taiwan location and is designed to produce approximately two million tons (mt) of slabs made of carbon and micro-alloyed steels annually for highquality flat-rolled products. Previously, two continuous casters had already been installed by Siemens and were already in operation at the site. Two-strand continuous slab caster S2 was supplied by Siemens to Dragon Steel in Taichung, Taiwan. According to a company statement, the new S3 continuous casting plant at the Taichung metallurgical plant of Dragon Steel produces slabs in a thickness of 250 millimeters and in widths ranging between 750 and 1880 millimeters. High-quality steel grades for rolling applications are cast at the plant, including low- and mediumcarbon steels, peritectic steels and pipeline grades. The caster is of arc design with a straight mold and features a metallurgical length of nearly 40 meters. The line is equipped with a series of technology packages specially developed by Siemens for continuous slab casters, including DynaFlex for flexible adjustment of oscillation parameters, LevCon to control the liquid metal level in the mold, the Mold Expert breakout detection system and DynaWidth for adjustment of the slab width. Minimum-maintenance Smart Segments
Two-strand continuous slab caster S2 supplied by Siemens to Dragon Steel in Taichung, Taiwan
have been implemented in the straightening and horizontal zones. Internally cooled and long-lasting I-Star rolls support uniform cooling of the slab surface. The Dynacs secondary cooling system controls the slab cooling process, and quality assurance is performed by the VAI-Q control system. Siemens VAI also supplied the complete automation and process control systems for the continuous slab caster, making it possible to perfectly match the operating parameters of the individual components. With the new caster, Dragon Steel now owns three continuous slab casters. Previously two Siemens continuous slab casters were in operation in the Taichung works. One was installed in October 2009 and the other in February 2010. A blast furnace and a sintering plant are also in operation at the site. An additional blast furnace and a second sintering plant are currently being supplied by Siemens, the statement added. Dragon Steel is a subsidiary company of China Steel Corporation, the largest steel producer in Taiwan. Through constant expansion of the facilities in Taichung over the past few years, Dragon Steel has continuously increased production capacity and become more prominent in the flat-rolled-product market.
ashtriya Ispat Nigam Limited has contracted SMS Siemag of Germany, as the leader of a consortium for the modernisation and expansion of their converter shop No. 1 in Visakhapatnam. The aim is to increase annual production from 3.2 million tons (mt) to 3.6 mt of steel as well as to improve environmental protection by installing an SMS Siemag gas cleaning system, SMS Siemag said in a statement. The scope of supply comprises the engineering and manufacturing of core components for three new 150-ton converter vessels with tilting drives, matching oxygen lances and bottom stirring equipment, the modernization of the primary dedusting system as well as the secondary dedusting system. The gas cleaning system will be executed as a wet dust collection facility complete with Venturi scrubber. SMS Siemag will be responsible for the entire installation and commissioning work. The company’s converter shop No. 1 will be equipped with X-Pact ® electrical and automation systems for the main plants and auxiliary systems. Commissioning is scheduled for the first quarter of 2014. SMS Siemag is also building an X-Melt ® converter shop at the same location. The new converter shop No. 2 is to produce 2.8 mt of liquid steel per year. X-Melt ® is an SMS Siemag trademark from the Steelmaking Division. It is the brand name for plants and technologies that set standards for the economical production of high-quality liquid steel, the company statement added
Steel Insights, January 2013
51
Social Buzz
2013 sends mixed signals for steel community 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.
Steel Insights Bureau
I
n the new year, the market is sending mixed signals to the steel community. On one hand, there are reports of significant improvement in per capita consumption of steel in India; on the other hand, there is no let up on bottlenecks impeding progress of mega steel plant projects. Amid these, lack of support from almost all the state governments have led to the shelving of the concept of Ultra Mega Steel Plants (UMSP), an initiative that was taken up by the steel ministry. The community on ISMW reacted to such reports with a jilt, but maintained hope that the scenario would change for the better, sooner than later. However, while the industry looks up to the government for solutions, the latter has none to look up to. The need of the hour, sources point out, is a national consensus on issues that hold industrial growth to ransom. The only positive from the current market cues is perhaps that expectations of long term demand growth potential has remained intact. Flat, long prices
At the very start of the year, India’s prime steel mills have increased prices of both flat and long products by Rs 750-1000/ton,
52 Steel Insights, January 2013
