Steel Insights - Jun 2012

EDITORIAL Chief Editor Rakesh Dubey, Tel: +91 91633 48159, E-mail: rakesh.dubey@mjunction.in Executive Editor Tamajit Pain, Tel: +91 91633 48065, E-mail: tamajit.pain@mjunction.in

Dear Readers,

Editorial Board Dr Abhirup Sirkar, Professor Economics, Indian Statistial Institute (ISI) Dr Amit Chatterjee, Consultant and former Advisor to MD, Tata Steel Ltd Jayant Acharya, Director (Commercial & Marketing), JSW Steel Ltd K Ranganath, CMD, KIOCL Vikram Amin, Executive Director (Strategy and Business Development), Essar Steel Ltd

World consumption of steel reached a new record high of 1.37 billion tons last year, according to new data published by the World Steel Association. This was up by 72 million tons (mt) or 5.6% from 2010, and was also more than 230 mt or 21% higher than consumption in the crisis-hit year of 2009.

Most regions and countries increased their consumption of steel last year while Asia’s share of the world total remained at around 64%. China’s share increased marginally from 45.2% in 2010 to 45.4% last year. Consumption of steel per person also increased to a new high last year, rising from 205.5 kg in 2010 to 214.7 kg. The country showing the highest usage of steel per capita was Korea with 1,156.6 kg. The second highest was Taiwan with 784.4 kg, according to World Steel Association figures. China’s consumption per person of 459.8 kg was almost twice the Asian average of 238.8 kg.

Coming back to India, the steel market and industry participants are braced for sluggish demand and weak sentiment in the domestic market in the short term. Concern over the nation’s economic slowdown amidst global economic uncertainties, persisting inflation, and the depreciation of the rupee are pressuring market sentiment.

The market is “cautious to edgy.” But data from the steel ministry’s Joint Plant Committee (JPC) showed that domestic steel consumption grew 7.7% year-on-year to top 5.6 mt in April.

Many analysts forecast an 8% y-o-y growth this fiscal. However, it’s difficult to say much from data for a single month. Anyway, growth in April could have been because of a low base effect.

Data from JPC shows that domestic real steel consumption grew only 1.5% y-o-y in April 2011 to slightly more than 5 mt.

Meanwhile, the Indian economy grew by 5.3% in JanuaryMarch, representing a nine-year low for the quarter. GDP growth was at 6.5% for the April 2011-March 2012 fiscal year, compared to 8.4% in 2010-11. There is no positive news or development from any quarter. In spite of a high exchange rate, mills have rolled over their prices.

Fitch Ratings said it expected profit margins of Indian steelmakers to remain under pressure in July-December as they would be unable to pass on higher production costs owing to “subdued demand from end-user industries given the prevailing unfavourable macro-economic environment.”

In this backdrop, we at Steel Insights tried to estimate the current trends and future growth prospects of long products segment during the fiscal year 2012-13. The issue also delves on indepth analysis of Siemens Metal Technologies growth strategies in FY13 and IBM’s strategies on steel technologies. We also have an interview of Bhilai Steel Plant CEO on flat product segment and an update on stainless steel sector in India.

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Happy reading.

(Rakesh Dubey)

Contents

6 | Cover Story

33 Siemens Metals Tech to focus on lifecycle solutions 36 Achieving smarter ops in steel industry

Standardisation need of the hour in long product segment

45 RINL, NMDC sign MoU for slurry pipeline, pellet plant 46 Texmaco UGL Rail to set up preparatory shop at Belgharia 47 JSPL to acquire stake in Gujarat NRE Coke Australian arm 48 Dipping profits mark FY 12 of leading steelmakers 52 Low prices prompt iron ore rebound 53 Bearish trend in ferro alloys

Specifications and quality of prime importance in fast-growing segment

24 | Interview

BSP develops 12 new products every year: CEO

Pankaj Gautam stresses on quality and qualified manpower

54 Supply concerns push up coking coal

34 | Technology

55 Bring coking coal under steel ministry: Verma 56 Sponge iron production falls 11.6% in FY12 57 April car sales growth lowest in 10 years

Siemens VAI to focus on cost optimisation over next 3 years

58 New steel policy being finalised: Minister 59 Demand drives steel prices 60 Iron ore handling by major ports down 29.7% in April 61 Railways commodity wise freight revenue falls 62 Macroeconomic indicators of India 64 Global crude steel production down 3% 65 International flat products: Low demand keeps prices lacklustre 68 International long products: China glitters in otherwise dull market

Execution delays a major cause for worry in India, says Siemens VAI CEO

40 | Corporate update

Bunch of new SAIL projects to come on stream in 2012-13 SAIL on a roll despite 2011-12 net profit dip

50 | Feature

70 Domestic flat & long products: Prices move in different directions

Stainless steel consumption set to grow

74 Domestic raw materials: Ferrous scrap imports come to a standstill 79 Ferro alloys & metals price trends

As Indian GDP rises, it spells good news for the steel sector

80 Iron ore export data for May 2012

STEEL INSIGHTS 4 JUNE 2012

Cover Story

Standardisation need of the hour in long product segment Tamajit Pain

B

y dint of being a developing economy, long products in India are in a more dominant position over flat products. That is because as is typical of a developing economy, growth in construction and infrastructure sectors and to some extent the auto and engineering industries, has driven the growth of the long products segment. Among all this, construction activities like building of roads and bridges, have primarily driven the long products segment.

However, the long products market has not been as organised as the flat products market. There are too many players and there is very little quality consciousness. There is absence of specifications against which materials can be produced. As a result consumers really do not know what they are buying and many a time they are buying sub-standard products.

As a result what happens is that designers and architects do not go by the specifications for the steel that they are using and they pay extra margins for design. Thus the consumer actually ends up paying far more money for the steel that is used.

STEEL INSIGHTS  6  June 2012

Cover Story The current state of affairs happened because there was stunted growth of prime manufacturers in this country, particularly in the long products segment. The secondary segment rose to the occasion and even though they did not meet the quality norms very well, they at least provided the material.

Currently the industry is being dominated by secondary steel makers comprising mini steel plants and re-rollers.

Large integrated steel plants have a minimal share of the total industry pie. While the integrated steel plants manufacture steel from iron ore, re-rollers use semis, ingots and billets as raw material.

The integrated plants like Rashtriya Ispat Nigam, SAIL’s IISCO plant and Tata Steel manufacture mainly highend products. Electric arc furnace units, mini steel plants, induction furnace operating in the market cater mainly to the construction market demand.

The arc furnace units produce long products such as bars, rods and structurals and also act as commission agents for major steel manufacturers. While bars are used as reinforcement for concrete, wire rods are used for the manufacture of hand tolls,

chairs and coil springs and angles, channels are used largely in civil engineering along with other structural materials.

The structural materials are used in the civil engineering sector – bridges, flyovers, etc. The other user segments of long products are irrigation, P&T, oil sector, ports, shipyards, agricultural implements, electrical manufacturers, ports, shipyards, railways and power among others.

Production According to data available with Steel Insights Research, long steel production currently stands at around 36 million tons (mt) out of the total 73 mt of steel in the country.

Industry experts estimate that long steel production will rise to 62 mt in 2016-17 as India strives to touch steel production levels of 100 mt by 2016-17.

Presently, out of the 36 mt of long steel production around 27 mt is produced by the secondary steel makers, while the rest is being produced by the prime steel makers like Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd (RINL), Tata Steel and others.

But as the long product segment grows with India striving

PRODUCTION, OWN CONSUMPTION, PRODUCTION FOR SALE OF IRON & STEEL APRIL 2011 - MARCH 2012 MAIN PRODUCERS CATEGORY

BARS & RODS STRUCTURALS RLY. MATERIALS TOTAL (NON FLAT-Non Alloy) NON FLAT (Alloy) GRAND TOTAL

RINL

SAIL

TSL

2,535

1,470

1,577

297

409

0

OTHER PRODUCERS TOTAL

MAJOR PRODUCERS JSPL

OTHERS

JSW

TOTAL

(‘000 tons)

"Less : IPT / Own Consumption"

"Total Production for Sale"

ESSAR

ISPAT-JSW

5,582

0

0

0

1,236

21,460

22,696

0

28,278

0

706

0

0

553

0

3,532

4,085

0

4,791

900

0

900

0

0

11

0

0

11

0

911

2,832

2,779

1,577

7,188

0

0

564

1,236

24,992

26,792

0

33,980

0

114

0

114

0

0

0

211

2,244

2,455

0

2,569

2,832

2,893

1,577

7,302

0

0

564

1,447

27,236

29,247

0

36,549

“IMPORT, EXPORT, AVAILABILITY, STOCK & APPARENT CONSUMPTION OF IRON & STEEL” (‘000 tons) APRIL 2011 - MARCH 2012

CATAEGORY

“Total Production For Sale”

Stock as on Imports

Exports

Availability

“As on 1-APR2011”

“As on 31-MAR2012”

Apparent Consumption “Variation in Stock”

“Current Yr”

Last Yr.

“Apparent Consumption Variation Over Last Year(%)”

BARS & RODS

28,278

425

224

28,479

588

842

254

28,225

26,444

6.7

STRUCTURALS

4,791

63

44

4,810

67

74

7

4,803

4,619

4

911

12

42

881

85

95

10

871

971

-10.3

33,980

500

310

34,170

740

1,011

271

33,899

32,034

5.8

2,569

259

237

2,591

0

0

0

2,591

2,473

4.8

36,549

759

547

36,761

740

1,011

271

36,490

34,507

11

RLY. MATERIALS TOTAL (NON-FLAT-Non Alloy) NON-FLAT - Alloy GRAND TOTAL

Source: Steel Ministry

STEEL INSIGHTS 8 JUNE 2012

Cover Story to achieve double digit growth rates, changes in accordance with the customer requirements are the need of the hour.

Demand scenario The long steel sector is currently witnessing stable demand.

The demand signals changing industry dynamics as demand for houses has proven stronger than the pull from cars and consumer goods, say industry analysts. While cost factors may have influenced the trend, it also extends concerns that consumption is slowing as reflected in the decade-long low in the gross domestic product at 5.3 percent for the fourth quarter.

While it’s early to calculate any implications for the $30-billion Indian steel industry, this would dictate the quantum of investments for building long steel capacity, which accounts for almost three-fourths of the 44 mt of construction grade steel made in the country.

Long steel is still a commodity that is produced and consumed locally and is not exported or imported usually.

Although the price hike in long steel has been due to growing demand, cost too has played its part with prices of non-coking coal, iron ore and scrap - raw material for long steel – rising 15-20 percent in the January-March quarter.

In comparison, prices of coking coal and iron ore, the twin ingredients for flat steel, have softened globally. Iron ore has come down to $129 a ton from $150 last quarter, but tight availability has kept prices firm in India.

State-owned Steel Authority of India, RINL, Tata Steel and JSW Steel are the players in the organized sector, while the rest are in the un-organised sector. The smaller, regional players use induction furnaces or electric arc furnaces that rely on costly electricity.

High tariffs and low power availability combined with high prices of scrap have led to the closure of many small scale producers in Andhra Pradesh and Karnataka. This too has jacked up prices of long steel.

One of the major concerns in the mostly unorganised long product segment is the lack of quality consciousness.

The secondary players, who rose to the occasion and offered support to the consumer demands when the big players posted stunned growth, failed to stick to specifications.

Lack of rail and road infrastructure also results in delay in transportation of raw materials and the end products on time.

This shows that there is a need to address quality issues and build-up of rail and road infrastructure.

Need of the hour The need of the hour is to stick to specifications and governance of the quality of products that are delivered. There is in fact a need of industry effort to bring up the quality of products and gradually people are learning to produce economically good quality of steel. Gradually this change is happening but there is still a long way to bring in everybody on board.

According to industry sources, there is an urgent need for

STEEL INSIGHTS 10 JUNE 2012

Cover Story ISI certified construction material. There is also need for stricter Bureau of Indian Standards (BIS) norms. There is an urgent need for standardisation. Tough stance for long material is the need of the hour. Initially there will be problems but in the long run the gains would be more than the losses, industry experts said.

Evolution Industry insiders feel that as the prime integrated steel makers expand capacity, the current industry structure would see some change.

Earlier, there were integrated steel plants and secondary producers. Secondary producers typically were re-rollers, who were dependent on either ingots as source of raw material or billets which came from primary producers. Going forward there will be emergence of a second segment – the integrated secondary producers, who are quality conscious and were able to operate on an economically viable model through raw material security. However, the economics of the supply chain is still being streamlined.

There is an opportunity for consolidation. At the same time there is very little room for standalone re-rollers. Either standalone re-rollers would backward integrate or they would merge with somebody else either through a supply chain mechanism or by selling themselves off or simply shutting themselves down because many of these facilities are not of

very high quality in terms of equipment and plants and are highly dependent on manual labor. There will be emergence of this second block of integrated secondary steel producers i.e. those who are quality minded. If at all they can find a good and economically viable model for their operation. The signs of these becoming possible are being seen.

Raw material security would drive growth in the segment, says industry sources. There will be need for some structuring in the industry going forward and opportunities of consolidation would come in the way, industry experts say.

The effort is already on to come out with an economically viable model by reducing the use of costly raw materials. The industry will focus more on value addition and standardisation of products. More and more customisation of products would be undertaken to ensure that consumers working on projects can deliver the end product at the least possible time.

Adoption of new practices and 98 to 99 percent due date delivery would ensure better return on investment by channel partners and rotation of cash by steel makers.

The industry leaders are already evaluating alternates to use of coking coal, which had shown an uptrend in the last one year. The R&D activities are centered around areas whether non-coking coal can be utilised in steel making. Efforts are also on by industry stalwarts to look at alternative ways of energy use through use of gas or gasification of coal, which can reduce the cost of production.

With increased focus of the government of India to build sound infrastructure, the domestic steel industry is expected to grow at a CAGR of 10 percent in the next few years. With growth prospects remaining intact, many of the prime steel makers have lined up expansion plans. This also includes expansion in the long segment.

Outlook Since India is a developing economy, long products still have pre-dominance over flat products.

As the economy matures, it is expected to veer more and more in favour of flat products. However, India is still in a phase where growth would happen in both the segments.

Unfortunately the long products market has not been as organised as the flat products market. There are multiple players and qualityconsciousness is very low. All this could change if manufacturers stick to specifications and the quality of products is monitored.

STEEL INSIGHTS  12  JUNE 2012

Cover Story The current state of affairs is a result of a stunted growth in the long products segment of big players. Though secondary producers rose to the occasion, they did not follow quality norms and only provided the material.

However, it is imperative that specifications should be put in place.

There is in fact a need for industry effort to ensure quality. Investments have been made, but they have been technological investments and no attention has been paid to quality. However, gradually this change is also happening.

Only material that is ISI certified by the Bureau of Indian Standards (BIS) can be technically used for construction.

However, BIS norms themselves are a little loose in some cases and there a little more stringency will be required. For example, IS1786 is not very clear about the processes of manufacturing. If it was, it would not allow certain types of impurities or certain deviations.

Apart from that, a lot of non-ISI certified material is available in the market which is very sub-standard. The consumer has the right to know what he is using. If somebody is writing 500 D and is not able to substantiate it with BIS documents, he does not have the right to sell and advertise. At the end of the day it is the consumers who have to face the brunt of this lack of standardisation and lack of monitoring.

Traditionally a small amount of long products always get imported. Rebars do not travel very long distances because of the economy. There is still a lot of difficulty in importing steel into the country and it is also uneconomical.

The growth in Chinese economy has led to more buying power among the Chinese people. Same set of circumstances

are happening in India but a bit slowly. But if 2 billion people get added to the world economy as consumers can you imagine the amount of material required just to consume. With more of economic parity among the people of India there will be more disposable funds for industrial products. We will have to see whether we are ready for such a scale of production.

Analysts expect long steel production will go up to 62 mt

by FY17 if overall steel production capacity reaches 100 mt by the same period. As far as rebars are concerned, production will rise from around 19 mt this year to about 27.8 mt. The secondary long steel producers will go from 29 mt to about 35 mt and the balance will come from the integrated secondary steel producers and the integrated steel producers.

The country has no option but to focus more and more on standardisation. Therefore usage of standard products, usage of preengineered, pre-made stuff is going to be very useful in speeding up construction. There should be some standard windows, frames, doors, standard panels.

The second need is to debottleneck road and railway infrastructure.

Capital productivity is at an all-time low on Indian roads. That needs to improve.

The integrated prime steel mills in the country are also trying to improve operations and expand capacity to meet the growing demands for the key steel product.

STEEL INSIGHTS  14  JUNE 2012

Cover Story Steel Authority of India Ltd (SAIL) SAIL’s Bhilai Steel Plant (BSP) is India’s sole producer of rails and heavy steel plates and major producer of structural. The plant is the sole supplier of the country’s longest rail tracks of 260 metres. With hot metal production of 5.13 mt in 2011-12, the plant also specializes in other products such as wire rods and merchant products.

SAIL’s Durgapur Steel Plant (DSP) has also undertaken massive modernisation program and technological developments to have improved productivity, substantial improvement in energy conservation and better quality products. DSP’s Steel Making complex and the entire mills zone, comprising its Blooming & Billet Mill, Merchant Mill, Skelp Mill, Section Mill and Wheel & Axle Plant, are covered under ISO: 9002 quality assurance certification.

SAIL’s IISCO Steel Plant (ISP), an integrated steel plant

in Burnpur, produces a large number of steel structurals and special sections as well as pig iron. The plant pioneered the production of centre–sill Z-section used in the fabrication of wagon and Z-type sheet piling section used in construction of barrages, bridge foundations and other projects and colliery arch section used for roof support in collieries. The plant has also developed ‘slit rolling’ for small diameter rounds (10 mm and 12 TMT), which are in high demand in the domestic market.

The plant is set to undergo modernisation-cum-capacity expansion though which its hot metal production capacity will be raised to 2.5 mt.

ISP is accredited with ISO 9001:2000 QMS for its Heavy Structural Mill and Merchant & Rod Mill. It has also been awarded ISO 14001:2004 EMS for its entire Rolling Mill Complex.

Rashtriya Ispat Nigam Ltd (RINL) Visakhapatnam Steel Plant has expanded its capacity to 6.3 million tons per annum (mtpa) of liquid steel. The new blast furnace was commissioned on April 24, 2012 and is under stabilisation. While the new caster is commissioned, the trial runs of LD Converter are in progress and will be commissioned soon. RINL is in the process of commissioning of balance facilities which includes wire rod mill, special bar mill and structural mill, which is likely progressively during this current fiscal. The cost of expansion is `12291 crore.

Parallely, RINL has also undertaken modernisation and upgradation of its blast furnaces which will increase the hot metal production capacity by 1 mtpa. Additionally, one converter, caster and seamless tube mill are also being installed along with modernisation of existing sinter plant and BOF Shop to match with the hot metal production and the capacity shall increase to 7.3 mtpa liquid steel.

The units are likely to be commissioned progressively by the year 2014. The next phase of expansion to around 11.5 mtpa of liquid steel involving an outlay of over `22,000 crore has already been conceived. The consultant Dasturco has prepared the feasibility report which envisages flat products like HR coils and special steels like CRGO/CRNO grade in its product mix and it is under active consideration of the Board.

To achieve the desired hot metal production of 6.5 mtpa, additional 1 No. BF is being installed with a capacity of 3800 cu.m. producing 2.5 mtpa . The raw materials required for manufacturing process are sinter, sized ore, quartzite, coke and injection coal. Raw materials and coke from stock yard are transported to the stock house bunkers through junction houses. The main charging conveyor feeds the burden into the blast furnace.

The mill will produce 6 lakh tons per annum (ltpa) of plain rounds in coil form. The wire rod size will be in range of 5.5 to 20 mm (dia). Provision is kept for the mill for producing 7.7 ltpa on the market demand.

STEEL INSIGHTS 16 JUNE 2012

Cover Story The rolling mill will use the cast billets of size 150 x 150 mm having length of about 12 metres and rolled billets of size 125 x 125 x 9.7 to 10.2 metres. The mill will roll 85,000 tons per annum (tpa) of low carbon, medium carbon (93,000 tpa), high carbon (93,000 tpa), spring steel (25,000 tpa), cold heading (1,34,000 tpa), welding rod (85,000 tpa), bearing steel (25,000 tpa), free cutting steel (35,000 tpa) and case hardening (25,000 tpa).

The billet will be charged into 200 tons per hour capacity reheating furnace one by one. The billets after heated up to 1200 deg C will be discharged. The billets will be rolled down in the breakdown mill and passes through pre-finishing mill. The finished product will come out of reducing and sizing mill in coil form. The output of size wise product mix are - 5.5.mm dia(mm) – 1,50,000 tpa , 6.07.5 dia(mm) – 2,40,000 tpa, 8.0-16 dia (mm) – 1,75,000 tpa, 17-20.64 dia (mm) – 35,000 tpa.

The special bar mill will produce about 750,000 tpa of plain rounds in straight length and in coil form. The bar size shall be in the range of 16 mm to 40 mm. Provision will be kept in the mill for producing 900,000 tpa of special bar when the market demand increases. The mill will roll medium and high carbon steel, case hardening steel, cold heading quality steel, electrode steel, spring steel, bearing steel and free cutting steel.

The mill shall use continuous cast billets of 150 mm square size and 12 m length. Considering the yield of 96 percent for

losses due to scale, shear cropping, cobbles etc the requirement of billets for producing 750,000 tons of bar shall be about 781,000 tons.

The structural mill will produce about 700,000 tpa of light structurals in straight length. The structural mill shall be able to produce wide range of products inclusive of plain round, rebars, semis, besides structurals and product-mix of the mill shall have to be decided depending upon the market demand and supply patterns at the time of implementation.

Provision will be kept in the mill for producing 850,000 tpa of structurals when the market demand increases. The mill will roll constructional steel conforming to standards of structural products. structurals when the market demand increases. The mill will roll constructional steel conforming to standards of structural products.

The mill shall be operated in three shifts per day and 300 days in a year. Operation of about 5000 hours shall be considered for producing 850,000 tpa at an average production rate of 170 tons per hour. The mill shall use continuous cast billets of 200 mm square size and 6 m length. Considering yield of 92.0 percent for losses due to scale, shear cropping, cobbles etc the requirement of billets for producing 700,000 tons of bar shall be about 761,000 tons.

Tata Steel Tata Steel’s current long products capacity in India stands at around 3.2 mt at crude steel (billet stage) and thereafter it is

Tata plant in India

STEEL INSIGHTS 18 JUNE 2012

Cover Story rolled into bars. So at finished product levels, the capacity is around 3 mtpa. Of this around one-third comes as wire rods and the rest is in the form of TMT. In Jamshedpur, the next expansion is coming up only in the flat segment because it is one single integrated operation.

It is a very efficient operation where starting from steel making right into making the final strip, it is one process.

The company is putting up a rebar mill at Gopalpur in Orissa. The long products division of Tata Steel operates as a separate profit centre and was the first to introduce the Thermo Mechanically Treated (TMT) rebar under the brand name Tata Tiscon in the country. Controlled processes, supervision by expert metallurgists and engineers coupled with highly advanced processes make Tata Tiscon the leading rebar in the country. Tata Tiscon is available for both residential and project applications. The residential segment is catered to by the company’s extensive dealer/distributor network and the project applications segment is handled by the division’s sales offices.

Tata Tiscon is made from pure steel, with the most advanced TMT technology from Tempcore, Belgium in stateof-the-art plants of Tata Steel. Tata Tiscon rebars are ‘hot rolled’ in fully automated rolling mills and subjected to online thermo-mechanical treatment in three stages – quenching, self tempering and atmospheric cooling. Empowered with the latest technology supplied by Morgan, USA, Tata Tiscon has created a new benchmark.

Tata Tiscon is the only rebar in the market today that provides consistent mechanical and chemical properties. This is because Tiscon is manufactured from virgin steel (from Tata Steel’s own mines) and rolled with superior technology and strict discipline. Strong quality control ensures that each product comes with the same trust and quality that the Tata name commands.

Long Products Technology Group (LPTG) provides both

PRODUCT RANGE Cast Products: ♦♦ Billets & Blooms : 100x100, 130x130, 160x160, 250x250, 340x400 mm ♦♦ Rounds : 160, 180, 200, 220, 310 mm Bar & Rod Mill: ♦♦ Wire Rod : 5.5 to 32.0 mm ♦♦ Bars : 20 to 60 mm ♦♦ Flats : 60x7 to 101.11x12.7 mm Blooming Mill: ♦♦ RCS : 55, 63, 75, 80, 90, 95, 100, 125, 140, 160, 180, 200, 240 mm ♦♦ Rounds : 56 to 200 mm ♦♦ Flats : 120x20, 120x30, 120x40, 130x20, 130x30, 130x40 mm

long and short term technical support for the Long Product Division.

The Long Products Division was awarded the prestigious certificate by CARES, UK for superior quality rebars. These rebars guarantee a minimum of 5 million cycles of fatigue strength. Tata Steel is the only rebar manufacturer in India to receive this honour.

Tata Tiscon is manufactured to suit varying construction needs. With the commissioning of the spark erosion machine, the three products in the Tiscon range in the project segment - Tata Tiscon, Tiscon CRS and Tiscon 500 -have started arriving in the market place carrying the distinct brand names.

Tata Tiscon is the first rebar in India to be awarded the ‘Superbrand’ status in the construction rebars category. The Division achieved best ever TISCON sales of 1.82 mt in FY 11 thus becoming the market leader in retail sector of rebar.

A new grade of FE 500 D was launched for the first time in India having lower impurities of phosphorous and sulphur under the brand called Tata Tiscon 500 D. High levels of phosphorus can lead to ‘cold shortness’ in steel where the steel tends to become very brittle under extreme cold conditions and thus vulnerable to cracking. High level of sulphur can lead to ‘hot shortness’ in steel, a condition in

STEEL INSIGHTS 20 JUNE 2012

Cover Story

A rolling mill in operation

which the melting point of steel gets lowered thereby reducing its strength dramatically under high temperature conditions.

However, lower levels of S&P can be achieved only through advanced steel making technology.

JSW Steel JSW group acquired Salem works and took over the Management from November 2004. Salem Works is the only integrated steel plant in Tamil Nadu and is located at Pottaneri/M. Kalipatti villages and at about 35 km from Salem.

As part of the JSW group, the plant underwent a dramatic transformation and started making profits from the first year onwards. Today, it has become the first 1 MTPA integrated steel plant in Tamil Nadu.

The company is having facilities for production of pig iron, steel, billet and rolled steel products in the long product category. The present capacity is being expanded to 1 mtpa. It has adopted the sinter plant – blast furnace – energy optimising furnace – Ladle Furnace, Vacuum Degassing Continuous Casting Machine – bar and rod mill route with iron ore as the basic input material. It also has plants for generation of power and production of oxygen.

Salem Works is highly environment conscious and the process and technology is designed for reusing and recycling the process waste. We have an expanding green belt to provide a green environment.

Products of Salem Works have the hallmark of quality and combined with competitive pricing, they are highly preferred in automobile and construction sectors.

JSW TMT Plus bars are specially designed for earthquake

prone zones and has more resistance to earthquakes and shocks due to combination of higher strength and ductility.

Its high UTS/YS ratio of 1.15 minimum ensures higher energy absorption capacity. It has excellent weldability due to lower carbon equivalent. It can be easily butt-welded, lap-welded and manual arc welding can also be done quite simply without any pre-heating.

JSW TMT Plus has higher corrosion resistance as compared to ordinary rebars due to its unique and uniform microstructure and absence of residual stresses. These rebars can be bent into customized shape in spite of having very high strength due to its inherent microstructure with soft ferrite and pearlite core.

JSW TMT Plus rebars are available in 8 to 40mm size range. It conforms to Indian, American, British and Australian Standards. It also meets specific customer requirements with supply of customized products and ensuring availability of services of experts in product application and end use.

Manufactured in Fe-500 & Fe-500D grade, JSW TMT PLUS, in a short span, already has esteemed list of projects & customers which include Bangalore & Chennai Metro Rail, Jaypee’s Yamuna expressway, Delhi & Mumbai International Airport, Power Projects, to name a few.

Wire Rods, Special Steel, RCS, Rounds and Spring Steel Flats are manufactured in Salem and Vijayanagar Plants. JSW Salem Works is the Largest Integrated Special Steel Complex in India with 1 mtpa capacity. JSW products are known for consistent quality, on-time delivery and customised products.

It has facilities for production of billet/blooms, pig iron and rolled steel products.

STEEL INSIGHTS 22 JUNE 2012

interview

BSP develops 12 new products every year: CEO Rakesh Kumar Dubey

Bhilai Steel Plant (BSP), India’s sole producer of rails and heavy steel plates and major producer of structural, is the sole supplier of the country’s longest rail tracks of 260 metres. The plant also specializes in other products such as wire rods and merchant products.

The plant produced 3.27 million tons (mt) of finished steel and 4.29 mt of saleable steel in 2011-12. Out of this, the production of plates was 1.194 mt. As per plan, BSP will produce 1.25 mt of plates in 2012-13. In the post-expansion period, the plant will produce 1.65 mt of plates.

In an exclusive interview with Steel Insights, CEO Pankaj Gautam spoke at length about the growth plans, future expansion projects, value addition in products and expectation of steel capacity in India.

Excerpts: How will you describe the growth of flat steel over the last few years?

It has been observed that in the case of developed nations, the alloy & stainless steel grades of flats form about 8-9 percent of the total consumption of finished steel. The ratio, currently in India is around 3.4 to 3.5 percent. As of now and in the near future, the steel industry will continue to see stronger increase in demand for long products.

It is also observed that as the nation develops the share of construction in the total steel consumption to fall gradually with rise in the areas of automobiles, appliances, packaging, engineering and capital goods. Adoption of steel intensive construction and weight reduction through thinner flat products use may lead to increased demand for flats.

What is the current flat steel production capacity in India out of the total steel production in the country?

The total annual production of flat products in the country is

“Consumers of flat products are relatively much more quality sensitive. This requires highly skilled and technically qualified manpower”

currently 35 mt while the total steel production is around 74.2 mt.

What is the current operating capacity of Bhilai Steel Plant and what are the expansion plans?

The present production capacity and that after expansion is detailed below (in mt): Installed Capacity

After Current Phase Of expansion

Hot Metal

Item

4.08

7.5

Crude Steel

3.93

7.0

Saleable Steel

3.15

6.56

Bhilai Steel Plant produced 3.27 mt of finished steel and 4.29 mt of saleable steel in 2011-12. Out of this, the production of plates was 1.194 mt. As per plan, BSP would produce 1.25 mt of plates in 2012-13. In post-expansion period, the Plant would produce 1.65 mt of plates.

The year-wise market share of flat products of BSP w.r.t domestic presence as well as w.r.t. that in SAIL in given below: Year Domestic Within SAIL Units

STEEL INSIGHTS 24 JUNE 2012

2008-09

2009-10

2010-11

19%

23.7%

22.2%

41.2%

50.3%

47.5%

interview Who are your major consumers?

Our list of major customers is quite vast and this includes Indian Railways, Indian Navy, BHEL, NTPC, L&T, Thermax, BPCL, HPCL, IOL, IOTL, ISGEC, TISCO, BEML, Siemens, BALCO, NEPC. Besides, there are many more customers for whom we have developed special steel plates. BSP also exports plates including special grades. Out of the total volume of 2,29,566 tons of steel exported during 2011-12, the volume of finished plates exported was 1,75,955 tons.

Can you please elaborate on the quality aspect of the products?

Among flat products, plates are very widely used in the areas of manufacturing boilers and pressure vessels, construction of bridges / structures, earth moving equipment, heavy engineering and machineries, line pipes, off-shore platforms, penstocks, ship building, wind mills, Transport vehicles and many other applications. Plates, as a raw material, are subjected to various operations like cutting, bending, hot/ cold forming, heat treatment, extensive welding, etc. for making the components. The products are put into use at different conditions like extremely high temperatures, subzero temperatures, high pressure, Load bearing and corrosive atmospheres.

Every end application has unique requirements on the Technical Delivery Conditions (TDC) of the plates specified by applicable material specification, fabrication code and further

“We are able to deliver mild quality plates in 30 days’ time and special quality plates in 45 days’ time” stringent conditions based on the design parameters. In view of this, the quality parameters for plates at Bhilai Steel Plant (BSP) are carefully designed at various stages of processing right from raw material selection for steel making to finishing & heat treatment of plates to ensure the desire performance of the product at customer’s end. Customer requirements are deliberated in Plate Enquiry Committee for finalising the TDCs and process routes.

BSP has facilities like external desulphurization of hot metal, Basic Oxygen LD converters for steel making, calcium treatment for sulphur morphology control and Ladle furnaces and RH Degassers for secondary refining and vacuum degassing. Steel is continuously cast into slabs though slab casters. Argon shrouding, Larger Tundish, automated secondary cooling, mould level control and soft reduction are some of the salient features focused towards quality products.

Through this state of the art steel making and casting facilities, slabs with very low inclusion count, high internal soundness and excellent surface characteristics are being produced. The slabs are hot rolled at plate mill equipped with reheating furnaces, hydraulic descaler, vertical edges, reversible rouging

STEEL INSIGHTS 26 JUNE 2012

interview

“BSP is designing a strategy to retain its position and dominance in a selected grade of steel that other steel makers do not produce” and finishing stands with HAGC controls, accelerated cooling devices, finishing and inspection facilities and two normalising furnaces for heat treatment of the plates.

To meet the growing customer needs, BSP is continually improving its processes for production of plates with stringent requirement such as: • Steel with very lean chemistry, extremely lower levels of S, P, dissolved gases and inclusions, with the combination of high strength, toughness and ductility.

• Improved ductility in transverse direction and through thickness properties • Internal soundness conforming to various International standards of ultrasonic testing • Flawless surface quality, very close dimensional tolerances In India, the flat segment is dominated by primary steel makers. How do you see the situation going forward?

It is a fact that flat products are dominated by primary steel makers and the situation is likely to continue in the same manner owing to the fact that flat products manufacturing requires huge capital, high-end technology with reduced energy consumption and a more integrated approach.

Consumers of flat products are relatively much more quality sensitive. This requires highly skilled and technically qualified manpower. Moreover, the flat producer must be able to foresee customer requirements and also have the ability to invest extensively in R & D, for producing value added grades presently being imported.

Can you please provide some details about your plans to introduce further value addition of flat products in your product basket?

Production of BQ Plates (‘000t)

“Differentiated Products to Customers” being one of our quality goals, BSP continuously upgrades its existing products to suit the changing requirements of its customers, thereby creating sustainable value for customers. To cater to the future needs of the existing as well as Potential customers, BSP follows its policy of “Developing one new product every month”. BSP has established a simple and powerful policy to create a robust product development process, meeting the newer and anticipated requirements of customers. Since the last five years we have continuously developed 12 new products every year in line with our customers’ requirements.

Some of the new products developed in 2011-12 in the flats segment are: • Atmospheric corrosion resistance steel plates in JIS 3114 SMA 490BWN : These plates are meant for manufacture of Bogie frames by BEML for use in Delhi Metro Project

by Delhi Metro Railway Corporation Ltd., (DMRCL) • ASTM A 537 class 1 plates in heavy thicknesses, with impact test in transverse direction, the most stringent specification of impact energy values 50 J min at very low temperature of (-) 47 Deg C. Developed and supplied for the Project of M/s IOTL for Brahmaputra Petrochemical Complex of Brahmaputra cracker & polymer Ltd., Lepetkata, Assam.

• DIN EN 10028-3: P355 NL1 - Weldable fine grain Pressure vessel plates : The plates are intended by M/s Titagarh Wagons limited. These plates are meant for use in fabricating High Speed Light Wagons for export to France.

Besides the above new grades developed and supplied to cater to requirements of customers, the plant continued with its efforts for commercializing the products already developed in previous years. The plant also fulfilled a fresh order for rolling longer plates from MIDHANI Slabs for space application by ISRO. For the year 2012-13, value addition in the area of flat product basket would be: • Special low carbon plates for a BARC project. Heavy plates of 56 mm thickness with required magnetic property is under development for this purpose.

• Alloy steel boiler quality steel plates in the grade A 387 Grade 22 in normalized and tempered condition for supplying to BHEL, who are currently importing the plates.

• Corrosion resistant plates for off-shore platforms • Earthquake resistance plates for construction segment • Lamellar tear resistant plates in medium and high strength grades for earth moving equipment segment.

BSP recorded the best ever production of 91,388 tons of BQ plates at plate mill in 2011-12, surpassing the previous best of 86,324 tons in 2007-08, registering a growth of 12.3 percent over the previous year.

Among the new product grades in the flats segment developed by BSP in 2011-12 are atmospheric corrosion resistance steel plates meant for manufacture of Bogie

STEEL INSIGHTS 28 JUNE 2012

interview

frames by BEML for use in Delhi Metro Project by Delhi Metro Railway Corporation Ltd., plates in heavy thicknesses with impact test in transverse direction and as per the most stringent specification of impact energy values 50 J min at very low temperature of (-) 47 Deg C. The latter was developed and supplied for M/s IOTL’s Brahmaputra Petrochemical Complex in Assam.

We also developed and supplied weldable fine-grain pressure vessel plates that Titagarh Wagons Limited sourced from us for fabricating high speed light wagons for export to France. Besides the above new grades developed and supplied to cater to requirements of customers, the plant continued with its efforts for commercialising the products already developed in previous years. The Plant also fulfilled a fresh order for rolling longer plates from MIDHANI slabs for space application by ISRO. What is the general contracting mechanism and what are the lead times of delivery?

We are supplying our flat products through yearly MoU with customers through Headquarter of our company’s Central Marketing Organisation (CMO). All our branches also enter into MoUs with their customers on yearly basis in order to have committed off-take on monthly basis. We select our Key Customers on basis of specific selection criterion and these customers are looked after through a single window called Key Account Manager (KAM) at the CMO Branch level. Many variables are required to be catered to for production of flat

products for which extensive planning has to be done for heat making and subsequent rolling.

We are able to deliver mild quality plates in 30 days’ time and special quality plates in 45 days’ time. Regarding documentation, we have gone a step ahead and are able to provide the invoices before rakes reach the destination along with test certificates. Bhilai is the first plant in the country that has been given clearance by excise authorities for remote printing of invoices.

There has always been a surge in flat steel imports mostly because some value added products are not available within the country. How do you see imports panning out going forward?

Since flat products are quite technology sensitive, there is a lot more to be done in order to cater to specific requirements of overseas customers. Regarding Bhilai, we have aligned our product development programme to our organisation’s vision of becoming a world class corporation. As part of our aggressive product development programme of developing 12 new grades every year, we have developed many products that have substituted imports. While development of such new grades is mainly based on customer’s requirement, there are instances when we have sensed the needs of customers. Our objective has also been to supply such grades at affordable rates.

What kind of overall steel capacity do you expect in the near future?

The abundant availability of iron ore, overall competitiveness

STEEL INSIGHTS 30 JUNE 2012

interview in terms of production costs, the strong potential base for skilled labour combined with the low per capita steel usage in our country are enough impetus for both domestic steel industries as well as global leaders to go ahead with expansion plans. India is also well positioned geographically between the developed west and the emerging economies of the east. However steel industry’s growth is also dependent on government decisions and action regarding allocation of land and mines, available infrastructure and several other factors.

At the CII Steel Summit 2012 in New Delhi on May 2, 2012, where private and public sector steel makers discussed their expansion plans, it was made clear that the Indian steel sector is well placed to reach its production target of 200 mt by the year 2020. As for the near future, it is expected that the demand for steel in India will be 90.6 mt by 2015-16. It is also expected that by then the demand for flat and long products will be equal.