industry sources told ISMW. This is seen as a desperate move to cope with increase in input costs. Among the steel mills, JSW Steel Ltd raised steel prices by about 2 percent due to rising input costs. Following the increase, steel prices could go up by around Rs 750/ ton. Before the hike, JSW was selling flat products like hot-rolled coil at Rs 40,500/ ton and long products like TMT bars at Rs 41,000/ton. The company has not increased steel prices in last three months whereas input costs and steel prices in international market have gone up significantly. Similarly, Essar and JSW have also reportedly increased prices by similar amounts, sources said. Overall, flat product market in India has borne the brunt over the past 2 years owing to poor demand and influx of quality material from Japan and Korea under FTA. Even though Indian mills have tried to break the impasse by hiking prices intermittently it has been more of parity capitalization exercise with depreciating rupee rather than strengthening of core fundamentals. Even some mills are opting for rebates to clear their inventories. Commenting on the weak market conditions, Rajiv Bhutara, director, Mahrishi Alloys P Ltd, had earlier said, “Due to weak demand and negative realisation on HR coils could these primary producers have now moved to produce long products where they are selling at around Rs 43000 per ton all inclusive on TMT bars in southern India
and this has caused death bells ringing for secondary producers.” World steel output up
Meanwhile, the world crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) showed an increase of 5.1 percent to 122 million tons (mt) in November 2012 over the same period previous year. China’s crude steel production for November 2012 was 57.5 mt, up by 13.7 percent compared to November 2011. Elsewhere in Asia, Japan produced 8.5 mt of crude steel in November 2012, a decrease of 2.3 percent compared to the same month last year. South Korea’s crude steel production was 5.6 mt in November 2012, 2.7 percent lower than November 2011. India’s crude steel production stood at 6.4 mt in November 2012, 6.6 percent higher than November 2011 production of 6 mt. BSP’ production growth
Within India, SAIL’s Bhilai Steel Plant has registered an impressive growth of 4.1 percent, 5.3 percent and 5.3 percent in hot metal, crude steel and saleable steel production, respectively, during the first nine months (April-December) of 2012 over the corresponding period in last fiscal year. The Plant produced 3.98 million tons (mt) of hot metal, 3.83 mt of crude steel and 3.32 mt of saleable steel during the 9-month period. The Plant’s iron ore production was 4.1 percent higher than the same period last year. For the 9-month period of current fiscal year from April to December 2012, the Plant recorded best ever production of 117,300 tons of high tensile plates for home sales as against previous best of 107,300 tons in April to December 2008, best ever loading of 109,200 tons of long rails as against previous best of 99,400 tons in April to December 2011 and best ever labour productivity of 331.4 tons/man/year as against previous best of 322.6 in April to December 2010.
logistics
Iron ore handling by ports down 53% in Apr-Nov Steel Insights Bureau
M
ovement of iron ore through the 12 major Indian ports showed a significant drop of 53.38 percent in the first eight months (April-November) of 2012-13, due to restrictions imposed on mining and a hike in export duty on iron ore. The major ports together handled 19.83 mt of iron ore in the April-November period compared to 42.54 mt handled in the same period last year, according to data released by the Indian Ports Association (IPA). Vishakhapatnam port handled the highest volume of 7.75 mt of iron ore in April-November. This volume, however, was about 37.53 percent lower than the iron ore traffic moved through the port in the same period last year.
The country’s major ports handled a total of 20.44 mt of coking coal in April-November period, up 7.37 percent as compared with 19.03 mt handled Traffic handled at major ports in the same period (During Apr-Nov, 2012* vis-a-vis Apr-Nov, 2011) last year. However, (*) Tentative (in '000 tons) the movement of April to November traffic thermal coal through % Variation against Ports prev. year traffic the major ports was 2012* 2011 up 10.62 percent KOLKATA to 35.48 mt during Kolkata Dock System 7755 8364 -7.28 A p r i l - N o v e m b e r, compared to 32.07 Haldia Dock Complex 18031 22056 -18.25 mt achieved in the TOTAL: KOLKATA 25786 30420 -15.23 same period last year. PARADIP 35465 36366 -2.48 The 12 major VISAKHAPATNAM 39416 47904 -17.72 ports handled a total of 359.98 mt ENNORE 10759 8979 19.82 of traffic during the CHENNAI 35581 37851 -6.00 period, 2.88 percent V.O. CHIDAMBARANAR 18467 18107 1.99 lower than 370.67 mt recorded during the COCHIN 13299 13227 0.54 same period last year. NEW MANGALORE 23566 20951 12.48 Movement of MORMUGAO 14205 23856 -40.46 container traffic in MUMBAI 38885 35628 9.14 terms of tonnage showed an increase in JNPT 42860 43630 -1.76 the April-November KANDLA 61694 53758 14.76 period, while that of TOTAL 359983 370677 -2.88 TEUs fell during the Source: IPA period. The major
ports handled 79.72 mt of tonnage and 5.16 million TEUs in April-November period compared to 79.51 mt of tonnage and 5.17 mt of TEU 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 13.13 mt in April-November period. Visakhapatnam port handled the highest quantity of 4.59 mt of coking coal during the period. Movement of coking coal through Paradip, Kolkata, Visakhapatnam, Chennai and Cochin ports declined during the period when compared to the corresponding period last year. Six major ports showed positive growth in traffic handling during the AprilNovember period of the current fiscal, while the remaining six showed negative growth on a year-on-year basis. In terms of growth, Ennore port topped the list with a 19.82 percent increase in cargo throughput. Cochin port’s growth was lowest at about 0.54 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of 61.69 mt recorded for the period. The Mormugao port registered the highest decline of 40.46 percent in traffic handling during the period due to fall in iron ore export.