What is your prescription for the technology to be used for flat steel production? Who are the major suppliers of this kind of technology?

The major suppliers of technology are Siemens VAI, SMS Meer, NKK Japan, and Danieli Italy. As regards our plate mill in Bhilai, it is a medium width (3600 mm) mill that has a number of advantages. Plates up to 3600 mm width can be transported in railway wagons. The mills with Essar, JSPL and Welspun are wider width mills and produce plates of width from 4 metres to 5.5 metres. Such wider plates are difficult to transport in wagons at present or by road in our country. The only advantage of the new mills is that they have a maximum roll separating force that can withstand more load which is helpful in rolling of special high tensile quality plates.

How are the plates in Bhilai different from that of others?

Special steel plates from Bhilai continue to be much in demand for their application in infrastructure, construction sector, defence and energy sectors. With a share of around 22.5 percent in the market for plates in the country, Bhilai’s plates have a strong brand presence in the market for flats and also command higher premium. Besides the garden variety of steel plates, BSP produces a wide range of high value plates to meet specialized requirements which include high pressure and boiler quality plates, high tensile plates, API grade plates and ship building quality plates. For meeting satellite launch vehicles, BSP rolled 9.5 mm thick plates. And to meet specific requirement of BHEL, the plant has rolled special steel grade plates in thickness of 100 and 125 mm also.

Plates in Bhilai are produced exclusively through modern

BOF Converter – Ladle Furnace – RH Degasser – Continuous Casting route for the highest quality and consistency. Bhilai’s Plate mill already has such advanced facilities for ensuring high product quality as On-line Ultra-Sonic Testing Machine, Hydraulic Automatic Gauge Control, Plan View Rolling, Normalizing Furnaces etc.

While a new set of Ladle Furnace and RH Degasser was installed in 2009-10 as secondary refining units exclusively for processing plate steel in line with customer’ requirements, the Plant also commissioned a new Slab Caster No 6 in its Steel Melting Shop II and a Hot Metal Desulphurisation unit.

In 2010-11, a new normalising furnace was commissioned in Plate mill with in-house resources and expertise to cater to the increased demand for normalised plates. All of these have strengthened BSP’s special plate making capability including that for rolling the API grade plates.

Concerned with the growing competition in the steel market, SAIL’s flagship entity BSP is designing strategy to retain its position and dominance in a selected grade of steel that other steel makers do not produce. The Essar Steel has fast emerged as a close competitor of BSP with its widest plate in the mild steel section. Around 47 percent of the total production in the Plant’s Plate mill is currently value-added special steel variety. Bhilai Steel Plant now plans to enhance the proportion of special steel grades in total plates production to more than 50 percent.

The development of new grades of plates tailor-made to meet customer’s specific requirements as regards chemical and mechanical properties to develop and cement a kind of partnership with customers is part of this strategy. As a result of the plant’s intensive one new grade a month product development programme, Bhilai has developed as many as nine new grades of plates in both the fiscal years 2009-10 and 2010-11. The trend was the same in last fiscal year as well with several of the new grades being export grades.

It is with the objective of enhancing the plant’s capabilities to produce more volumes of plates in the special steel category that Bhilai has been honing its plate making capabilities in Plate mill. While the augmentation of capacity project in plate mill will augment the mill’s capacity to 1.65 mt per annum, the new facilities recently installed in plate mill including a new cooling bed & piler, flame cutting machine for heavy plates, guillotine shear for cutting thicker plates, CNC Roll Grinding Machine, an Express Lab, a 40 T EOT and a 17 T Semi portal Crane, have greatly enhanced Plate mill’s flexibility of processing, finishing and handling larger volumes of special steel plates. A new edge marking machine and automatic length measuring system are also being installed.

STEEL INSIGHTS 32 JUNE 2012

Technology

Siemens Metals Tech to focus on lifecycle solutions Tamajit Pain

S

iemens Metals Technologies has begun transitioning from steel mill engineering and project development to focusing on offering more lifecycle solutions for the metallurgical industry, Werner Auer, CEO of the Siemens AG’s metal business unit, said.

With current steel capacity satisfying global demand and a need for asset management at aging facilities, the Linz, Austria-based unit sees increasing opportunities in plant modernisation, said Auer at the Siemens Metals Technologies media summit in Mexico City on May 22.

The demand for high-quality steel places increasing pressure on steelmakers to upgrade their plants with new automation packages and IT applications, Auer said.

“The change from a manufacturer’s market to a buyer’s market has made the global competition in the steel world even tougher and has set new standards for steel production,” Auer said.

Auer said continuously changing production conditions affect steel plant performance along the complete lifecycle. For steel makers to stay competitive even after 40 years since plant start up, Siemens Metals Technologies is developing new solutions to secure plant operations and plant performance over the entire life time of the installed equipment.

In the future, steel makers will become more flexible in adjusting their production to new market developments and customer demands, produce new steel grades in their plant and on request while at the same time achieving further cost savings and complying with increasingly strict environmental regulations, Auer said.

Whether new steel products, a broader product portfolio, lower consumption of raw materials and energy or more

flexible production as part of a global network, every steel mill will need a sustainable innovation strategy more than ever in order to keep production and investment competitive, he said.

The development of new automation solutions and the use of comprehensive corporate IT network promotes such lifecycle partnerships, explained Michael Irnstorfer, who is responsible for “Electrics and Automation” at Siemens Metal Technologies.

With increasing level of automation, deployment of sensors and mechatronics, a steel mill produces an increasing amount of information. This information ensures the transparency of complex processes and helps to control the production on the basis of new targets.

According to Irnstorfer, developments in information technology contribute significantly to the ability to produce new steel grades in existing plants to optimize workflows or to save energy and reduce costs.

Over the past 20 years, says Irnstorfer, basic automation has made the production faster and process automation is virtually becoming the brain of production. “Information technology, especially management execution systems used for production control, brings in increasing level of intelligence to the steel plant and is already able to provide precise warnings of imminent component failure,” Irnstorfer informed.

Siemens has expanded its offerings of predictive maintenance technologies that monitor and provide data about equipment.

“By checking current information about the condition of plant components in a production environment against this database we can make a prognosis about equipment and its condition and predict when it is advisable to replace a component or when it is bound to fail,” said Andreas Flick, chief technology officer and head of research and development for Siemens VAI Metals Technologies.

This includes simulation tools that allow plants to compare ideal conditions to real-world operations, said Flick.

“By simulating plants and processes, we can determine the optimum process flow and the associated lever to control complex steel mills better than before,” Flick said.

“This also enables us to focus on any weak points that used to appear everywhere during the long lifetime of a plant,” he added.

Siemens Metals Technologies recently announced modernisation plans at several metals-producing facilities, including ArcelorMittal SA plants in Dunkirk, France, and Ghent, Belgium, and a hot-rolling mill at an Aluminum Norf GmbH complex in Neuss, Germany.

STEEL INSIGHTS 33 JUNE 2012

Technology

Siemens VAI to focus on cost optimisation, over next 3 years

S

Tamajit Pain

iemens VAI Metals Technologies, the leader in technology solutions for the iron and steel industry worldwide, has drawn up a new roadmap with increased and improved localisation in different markets as one of the major thrusts.

In the wake of the new global economic realities Werner Auer, CEO, Siemens VAI and compulsions, the Metals Technologies company will focus on new strategies for the next three years.

The new focus of the company over the period 201215 will be on improving cost position by standardisation or modernisation of in-house manufacturing, improving market position via continued localisation, strengthening market position through vertical integration of technology, growing portfolio with focus on energy saving solutions and exploring industrial IT as a strong business opportunity, as per Siemens VAI Metals Technologies officials.

Stronger partnership and better coordination between plant operators and technology providers like Siemens are also very important in the present scenario, the company felt.

As steel operations are becoming more and more integrated, new automation packages and implementation of new IT applications can create new levers for better managing the entire production chain of steel making.

On the sidelines of an international summit of metal

Execution delays a cause for worry in India

S

Steel Insights Bureau

iemens Metal Technologies has said execution of projects in India is the biggest worry for a global firm as expansion and modernisation programmes take a long time to complete in the country.

"The biggest worry in India is that it takes a long time for execution, particularly in the public sector," CEO of Siemens Metals Technologies Werner Auer told visiting analysts at a recent global media summit in Mexico City.

Auer added that work on the expansion and modernisation programmes needs to be expedited in India to meet the projected rise in the capacity expansion of its companies. He further said that Siemens is looking for a bigger pie from the growing Indian market, particularly from the steel sector. "We are working with all the major public and private steel companies in India. India is a major market for us", Auer said.

India currently has an installed steel making capacity of 90 million tons per annum (mtpa) and is the world's fourth largest producer of the metal alloy. The government has projected steel making capacity of 140 mtpa by 201617 in the country. Auer said that Siemens, which has an engineering centre in Kolkata with 100 professionals, is looking to hire more local population to increase its presence in the country.

"We plan to add more engineering hours in India by

hiring more", he said, adding India accounts for about 12 percent of Siemens' global business.

Stating that metal technologies domain of Siemens was dominated by both India and China, Auer said, the company had expanded the engineering network with additional one lakh engineering hours in India and China during 2011.

For the current year, Siemens will focus on improving process technologies through advanced automation systems and close the portfolio gap in the furnace technology, he added. 

STEEL INSIGHTS  34  JUNE 2012

Technology technology for cost-efficient and environmentally friendly production of hot metal from iron ore and coal. The process differs from the conventional blast furnace route in that noncoking coal can be directly used for ore reduction and melting work, eliminating the need for coking plants. The use of lump ore or pellets also dispenses with the need for sinter plants.

So are you looking at new greenfield expansions of steel companies only?

Greenfield expansion is certainly our focus. But, besides new construction business, we are now expecting stronger demand for modernisation and service, following the economic crisis.

This will further optimise operating procedures and individual processes in the steelworks.

Other than India, which are the other countries you are focusing on?

technologies in Mexico City, CEO, Siemens VAI Metals Technologies, Werner Auer, spoke to Steel Insights.

Excerpts: Siemens has so far been servicing large steel firms across the world and India including ArcelorMittal, Posco, Tatas, Corus, Jindals and so on. Now given the current global economic scenario, many of the large players have put some of their plans on the backburner as raising funds is becoming increasingly difficult. In the wake of this, is there a need to rework Siemens roadmap or restrategise?

India is extremely important for us. Actually BRIC countries will continue to be our focus. We are confident that Russia will come back sooner or later. China is moving up from mass market to mid level, which in turn will throw up huge opportunities. Brazil offers opportunity and now we are looking at Mexico as well. We think that after the forthcoming presidential election in Mexico, some of the procedural and legal issues will be taken care of and there will be enough scope for steel companies and steel servicing companies like us to grow.

We have now decided to focus on smaller players in India, something we have not done in the past. There are quite a good number of small and medium sized steel players in India.

With this in view, we are putting up a new factory to make steel plant equipment, mostly steel fabrication, in India. We have acquired the land in Vizag and hopefully by September next year, work will start there.

When it comes up, this will be Siemens VAI’s second manufacturing unit, the first of which is located near Mumbai. We are expanding our capabilities in India in project management, engineering services and other service areas. We are also aggressively increasing our headcount in India. We are already a 1,000-people organisation in India and are growing further. In the past couple of years, the company has already doubled the number of engineers on its rolls.

Most of the steel companies in India are suffering from volatility in input costs and input qualities. Is Siemens coming up with any new technology to address this?

There is no escape from coal. We have to accept this. Given this, Corex, the smelting-reduction process developed by Siemens, is the best solution for Indian steel makers. Corex is an efficient

STEEL INSIGHTS 35 JUNE 2012

Technology

Achieving smarter ops in Steel Industry Rajaraman Hariharan & Vishwanath Narayan

S

teel companies are operating today in a highly competitive market. They have to deal with an increasingly volatile commodity market, manage complex global operations, meet increasing demands from customers and reduce total cost of operations, all at the same time. While dealing with customers, steel companies are expected to be highly responsive to Rajaraman Hariharan their demands, have the ability to promise them on a shorter lead time to delivery, and to deliver higher quality products at a lower cost. These factors require steel companies to correlate their business objectives with the reality of the business execution so as to continuously optimise their business operations thereby improving profitability.

To improve profitability, a steel company needs to be able to leverage data effectively across its business functions.

The business functions of a steel company may be broadly classified as follows: ♦♦ Smarter operations ♦♦ Smarter maintenance ♦♦ Smarter energy ♦♦ Smarter supply chain management ♦♦ Smarter logistics ♦♦ Smarter quality ♦♦ Smarter global operations Each of the above business functions require information from multiple data sources, including plant floor systems and Enterprise resource planning (ERP) systems to ensure information coherence to fulfill customer orders with quality.

Plant floor systems, in specific, generate high volumes of data, which necessitates heavy amount of data processing in near real time before meaningful information can be extracted for use by these business functions. In order to quickly and correctly process this high volume of data, a robust information system is required. The information thus derived will support the business decisions that need to be taken by these business and production functions. Hence we term this information system as the Decision Support Platform for steel production.

Take for example, a scenario of ensuring the quality of a steel product that is being produced for a certain customer order. For producing the customer order, there are many interrelated steps starting from the making of molten iron in the blast furnace to the product rolling for creating the final steel product. A deviation in quality of an intermediate product at any step will negatively impact the quality of the final product. If there is a quality deviation at any step, it would be preferable to identify the deviation at the earliest possible operational step.

This requires the proposed decision support platform to acquire relevant data about product quality as well as process parameters from underlying data sources, to process the acquired data within a reasonable timeframe and to identify any deviations in the product quality.

While it is valuable to identify a quality deviation as soon as it occurs, it is even better if the platform can Vishwanath Narayan predict the occurrence of a deviation even before it happens. The proposed decision support platform would provide information about the quality deviation and the suggested corrective measures to the production planner so that the best corrective action can be identified to handle the problem at hand.

Overview The applications and systems used by steel companies can be classified into the following levels proposed by the ISA95 Standard: ♦♦ Level 0 – Physical equipment ♦♦ Level 1 – Systems to monitor and manipulate production processes ♦♦ Level 2 – Control Systems. Examples: Distributed Control Systems (DCS), Supervisory Control and Data Acquisition (SCADA) ♦♦ Level 3 - Manufacturing Execution Systems; Systems for Planning, Scheduling, Operations Management, Laboratory Information Management, Product and Process related Analytics, Plant KPI (Key Performance Indicator) dashboards Decision support platform

These are the different levels of systems that exist within the steel enterprise. The portion highlighted in red represents the scope of the Decision Support Platform.

STEEL INSIGHTS 36 JUNE 2012

Technology ♦♦ Level 4 - Business Systems. Examples: Enterprise resource planning (ERP) functions, Advanced planning and scheduling systems, Enterprise Asset Management There are several dependencies between the different systems mentioned above. For example, let us take a customer order captured in the ERP that requires a specific quality of steel grade, for a specific volume to be delivered by a said date. This order information needs to be translated to the level 3 systems that need to plan, manage and execute the process to create the required quality of steel in the said timelines.

At a finer level, each aspect of making this steel needs to be monitored and controlled in real time using plant personnel using the level 2 control systems.

Based on the input from level 2 and level 3 systems, the ERP applications at Level 4 will need to track if the customer order can be delivered on time. Thus there is a strong need to make the applications within and across the different levels to pass information to each other. The decision support platform described in this section enables this intercommunication of information between different systems used in the steel company. The information thus shared becomes the basis for decision making in the steel company. The decision support platform is made up of eight pieces as following: Semantic Meta-model Each application and system in the steel company ecosystem represents their system of record in different information spaces.

In other words, the level of detail, the type of detail, the terms used to describe the detail vary significantly between different applications and systems. The challenge is to make these systems talk to each other coherently with the right context, such that the exchanged information is interpreted correctly.

Semantics refer to the meaning of words used in any communication. It makes the communication between two parties unambiguous. For example, a term like ‘success criteria’ can have completely different meaning for a plant engineer focusing on a shift versus a business planner who is trying to produce a plan for the next few days. Hence it is important to understand the word in the context it is used, so that the correct information is exchanged between two parties.

A semantic model captures the finer details of the meaning in different user perspectives. Disambiguation is the key purpose of a semantic model. In other words, the semantic model helps applications and users to understand the actual meaning of the communicated information.

Industry Standards like ISA 95, ISA 88 and ISO 15926 provide detailed dictionary of resources and tasks associated with process industries. These standards can be leveraged to build the semantic meta-model for a Steel company. IBM has combined several of the relevant standards into a single metamodel called the Reference Semantic Model for this purpose.

To illustrate the value of a semantic model, lets us say that an application wants to identify all rolls in Hot Strip Mills that were manufactured by company ABC that had a specific operational characteristic during the month of January this year. Such

a high level query can be crafted by any application or user, whereas the semantic database first identifies the Hot Strip Mills that match the specification mentioned in the query and then goes to several data sources/applications to get information on the identified equipments. Finally the semantic database collates the information together and provides the details to the requesting application or user. Thus the individual applications can access information without having to get into the details of where the data is stored and how the data is represented in the target system that contains the data.

Semantic Information Perspective The semantic model described above provides a holistic view of the resources in the steel company. This includes information on assets, processes and materials used by the steel company in different contexts like maintenance, operation and so on.

Each application needs a specific perspective on the semantic model. The Semantic Information Perspective enables steel companies to tailor the access to the overall semantic model to suit the application in context. For example, an asset management system will want to look at all assets only from a maintenance perspective like equipment service history, equipment maintenance schedule, and so on. A quality management system will only want to look at plant floor data that relates to quality and plant execution processes that relate to adjusting product quality when a quality deviation is found.

STEEL INSIGHTS 37 JUNE 2012

Technology Data Capturing and Acquisition Data is generated and consumed by almost every system used in the Steel Enterprise. There are two types of data that a Steel Enterprise needs to deal with – Static data and Time Series data (Dynamic data). Production quality data, equipment performance data and process execution data are some examples of time series data. These values are expected to vary with time and typically have to be captured periodically.

Based on the business needs, the data capturing facility needs to provide static and dynamic data to the requesting applications or users. In a production operation context, data capture must interface with level 2 distributed control systems via Historian or SCADA to obtain dynamic data. Static data will be obtained from engineering information systems, asset management systems, lab information management systems, and so on. For example, a quality management system requires static information from the production planning system to know the expected quality of the steel product that needs to be produced and dynamic data from plant control systems about the actual quality of the product being produced. The static and dynamic data need to be correlated to correctly identify if the produced product complies with the quality specification.

Key Performance Indicators A Key Performance Indicator (KPI) is an assessment of business performance and is a measure of success of the activities performed by the company. KPI is a broad concept and can be applied to a variety of business functions. For example, KPIs can be used to represent how the Steel Company is performing against a financial goal, how the quality of the produced molten iron compares with the expected quality, how an equipment performs compared to the vendor provided performance specifications, and so on. KPIs provide a language to communicate the objectives and the progress made towards achieving these objectives, to various parties.

Steel companies will need to define and manage several KPIs that are relevant to the functioning of the company. KPIs usually provide a quantitative measure of the performance.

KPIs may need several sources of data as input, to arrive at this quantified indicator of performance. Hence the quality of the data collection process is crucial for determining an accurate KPI. The previous section on data capture is a key building block for determining KPIs. In a production operations context, KPI of any equipment or the overall plant states the health or productivity of the same. Plant managers want clarity on the actual plant productivity in relation to the overall plant production objectives. The distributed control system in level 2 would capture numerous parameters from the instrumentation of different equipment on a continuous basis. Though there is sufficient data to calculate plant or equipment performance, it requires an expert to interpret this data to determine the productivity of the plant. This consolidation is also a time consuming process. The notion of a KPI provides an

effective solution to this problem. Multiple data points from plant systems may be combined together using a formula to arrive at a single value that represents the performance of the equipment or the overall plant. This information can then be used by the plant manager to get a view of plant productivity and take corrective actions if required.