Steel Insights, January 2013
53
Logistics
Railways iron ore handling down in Nov Steel Insights Bureau
T
he Indian Railways transported 8.37 million tons (mt) of iron ore in November 2012, lower than 8.67 mt in October. Revenue from transportation of iron ore for exports, steel plants and for other domestic user in October fell to `490 crore, down 6.43 percent from `523.67 crore in October, according to information available with Steel Insights. Commodity-wise revenue Commodity
Quantity (in mt) Nov’11
Earning (in ` cr)
Nov’12
Nov’11
Nov’12
Coal (i) for steel plants (ii) for washeries (iii) for thermal power houses (iv) for public use (v) Total Raw material for steel plants except iron ore
3.94
3.47
174.01
199.87
0.11
0.1
1.29
1.53
26.05
25.79
1,782.65
2,155.80
8.92
11.53
553.35
728.61
39.02
40.89
2,511.30
3,085.81
1.04
1.45
92.8
128.52
Pig iron and finished steel (i) from steel plants
2.03
2.1
267.78
343.61
(ii) from other points
0.59
0.73
43.36
81.65
(iii) Total
2.62
2.83
311.14
425.26
(i) for export
0.18
0.04
49.13
10.26
(ii) for steel plants
5.23
4.92
202.74
228.06
(iii) for other domestic users
2.95
3.41
207.97
251.68
(iv) Total
8.36
8.37
459.84
490
Cement
9.03
7.96
570.93
629.5
Foodgrains
2.92
3.82
269.67
523.61
Fertilizers
5.26
4.38
449.59
476.18
Mineral Oil (POL)
3.47
3.34
311.75
371.33
(i) Domestic containers
0.77
0.81
78.76
79.31
(ii) EXIM containers
2.31
2.49
202.14
214.92
(iii) Total
3.08
3.3
280.9
294.23
Balance other goods
6.33
5.41
443.64
460.12
81.13
81.75
5,701.56
6,884.56
Iron ore
Container Service
Total revenue earning traffic
54 Steel Insights, January 2013
Coal transport by Indian Railways also fell 1.1 percent in November to 40.89 mt from 41.37 mt in October. Revenue earnings from transportation of coal also fell to `3,085.81 crore in November from `3,130.05 crore in October. Overall, the Indian Railways’ revenue earnings from commodity-wise freight traffic fell month-on-month in November, mainly due to lower transportation of coal and iron ore. Revenue earnings from commoditywise freight traffic during November 2012 stood at `6,884.56 crore, down 3.93 percent compared with `7,165.82 crore earned in October. Revenue from transportation of cement in November stood at `629.5 crore (7.96 mt) as compared to `712.42 crore (8.91 mt) in October, while that from foodgrains transportation increased to `523.61 crore (3.82 mt) in November from `569.17 crore (3.85 mt) in October. The Railways revenue from transportation of fertilizers in October fell sharply to `476.18 crore (4.38 mt) from `580.98 crore (5.2mt) in October. Revenue from transportation of petroleum oil and lubricant (POL) in November stood at `371.33 crore (3.34 mt), while the same from pig iron and finished steel from steel plants and other points was `425.26 crore (2.83 mt). Revenue from container services was `294.23 crore (3.3 mt) and from transportation of other goods was `460.12 crore (5.41mt).
macro outlook
Macroeconomic indicators of India
INR movement against select major currencies
INR vs USD & EURO
68 63 58
USD
1600000 1550000 1500000 1450000
11.00%
Wholesale price index (Selected categories) 230 220 210
7.24%
7.52%
8.01%
7.45%
6.00%
8.07%
7.00%
7.58%
8.00%
7.55%
9.00%
em be r -1 2
to b e r12
Oc
No v
mb er12
Au gu st 12
Se p te
Ju l y12
Ju ne - 12
em be r -1 1 De ce mb er 11 Ja nu a ry -1 2 Fe bru ar y - 12 Ma rch - 12
5.00%
No v
India’s foreign exchange reserves were at $296.54 billion for the week ended December 21 in the wake of fall in core currency assets, compared with $296.63 billion in the previous week. During the previous reporting week ending December 7, the country’s forex reserves had seen a rise of $484.2 million to $294.993 billion. Foreign currency assets, a major component of the forex reserves, were down by $169.9 million to $261.949 billion for the week ending December 21 as per RBI. The gold reserves remained unchanged at $27.803 billion during the week while the special drawing rights (SDRs) were up by $15.8 million to $4.45 billion, and the country’s reserve position with the IMF rose $61.3 million to $2.33 billion.
7.50%
10.00%
Source: rbi
-12
in Rupees crore
Ma y
26-Oct-12 9-Nov-12
23-Nov-12 7-Dec-12 21-Dec-12
12-Oct-12
14-Sep-12 28-Sep-12
3-Aug-12
Inflation rate in India
1400000
Ap ri l12
in Million $
17-Aug-12 31-Aug-12
6-Jul-12 20-Jul-12
27-Apr-12 11-May-12 25-May-12 8-Jun-12 22-Jun-12
13-Apr-12
30-Mar-12
16-Mar-12
3-Feb-12 17-Feb-12 2-Mar-12
6-Jan-12 20-Jan-12
282000
7.56%
284000
YEN
The rupee dropped 3.5 percent last year after plunging 19.1 percent in 2011. The INR also fell for the month of December by almost 1.4 percent. It ended the year with an improved tone, recovering some 4.2 percent from the record low of 57.32 touched in June, when investor confidence in the economy and the government were at their weakest. The INR is expected to be at 52.50 by end-March and head towards 54 by end 2013 as per experts.