Events Capturing Event is an indication that something of potential interest has happened within the steel company. Events can arise from several sources, for example, an application at the Level 3 or Level 4, from the instrumentation of equipment or a production process, and so on. Reconfiguration of a customer order, a new customer order, a cancellation of a customer order, deviation of a product quality with respect to the planned product quality, a breakdown of equipment, addition of a new production equipment in the plant are all examples of events.

It should be noted that an event may indicate a cause or an effect of a situation. For example, when some equipment fails during production, we can expect to see events from downstream equipment that are unable to operate since they have a dependency on the failed equipment. Periodically the failed equipment or the downstream systems may report the status again, causing duplicate events. The event capture system should have the capability to identify duplicate events and to merge these duplicates with the original event. The event capture system should also have the ability to identify events from downstream systems that are merely a side effect of an upstream event. This ability keeps the focus on the events that relate to the root cause, thus enabling quicker resolution of the situation at hand. The event capture system should also have the ability to apply rules and detect patterns to identify the root cause of the problem. Once a root cause is identified, the next step is to decide the reaction to the event and to execute the identified action(s).

Business Analytics and Optimisation Business Analytics and Optimisation allows companies to produce trusted and relevant information to enable fact based decision making. This analysis enables businesses to predict business outcomes, which in turn allows the planning and execution systems to optimise these outcomes. Business Analytics and Optimisation is about using existing business data and statistics to make informed decisions. Today, steel companies have a lot of data available, but proportionally minimal information is used effectively to make decisions. Technological advances in the recent times have improved the ability to analyse high volumes of data in a short span of time, making it possible to implement effective business analytics and optimisation systems.

Analysis can be applied to address business level questions or can be applied to very specific process execution problems at the plant floor that need to be addressed within a limited amount of time. Business analytics may be initiated in response to an event or can be performed on a periodic / ad

STEEL INSIGHTS 38 JUNE 2012

Technology hoc basis. Steel companies need both these types of business analysis systems, as each has their advantages.

Performing analysis based on event occurrences may be used to take informed decisions within a short span of time.

For example, a quality monitoring system notices a deviation between the expected vs. actual metallurgical properties of the molten steel. The quality monitoring system triggers an event that describes this problem. The analysis system reacts to this event by looking at various process and metallurgical parameters and predicts that the steel to be produced would not meet the customer order for which it is planned. This predictive analysis must complete in a matter of seconds, so that the prediction results can be made available to the planner before the problem percolates to the downstream processes.

The second category of business analytics systems work better with a larger data set that is presented periodically.

This type of analytics system is typically used to take more complex decisions. This analysis may require a larger time to execute, in the order of minutes or hours. For example, the management team wants to look at quality deviation data for the past 6 months to identify any pattern of failures and thus identifying a root cause and possibly take preventive action against future failures. The analysis may try to determine specific type or make of different equipments used in the production process that have been more problematic. Thus, a broader view of the problems and the corresponding solutions may be obtained using periodic business analytics.

Mobile Technology Mobile technology has developed significantly in the last decade in terms of functionality, combined with significant reduction in cost. The newer mobile technology allows business users to access enterprise data and to perform complex functions from virtually anywhere. Mobile technology has wide applications in a Steel company, starting with delivering a report to a management executive to being able to monitor production tasks by a plant engineer. Given the benefits of accessing enterprise data and functions using mobile technology, Steel companies should build the foundations for supporting this technology.

Mobile technology can also work in a disconnected mode, where a mobile worker can use a mobile device to support his work, even when he cannot access the corporate network. Take for example, an employee who is responsible for dispatch of finished steel products for a specific customer order. He does not have a mechanism to connect to the order management system to enter details of the dispatch, hence he has to capture the details on a paper and enter these details into the order management system when he returns to his office.

This delayed entry may lead to manual errors during data entry and is also an unnecessary labor. In a steel company that leverages mobile technology, the employee downloads the order information to a mobile device while in office and is able to captures the dispatch details on the mobile device while at the warehouse even though he has no access to the order management system. When the employee enters the office

area, the mobile device connects to the wireless network and uploads the data from the mobile device, which soon reflects in the order management system.

Knowledge Management and Inference Knowledge management is about capture and distribution of a variety of insights and experiences. For example, the knowledge management system may capture lessons learnt / best practices to produce a specific quality of steel, decisions taken when a quality variation was predicted, the effectiveness of past decisions, and so on. This provides a platform to share best practices as well as improve business performance of the company.

Inference refers to arriving at logical conclusions based on the available knowledge. Experts may need to look at the collected knowledge to arrive at inferences. Deriving inferences by the system without human intervention is an active research area today and is worth considering in the technology roadmap of the steel organisation.

Many business analytics systems have a capability to use past data to improve the accuracy of the analysis performed.

Thus, it is important that the collected knowledge is provided to these analysis systems periodically, thereby improving the effectiveness of these business analytics systems. For example, the analytics system trying to predict quality deviations looks at the knowledge to fine tune the prediction technique.

Conclusion The Decision Support Platform enables business applications to use information to effectively deliver the business functions required by the steel company. This platform converts the high volume of disparate data generated in the steel company to precise and meaningful information needed by the business functions to operate. This platform enables fact based decision making and prediction of business outcomes, thus enabling planning and execution to optimise these outcomes.

IBM is working with major steel companies worldwide to adopt and evolve the decision support platform for supporting the production operations to deliver quality products against the contracted orders. IBM’s tools can manage significant volumes of production data, process the data using industry standard specifications, and perform complex predictive analytics to interpret data from the steel plants. With such industry leading technology tools and with significant experience in supporting steel customers, IBM continues to support the business transformation in the steel industry.

(Rajaraman Hariharan is an Industry Solutions Architect at IBM India Software Labs, with expertise in multiple industries. Vishwanath Narayan is an IBM Distinguished Engineer and is the CTO for Industry Solutions Architecture in IBM Software Group. He also heads the Industry Solutions Worldwide and Natural Resources Center of Excellence in IBM India, focusing on steel, mining, and oil and gas industries.)

(Note: The views expressed here are those of the authors and not of Steel Insights. The publication does not take any responsibility for the article in part or in full)

STEEL INSIGHTS 39 JUNE 2012

Corporate update

Bunch of new SAIL projects to come on stream in 2012-13 Sanjukta Ganguly

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lthough the largest government owned steelmaker of India, Steel Authority of India Limited (SAIL) has seen its net profit plunge sharply by about 27.8 percent during 2011-12 as compared to its profit earned during the previous fiscal, a number of expansion projects already undertaken by this leading steelmaker is to see the light of the day in the current fiscal (2012-13), company sources informed Steel Insights.

During 2012-13, several new major production units will become operational at SAIL’s IISCO Steel Plant at Burnpur,

including Raw Material Handling System, Sinter Plant, COB11, Blast Furnace, SMS and casters, Power Blowing Station and Wire Rod Mill, paving the way for full-fledged operations to start in this greenfield plant.

Apart from this, major facilities to be completed in other SAIL plants include: ♦♦ 700 tpd Oxygen Plant (operational since 3.5.12) and Ore Handling Plant at Bhilai Steel Plant ♦♦ Medium Structural Mill and rebuilt COB-2 at Durgapur Steel Plant

STEEL INSIGHTS 40 JUNE 2012

Corporate update ♦♦ New Raw Material Handling System, Sinter Plant-3, new COB-6, new Blast Furnace-5, new slab caster and converter at Rourkela Steel Plant ♦♦ Hot Metal Desulphurisation Unit in SMS-2, Cold Rolling Mill-3 and Cast House Granulation System for BFs 1, 2 & 3 at Bokaro Steel Plant With SAIL meeting capex requirements mainly through internal resources, the company’s market borrowings were reduced by around `3,050 crore during FY12, taking its debtequity ratio to 0.41:1 as on March 31, 2012. SAIL’s net worth on that date stood at `39,811 crore as against `37,069 crore a year ago.

MoEF nod continues to elude Gua

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Steel Insights Bureau

he Gua iron ore mine leases of SAIL are still awaiting clearance from the ministry of environment and forests (MoEF) even though the steel ministry has asked for expediting the same, steel ministry sources said.

The External Appraisal Committee (EAC) of MoEF examined the proposals of Jhillingburu-I, Jhillingburu-II and Topailore leases of Gua iron ore mines of SAIL in Jharkhand in January 2012. The EAC’s report is important for issuance of Term of Reference (ToR) for preparation of Environment Impact Assessment (EIA)/Environment Management Plan (EMP) reports.

However, the EAC observed that these leases are located in West Singhbhum District, an area identified as severely polluted in terms of the respirable suspended particulate matter exceeding the prescribed levels.

The EAC has therefore deferred and kept the proposals in abeyance till appropriate control measures are implemented in the said area. As a result, the proposal is still pending with MoEF for approval.

The shortfall in the supplies of iron ore as a result of the closure of mines is being met from other operating mines as a short term measure.

Commenting on the issue, steel minister Beni Prasad Verma said that his ministry has taken up the matter on several occasions with MoEF to expedite the grant of forest and environment clearances in respect of pending leases of iron ore mines including Gua.

C.S. Verma, Chairman, SAIL

Again, during 2011-12, the company’s subsidiary, Maharashtra Elektrosmelt Ltd (MEL), was amalgamated with SAIL and renamed as Chandrapur Ferro Alloy Plant. The Salem Refractory Unit of Burn Standard Company Limited (BSCL) was also transferred to SAIL Refractory Company Limited (SRCL), a wholly owned subsidiary of SAIL during the year.

Wagon components SAIL, the leading steelmaking company of the country, has signed a joint venture agreement with Burn Standard Company Limited (BSCL) at Kolkata for setting up a Wagon Components Manufacturing Facility at the premises of BSCL at Jellingham, Purba Medinipore district, in West Bengal, with a capacity to produce 10,000 bogies and 10,000 couplers per annum, according to information available with Steel Insights.

The estimated capital outlay for the project is about `200 crore. The agreement was signed in the presence of chief minister of West Bengal, Mamata Banerjee, Union minister for railways, Mukul Roy, West Bengal minister for industries & commerce, Partho Chatterjee, chairman of SAIL, C.S. Verma, Railway Board member (mechanical), Keshav Chandra and other senior officials of the West Bengal government, Railway Board and SAIL. Speaking on the occasion, Mamata Banerjee, said, “The facility would lead to overall development of the region and

STEEL INSIGHTS 41 JUNE 2012

Corporate update

SAIL signs strategic MoU with Mongolia

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Steel Insights Bureau

teel Authority of India Limited (SAIL) signed a Memorandum of Understanding (MoU) with the Ministry of Mineral Resource & Energy (MMRE) of the government of Mongolia at Ulaanbaatar, Mongolia for exploring business opportunities in the mining and steel sector.

The MoU was signed by H.E. Balkhuu Bataa, Director (Mining & Heavy Industry), Policy Dept., Govt. of Mongolia, on behalf of MMRE and Rakesh Kulshreshtha, SAIL executive director (corporate Planning), in the presence of SAIL chairman C.S. Verma, joint secretary, ministry of steel U.P. Singh and other delegates from India and Mongolia.

Verma said that SAIL is happy to be a partner in Mongolia’s economic development, and commended the Mongolian government for its initiatives in developing its mining sector, which will serve to be ‘’crucial drivers of FDI’’ for the country, while also meeting the mineral needs of India and other Asian economies.

MMRE Vice-Minister T.S. Garamajav termed the MoU as a welcome step in cooperation between the two countries and hoped that joint feasibility report could help Mongolia set up a mineral processing industry.

As per the MoU, MMRE will provide information on iron ore and coal deposits in Mongolia to SAIL and will offer options of locations and size of steel manufacturing facility for pre-feasibility study. A joint pre-feasibility study for setting up of mineral processing facility for iron ore and coal, both coking and thermal, in Mongolia, and downstream steel making facilities for domestic consumption and trade, will be taken up by MMRE and SAIL. SAIL, on the other hand, will select the best available technology to treat Mongolian iron ore and coal deposits based on the feasibility study.

The MoU envisages exploration of opportunities for investments to be made by SAIL either individually or in a consortium with other entities to develop mineral processing/ steel manufacturing facility in Mongolia.

I urge the officials to complete it by 2013 and not 2014 as planned. I had announced the project in my 2010 budget speech and Railways have assured annual offtake for 5,000 units.”

“It is praiseworthy that SAIL is investing `21,000 crore in Durgapur and Burnpur. Both these SAIL plants are playing a yeoman’s role in transformation of West Bengal.

I have complete trust in SAIL’s capacity and capabilities and the company is doing exemplary work for the state.

The symbiotic relation between SAIL and Railways has the potential to grow further and it should be harnessed fully,’’ she added.

“Indian Railways and SAIL have a longstanding association. The Indian Railways has been providing the critical service of transporting practically all of SAIL’s raw material and finished products. Several SAIL plants together produce a wide variety of steel products used by the Railways, including rails, wheels & axles, material for coach manufacturing, etc.,” Verma said.

“Today’s event is a significant milestone in this journey together and SAIL is open to more such collaborations with the Railways to meet all the future needs of the nation,” he said, further adding that SAIL is on the lookout for new markets or segments, where we can refocus our opportunities to supply more value-added steel. Railways, which require stainless steel and other special grade steel items for manufacturing of various types of passenger coaches and goods wagons, as well as the cast steel frames (bogies & couplers) for these coaches, will be one such potential segment for SAIL. While commenting on this development, Keshav Chandra commented, “The signing ceremony is a momentous occasion as the manufacturing facility would meet the requirements of Railways and industry. This assumes special significance considering the fact that bogies and couplers are in short supply.”

According to industry sources, as per the Vision 2020 document of the Railways, the demand for wagons from Indian Railways and other wagon users are likely to go up sharply, thereby pushing the demand for wagons, bogies and couplers in turn. The SAIL-BSCL venture will be able to beat the competition and secure a good market share for the new or upgraded products.

STEEL INSIGHTS 44 JUNE 2012

Corporate update

RINL, NMDC sign MoU for slurry pipeline, pellet plant Sanjukta Ganguly

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ashtriya Ispat Nigam Limited (RINL), a government of India enterprise, is all set to take its expansion plans to the next level by initiating a number of projects.

This second largest government owned steel company in India has recently signed a memorandum of understanding (MoU) with NMDC Ltd, a leading mining company of the country for installation of a 336-km slurry pipeline from Jagdalpur to Visakhapatnam and a 4 million tons per annum (mtpa) capacity pellet plant at Visakhapatnam, according to information available with Steel Insights.

The MoU was signed by CMD of NMDC, N.K. Nanda, and CMD of RINL, A.P. Choudhary, in presence of the steel minister Beni Prasad Verma. “Joining hands by RINL and NMDC to take up the project for laying slurry pipeline and pellet plant is a very significant move. NMDC needs to market and clear the fines from mine site and RINL needs raw material linkage for its growth plan,” Verma said, adding that it is a step in the right direction. According to steel secretary D.R.S. Chaudhary, who was also present during the signingin ceremony, said that the pellet plant will be a right step in the direction of raw material security that RINL is aiming for in the backdrop of its long term capacity expansion plan.

Steel secretary inaugurates new facilities

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teel secretary D.R.S. Chaudhary inaugurated the Caster Shop in New Steel Melt Shop (SMS2) and Air Separation Unit (ASU4) of Rashtriya Ispat Nigam Limited’s (RINL) Vizag Steel Plant recently. A RINL release said that the Caster Shop And ASU4 were a part of company’s 6.3 million tons per annum expansion plan and were built at a cost of around `800 crore.

Chaudhary advised the RINL management to fully capitalise on the advantages of the coastal location of the plant. He also advised the company to set up a captive jetty in order to take full advantage of material logistics.

Chaudhary mentioned that proposed listing of RINL shares will be a gain not only to the company, but also to the government. He allayed the fears that disinvestment of 10 percent shares in RINL will lead to privatisation and added that it would in fact enhance corporate governance.

NMDC, the giant miner of India is planning to increase its production of iron ore from Bailadila Region to 50 million tons per annum (mtpa) with expansion of existing mines and addition of new mines like Deposit -11B, Deposit 13 and Deposit 4. To increase the evacuation capacity, NMDC is contemplating to develop a slurry pipeline project from its mines in Chhattisgarh to feed RINL’s plant at Visakhapatnam and also to the proposed NMDC’s steel plant at Nagarnar, a company source told Steel Insights.

In addition to this, to further augment the expansion plans of the company, a new blast furnace has recently been commissioned in April 2012.

This project will strengthen the synergy between steel major RINL and leading mining firm NMDC. At the moment, the Kirandul to Kothavalasa railway line which is the lifeline for transportation of iron ore by NMDC to Visakhapatnam steel plant and other customers has reached its capacity for handling iron ore traffic. Hence, it is believed that this project shall expect to ease congestion on KK railway line.

In fact, this slurry pipeline shall be the second one to terminate at Visakhapatnam in addition to the existing pipeline of Essar Steel. The pipeline is planned to be routed alongside the National Highway 43, avoiding the forest area.

This will result in easy access for maintenance and reduced threat from extremists, company sources informed.

The slurry transportation cost is expected to be approximately `400- 500 per ton as compared to `870 per ton by rail. Mecon shall be the consultant for this entire project while the project is expected to be executed at the total cost of around `2200 crore in 36 months from the date of order placement, company sources added.

Trials for continuous billet caster As a major step towards embarking upon a path of expansion, the company has completed hot trials on a new continuous billet caster, the latest element of its major expansion plan, according to industry sources.

To secure outlets for the additional production the plant’s owner, RINL, is seeking to establish toll-rolling arrangements with independent mill operators.

The new caster can produce billets of 150mm and 200mm square at a speed of up to 4.0 metres/minute. It adds 1m tons/year to the works’ production capacity. The Visakhapatnam plant has almost completed a project to increase crude steel capacity from 3 million tons/year to 6.3 million tons/year.

STEEL INSIGHTS 45 JUNE 2012

Corporate update

Texmaco UGL Rail to set up preparatory shop at Belgharia Sanjukta Ganguly

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exmaco UGL Rail Private Ltd, a joint venture company between renowned infrastructure and heavy engineering firm Texmaco Rail & Engineering Ltd (Texmaco), and technology & engineering giant in Asia Pacific, UGL, Australia is to set up preparatory shop at Belgharia in the state of West Bengal, according to information available with Steel Insights.

The ‘foundation stone’ of the unit was laid on May 19, 2012 in presence of Madan Mitra, Minister of Transport, Government of West Bengal, Nirmal Ghosh, MLA of Panihati along with several other members of Kamarhati municipality, local councillors, company executives and union office bearers and many others, a company source informed.

According to a company statement, this adds another milestone in the partnership between Texmaco and United Group, Australia, to establish a composite world class manufacturing facility in Kolkata, rivalling the best in the world.

The plant and machinery for the project have been selected from the best in the world. Laser cutters/plasma cutters/5AXlS CNC machining centre/moulding/robots/CNC process environment controlled blast and paint booths are presently getting installed in its main facility, the statement said.

Texmaco posts net profit of `93.05 cr

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Steel Insights Bureau

exmaco Rail & Engineering posted a net profit of `93.05 crore for the year ended March 31, 2012 while the gross turnover during the said period stood at `937.96 crore (excluding the value of free supply inputs of `334 crore provided to the company by Indian Railways and other clients) as against `1111.44 crore in the previous year.

Gross profit of the company for the year (PBDT) and profit before tax (PBT) were lower at `145.44 crore and `136.26 crore respectively, the company said in a release.

The company’s board of directors has recommended a dividend of 100 percent for the fiscal 2011-12. It has orders worth `1528 crore presently.

The company has started cutting steel components and making tangible progress including testing and commissioning of equipment installed. The facility will be fully ready for production by October 2012, and will ramp up to full production capacity by March next year. The products will be of the highest quality, supported by structured training.

This joint facility will build products for the Australian and global market followed by Hitech products for the Indian and the neighbouring Asian markets. It would also explore related rolling stock maintenance and refurbishment opportunities.

In order to fully equip this unit, operations personnel are being sourced from local including training institutes.