7.69%
286000
GBP
9.46%
288000
in Rs crore
290000
EURO
Source: rbi
7.74%
292000
in million $
73
1650000
294000
280000
78
2 2 2 2 2 2 2 -12 -1 2 -1 2 - 12 - 12 -1 2 -1 2 -1 2 -12 12 -1 2 -12 -1 2 - 12 l-1 l-1 -1 -1 - 12 -1 -1 2 -12 12 1 2 - 12 -1 -1 an a n a n e b e b a r a r p r pr ay- a y un u n Jul -Ju -Ju ug ug e p ep ct ct ov- o v- ec e c e c 1 -J 1 5-J 2 9-J 1 2-F 2 6-F 1 1-M 2 5-M 8 -A 2 2-A 6 -M 2 0-M 3 -J 1 7-J 1 - 1 5 2 9 1 2-A 2 6-A 9 -S 2 3-S 7 -O 2 1-O 4 -N 1 8-N 2 -D 1 6-D 3 0-D
1700000
296000
83
7.23%
Foreign Exchange Assets
88
INR vs GBP & YEN
Steel Insights Bureau
298000
72 70 68 66 64 62 60 58 56 54 52 50 48 46 44 42 40
Source : OEA, GoI, Ministry of Commerce & Industry
India’s WPI based inflation fell to 7.24 percent as compared to a year before. However this fall may not be enough to lure RBI to cut rates at its upcoming policy review meeting although it does raise the hope that RBI may start doing so gradually. So far in 2012, wholesale inflation has averaged about 7.6 percent. Inflation rates are expected to trend downward over the next two-three months and reach the 5.4 percent level in FY14.
200 190 180
205
170 160
185
150 140
165
130 120
145
110
Jan
-1 2
Index of Industrial Production
-1 Fe b
2
1 Ma r-
2
A pr-
12
-12 Ma y
All Commodities Manufactured Products Basic Metals Alloy s & Metal Products
Jun
-1 2
12 Jul-
A ug
-12
S ep
-12
O ct-
12
-12 No v
Primary Articles Fuel & Power Steel
Source : OEA, GoI, Ministry of Commerce & Industry
India’s wholesale price index (WPI) (Base 2004-05=100) stood at168.8 in November almost similar to 168.7 recorded in the previous month. Also WPI for September this year was revised to 168.8 this month. The index for primary articles group increased by 9.24 percent to 220.8 from 201.8 in November the previous year. The index for manufactured products group also rose by 5.41 percent to 148 from 140.4 in November 2011. Fuel and power index rose 10.02 percent to 188.8 from last year while index for basic metals and metal alloys rose by 4.39 percent to 166.4 on rising prices of the product globally. Steel index however remained unchanged.
125 105 Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul-12 Aug- Sep- Oct11 11 11 11 11 12 12 12 12 12 12 12 12 12 Mining & Quarrying Electricity
Manufacturing General Index
Source : Govt. of India, MoSPI
India’s industrial production index in October rose at a better-than-expected rate of 8.2 percent aided by a statistical spurt in infrastructure-related output. This was the fastest annual pace in nearly a year after an unexpected contraction in September. September output growth was revised down to a contraction of 0.7 percent from 0.4 percent earlier. In the April-October period, industrial production expanded an annual 1.2 percent.
Steel Insights, January 2013
55
market report produced 5.626 mt during the same period, a 2.7 percent decrease on the same month 2011. In the EU, Germany produced 3.4 mt of crude steel in November 2012, a slight decrease of 0.2 percent on November 2011. Italy’s crude steel production was 2.2 mt, down by 12.9 percent compared to November 2011. France’s crude steel production was 1.3 mt, a decrease of 5.4 percent on November 2011. Spain produced 1.0 mt of crude steel, 14.2 percent lower than November 2011. In November 2012, Russia produced 5.5 mt of crude steel, a decrease of 0.7 percent compared to the same month last
Global crude steel production drops m-o-m in Nov
56 Steel Insights, January 2013
Jan12/11
Feb12/11
Dec11/10
Oct11/10
Nov11/10
Sep11/10
Aug11/10
July11/10
June11/10
Apr11/10
May11/10
Mar11/10
Jan11/10
Feb11/10
Dec10/09
Oct10/09
Sep10/09
Aug10/09
July10/09
June10/09
Apr10/09
May10/09
Mar10/09
Feb10/09
W
Nov10/09
November this year, an increase of 15.21 percent as compared to the corresponding orld crude steel production for period in 2011, when production stood at the 62 countries reporting to 49.883 mt. Again, m-o-m production saw a the World Steel Association fall of 2.75 percent as compared to October’s (Worldsteel) fell to 121.681 million tons produce of 59.096 mt. Elsewhere (mt) in November 2012 as compared to that in Asia, Japan Crude Steel Production Growth Rate (Y-o-Y) reported in October 2012 at 125.097 mt. produced 8.498 mt Again, crude steel production for November 50.00% 2012 was higher by 5.47 percent compared to of crude steel in November 2012, 40.00% November 2011. a decrease of 2.29 In November 2012, Asia produced 79,545 30.00% mt of crude steel, an increase of 10.14 percent percent compared 20.00% over November 2011. The EU produced to the same month last year. India’s 13.51 mt of crude steel in November 2012, 10.00% for down by 4.81 percent compared to the same production 2012 0.00% month of 2011. North America’s crude steel November stood at 6.4 mt, production in November 2012 was 9.423 mt, -10.00% 3.31 percent lower than the corresponding up 6.67 percent compared to month of 2011. China Rest of the world except China World November 2011. China, the single largest producer, South Korea produced 57.471 mt of crude steel in year. Ukraine’s crude steel production for November 2012 was 2.7 mt, 7.9 percent less World Crude Steel Production in ‘000 tons than November 2011. Nov 12/ World Crude Steel Turkey’s crude steel production for Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Nov 11 (% Production November 2012 was 3.0 mt, an increase of Change) 4.6 percent compared to November 2011. European Union (27) 14,716 14,249 12,029 14,301 14,126 13,510 -4.81% The US produced 6.7 mt of crude steel Other Europe 3,151 3,264 3,175 3,186 3,002 3,121 1.21% in November 2012, down by 4.8 percent C.I.S. (6) 9,243 9,172 9,250 9,280 9,057 8,919 -2.46% on November 2011. Brazil’s crude steel North America 9,780 10,014 10,348 9,592 9,588 9,423 -3.31% production for November 2012 was 2.8 South America 3,832 3,935 3,836 3,837 4,197 3,848 0.91% mt, an increase of 2.4 percent compared to Africa 1,191 1,191 1,186 1,176 1,195 1,183 8.49% November 2011. Middle East 1,674 1,404 1,589 1,642 1,634 1,659 1.08% The crude steel capacity utilisation ratio Africa/Middle East 2,865 2,595 2,775 2,818 2,829 2,842 4.04% for the 62 countries in November 2012 declined to 76.1 percent from 76.5 percent China 60,213 61,693 58,703 57,946 59,096 57,471 15.21% in October 2012. Compared to November India 6,375 6,359 6,476 6,299 6,604 6,400 6.67% 2011, it is 1.6 percentage points higher. Japan 9,198 9,251 9,207 8,802 8,836 8,498 -2.29% It is to be noted that the March to South Korea 5,764 5,907 5,632 5,661 5,652 5,626 -2.70% November 2012 data covers 62 countries Taiwan, China 1,781 1,761 1,730 1,440 1,606 1,550 -16.67% against 64 in March to October 2011. In Asia 83,330 84,971 81,747 80,147 81,795 79,545 10.14% January and February 2012, only 59 countries Oceania 485 494 519 511 504 473 8.97% are covered as three African countries, Rest of the world Algeria, Libya & Morocco while two Middle 67,189 67,000 64,977 65,727 66,001 64,210 -1.95% except China East countries Iran and Qatar did not provide World 127,402 128,693 123,680 123,673 125,097 121,681 5.47% monthly production statistics. Chandrika Mitra
Market Report
Domestic flat & long markets
Liquidity crisis, low demand conditions persist Sanjoy Chakraborty
S
teel markets across the country began the month of December on a weak note. All segments of the steel segment were in trouble with weak demand and dwindling prices even as liquidity crisis continued to haunt the market. On top of that, there was sudden threat from imports whenever there was a slight positive movement in the exchange rate. A few private flat steel manufacturers like Essar, Jindal and Lloyd Steel raised their hot rolled coil prices in the range of `1,2001,500 per ton at the beginning of the month while the other major players like SAIL and Tata Steel kept their prices unchanged at its previous levels. However, this price rise was not taken well by the market as the actual demand was feeble.