Texmaco is providing full support of its state-of-the-art in-house technical training facility to develop the skills of these people to achieve the desired level, a company source informed Steel Insights.

As far as Indo-Australian partnership is concerned, this initiative is undoubtedly a significant step in the context of Indo-Australia relationship, given India's importance as a growing trade partner for Australia with more and more Indian companies investing in resources and technology in Australia boosting India's interest in exporting coal, out of Australia.

The facility will be an integral part of UGL's supply chain and assist in providing components at competitive prices to support UGL's manufacturing business in Australia.

"Our presence in India continues to grow, and Texmaco is an outstanding partner for this long term commitment."

Richard Leupen, chief executive of UGL, had said in an earlier statement.

The company expects the work at this unit to be completed

by Q3 of 2012-13 so that the unit can be inaugurated by this time and work can be started.

STEEL INSIGHTS 46 JUNE 2012

Corporate update

JSPL to acquire stake in Gujarat NRE Coke Australian arm

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Steel Insights Bureau

indal Steel & Power Ltd (JSPL), which is facing problems in developing iron ore assets in Bolivia, has agreed to acquire through its Mauritius-based subsidiary a minority stake in Gujarat NRE Coke Ltd’s Australian subsidiary, Gujarat NRE Coking Coal Ltd (GNM), to get supply Arun Kumar Jagatramka, of up to 1 million tons Chairman, Gujarat NRE Coking per annum (mtpa) coking Coal Limited coal from the latter over a period of 10 years, according to information available with Steel Insights.

JSPL is likely to pay about Australian $25 million (`135 crore) to acquire a strategic stake in GNM to get supply of 0.5 mtpa of coking coal annually for a period of 10 years with an option for additional quantity 0.5 mtpa coal at benchmark linked price.

GNM said in a filing to Australian Stock Exchange on May 28 that it has decided to rope in JSPL as a strategic partner and has agreed to place 100,000,000 shares at a price of $0.25 per

Gujarat NRE Coke posts loss of `83.34 cr in FY12

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Steel Insights Bureau

ujarat NRE Coke Limited, a leading coke manufacturer of the country, has posted a loss of `83.34 crore during the year ended March 31, 2012 as compared to a profit of `134.70 crore earned during the previous fiscal 2010-11, the company said in a statement.

The company’s total income from operations during 2011-12 stood at `1398.39 crore while the figure stood at `1813.71 crore in 2010-11. On the other hand, Gujarat NRE Coke’s total expenditure during the year 2011-12 stood at `1079.28 crore as compared to `1578.25 crore incurred a year ago.

share, a premium of about 48 percent to the last traded market price of the GNM scrip at $0.17 on May 25, 2012.

GNM said it has entered into an offtake agreement with JSPL and will also make a placement of new shares in favour of Jindal Steel& Power (Mauritius) Ltd. The shares will be issued by the company under the 15 percent placement limit available under Listing Rule 7.1. The placement is expected to be completed by May 30, 2012.

Speaking on the development executive chairman of GNM Arun Kumar Jagatramka said, “We are extremely pleased to introduce Jindal Steel and Power Limited as a long term strategic partner and investor in the company. This is a winwin deal for both parties, since it provides secured supply of premium hard coking coal to Jindal Steel while it diversifies the customer base of the company.”

“This is not a huge investment by JSPL, but is in line with the company’s strategy to pick up stakes in firms that can offer raw material security,” Sushil Maroo, director (finance) at JSPL, said, adding that, “This investment is part of our policy to secure coking coal supplies.”

Gujarat NRE Coking Coal Limited owns and operates two premium quality hard coking coal mines in the Illawarra region of New South Wales and is in majority owned by Gujarat NRE Coke Limited, the largest independent manufacturer of metallurgical coke in India.

Currently both the mines of the company – NRE No.1 Colliery & NRE Wongawilli Colliery – are under longwall operations.

Gujarat NRE is the only Indian company with coking coal mines in Australia having over 650 million tons of coking coal resource with excellent coking properties.

The coal mines are owned through its subsidiary – Gujarat NRE Coking Coal Limited, listed on the ASX. The hard coking coal production is in the process of being increased from current level of 2 million tons per annum (mtpa) to 6 mtpa by 2015 to make it one of the top ten hard coking coal producers in the world.

On the other hand, JSPL operates the largest coal-based sponge iron plant in the world and has an installed capacity of 3 mtpa of steel at Raigarh in Chhattisgarh. With a 0.6 mtpa wire rod mill and a 1 mt capacity bar mill at Patratu, Jharkhand, a medium and light structural mill at Raigarh, Chhattisgarh and a plate mill to produce up to 5 metre wide plates at Angul, Odisha, the company is looking forward to secure its raw material supply furthermore to sustain its growth trajectory.

STEEL INSIGHTS 47 JUNE 2012

Corporate update

Dipping profits mark FY12 of leading steelmakers Steel Insights Bureau

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ost of the steel manufacturing companies of India have witnessed a profit slump during 2011-12 owing to sharp rise in input prices coupled with reduced demand. Even the giant steelmakers like SAIL, Tata Steel and few others were not spared from this trend. Following are a few snapshots of the financial results of a few leading steelmakers of India and some related companies.

SAIL net profit dips 27.8 percent

Steel Authority of India Limited (SAIL) posted a net profit of `3543 crore in 2011-12, down 27.8 percent from `4905 crore earned in 2010-11, according to a company statement.

On the other hand, in Q4, the company posted a net profit if `1577 crore, up 3 percent from `1531 crore during the corresponding period of the previous fiscal. This performance in Q4 helped the company achieve gross sales turnover of over `50,000 crore during 2011-12, for the first time since inception, with a growth of 7 percent over the previous year.

Under SAIL’s modernisation & expansion (M&E) plan, capital expenditure during FY12 crossed `11,000 crore, taking cumulative expenditure on this count during the Eleventh Plan to `40,321 crore. M&E projects completed during 2011-12 included installation of a new turbo blower and rebuilding of coke oven batteries (COBs) 1 & 2 at Bokaro Steel Plant (BSL), rebuilding of COB-6 at Bhilai Steel Plant (BSP), installation of new ladle furnace at Alloy Steels Plant (ASP), etc.

SAIL has pegged outlay on M&E during the Twelfth Plan at `45,000 crore, including `14,500 crore during the current financial year, the statement added. According to company sources, the effect of input price increase, amounting to over `4,000 crore, mainly of imported coking coal with average prices rising to $288 in FY12 from $213 the previous year, was compounded by the volatility in dollar-rupee valuations, carrying an adverse impact of around `900 crore.

“It is a matter of great pride that SAIL’s turnover crossed the `50,000-crore mark during a year in which the global economy faced many challenges. With 2012 having begun on a very positive note for us, and our strategic initiatives in several areas taking firm shape, our outlook is bright. The focus during the current year will be on completing the ongoing M&E plan to give SAIL the readiness to meet the projected growth in steel demand during the Twelfth Plan period and beyond,” said chairman of SAIL, C.S. Verma, while commenting on the financial performance of the company during 2011-12.

Q4 FY ’12 Gross sales turnover (`/cr) Income from operations (`/cr) Profit before tax (`/cr) Profit after tax (`/cr)

FY ’11

Full year percent growth

FY ’12

FY ’11

percent growth

14785

13135

12.6 percent

50348

47041

7

15079

13339

13 percent

51036

47629

7

2301

2225

5151

7194

–28.4

1577

1531

3543

4905

–27.8

3.4 percent 3 percent

Tata Steel FY12 PAT falls 40% Tata Steel Group reported 40 percent decline in its profit after tax during the financial year 2011-12 at `5,390 crore ($1.06 billion) compared to a profit of `8,983 crore ($1.77 billion) in 2010-11. The company said in a release that its EBITDA in 2011-12 was `13,533 crore ($2.66 billion), down 20.93 percent compared to `17,116 crore ($3.36 billion) in 2010-11.

The turnover during the year stood at `1,32,900 crore ($26.13 billion) up 11.9 percent compared to 1,18,753 crore ($23.34 billion) in 2010-11. The Group’s steel deliveries in FY12 fell marginally by 1.1 percent to 24.22 million tons (mt) compared to 24.50 mt in FY11. The net debt at the end of March 2012 increased slightly to `47,697 crore ($9.38 billion) compared to `46,660 crore ($9.17 billion) at the end of March 2011.

During the fourth quarter of 2011-12, the Tata Steel Group’s profit after tax stood at `433 crore ($85 million) compared to a loss of `603 crore ($118 million) in Q3 of FY12 and a profit of `4,176 crore ($821 million) in Q4 of FY11. The group EBITDA in Q4 of FY12 was `3419 crore ($672 million) compared to `2023 crore ($398 million in Q3 of FY12) and `4782 crore ($940 million) in Q4 of 2010-11.

The analysts had expected Tata Steel to report 42.4 percent fall in EBITDA on account of higher raw material cost, mainly in its European operations. Consolidated turnover during the fourth quarter stood at `33,999 crore ($6.68 billion), up 2.7 percent from `33,103 crore ($6.51 billion) in third quarter of 2011-12 and by 0.5 percent from `33,824 crore ($6.65 billion) in Q4 of 2010-11. Broking firm, Angel Broking, had expected the company to report 1.1 percent fall in fourth quarter net sales on account of lower volumes from its European operations.

Turnover at Tata Steel India in FY12 increased by 15.4 percent to `33,933 crore ($6.67 billion) from `29,396 crore

STEEL INSIGHTS 48 JUNE 2012

Corporate update ($5.78 billion) in FY11 while fourth quarter sales of `9,479 crore ($1.86 billion) were up 13.7 percent from `8,341 crore ($1.64 billion) in Q4 of 2010-11 and up 13.1 percent from `8,382 crore ($1.65 billion) of Q3 of 2011-12.

The turnover in Tata Steel Europe in 2011-12 increased to `82,153 crore ($16.15 billion) from `73,844 crore ($14.52 billion) in 2010-11 while fourth quarter sales were at `19,923 crore ($3.92 billion) compared to `21,488 crore ($4.22 billion) in fourth quarter of 2010-11 and `20,535 crore ($4.04 billion) in Q3 of 2011-12.

Tata Steel managing director H.M. Nerurkar said, “The Indian operations registered robust performance in FY12 amid growth concerns in the domestic market. Performance in FY13 is expected to be boosted by the start-up of the brownfield expansion at Jamshedpur, where trial production has begun.”

Work on the greenfield project in Odisha is on track, Nerurkar said, adding that the South East Asian operations are expected to perform better in FY13 on the back of cost reduction measures, a healthy order book position and product mix improvements.

Tata Steel Europe MD and CEO Kal-Ulrich Kohler said, “The continuing Eurozone crisis kept EU steel demand well below pre-crisis levels in the March quarter. In addition, operational difficulties that affected strip product output caused the European operations to perform worse than in the year-earlier period.”

But there was an improvement in performance over the third quarter, when the cost-price squeeze caused by high raw materials volatility was at its most extreme, Kohler said. The realisation benefits from cost saving and management improvement programmes contributed to this better performance and the company also met the first-year delivery targets on its long products restructuring by the end of March, he added.

JSW Steel net profit dips 52.83% JSW Steel Limited, one of the leading steelmakers of India, has posted a net profit of `782.81 crore, down 52.83 percent as compared to `1659.38 crore during 2010-11, the company said in a filing to BSE. The company’s total income from operations stood at `34368.05 crore as compared to `24,116.09 crore during 2010-11. However, total expenditure of the company was at `30199.31 crore against `20797.21 crore during the previous fiscal.

NMDC net profit up 12% NMDC has posted a net profit of `7,265.39 crore for the year 2011-12 against `6,499.22 crore in 2010-11, registering an improvement of 12 percent over last year, the company said in a statement. The production and sales of iron ore for the year 2011-12 have reached a level of 27.26 tons and 27.3 tons, respectively representing an increase of 8 percent and 4 percent, respectively in comparison to 2010-11 and posted

turnover of `11,261.89 crore for the year 2011-12, the statement added. During the year, the quantity of domestic sales of iron ore increased by 13 percent whereas exports reduced by 85 percent for catering to the needs of the domestic market, the statement further added.

Electrosteel Castings posts net profit of `28.53 crore Electrosteel Castings Limited, has posted a net profit of `28.53 crore during the year ended March 31, 2012, down 82.42 percent from `162.27 crore earned during 2010-11, the company said in a filing to BSE. The company’s total income from operations stood at `2101.75 crore in 201112, up from `1933.98 crore during 2010-11. On the other hand, total expenditure of the company during 2011-12 stood at `2053.64 crore as compared `1659.21 crore during 2010-11.

Sesa Goa Q4 net profit dips 20.5% Vedanta group firm Sesa Goa reported a decline of 20.50 percent in its consolidated net profit at `1,162.11 crore for the quarter ended March 31, 2012, due to a slew of reasons like lower volumes, higher export duty and higher interest cost.

The company had reported a net profit of `1,461.76 crore during the corresponding quarter of 2010-11. During the period under review, net sales of the company were also down by 22.59 percent to `2,791.37 crore vis-a-vis `3,605.92 crore reported during the same period of FY11, it said in a BSE filing.

The Goa-based iron ore miner said in a separate statement that it has received approvals of BSE, NSE and Competition Commission of India for the proposed merger of Sterlite Industries and other Vedanta group companies into it.

“The application of the company before the Foreign Investment Promotion Board is pending consideration,” Sesa Goa said, adding that it has also sought approval of the relevant courts for the proposed merger.

The company has also accounted `465.80 crore for its 20 percent stake in Cairn India, that was acquired last year for `13,075 crore, it said. During the fourth quarter, Sesa Goa’s cash profit declined by 51 percent to `1,110 crore, while for the entire fiscal, it was lower by 43 percent to `3,235 crore. “The profit was lower on account of lower volume, higher export duty, reduced income from investments on account of lower cash balance, higher interest cost and foreign exchange losses,” the company said.

For the full year 2011-12, Sesa Goa’s net profit was down by 36 percent to `2,695.50 crore, while its net sales declined by 10 percent to `8,274.53 crore. Production of iron ore in Q4 was lower by 11 percent at 4.9 million tons (mt). Production for the full year was 13.8 mt compared with 18.8 mt in the previous year. Volumes were lower primarily due to the Karnataka mining ban and discontinuation of Orissa operations.

Expansions of the pig iron capacity to 625 ktpa and metallurgical coke capacity to 560 ktpa are progressing well and will be commissioned in the current quarter, it added.

STEEL INSIGHTS 49 JUNE 2012

Feature

Stainless steel consumption set to grow Steel Insights Bureau

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ndia is set to be a shining story in stainless steel consumption map of the world in the years to come, according to a presentation by N.C. Mathur, senior advisor at Jindal Stainless Limited, at a conference in New Delhi, recently.

By 2020, estimates suggest Indian GDP could rise to $4 trillion, taking India to the fourth place behind the US, China and Japan by the size of the economy. High level of infrastructure spending and consumer spending in areas like

housing, auto and consumer durables is a positive signal for the steel industry in the country.

Quoting research reports, Mathur said construction sector is expected to grow by 22 percent annually to reach $335 billion by 2016, while the auto component sector is expected to grow by 17 percent annually to reach $84 billion by 2016 and electronics sectors is expected to grow by 23 percent to $363 billion by 2015.

New Development Areas for Stainless Steel

Stainless Steel Consumption Pattern (%)

STEEL INSIGHTS  50  June JUNE 2012

feature Jindal Stainless : India’s Largest Integrated Stainless Mill

Emerging Applications

Mathur said that the low per capita consumption of stainless steel in India which was 2.1 kg as compared to 7.5 kg in China and a world average of 4 kg, all in the 2011-12 fiscal year, constitutes a huge opportunity for growth in this sector.

According to Mathur, Indian stainless steel consumption will grow at a compounded annual growth rate of 9.7 percent reaching 3.4 million tons per annum (mtpa) by 2015, outstripping global consumption growth of 6 percent to 34.12 million tons.

Indian consumption of stainless steel has been mainly driven by the kitchen and catering segment, consuming 71 percent of production against a world average of 33 percent. However, industrial consumption of stainless steel in India was just 8 percent against a world average of 27 percent. The Indian construction sector accounted for just 4 percent of stainless steel against a world average of 16 percent.

A number of new development areas for use of stainless steel are coming into fore over time like for example roofing sheets, luxury bus bodies, process and engineering sector and consumer durables sector among others.

In the midst of this, Jindal Stainless, the country’s largest integrated stainless mill, has undertaken ambitious expansion plans to fuel growth in the segment.

Mathur said high level of integration, state-of-the-art technologies, wide spectrum of products – precision strips, blade steels and coin blanks and market development for the applications would help in the growth of the company.

Economic growth and increasing consumption of stainless steel would help in the overall growth of the sector, according to Mathur.

The growth areas of architecture, building and construction and new applications would fuel growth for the sector by overriding the challenges of raw material volatility and slow infrastructure development in India.

Odisha Plant : The Future of Stainless Steel

Hisar Plant : Pioneer of Stainless Steel

STEEL INSIGHTS 51 JUNE 2012

feature

Low prices prompt iron ore rebound

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Steel Insights Bureau

pot iron ore prices in China showed signs of rebound in May, propped up by expectations that Beijing will do what it needs to boost a slowing economy which should buoy demand for steel and its key raw material. A rapid fall in iron ore prices in May drew some buyers back into the market, with some Chinese steel mills replenishing low stockpiles following a bounce in spot steel prices.

Iron ore has dropped nearly 9 percent so far in May, far more than the 4 percent decline in steel prices, as Chinese buyers skipped cargoes due to weak steel demand. Price offers for imported iron ore in China rose towards the end of May for the first time since early April, with Australian and Brazilian cargoes increasing as much as $2 per ton, industry sources said. However, deals were not much and it is difficult to say whether the market has reached the bottom. Many players think that the mills are not ready to pay at current prices yet.

Signs are growing that China is doing what is necessary to boost the world’s second largest economy that probably slowed further in the second quarter after an already weak first three months. According to analysts, China needs to lift investment to spur growth, but also cautioned against any aggressive fiscal stimulus, dampening market hopes the government might

Goa to audit mining leases

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he mines department of Goa has decided to audit the iron ore stock of 338 mining leases in the state to find out its exact quantity in operational and non-operational mines. Mining companies, in a written statement submitted before the mines department, have stated that around 765 million tons (mt) of iron ore are lying in dumps in and outside leases in the state.

The state government has stopped handling of dumps till the government comes out with a clearcut policy on their handling. The government has prepared the proposal and list of mines to be visited to carry out the audit of iron ore stock. This will help the department to know the exact quantity of ore so far extracted and pending for exports in the state. Chief minister Manohar Parrikar will hold the meeting after June 15 to discuss the state’s mining policy.

The aim of the mining policy would be sustainable development and to conserve the state’s natural resources, sources said. The mines department has also received application from various consultants to conduct a resurvey of all mining leases in the state based on survey numbers, to identify the exact boundaries of mining leases. There are around 90 operational mines in Goa, which exported around 43 mt last year.

unleash a budget similar to the 4 trillion yuan ($630.12 billion) it spent during the 2008-09 financial crisis.

Iron ore with 62 percent iron content was quoted at $132.50 a ton on May 29. Higher steel prices backed the recovery in iron ore. The price of steel billet in China’s key Tangshan area in Hebei province rose 20 yuan to 3,530 yuan per ton on May 29 and is likely to gain another 10-20 yuan. There are talks that prices for iron ore at ports stocks have improved by 10-20 yuan per ton for all grades. But analysts do not expect another strong rally in iron ore prices for the rest of the year, with the spike to nearly $150 per ton in April possibly the peak.