Long products
The month of December commenced on a
remained doubtful. The concluding week of the year 2012 remained firm for the long and scrap steel items as the availability factor became a serious issue. Though demand conditions did not see any marked improvement, the tightness in supply and low inventories kept the market firm. Some project activities have started ticking over which injected some momentum into the market and all tiers of the long steel segment showed a steady trend. Semis like billets and blooms witnessed a price increase while finished items like rebars, joists, channels, beams etc. depicted a firm
subdued note for the long products segment. The demand conditions remained frail and liquidity crisis became a haunting concern for the market. Also, market sentiments took a beating on Domestic HR Coil Prices (HRC - 2.5mm â&#x20AC;&#x201C; Cold Rolling) continuous failure in speculations. Date Kolkata Kanpur Delhi Prices kept 27-Nov-12 38510 37920 35910 dwindling. 30-Nov-12 38510 37920 35910 The second 6-Dec-12 38510 37920 35910 week of December 14-Dec-12 39110 37490 35910 was practically 21-Dec-12 39110 37050 35910 an extension of the first. The The above prices are in Rs/MT (basic) Source: Steel Insights Research market remained pale with demand conditions continuing trend too on the back of a slight spur in the to remain gloomy. There were hardly any activities. transaction activities as the end-user sector The semi-finished steel market depicted did not pick up. a firm trend !! The market for semis remained Despite slow demand conditions, there firm over the week. The prices kept moving was some market movement this week north mainly on the supply issues. Low mainly arising out of supply shortage at inventories and positive cues from global various places. However, according to market market are fuelling the market to move up. sources, the sustainability of this movement Flat products
Ingot price trend 35000
Price in Rs/MT, basic
34000 33000 32000 31000 30000 29000 28000 27000 26000
Mandi Govindgarh Price in `/t is basic
Ghaziabad
Raipur
Mumbai
Durgapur
The basic market fundamentals in the flat steel market remained weak in the first half of December and market participants adopted a wait-and-watch mode. The market continued to limp forward as demand conditions stayed weak while a few manufacturers like Essar, Jindal and Lloyd Steel decided to increase their HR coil prices. However, the market reaction to the hike was not favourable. Other manufacturers like SAIL and Tata Steel held on to their earlier prices. The second half of the month also remained dull and inactive. Liquidity crisis, high bank interest rates, weak buying willingness on part of the buyers, sluggish demand from the end usersâ&#x20AC;&#x2122; sector and arrivals of imported cargoes continued to plague the sector.â&#x20AC;&#x201A;
Steel Insights, January 2013
57
Market Report Sponge iron prices (basic) in different markets
Domestic raw materials
Prices show mixed trend in December Pig iron
Steel Insights Bureau
M
elting scrap prices showed mixed trends in December on fluctuating demand conditions prevailing in the market, data available with Steel Insights showed. While prices in Gobindgarh and Raipur markets rose on demand from end users, prices in Durgapur and Kandla declined during the course of the month. Sponge iron
Price in Rs/MT, basic
Sponge iron prices continued to drop on limited availability of high grade iron ore and low demand, sources told Steel Insights. Pellet sponge of 75 FeM is being offered at around `17,000 per ton (Ex Bellary) whereas 78 FeM pellet sponge is at `17,600 per ton (Ex-Bellary). However, towards the beginning of January prices firmed up a bit on rebound in demand and limited availability of the material, sources said.
Pig iron producers in India lowered offers by `200-300 per ton in the December-January period on expectations of improved sales. NINL, one of the largest pig iron manufacturers in the country has reduced its steel grade pig iron prices on December 19, 2012 by `1,000 per ton on their basic price, valid till January 4, 2013. The steel grade pig iron is prevailing at `22,500 per ton (basic). On the other hand, NINL has also reduced it foundry grade pig iron price by `1,300 per ton to `23,000 per ton (basic). RINL, Vizag has lowered steel grade pig iron price by `500 per ton to `23,000 per ton (basic) w.e.f from December 19 on account of low sales in domestic market and uninterested buyers in international market. Rashtriya Ispat Nigam Limited (RINL) reduced steel grade pig iron prices further by `500 per ton on December 28 to `22,500 per ton (basic) for the second time in December. As per the buyers, Jayaswal Neco Industries Limited at Raipur has reduced its steel grade pig iron price too in the same
Melting scrap Price Trend over a month
27000 26500 26000 25500 25000 24500 24000 23500 23000 22500 22000 21500 21000
(in ` per ton)
Date
Raipur
Raigarh
7-Jan
21400
20600
Rourkela 19300
13-Dec
20200
19600
18400
28-Nov
21000
20600
19800
22-Nov
21200
20700
20000
7-Nov
21800
21100
20300
2-Nov
21900
21400
20400
26-Oct
22000
21100
20400
Source: Steel Insights Research
line. The secondary pig iron producers have also reduced their steel grade and foundry grade pig iron prices. Steel & foundry grade pig iron price trend of NINL, Orissa Steel Grade (N1) Pig Iron (Retail by Road delivery)
Foundry Grade (N2) Pig Iron (for road despatches)
1st-25th Jun, 2012
25400
25700
26th-29th Jun, 2012
25400
25700
1st-31st July, 2012
25000
25300
1st-16th Aug, 2012
24500
25000
17th-31st Aug, 2012
24000
25000
1st-28th Sep, 2012
24000
25000
1st-31st Oct, 2012
24000
24,500
1st-15th Nov, 2012
24000
24500
15th Nov-14th Dec, 2012
23500
24300
19th Dec, 2012 - 4th Jan, 2013
22500
23000
Time Period
The above prices are in `/ton (basic)
Steel grade pig iron price trend of RINL, Vizag Months
Mandi Gobindgarh Price in `/t is basic
58 Steel Insights, January 2013
Durgapur
Kandla
Chennai
RINL, Vizag
1-Jun-12
`24900 per ton (basic)
1-Jul-12
`24620 per ton (basic)
1-Aug-12
`24,120 per ton (basic)
1-Sep-12
`24,120 per ton (basic)
1-Oct-12
`24,000 per ton (basic)
1-Nov-12
`23,500 per ton (basic)
19-Dec-12
`23,000 per ton (basic)
28-Dec-12
`22,500 per ton (basic)
Source: RINL
PRICE DATA
Indicative market price for November 2012 Steel Insights Bureau (` per ton)
Sl. No.
ITEM
Kolkata
Delhi
Mumbai
Chennai
1
PIG IRON
31850
35600
32600
35180
2
BILLETS 100 MM
41030
41300
42720
41740
3
BLOOMS 150X150 MM
39890
40220
41490
39940
4
PENCIL INGOTS
35350
31800
35400
36230
5
WIRE RODS 6 MM
47240
48110
49240
48550
6
WIRE RODS 8 MM
46770
47650
48510
48090
7
ROUNDS 12 MM
46500
46740
46660
47540
8
ROUNDS 16 MM
46210
47160
46700
47440
9
ROUNDS 25 MM
45950
47520
46500
47280
10
TOR STEEL 10 MM
48630
49580
48970
49420
11
TOR STEEL 12 MM
47350
47850
48020
48860
12
TOR STEEL 25 MM
47220
48060
47960
48770
13
ANGLES 50X50X6 MM
47000
46740
48110
48130
14
ANGLES 75X75X6 MM
46120
46500
47290
47510
15
JOISTS 125X70 MM
46880
47160
48230
48190
16
JOISTS 200X100 MM
46690
47400
48660
48190
17
CHANNELS 75X40 MM
47930
48830
49060
48670
18
CHANNELS 150X75 MM
46900
48460
48400
48040
19
PLATES 6 MM
47560
49540
49380
50050
20
PLATES 10 MM
47640
49520
49370
50050
21
PLATES 12 MM
48170
50050
49920
50630
22
PLATES 25 MM
48760
50590
50470
51220
23
H. R. COILS 2.00 MM
46730
48750
49610
49190
24
H. R. COILS 2.50 MM
45630
47680
48540
48180
25
H. R. COILS 3.15 MM
45540
47660
48510
48180
26
C. R. COILS 0.63 MM
51630
52580
53070
53420
27
C. R. COILS 1.00 MM
50530
52080
52340
52710
28
G. P. SHEETS 0.40 MM
55980
57030
57100
59680
29
G. P. SHEETS 0.63 MM
53620
52480
54750
58560
30
G. C. SHEETS 0.40 MM
54880
56000
55740
59710
31
G. C. SHEETS 0.63 MM
53710
54080
55000
58660
32
MELTING SCRAP H M S - I
27750
27500
NA
25200
33
MELTING SCRAP H M S - II
27000
27500
NA
24150
34
SPONGE IRON (COAL BASED)
23380
26000
29300
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 15 day of every month. (4) Prices are indicative.
60 Steel Insights, January 2013
PRODUCTION DATA
Production, Imports, Exports, Availability & Apparent Consumption (provisional) April - November 2012 Steel Insights Bureau (in â&#x20AC;&#x2DC;000 tons)
FINISHED STEEL Non-Alloy Steel (Carbon)
PRODUCERS 2012 - 13 (Prov.)
2011 - 12 (Prov.)
Alloy Steel
% Variation
SAIL
6382
5950
7.3
RINL
1722
1829
TSL
3937
2012 - 13 (Prov.)
Total
2011 - 12 (Prov.)
% Variation 7.2
-5.9
1722
1829
-5.9
3615
8.9
3937
3615
8.9
12041
11394
5.7
12223
11569
5.7
ESSAR
3922
4104
-4.4
3922
4104
-4.4
JSW ISPAT
2279
2003
13.8
2279
2003
13.8
JSWL
6711
5482
22.4
7554
6106
23.7
JSPL
753
808
-6.8
753
808
-6.8
(b) Prod. of Major Producers $
13665
12397
10.2
843
624
35.1
14508
13021
11.4
Others
26991
27576
-2.1
2481
2367
4.8
29472
29943
-1.6
Less : IPT/Own Consumption
5908
5983
314
216
6222
6199
(c) Total Production for Sale
46789
45384
3.1
3192
2950
8.2
49981
48334
3.4
(d) Imports $
3925
3190
23.0
1176
1013
16.1
5101
4203
21.4
(e) Exports $
2922
2430
20.2
380
285
33.3
3302
2715
21.6
(e) Availability (c+d-e)
47792
46144
3.6
3988
3678
8.4
51780
49822
3.9
(f) Variation in Stock
-677
-188
4
-2
-673
-190
(g) Apparent Consumption (e-f)
48469
46332
3984
3680
52453
50012
Less : Double Counting
3408
2856
606
678
4014
3534
Real Consumption
45061
43476
3378
3002
48439
46478
Source: Steel Ministry
62 Steel Insights, January 2013
4.6
3.6
843
175
624
4.0
2011 - 12 (Prov.) 6125
182
175
2012 - 13 (Prov.) 6564
(a) Prod. of Main Producers
182
% Variation
4.0
35.1
8.3
12.5
4.9
4.2
price trend
Ferro alloys & metals price trends Steel Insights Bureau Ferro alloys & Metals
December'12
November'12
October'12
Ex-works Rs/ ton Ferro Silicon (Si - 70%) 74000
72000
70250
Ex-works Rs/ ton HC Ferro Chrome (Cr - 60%) 70500
67750
68500
Ex-works Rs/ ton HC Ferro Manganese (Mn - 70%) 53250
53250
53500
Ex-works Rs/ ton Silico Manganese (Mn - 60%, Si - 14%) 53500
53500
54500
Ex-works Rs/ ton MC Ferro Manganese ( Mn - 70%, C -1.5) 76500
76500
75500
Ex-works Rs/ kg Ferro Vanadium 785
735
725
Ex-works Rs/ kg Ferro Moly (Mo - 60% min) 1020
985
1005
Ex-works Rs/ ton Ferro Titanium (Ti - 30%) 155500
162000
152500
Steel Insights, January 2013
63
Iron Ore data
Iron ore export data for November 2012 Steel Insights Bureau Port
KOLKATA
Destination Country
CHINA
Date
Product Category
Unit Price (in Rs/ton)
Fe Content
Quantity (in tons.)