Iron ore prices have come under pressure as seasonal demand improvement in China fade out, but prices can be sustained in a $120-$140 per ton range through 2012, analysts felt. While slower demand growth from China would cap any upside, prices should find a floor near $120 per ton given the high cost for some producers, analysts said. Top miner Vale has been briskly selling cargoes in the spot market in May, with some traders estimating its spot sales at around 3 million tons (mt) so far in May. GlobalOre GlobalOre, backed by top iron ore miners BHP Billiton, Vale and Rio Tinto and Chinese steelmakers including Baoshan Iron and Steel, began trading less than a month after China launched its first iron ore physical trading platform in a bid to boost its price-setting influence in its biggest commodity import by volume. BHP, Vale, Rio Tinto and Baosteel, along with other miners and steel producers, are also members of the China Beijing International Mining Exchange (CBMX) which runs the Chinese platform that debuted on May 8.

Traders said they have not heard of any deal so far on CBMX after two cargoes, one Australian and one Brazilian, were sold on the platform. Since CBMX’s debut, a total of 1.6 mt have been sold on the platform, Dong Chaobin, president of the exchange, told an industry conference in Singapore.

Outlook Traders expect Chinese appetite for iron ore to revive, with steel mills still running at full capacity, which should keep daily crude steel output near record highs at around 2 million tons in June. While the Chinese steel market has seen prices rallying over the past few days on Beijing’s promises of stimulus, analysts do not see a fundamental turn in pricing in China as production is likely to continue to outpace demand.

To prevent a further slowdown, China announced a series of policy steps in recent months, including allowing banks to set aside less money as reserves and fast tracking approval for infrastructure projects. Hopes are rising Beijing could unleash a massive stimulus budget, but the country’s top policy advisers said the country does not need one since aggressive spending now could do longer-term harm.

STEEL INSIGHTS 52 JUNE 2012

feature

Bearish trend in ferro alloys Anondo Kumar Dutta

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he domestic ferro alloy market showed sluggish trends in the month of May, largely owing to weak demand and the general economic downturn.

Ferro chrome Though the domestic ferro-chrome market has been inactive over the month of May, exports have been especially on the uptrend.

Market participants pegged prices of high carbon ferro-chrome at 96-97 cents/lb cfr last week, up from 95-97 cents/lb in the third week of May in line with rising international Fe-Cr prices.

International prices had risen by $31-47 per ton since mid-May. Exports were currently being conducted at $1,224-1,256 per ton last week, which is equivalent to 93-95 cents/lb. However, there is limited room for Fe-Cr export prices to rise in the near term as the outlook for the domestic stainless steel industry remains bleak, with production cuts expected to continue among mills in the month of June.

Ferro molybdenum Ferro molybdenum prices remained stable in the range of `1130-1160/kg Mo but the sentiment among dealers is that it looks getting weaker because of sluggish demand. Officials added any deals concluded at up to `1160/kg Mo attract 60day payment term, a condition converters are reluctant to agree upon now given the continual depreciation of the Rupee in the last three weeks.

The market is stable but any quotations above `1150/ kg Mo ($ 34.5/kg) is not receiving any bids. With molyoxide quotations for new shipment in the range of $ 13.814.1/lb CIF Nhava Sheva, converters claim to have enough inventory in the domestic market to reply upon should supply become tight due to continuing refusal of end-users making booking for new shipment. Negotiations for deals of around $ 13.75/lb CIF Nhava Sheva are being done, based on the reality there is no lower quotations in the market and this could be an indication the market price is about bottom-out level but with no demand to turn the current price trend.

Ferro manganese On account of weak demand and volatility in the exchange rate, ferromanganese market is under pressure as producers have reduced their quotations in order to stay competitive among rivals rather than being able to stimulate demand.

According to participants, high carbon ferromanganese 65-70 percent is down `1000 per ton to now at `56000 per ton ex works whilst traders reported they are unable to achieve bids higher than `59000 per ton ex warehouse.

Although companies had received enquiries for supplies from Iran, sources declined to put material on offer citing

current international sanctions slapped on the country.

Medium carbon ferromanganese 70 percent being offered in the range of is `80000-81000 per ton ex works and medium carbon ferromanganese 80 percent min grade material quoted in the range of `87000-88000 per ton ex works but due to lack of end-user enquiries, dealers are under pressure to review downwards their bids expectation.

Ferro silicon Prompted by realisation of weak end-user demand, ferrosilicon 75 percent dealers and traders are adjusting quotations although this is hardly enough to push for more deals as this is more borne out of the downturn, or perhaps sluggishness, of the economy. Mid-week, companies are offering ferrosilicon 75 percent min grade material at `78000 per ton ex warehouse but deals were being lost as buyers are securing materials at discounts & are being offered `77000 per ton ex warehouse.

There is no business laments producers, and are discouraged from placing new orders from Bhutan.

Meanwhile, Bhutan quotations remained firm in the range of `71000-72000 per ton ex Bhutan and appear not ready to consider lower bids around `69000 per ton ex Bhutan, a price-level Indian dealers now expect for next shipment in order to remain in business and adjust to competitive offers from producers in Meghalaya. On the future trend, whilst some dealers stated they are adopting wait-and-see attitude, many more stated although sentiment is not positive in the market, it is unlikely there would be any further sharp price decline, given the rupee equation to major currencies, and expect stability in the exchange rate in the coming month.

Silico manganese Participants reported continuing slow demand of silicomanganese 60/14 grade and thereby, depending on regional disparities and proximity to major producing areas, leading to pressure on dealers to consider lower bids from the current range of `57000-59000 per ton ex works.

Whilst traders in Kolkata area are insisting on workable bids of silico-manganese 60/14 at around `59000 per ton ex works, dealers in Ahmedabad find it difficult to convince prospective buyers to accept their quotations at `57,000 per ton ex works.

In the export market, mainstream prices for silicomanganese 60/14 grade material remains being quoted in the range of $1050-1100 per ton fob India, whilst silico manganese 65/17 is around $1250 per ton fob India but dealers lamented there have been no business in the last several weeks and are unable to claim the 3 percent incentive of export deals. 

STEEL INSIGHTS  53  JUNE 2012

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Supply concerns push up coking coal

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Steel Insights Bureau

hreats of potential supply tightness for premium lowvolatile coking coal from Australia and Canada exerted an upward pressure on spot coking coal prices in May. Workers in the Queensland coal mines embarked on a week-long strike towards the end of May after last-ditch negotiations with BHP Billiton-Mitsubishi Alliance over workplace agreements failed. Employees of Canadian Pacific railroad also went on strike, threatening a key export rail artery. Premium low-volatile coal was assessed at $223 per ton fob Australia. Second-tier hard coking coals rose by a greater margin, $3 per ton, to $192 per ton fob.

Thin trading activity was observed as market participants adopted a wait-and-see attitude following news of the strikes.

Offer prices, however, were given a boost with Australian prime hard coal heard offered as high as $230 per ton fob.

Second-tier HCC prices rose in tandem with premium low-vol, with high indicative buying interest by Indian mills supporting prices. Indian steel producers were said to be increasing their intake of second-tier coals in their attempts to decrease purchases of prime hard coals. A deal for 30,000 tons of Indonesian mid-vol coal was said to be concluded at $186.50 per ton fob to an Asian steel mill.

Separately, contract negotiations for premium low-vol Australian HCC for the July-September quarter were said to be underway. It was reported that Anglo American began negotiations with an offer at $230 per ton fob, but most sources surveyed believed that a deal would be possible at $220-225 per ton fob.

India’s Mongolia move In a move to reduce dependence on highly priced Australian coking coal, India will acquire a mine in Mongolia and also set up the first steel plant in the quality coal rich country.

The Indian delegation comprising Chairman of Steel Authority of India (SAIL) C.S. Verma and U.P. Singh, Joint Secretary in the Ministry of Steel, went to Ulaanbaatar to sign a pact in this regard.

The plan is to acquire the mine, utilise the coal for the steel plant India proposes to set up in Mongolia and export the rest to India through Chinese ports as Mongolia is a land locked country.

Mongolia has very good quality of coking coal mines.

India does not have such quality coal mines ourselves. When Mongolian government allocates some good coking coal mine, India will have reciprocal arrangement to set up a steel plant there.

Despite being a growing economy with abundant coking coal mines, Mongolia does not have any steel plant of its own.

The mine India plans to acquire will first meet the requirement of setting up a steel plant there. Then the surplus coking coal will be taken to from there. The mine

and volumes of the coal expected of it will be identified after the pact is in place.

This will be the first attempt by India to break away from the excessive dependence on Australian coking coal, which has become too costly in recent years pushing up the cost of steel production.

India is importing 35 mt of coking coal every year about 60 to 70 percent from Australia which is close to India and the rest from US and New Zealand.

Considering India plans to expand steel production from the current 80 mt to 200 mt by 2020, it is looking to get coking coal securitisation, as there were no quality coking coal mines at home. It has become very important as to produce 1 ton of steel requires 0.9 tons of coking coal.

The consumption of coking coal in India is roughly about 35 to 40 million tons (mt) of which about 12 to 15 mt available in India. About 30 to 35 mt is imported in India every year, of which SAIL imports about 14 mt.

Though the newer technologies are coming up, they would take a long time to emerge he said referring to talks with Posco to set up furnace based steel plants. Securitisation is important as Australian coking coal price has gone up from $125 per ton in 2010 to $350 per ton in 2011.

Mongolia has prime quality coking coal. China which also has a lot of coking coal reserves is importing from Mongolia, cutting down its imports from Australia.

CIL seeks to exit ICVL State-owned Coal India Ltd has written a letter to the Coal Ministry stating its decision to opt out of ICVL, a special purpose vehicle formed to acquire coal mines overseas, according to reports.

ICVL, a joint venture between SAIL, CIL, NTPC and NMDC, was incorporated in 2009. It was conceptualised by the Steel Ministry for securing much-needed coking coal and thermal coal assets in overseas territories.

According to sources, the Coal Ministry on receiving the letter from CIL will make recommendations to the Steel Ministry and seek its permission to CIL’s exit from ICVL. Sources had said that CIL board had agreed to walk out of ICVL. The board felt that it was not advantageous for the PSU to be part of the consortium, they said, adding that the venture on the part of CIL involved financial burden without commensurate advantage.

NTPC had also expressed its willingness to opt out of the consortium. SAIL and CIL each holds 28 percent stake and RINL, NMDC and NTPC 14 percent each in ICVL. ICVL, which has `10,000 crore authorised capital and `3,500 crore equity capital, has not been able to taste success since its formation. The consortium aims to be the owner of about 500 mt of met coal reserves by 2019-20.

STEEL INSIGHTS 54 JUNE 2012

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Bring coking coal under steel ministry: Verma

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Steel Insights Bureau

aking a cue from a Planning Commission recommendation, the Indian steel industry has raised its voice on demerging coking coal operations from the ambit of Coal India Ltd (CIL). While the Plan Panel mooted the formation of a separate entity, the steelmakers seem to prefer bringing coking coal under the purview of the steel ministry.

The suggestion has come from none other than the chairman of the Steel Authority of India Limited (SAIL), C.S. Verma, who said that such a move would help ensure supply security for this all important fuel. This, he averred, was also necessary to achieve the national goal of achieving a steel production of 200 million tons (mt) by 2020.

SAIL is investing about `72,000 crore to lift annual crude steel making capacity to 21.4 mt from the current level of 13.8 mt. Hence, the issue of long-term security in coking coal

SAIL’s global tender receives ‘reasonable’ response

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he Steel Authority of India Limited’s (SAIL) global tender to procure 0.5 million tons (mt) (+/10%) freshly mined imported prime quality hard coking coal has witnessed a reasonable response unlike in the past when the company used to get very limited response, a source in SAIL told Steel Insights.

“We have received reasonable response to the tender that closed on May 14 and the next stage (finalising commercial bids) is under process,” the source added.

The source, however, could not disclose the names of companies which participated in the tender floated on April 13.

SAIL is required as per the ministry of steel directive to purchase 10% of its total coking coal requirement through open tenders and the balance through direct negotiation with miners.

There used to be limited response from miners or suppliers for SAIL’s coking coal tenders as generally the miners were unwilling to supply coking coal at long term contract prices, an industry source said.

However, this time the response may be slightly better as the steel behemoth has planned to start taking delivery within six months starting from June and completing in November instead of a delivery period of 12 months in earlier tender conditions.

supply is undoubtedly one of the most important areas of concern for the SAIL authority and the steel industry at large.

Import dependence Coking coal being a key ingredient for making steel, the domestic steelmakers rely heavily on imports mainly from overseas countries like Australia to meet their requirement.

It is estimated that India has coking coal reserves of about 33 billion tons, which are not exploited adequately. Besides expressing the wish to bring the coking coal mines under the steel ministry, the steelmakers have also sought government funding for research and development (R&D) initiatives in steel to encourage collaborative research.

In order to meet the steel production target set by the Government of India, Verma further stressed upon the need for timely grant of statutory approvals for mine leases and ease in land acquisition process.

Focus on R&D According to Verma, Indian steelmakers’ R&D spend ranged from 0.15-0.25 percent of their turnover, while their global counterparts spend 2-2.5 percent of their earnings. Since, these globally breakthrough technologies were possible only through government aided research and development projects, the SAIL chairman called for such support in India to encourage the collaborative research.

SAIL wants to go for a joint venture with South Korea based Posco for building a 3 mt steel mill at Bokaro using the former’s patented Finex technology that makes hot metal from iron ore fines and non-coking coal.

The attendant mini flat mill, in a revolutionary way, allows direct casting and rolling in a single sequence. This and also the absence of coke oven batteries will need 60 percent less land than is the case with a BF-BOF mill of identical size.

Hence, although this Finex technology is of great importance for SAIL, but any steel mill will require coking coal as an input, hence ensuring the uninterrupted supply of this raw material is of paramount importance for the largest Indian steelmaker.

Moreover, other initiatives such as acquiring coal assets abroad by itself or in alliance with others, as will be the case whenever International Coal Ventures Ltd (ICVL) of which SAIL is the lead partner is proving to be time consuming.

On the other hand, acquisitions will also not come cheap.

Therefore, at present, the main focus for this largest steelmaker of the country is on how to maintain continuous supply of this essential raw material to sustain production.

STEEL INSIGHTS 55 JUNE 2012

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Sponge iron production falls 11.6% in FY12

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Sanjukta Ganguly

ponge iron production in India dropped 11.6 percent in 2011-12 and stood at 20,557,663 tons, as compared to production in 2010-11 at 23,255,349* tons, according to data made available to Steel Insights by a member of the Sponge Iron Manufacturers’ Association of India (SIMA).

During the fourth quarter (January-March or Q4) of 201112, total production of sponge iron stood at 4,758,173 tons whereas in Q4 of 2010-11, the figure was at 5,981,908 tons, as per the available data.

Out of the total sponge iron production during 2011-12, gas based production accounted for 5,150,018 tons (6,189,917 tons in 2010-11) whereas the remaining coal based production of sponge iron stood at 15,407,645 tons (17,065,432 tons in 2010-11).

Exports of sponge iron by three major sponge iron manufacturers – namely Welspun Maxsteel Limited, Tata Sponge Iron Limited and Monnet Ispat & Energy Limited – has dipped by 25.29 percent in 2011-12 and stood at 116,159 tons as compared to 155,495 tons in 2010-11, according to the data.

In Q4 (January-March) of 2011-12, total exports of sponge iron by these companies stood at 18,350 tons whereas the exports stood at 32,707 tons during the corresponding period of last year.

DRI Production in 2011-12 (in tons) Month (2011-12) April May June July August September October November December January February March Total

Source: SIMA

Total gas based 561,876 501,440 513,951 559,601 518,692 404,641 341,718 311,031 325,005 377,046 346,049 388,968 5150,018

Total coal based 1,399,327 1,463,195 1,433,178 1,325,530 1,328,723 1,275,571 1,177,838 1,154,222 1,203,951 1,200,446 1,202,103 1,243,561 15,407,645

Grand total 1,961,203 1,964,635 1,947,129 1,885,131 1,847,415 1,680,212 1,519,556 1,465,253 1,528,956 1,577,492 1,548,152 1,632,529 20,557,663

Export of sponge iron (in tons)

Company Tata Sponge Iron Limited Welspun Maxsteel Ltd Monnet Ispat & Energy Limited Total

2011-12 23920 35733 56506 116,159

2010-11 24650 92051 38794 155,495

Source: SIMA * For production details, please see annexure on pg. 76

Smoke coming out of sponge iron plant

STEEL INSIGHTS 56 JUNE 2012

fEATURE

April car sales growth lowest in 10 years Steel Insights Bureau

C

ar sales figures were dismal at the beginning of the new financial year, for the time being dashing all hopes of a full-fledged recovery in 2012-13. On the contrary, at 3.4 percent, passenger car sales in India saw the slowest growth in April 2012 in the last 10 years. The entry-level segment took the biggest hit as customer sentiments remained low due to price hikes and low interest rates.

According to figures released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales dropped sharply by 26 percent and stood at 1,68,351 units in April 2012 compared to 229,866 in March. During the same month last year, the sales stood at 1,62,813 units.

“The price hike that was done after the excise duty was raised in the Budget and high interest rates have affected consumers’ sentiment,” SIAM director general Vishnu Mathur was quoted as saying. In April 2002, the auto industry had seen passenger car sales falling by 22 percent, he added.

“The volume-driven small car segment is the worst hit in April with just 0.68 percent rise. This segment is very price sensitive and slightest alterations impact it,” Mathur said. The market will take some time to absorb this price hike that has affected other sectors also.

In the Budget 2012-13, the government had hiked excise duty by 2 percentage points to 12 percent that every automobile manufacturers passed on to customers. Besides, different duties were raised depending upon the vehicles’ engine and size specifications. Total sales of vehicles across categories

Maruti May sales falls 5 percent y-o-y

M

Steel Insights Bureau

aruti Suzuki India Limited has sold a total of 98,884 vehicles (including 9406 units for export) in May 2012, recording a fall of 5 percent in sales from 104,073 vehicles sold during the corresponding month of the previous year, the company said in a statement.

However, Maruti Suzuki India’s export fell by 10.9 percent in May 2012 to 9406 units from 10554 units in the year-ago period, the company statement said.

On a year-on-year basis, during the first two months (April-May) of the current financial year, the company’s total auto sales dropped by 1 percent and stood at 199,299 as compared to 201,228 vehicles sold during the corresponding period of 2010-11.

registered an increase of 10.01 percent to 14,72,385 units in April as against 13,38,430 units in the same month last year.

“Overall growth in the industry was subdued. The first six months are going to be tough because if we expect any industryfriendly monetary policy, then it will happen in the second half only,” Mathur said. In the passenger car segment, market leader Maruti Suzuki’s sales dipped by 1.31 percent to 72,939 units.

However, rival Hyundai Motor India’s sales increased by 10.75 percent to 35,000 units. Home-grown auto major Tata Motors’ passenger car sales were down by 4.78 percent at 18,610 units.

According to reports, total two-wheeler sales last month increased by 10.94 percent to 11,57,108 units from 10,43,010 units in April 2011. According to the SIAM data, motorcycle sales in the country grew 6.54 percent during the month to 8,61,602 units from 8,08,728 units in the same month last year.

In this segment, market leader Hero MotoCorp posted 5.53 percent jump in sales to 4,94,473 units in April. Rival Bajaj Auto’s sales went up by 2.17 percent to 2,00,228 units during the month. Honda Motorcycle & Scooter India (HMSI) posted a 35.69 percent increase in sales to 77,665 units, while TVS Motor moved 50,863 units, 2.13 percent more than the corresponding month of the previous year.

SIAM said the scooter segment’s overall sales grew by 30.29 percent to 2,27,924 units from 1,74,931 units. HMSI’s scooter sales grew by 55.64 percent to 1,15,846 units, while Hero MotoCorp sold 40,354 units, up 15.44 percent. TVS Motor’s sales saw marginal growth during the month to 32,736 units.

Commercial vehicles sales grew by 4.37 percent to 56,257 units in the reported month from 53,903 units in the year-ago period, SIAM said. Medium and Heavy Commercial Vehicle sales declined 11.60 percent to 19,914 units during the month compared to 22,528 units in April last year. According to SIAM, light commercial vehicle sales grew 15.83 percent to 36,343 units in April 2012 from 31,375 units in April 2011.