3-Nov-12
FINES
56/55
3540
555
5-Nov-12
FINES
61
4352
14914
6-Nov-12
FINES
57
2189
1400
54
2945
8000
57
2243
1400
9-Nov-12
FINES
10-Nov-12
FINES
55.5
3566
2420
12-Nov-12
FINES
57
2243
1400
15-Nov-12
FINES
55
3202
6300
55
2624
10000
57
2238
1400
56
3641
19200
55
3213
10100
57
2238
1400
56
3109
12000
54
2673
11000
57
2279
1400
16-Nov-12
FINES
17-Nov-12
FINES
21-Nov-12
FINES
27-Nov-12
FINES
29-Nov-12
FINES
2-Nov-12
FINES
3936
27000
6-Nov-12
FINES
2410
5000
15-Nov-12
FINES
3936
1500
28-Nov-12
FINES
3608
18500
29-Nov-12
FINES
3608
1000
8-Nov-12
FINES
56
3537
11006
19-Nov-12
FINES
63.5
5516
27600
21-Nov-12
FINES
63.5
5619
191
26-Nov-12
FINES
56
3802
4600
56
4364
2250
57
4391
3600
5087
5506
KOLKATA Total
PARADIP
102889
CHINA
PARADIP Total
VIZAG
53000
CHINA
27-Nov-12
29-Nov-12 30-Nov-12
FINES
FINES FINES
61
5462
15015
63
5623
11494
57
4473
45
61
5564
1483
63
5623
2263
57
4364
1784
VIZAG Total
86836
Grand Total
242725
64 Steel Insights, January 2013
Iron Ore data
Iron ore import data for November 2012 Steel Insights Bureau Port
Country Of Origin
Date
BRAZIL
MALI SENEGAL UKRAINE
Unit Price (in $)
IRON ORE PELLETS
8,165
149.68
2,000
IRON ORE PELLETS
8,284
151.87
2,000
7-Nov-12
IRON ORE PELLETS
8,234
150.95
1,000
8,142
149.26
2,000
8,307
152.29
2,000
8,142
149.26
1,777
IRON ORE PELLETS
IRON ORE PELLETS
8,286
151.89
2,000
9,857
180.70
5,000
12-Nov-12
IRON ORE PELLETS
8,286
151.89
2,000
16-Nov-12
IRON ORE PELLETS
8,142
149.26
5,000
19-Nov-12
IRON ORE PELLETS
8,427
151.84
2,000
20-Nov-12
IRON ORE PELLETS
8,427
151.84
2,000
10,027
180.67
5,000
23-Nov-12
IRON ORE PELLETS
29-Nov-12
IRON ORE PELLETS
10,012
180.39
4,000
2-Nov-12
IRON ORE PELLETS
8,214
150.58
10,000
17-Nov-12
IRON ORE PELLETS
8,422
151.74
5,000
29-Nov-12
IRON ORE PELLETS
8,567
154.37
2,108
19-Nov-12
IRON ORE LUMPS
7,085
127.66
1,970
8,121
146.33
2,000
8,449
152.24
5,000
27-Nov-12
IRON ORE LUMPS (63.50%)
7,209
129.88
1,970
2-Nov-12
IRON ORE LUMPS
6,910
126.67
1,970
15-Nov-12
IRON ORE LUMPS
7,085
129.88
1,970
5-Nov-12
IRON ORE PELLETS
8,452
154.94
9,552
29-Nov-12
IRON ORE PELLETS
7,977
143.72
KANDLA Total
7,000 86,317
AUSTRALIA
MUNDRA
Quantity (in tons)
1-Nov-12
9-Nov-12
KANDLA
Unit Price (in Rs.)
5-Nov-12
8-Nov-12
AUSTRALIA
Item Description
SENEGAL
16-Nov-12
IRON ORE PELLETS
7,342
134.60
5,000
29-Nov-12
IRON ORE PELLETS
7,470
134.60
5,000
3-Nov-12
IRON ORE LUMPS (NON SIZED)
5,921
108.54
1,598
MUNDRA Total
11,598
Grand Total
97,915
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Steel Insights, January 2013
65
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66 Steel Insights, January 2013