In the three-wheeler category, sales fell by 5.35 percent to 31,986 units from 33,793 units in the same month last year.

Exports In the month of April 2012, overall automobile exports registered a marginal growth rate of 1.29 percent. Passenger Vehicles registered negative growth at (-10.47) percent in the month.

Commercial Vehicles and Three Wheelers also recorded deceleration at (-13.62) percent (-20.50) percent respectively.

Only two wheelers exports grew by 9.18 percent in April 2012.

Production The production data for April 2012 shows production growth of 5.81 percent over same period last year. The industry produced 1,721,627 vehicles in April 2012 as against 1,627,039 in April 2011.

STEEL INSIGHTS 57 JUNE 2012

feature

New steel policy being finalised: Minister

F

Steel Insights Bureau

eeling the need to reformulate policies in order to improve the steel production scenario of the country, Steel minister of India Beni Prasad Verma said that his ministry has decided to formulate a new National Steel Policy to replace the existing policy introduced in 2005.

The minister said the process of formulation of the new National Steel Policy is already on and that this policy is being finalised following detailed deliberations with various stakeholders.

He said the new National Steel Policy will formulate a new set of projections and policy guidelines for facilitating the steel sector of the country.

The policy is proposed to address various issues for facilitating steel sector like attracting investments in steel sector, technology and R&D initiatives, manpower requirement, raw material supply, infrastructure requirement, land acquisition and water, among others.

In addition to this initiative, the Indian steel ministry has reviewed the price fluctuation issue with the steel makers on June 1, 2012. Sharad Mahendra, senior VP, sales of JSW said after the meeting, that, “There has been lot of ups and downs in the prices of steel in recent times. They were trying to understand the reasons. However, they did not ask us to bring down the prices.”

He said, “We have told them that prices were up primarily because the secondary producers are suffering from power shortage. They are also facing iron ore shortage and other issues. And as a result of all these, they are not able to produce more.”

The meeting was called to find out the reasons of faster movement of the prices of long products than flat products, though its production cost is higher.

Review of JV, MoUs Apart from the price fluctuation issue, the steel ministry is focusing on review of MoUs and JVs signed by PSUs at present. In fact, Verma will review the status of the MoUs and JVs signed by SAIL, RINL, NMDC and others, according to information available with Steel Insights.

The future of International Coal Ventures Ltd (ICVL) may be decided when the steel ministry reviews the memorandum of understandings (MoUs) and joint ventures (JV) inked by PSUs under its administrative control.

The meeting assumes importance, particularly for ICVL as CIL and NTPC have already expressed their intention to exit from the five-member consortium of state-run firms.

Incidentally, the three remaining PSUs- SAIL, RINL and NMDC - are under the administrative control of the steel ministry.

In the event of CIL and NTPC’s exit from the consortium, the steel ministry may distribute their respective stakes of 28 percent and 14 percent among the three remaining members and not to induct a new partner, industry experts felt.

ICVL was incorporated in 2009 as a joint venture between SAIL, RINL, CIL, NMDC and NTPC with the mandate of securing overseas coking coal and thermal coal assets. It aimed to own 500 million tons of coal reserves by fiscal 20192020.

Despite enjoying the status of a ‘Navaratna’ firm without having formal Navaratna status, ICVL has failed to make a mark since its inception in 2009. On a couple of occasions, it had to retreat from plans to acquire an overseas asset after discords crept in and consensus took longer than expected.

The minister would also review status of the high-profile joint venture between SAIL and Posco, which is still hanging in the balance for more than a year now on the shareholding issue. Issues relating to NMDC-Severstal joint venture on the proposed three million tons a year steel plant in Karnataka are also part of the agenda.

ICVL to lose two shareholders International Coal Ventures Ltd (ICVL), a consortium of five state-owned Indian companies, in which Steel Authority of India Ltd (SAIL) and Coal India Limited (CIL) each hold 28.6 percent shares, Miner NMDC, steelmaker Rashtriya Ispat Nigam Ltd (RINL), and NTPC hold 14.3 percent each, is likely to lose two of its shareholders, power producer NTPC Ltd and miner Coal India Ltd (CIL), owing to differences in interests pertaining to acquisition of overseas coal assets. However, SAIL, RINL and NMDC which are governed by the steel ministry together hold 57.2 percent of ICVL. Since its inception in May 2009, ICVL appears to be primarily focused on acquiring coking coal assets. But NTPC’s interest lies solely in thermal coal and the power producer has been looking to exit the consortium since last year.

More recently, CIL secured board approval to exit from a consortium it views as a “financial burden without commensurate advantage,” local media reports have said.

However, there may not be much of impact owing to the development.

In the event of CIL and NTPC exiting from the venture, their total shareholding of about 42.9 percent would reportedly be divided among the remaining three partners but no new member is being sought to join the consortium.

STEEL INSIGHTS 58 JUNE 2012

social buzz

Demand drives steel prices Steel Insights Bureau

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.

T

he members of the online forum India Steel Market Watch (ISMW) felt that the intrinsic demand have been directing the steel prices in the recent times as there is no real trigger in sight suggesting a sharp decline or increase in demand other than the upcoming monsoon season.

Overall the steel trade seemed to be spiralling downwards as the secondary steel prices receded at some of the demand centers across India, while depicting some range-bound movements in the finished steel prices as the demand was observed to be softening ahead of upcoming rainy season.

Although, the monsoon is still a few days away from northern part of the country, but the demand centers in the region have already started recording a marked decline in the volumes, while the offers remained around the levels of last week.

The Indian steel trade edged lower, pushing all hopes of revival in the spot markets with the drop in volumes. Also, the finished steel product prices saw some fluctuation in the prices as the demand dropped with the residential construction and infrastructure activities declining in the last few days.

Will iron ore follow coal route?

This was the question posed by the online members of ISMW. Faced with dwindling supplies and a country-wide clampdown on ore production due to illegal mining, steel companies are doing the unthinkable – importing iron ore to feed their plants. The imports, a trickle now, but which experts warn could easily turn into a torrent, threaten to increase India’s dependence on overseas supplies of crucial mineral resources it owns in abundance.

Like coal, which is imported in vast quantities by power companies, the slow rise in imports of iron ore could erode the competitiveness of steel companies, and leave them at the mercy of wild swings in international prices and supply disruptions.

“We are foreseeing a couple of years when India would be importing iron ore - it may not necessarily become a net importer though,” some analysts said.

Shipping industry and port officials in Paradip say another

150,000 tons of ore imports are expected soon to feed the state’s ravenous steel mills. They, however, could not confirm the name of the buyer. Bhushan Steel has also been importing pellets from Bahrain and Ukraine. The unlisted firm is building a 2.3-million-ton steel plant in Odisha.

Essar Steel, another steelmaker feeling the brunt of an acute shortage of the critical ferrous input, has been importing ore for the past few months, but on the western coast.

South African and Bahrain ores have been used to feed the company’s facility at Hazira in Gujarat.

“We have been importing iron ore for the past couple of months, but will be stopping now. The depreciation of the rupee no longer makes it viable, although international iron ore prices are coming down,” Essar Steel CEO Dilip Oomen said in a media report.

Essar’s 8-million-ton pellet plant in Visakhapatnam was fed by a slurry pipeline from NMDC’s Chhattisgarh mine. That has run dry after being damaged in a Naxal attack last October, and some iron ore is now being supplied through rakes.

Posco steel mill in India The members of the online forum also discussed Posco’s completion of the first steel mill in India. South Korea’s Posco, the world’s third largest steelmaker by output, has completed construction of its first steel mill in India.

The mill in the west-central state of Maharashtra, is capable of producing 450,000 tons of hot galvanised steel plate per year for cars and household goods in India and other countries.

Maharashtra has auto plants run by GM, Volkswagen, Tata Motors and Mahindra.

In the same state, Posco plans to open a 300,000-ton electric steel plate facility by October 2013 and a 1.8 million-ton cold-rolled mill in June 2014.

The company also hopes to start work in the second half of this year on its long-delayed plant in Orissa state on the east coast, a spokeswoman told AFP. The $12 billion project, which would be India’s biggest foreign investment, has been the focus of protests by locals and rights groups since it was first mooted in 2005.

Locals say the plant would deprive them of their traditional forest-based livelihoods and cause lasting environmental damage.

STEEL INSIGHTS 59 JUNE 2012

logistics

Iron ore handling by major ports down 29.7% in April Steel Insights Bureau

M

ovement of iron ore through the 12 major Indian ports showed a significant drop of 29.69 percent in April 2012 due to restrictions imposed on mining and a hike in export duty on iron ore. The major ports together handled 5.08 mt of iron ore during the month of April 2012 compared to 7.23 mt handled during the same month in 2010-11.

Mormugao port handled the highest volume of 3.08 mt of iron ore in April 2012. This volume, however, was about 0.93 mt less or 23.19 percent lower than the iron ore traffic moved through the port in 2010-11.

According to data released by the Indian Ports Association (IPA), the country’s major ports handled a total of 2.43 mt of coking coal in April 2012, down 17.52 percent compared with 2.94 mt handled in April 2011.

The 12 major Indian ports together handled 46.42 million tons (mt) of traffic during April 2012, 6.33 percent lower than 49.56 mt recorded during April 2011.

Movement of thermal coal through the major ports was up 13.13 percent to 4.49 mt during April 2012, compared to 3.98 mt achieved during the corresponding month of previous year.

Among the major ports, Paradip port had the distinction of handling the highest volume of thermal coal of around 1.38 mt in April 2012. Mormugao port handled the highest quantity of 0.6 mt of coking coal during the period.

Movement of container traffic in terms of tonnage showed an increase in April. The major ports handled 9.98 mt of tonnage in April 2012 compared to 9.88 mt of tonnage in April 2011.

Four major ports showed positive growth in traffic handling during the month of April 2012 while the remaining eight showed negative growth on a year-on-year basis.

In terms of growth, Ennore port topped the list with

Traffic Handled At Major Ports (During April, 2012* Vis-A-Vis April, 2011) (*)Tentative

(In ' 000 Tones)

PORTS

APRIL

% VARIATION

TRAFFIC

AGAINST PREV.

2012*

2011

YEAR TRAFFIC

2

3

4

Kolkata Dock System

898

1067

-15.84

Haldia Dock Complex

2202

2936

-25.00

TOTAL: KOLKATA

3100

4003

-22.56

PARADIP

4075

5260

-22.53

VISAKHAPATNAM

4958

5567

-10.94

ENNORE

1371

1069

28.25

CHENNAI

4297

5390

-20.28

V.O. CHIDAMBARANAR

2430

2348

3.49

COCHIN

1406

1409

-0.21

NEW MANGALORE

2931

2461

19.10

MORMUGAO

3986

4901

-18.67

MUMBAI

5533

4753

16.41

JNPT

5575

5608

-0.59

1 KOLKATA

KANDLA

6760

6788

-0.41

TOTAL:

46422

49557

-6.33

a record 28.25 percent increase in cargo throughput. V.O Chidambaranar port’s growth was lowest at about 3.49 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of 6.76 mt recorded for the period. Kolkata port registered the highest decline of 22.56 percent in traffic handling during April due to fall in iron ore export.

STEEL INSIGHTS 60 JUNE 2012

Logistics

Indian Railways commodity wise freight revenue fall m-o-m in April

T

Steel Insights Bureau

he Indian Railways’ revenue earnings from commoditywise freight traffic fell month-on-month in April due to lower transportation of coal, cement, foodgrains, iron ore and fertilisers.

The Railways’ revenue earnings from commodity-wise freight traffic during the month of April 2012 stood at `6,906.83 crore, down 10.88 percent compared with `7,749.94 crore earned in March, according to information available with Steel Insights.

Revenue from transportation of iron ore for exports, steel plants and for other domestic user in April rose to `633.93 crore, up 5.69 percent from `599.79 crore in March. However, the quantity of iron ore transported fell to 9.20 mt in April from 9.65 mt in the previous month.

Revenue from transportation of coal fell to `3,167.82 crore from `3,359.66 crore in March. The Railways transported only 40.33 million tons (mt) of coal in April compared with 44.77 mt transported a month ago.

Revenue from transportation of cement in April dropped to `764.90 crore (9.22 mt) from `808.01 crore (10.59 mt) in March, while that from foodgrains transportation fell to `459.48 crore

Commodity

Quantity (in mt) April’11

Earning (in `crore)

April’12

April’11

April’12

Coal i) for steel plants ii) for washeries iii) for thermal power houses iv)for public use

3.62

4.2

153.12

251.53

0.15

0.09

1.92

1.07

24.84

26.29

1,596.53

2,174.31

8.76

9.75

526.57

740.91

37.37

40.33

2,278.14

3,167.82

1.1

1.2

91.26

113.02

i) from steel plants

2.03

2.08

245.69

350.93

ii) from other points

0.56

0.63

44.03

56.11

iii) Total

2.59

2.71

289.72

407.04

1.4

0.36

372.39

86.63

ii) for steel plants

3.59

5.13

100.97

250

iii) for other domestic users

4.03

3.71

257.06

297.3

iv) Total

9.02

9.2

730.42

633.93

Cement

9.03

9.22

560.5

764.9

Foodgrains

4.09

3.26

436.22

459.48

Fertilizers

2.28

2.14

161.13

218.79

Mineral Oil (POL)

3.34

3.14

286.44

366.58

i) Domestic containers

0.74

0.72

71.84

68.99

ii) EXIM containers

2.28

2.57

193.39

224.41

iii) Total

3.02

3.29

265.23

293.4

Balance other goods

5.68

5.76

391.87

481.87

77.52

80.25

5,490.93

6,906.83

v) Total Raw material for steel plants except iron ore Pig iron and finished steel -

Iron ore i) for export

Container Service -

Total revenue earning traffic

(3.26 mt) in April from `579.06 crore (4.35 mt) in March. The Railways revenue from transportation of fertilisers in April declined sharply to `218.79 crore (2.14 mt) from `398.74 crore (4.0 mt) in March.

Revenue from transportation of petroleum oil and lubricant (POL) in April stood at `366.58 crore (3.14 mt), from pig iron and finished steel from steel plants and other points at `407.04 crore (2.71 mt), and from raw material for steel plants, except iron ore, at `113.02 crore (1.20 mt). Revenue from container services was `293.40 crore (3.29 mt) and from transportation of other goods was `481.87 crore (5.76 mt).

STEEL INSIGHTS 61 JUNE 2012

macro outlook INR movement against select major currencies INR movement against select major currencies

Macroeconomic indicators of India

73

89

71 69 67 65

84

61 59 79

57 55

INR vs GBP

INR vs USD, Yen

63

53 51

74

49 47 45

USD

YEN

7-May-12

29-May-12

18-May-12

4-Apr-12

26-Apr-12

15-Apr-12

2-Mar-12

24-Mar-12

13-Mar-12

9-Feb-12

29-Jan-12

20-Feb-12

7-Jan-12

18-Jan-12

27-Dec-11

5-Dec-11

16-Dec-11

24-Nov-11

2-Nov-11

22-Oct-11

13-Nov-11

11-Oct-11

8-Sep-11

30-Sep-11

19-Sep-11

6-Aug-11

17-Aug-11

28-Aug-11

4-Jul-11

26-Jul-11

15-Jul-11

23-Jun-11

12-Jun-11

69

1-Jun-11

43

Steel Insights Bureau

GBP

Source: rbi The INR slumped to a record low in recent weeks and stood 55.54 against a USD by end of May. The INR witnessed loss for the ninth consecutive week, the longest losing streak since the 2008 economic crisis. The RBI is understood to have sold USD from the reserves to curb the slide in the value of INR following which there was some gains in the currency market. The INR is headed for a further fall, due to the inflation rate differential between India and the US. Budget announcements on retrospective taxation antagonised foreign investors along with heightened uncertainty about Greece that led to flow of capital away from India resulting in a depreciating INR. Net FII equity flows, which were close to $12 billion in January and February, turned negative in April and May leading to a falling INR.

Inflation Rate in India 11.00%

10.00%

9.74%

9.56% 9.51%

9.78%

10.00%

9.46%

9.87%

9.36%

Foreign Exchange Assets

9.00% 325000

8.00%

1650000

320000

7.74%

7.36% 6.89%

7.00%

1600000

315000

7.23%

310000

6.89%

in million $

1550000

305000 300000

1500000

-1 2

Ap ril12

12 ua ry-

Ma rch

y-1 2

Fe br

nu ar

295000 290000

1450000

285000

Index of Industrial Production 205

in Million $

28-May-12

19-May-12

1-May-12

22-Apr-12

10-May-12

4-Apr-12

13-Apr-12

26-Mar-12

8-Mar-12

17-Mar-12

28-Feb-12

19-Feb-12

10-Feb-12

1-Feb-12

23-Jan-12

14-Jan-12

5-Jan-12

27-Dec-11

9-Dec-11

18-Dec-11

30-Nov-11

3-Nov-11

21-Nov-11

12-Nov-11

7-Oct-11

25-Oct-11

16-Oct-11

1400000

28-Sep-11

280000

1-Sep-11

WPI-based headline inflation touched 7.2 percent in April 2012 primarily due to food inflation re-entering the double-digit zone after a gap of six months touching 10.49 percent in April. This will make it difficult for the Reserve Bank of India to moderate monetary policy. Inflation figures are expected to deteriorate further in the coming months with expectations of a steep increase in the minimum support prices of food grains, the impact of the impending pass-through of global oil prices as well as depreciation of INR into domestic prices. Increase in the indirect tax rates in this year’s budget which are likely to be passed on to the consumers, might further add to inflation. Manufactured product inflation rose to 5.12 percent from 4.87 percent in March, as the INR depreciated against the dollar and higher indirect taxes came into effect from April. Last month inflation was recorded at 6.89 percent in the previous month.

19-Sep-11

Source : OEA, GoI, Ministry of Commerce & Industry

10-Sep-11

er -1 1

Ja

em b

er -1 1 De c

er -1 1

em b

tob

No v

be r-1 1

Oc

11

Se pte m

ly11

Au gu st-

1

Ju

1

ne -1 Ju

Ma y-1

Ap ril11

5.00%

in Rs crore

6.00%

in Rupees crore

Source: rbi India’s foreign exchange reserves fell by $1.74 billion to $290 billion for the week ended May 25, registering a sharp drop for the fourth week in a row, largely due to suspected sale of USD by the central bank to defend INR. The forex reserves had declined by $1.80 billion, $1.37 billion and $2.18 billion, respectively, in the previous three weeks. Foreign currency assets, the biggest component of the forex reserves kitty, fell by $1.71 billion to $254.40 billion during the week ended May 25. The value of special drawing rights fell by $18.6 million to $4.38 billion, and India’s reserves with the International Monetary Fund fell by $12.1 million to $2.85 billion. The value of gold reserves remained unchanged at $26.61 billion.

Wholesale Price Index (Selected Categories) 210

185

200 190

165

180 170 160

145

150 140

125

130 120 Mar-12

General Index

110

ALL COMMODITIES FUEL & POWER

Source : Govt. of India, MoSPI The index of industrial production (IIP) for March declined 3.5 percent, with the capital goods segment was once again being the primary factor behind the fall, showing extreme volatility and contracting over 21 percent. Slowdown in global demand and investment activity has impacted IIP as per the Finance ministry of the country. The IIP growth was higher at 9.4 percent in March last year. On an annual basis, the IIP grew by only 2.8 percent, as against 8.2 percent in the 2010-11 fiscal. Output of the manufacturing sector, which constitutes over 75 percent of the index, contracted by 4.4 percent in March, compared to growth of 11 percent in March 2011 while output in the capital goods sector contracted by 21.3 percent as against a growth of 14.5 percent in the same month last year. Mining output too fell by 1.3 percent in March, from a growth of 0.4 percent in the same month a year ago.

PRIMARY ARTICLES Basic Metals Alloys & Metal Products

Apr-12

Feb-12

Mar-12

Jan-12

Feb-12

Electricity

Dec-11

Jan-12

Nov-11

Dec-11

Manufacturing

Oct-11

Nov-11

Sep-11

Oct-11

Mining & Quarrying

Aug-11

Sep-11

Jul-11

Aug-11

Jun-11

Jul-11

May-11

Jun-11

Apr-11

May-11

Mar-11

Apr-11

105

MANUFACTURED PRODUCTS Steel

Source : OEA, GoI, Ministry of Commerce & Industry India’s wholesale price index (WPI) (Base 2004-05=100) rose by almost 0.88 percent to163.1 in April as compared to 159.8 recorded in the month of March. Also WPI for February was revised to 159 this month. The index for primary articles group increased by 4.65 percent to 15.9 from 206.3 in the previous month largely due to rise in prices of food articles. The index for manufactured products group also rose by 0.98 percent to 143.6 from 142.2 in March. Fuel and power index rose 1.78 percent to 177.1 while index for basic metals and metal alloys rose by 1.79 percent to 165.3 on rising prices of the product globally. Steel index however remained unchanged.

STEEL INSIGHTS 62 JUNE 2012

market report

Global crude steel production down 3% Chandrika Mitra

W

orld crude steel production for the 62 countries reporting to the World Steel Association (Worldsteel) was 128.376 million tons (mt) in April 2012, down by 3 percent as compared to 132.033 mt reported in March 2012. However crude steel production for April 2012 was higher by 1.3 percent compared to April 2011. Production for the first four months of 2012 was 504.738 mt, 0.35 percent higher than the first four months of 2011.

In April 2012, Asia produced 83.459 mt of crude steel, an increase of 3.14 percent over April 2011. The EU produced 14.884 mt of crude steel in April 2012, down by –5.23 percent compared to the same month of 2011. North America’s crude steel production in April 2012 was 10.425 mt, 5.55 percent higher than the corresponding month of 2011.

China, the single largest producer, produced 60.575 mt of crude steel in April this year, an increase of 2.61 percent and as compared to the corresponding period in 2011, when production stood at 59.416 mt.

Elsewhere in Asia, Japan produced 9.072 mt of crude steel in April 2012, an increase of 7.58 percent compared to the same month last year. India’s production for April 2012 stood at 6.0 mt, up 4.69 percent compared to April 2011. South Korea produced 6.011 mt during the same period, a 2.12 percent increase on the same month 2011. Overall, Asian markets, in comparison to January to April 2011 recorded a 0.68 percent increase in production of crude steel as the region closed the January to April 2012 period with crude steel production of 324.791 mt.

In the EU, Germany produced 3.602 mt of crude steel in April 2012, a decrease of –5.55 percent on April 2011. Italy’s crude steel production for March 2012 was 2.409 mt, down by 3.19 percent on April 2011. France’s crude steel production for April 2012 was 1.42 mt, a decrease of 1.79 percent compared to April 2011.

Spain produced 1.255 mt of crude steel in April 2012, 14.3 percent lower than April 2011. EU’s total production between January and April this year stood at 58.831 mt, a decrease of

World crude steel production Nov-11 European Union (27)

15,736

Other Europe

3,084

3,345

3,357

2,904

3,344

3,111

C.I.S. (6)

9,144

9,318

9,402

9,064

9,365

9,000 10,425

North America

9,745

10,134

10,477

10,191

10,781

3,814

3,795

3,823

3,856

4,250

4,129

Africa

1,090

1,202

1,201

1,202

1,299

1,260

Middle East

1,641

1,718

1,698

1,661

1,625

1,559

Africa/Middle East

2,731

2,920

2,899

2,863

2,924

2,819 60,575

China

49,883

52,164

56,733

55,883

61,581

India

6,000

6,150

6,100

5,700

6,200

6,000

Japan

8,697

8,397

8,630

8,612

9,324

9,072

South Korea

5,783

5,950

5,775

5,439

6,095

6,011

Taiwan, China

1,860

1,920

1,683

1,718

1,859

1,800

72,223

74,581

78,921

77,353

85,059

83,459

434

424

458

548

575

550

65,485

64,894

66,674

65,039

70,452

67,801

115,368

117,058

123,407

120,922

132,033

128,376

Asia Oceania Rest of the world except China World

4.15 percent as compared to January and April 2011. However, compared to March 2012, production dropped by 5.41 percent.

Turkey’s crude steel production for April 2012 was 2.885 mt, an increase of 4.68 percent compared to April 2011. The US produced 7.705 mt of crude steel in April 2012, up by 9.28 percent on April 2011. Brazil’s crude steel production for April 2012 was 3.029 mt, 1.21 percent lower than April 2011.

The world crude steel capacity utilisation ratio for the 62 countries in April 2012 remained nearly unchanged at 81.1 percent compared to March 2012. It was 1.7 percentage points lower compared to April 2011.

March and April 2012 data covers 62 countries against 64 in March and April 2011. In January and February 2012, only 59 countries are covered as three African countries, Algeria, Libya & Morocco while two Middle East countries Iran and Qatar did not provide monthly production statistics.

Steel capacity utilisation ratio

10.00%

0.00%

Apr12/11

Mar12/11

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

Nov10/09

Sep10/09

Aug10/09

-10.00% July10/09

14,884

South America

20.00%

June10/09

Apr-12

14,142

30.00%

Apr10/09

Mar-12

14,069

40.00%

May10/09

Feb-12

12,541

Crude steel production growth rate (Y-o-Y)

Rest of the world except China

(in ‘000 tons)

Jan-12

14,193

50.00%

China

Dec-11

World

STEEL INSIGHTS 64 JUNE 2012

Market Report

International flat product markets

Low demand keeps prices lacklustre

T

Steel Insights Bureau

he international flat steel market was impacted by the depressed demand from end users as they waited for prices to decline further.

Almost in all the markets prices remained flat because of low demand conditions. Analysts and sources said it will be difficult to predict when prices and demand conditions will recover.

Chinese cold rolled prices dip Due to poor demand and the negative market outlook, Chinese domestic cold rolled coil prices dipped in spite of rising hot rolled coil prices. Because of the continuous price falls, traders have become reluctant to book CRC from steel mills, even as producers offer incentives.

Similarly, export prices for 1.0mm thick CRC have decreased to as low as $750 per ton fob Chinese port, a fall of $25 per ton since early May. Domestic market prices for SPCC 1.0mm CRC in Shanghai and Guangdong Lecong were both down to around RMB 4,730 per ton with 17 percent VAT. CRC prices had already dropped about RMB 250 per ton in Shanghai and RMB 180 per ton in Lecong since the beginning of May. There is no sign that demand is on an upward track, and no-one is willing to book large volumes from mills as their prices are much higher than spot market prices.

Most traders remain uninterested in booking CRC from the mill as its June list prices are RMB 300 per ton higher than market prices.

CRC traders also worry that rising HRC prices have mainly been triggered by market speculation on possible new stimulus policies for the auto and white goods sectors, not on real demand.

According to some media reports, China is planning to launch new stimulus packages for the auto manufacturing industry, including a vehicle trade-in policy and a vehicle subsidy program for rural areas. However, it is too early to know for sure how and when these new policies could improve the steel market. All they can be sure of now is that demand is poor and the market, tough.

Meanwhile, the downtrend in Chinese domestic hot-dip galvanized coil prices has slowed down. HDG traders have switched to wait-and-see mode after hot rolled coil prices, a key indicator of the flat steel market, rebounded slightly amid market anticipation that new stimulus packages will be launched in auto and white-goods manufacturing sectors.

Currently, prices of 1.0mm HDG are prevailing at RMB 4,950-5,050 per ton with 17 percent VAT in Shanghai and RMB 5,000-5,100 per ton with VAT in Guangdong’s Lecong steel market. These prices have been mostly stable after dropping by around RMB 50 per ton from the middle of this month.

Some traders say they have noticed the uptick of HRC prices but preferred not to readjust their HDG offer prices so quickly. They are not sure whether the HRC price increases are sustainable because of continuing high levels of steel output and the fact that anticipated stimulus policies are unlikely to boost demand in the short term. Also policies are unlikely to be as dramatic as those in 2008, so it’s not realistic to expect a strong improvement in demand for steel.

Meanwhile, on the export market, due to falling cold rolled coil prices, export prices of 1.0mm 80g Zn HDG have dipped to around $700 per ton fob, down $15 per ton from early this month.

UAE trade remain slow Flat rolled steel trade in the United Arab Emirates remained slow, with buyers postponing bookings as they want to see prices bottom. Furthermore, consumption is expected to decrease in coming weeks as summer is close.

Hot rolled coil imports remained at $680-700 per ton cfr, but some discount is given for large tonnage bookings. Hotdip galvanized import offers are at $810-840 per ton cfr from India and Korea. Local producer Al Ghurair’s HDG price is still at $890-900 per ton ex-works.

According to sources, buying may pick up in June, as stock levels are getting low and product ordered that month should arrive in August when consumption is expected to firm.

STEEL INSIGHTS 65 JUNE 2012

Market Report However, bookings will probably still be in minimal tonnages due to continuing price fluctuations.

US sheet prices face headwinds US spot sheet prices faced significant headwinds as both analysts and market sources expressed negative sentiments regarding the near-term domestic outlook - even as some capacity appears likely to go offline.

Downward pressure continued despite RG Steel’s announcement it could idle or sell three flats facilities, and the disclosure earlier this month that ThyssenKrupp is open to offers for its mills in Brazil and Alabama.

Based on transactions and offers heard in the market, assessments of hotrolled and coldrolled coils fell by $5/short ton week-on-week, to $635-645/s.t for HRC and $735-755/s.t for CRC. Hot-dip galvanized also fell $5 to $795-805/s.t. All prices are ex-works, normalized to a midwest basis.

Traders agree downward pressure will continue, but said HRC prices - which is pegged around $640/s.t - cannot go much lower since “any lower than $640.

Turkey prices sluggish Turkey’s flat rolled steel market remained sluggish, with no short term improvement expected. Producers have lowered their prices since April, but this has failed to encourage more bookings. Mills with both flat and long product capacities

prefer to produce longs at present, but even that market is weak, sources said.

Hot rolled coil is quoted at $640-660 per ton ex-works from producer, while a contract was recently signed at $630 per ton ex-works for a large tonnage June delivery order. Offer prices have declined $10 per ton since earlier in May. Imports from Ukraine are offered at $580 per ton cfr, but no transactions have been heard.

Sources say that April and May were typically months when demand picks up; however, this year it is hard to plan ahead for the economic situation in June-July-August, which are holiday and mill maintenance months. Only an increase in scrap and iron ore prices will see flats prices pick up.

Egypt trade at standstill Egyptian flat steel trade is reported to be at a standstill, while the nation waits for the results of its recently contested first free presidential election. Steel market activity has been slow since the beginning of the year, with participants longing for a stable government to help boost Egypt’s economy.

Market sources in Egypt are unwilling to take positions until the future of the market becomes clear.

Sources believe market activity will not pick up before at least the third quarter, at which point the new government should be in charge.

STEEL INSIGHTS 66 JUNE 2012

Market Report

International long product markets

China glitters in otherwise dull market

T

Steel Insights Bureau

he international long steel market remained sluggish as demand remained low owing to the prevailing economic recession in most of the regions. However, there were exceptions like in China, where the demand remained strong due to expectations that the Chinese government will speed up some infrastructure projects in a bid to support the slowing economy.

Elsewhere in Europe, US and Turkey, sales remained sluggish on account of low demand because of the recessionary trends.

Rebar prices inch up in China Spot rebar prices in northern China continued to rise and rebar futures prices also closed at a slightly higher level. However, billet prices in the region were unchanged as buying interest started to fade after rapid price increases seen recently.

Prevailing offers for 18-25mm diameter HRB400 RB400 rebar, sourced from Hebei Iron & Steel (Hegang), inched up by about RMB 10-30 per ton to approximately RMB 4,2004,210 per ton. Hegang-sourced 18-25mm diameter HRB335 rebar gained by similar margins to about RMB 4,130-4,160 per ton. Both prices include 17 percent VAT. Outlook for the market remained cautious and traders were taking advantage of small spot prices increases by speeding up sales.

Hegang also took a prudent approach and elected to roll over its early-June list price for rebar from its late-May price.

This means the prices of its 18-25mm diameter HRB335 and HRB400 rebar stood still at RMB 4,100 per ton and RMB 4,120 per ton respectively, with VAT. In Hebei province’s Tangshan city, the ex-works price for 150x150mm Q235 billet from major local mills was retained at RMB 3,540 per ton, with 17 percent VAT and on a cash-payment basis.

Meanwhile, China’s wire rod export offers have declined by about $25-30 per ton since the start of May in response to weaker domestic prices. Major offers for boron added SAE1008 grade wire rod dropped to about $610-615 per ton fob, compared with late April’s $640 per ton fob.

According to sources, bookings were stronger in May than in April as lower prices enticed some buyers back to the market.

Prices were higher in April which reduced buying interest.

Despite this, wire rod export shipments in April jumped 23 percent to 407,145 ton from 331,357 ton in March, according to data from China Customs. The hike was due to active booking through January and March. In domestic markets, Shanghai prices for 6.5mm diameter Q235 wire rod have stabilized at about RMB 4,000-4,010 per ton, with 17 percent VAT. This is a drop of about RMB 200 per ton in total from late April.

Spot prices for long products in northern China started to pick up partly due to expectations that the Chinese government will speed up some infrastructure projects in a

bid to support the slowing economy. But industry sources doubted the stronger prices would be sustained as it would take time for Beijing’s policy to translate into orders for steel.

Rebar prices unchanged in NW Europe Rebar prices in northwestern Europe are unchanged at the moment with very low transactions registered and with sentiment that the prices are on the edge of a decrease. Buyers are in a waiting position mainly due to the lack of liquidity and of orders, with producers worried to see a continuing lack of substantial volumes and decreasing margins.

On top of that, buyers are still more cautious about placing orders due to fears of a further decrease in international scrap prices that that would imply a decrease in rebar prices. In Germany rebar prices are reported to be stable on the low part of the range at €520-530 per ton delivered. Cheap imports remain a problem. Average prices from Poland are reported to be at €510 per ton delivered.

In Benelux as well as in France prices are similar to the German prices and are quoted at €520-530 per ton delivered.

Some mills, especially in France, hope for an upturn in demand after a very quiet month of May due to long public holidays.

US rebar prices fall Southeastern US rebar buyers report falling prices on a case-bycase basis, contributing to a broadening of the spot price spread.

The rebar price assessment dropped to $695-715/short ton, fob southeastern US mill, down from $720-$725/s.t. earlier.

Sources in the region said they were able to buy a relatively small amount of rebar for $690/s.t, fob mill recently.

Turkey rebar sales slow Turkish rebar sales in local and export markets remained slow when some producers accepted rebar offer prices had slipped to $650 per ton fob and below for some June output, although fresh sales were few. In export markets buying in handysize, Turkish mills have been frustrated by Chinese competition, which seems to have increased in recent times. Offers to Singapore were undercut significantly by Chinese rebar.

The lowest available mesh quality wire rod from Turkey at $700 per ton cfr could not compete with Chinese product.

Meanwhile, Turkish bulk shipments were quoted at $670 per ton cfr Dubai theoretical weight, some $20-30 per ton above levels acceptable to importers. This is preventing Turkish producers from clearing large swathes of June production.

More steel tonnage should be available at prices closer to levels of buying expectation after scrap is booked in bulk at lower prices compared to recent previous transactions at around $440-450 per ton cfr Turkey.

STEEL INSIGHTS 68 JUNE 2012

Market Report

Domestic Flat & Long Markets

Prices move in different directions Anondo Kumar Dutta

M

Long product market The domestic long steel market is under severe stress as prices are soaring, making them even costlier than comparable flat steel products. This has even prompted the government to intervene and advise steel manufacturers to control the fluctuations of prices. Producers have blamed shortage of iron ore for the upward trend in steel prices. Further, with power shortages rampant across the country, supplies have been limited since the last few weeks.

Such problems have currently plagued secondary producers, who produce more than 70 percent of the total domestic long steel production.

However, they say that they were not asked by the government to cut prices. The price of domestic TMT bars has increased by 3.3 percent in the last quarter alone. It was up by 14 percent over the corresponding quarter in the previous year. SAIL is currently selling TMT bars at ` 41,000 a ton, a price the company has strived hard to maintain since April 1.

Percent change for hot-rolled flat products (m-m, q-q, y-y basis) Apr’12 Price (Avg.)

Products

May’12 Price (Avg.)

` change (M-M)

` change (Qtr-Qtr)

` change (Yr-Yr)

Cobble Plate

30862

31059

0.64

0.94

5.82

Def. Plate

30298

30283

-0.05

4.25

11.98

Def. HR Plate

31363

30768

-1.90

5.45

9.01

Semi Rolled Plate

31098

30560

-1.73

-0.54

11.84

--

--

--

--

--

SRP Coil Form Def. HR Coil

32228

5.66

12.79

19.66

5.66

Def. HR Sheet

34233

-4.18

5.13

11.61

-4.18

HR Products Price Trend

36000

34000

Wtd.Avg.Prcie(Rs./MT)

ajor flat steel producers have left May prices stagnant and propose to continue with the same subdued trend in the month of June. A slowdown in economic growth is pressuring domestic demand and hurting market sentiments. Indian mills are continuing to offer Grade A/B structural HRC, 3mm thick and above, at `36,000-36,500 per ton. Few mills are offering discounts to keep their stocks rolling in a market where demand is almost absent.

However, others feel that such discounts are pointless as raw material prices are high and demand does not seem to improve.

Although the constant depreciation in the rupee has been discouraging imports, Indian steelmakers are wary of international prices falling further. Even export offer prices for hot-dip galvanised coils weakened by `1,680-2,800 per ton during May on the continued depreciation of the rupee. Offers for 0.3mm thick soft coils with zinc coating currently average $840-860 per ton fob.

32000

30000

28000

26000

'12

Apr

ek 1 ek 2 ek 3 ek 4 Week 1 Week 2 Week 3 Week 4 Week 5 We We We We '12 '12 '12 '12 '12 '12 '12 '12 Apr Apr Apr May May May May May Defective HR Plate-Rourkela

Semi Rolled Plate

Defective Plate

Cobble Plate

Defective HR Plate-Bokaro

HR Sheet

Def. Chequered Plate

Price in `/t is basic

Percent change for cold-rolled flat products (m-m, q-q, y-y basis) Products

Apr’12 Price (Avg.)

May’12 Price (Avg.)

` change (M-M)

` change (Qtr-Qtr)

` change (Yr-Yr)

Def. CR Coil

31456

35569

13.08

2.57

5.67

Def. CRNO Sheet

32785

34628

5.62

9.34

-12.33

CR Coil End SPM-I

34270

33688

-1.70

-1.22

7.87

Price trend as observed in the auction held at metaljunction for flat products

CR Coil End SPM-II

35100

--

--

--

--

Following graphs show the price trend observed in the auction services of Metal Junction for the months of April & May 2012 for different HR and CR products.

--

34900

--

13.59

10.44

CR Sheet Cutting

31934

31300

-1.99

3.80

15.93

Def. CR Sheet

STEEL INSIGHTS 70 JUNE 2012

Market Report CR Products Price Trend

Long Products Price Trend

37000 35000

35000

Wtd. Avg. Price(Rs./MT)

Wtd.Avg.Price(Rs./MT)

37000

33000

31000

33000 31000 29000 27000

29000 ek 1 ek 2 ek 3 ek 4 Week 1 Week 2 Week 3 Week 4 Week 5 We We We We '12 '12 '12 '12 '12 '12 '12 '12 '12 Apr Apr Apr Apr May May May May May CR Coil End from SPM - I

Defective CR Coil

UACE from HDGL

CR Coil end from SPM-II

Def CR Sheet

Defective CRNO Sheet

A

12 pr'

ek We

1 A

12 pr'

ek We

3 A

12 pr'

ek We

4

k1 k3 k4 ee ee ee 2W 2W 2W 1 1 1 ' ' ' y y y Ma Ma Ma

Defective Billet MM end Cutting Plate Cutting

TMT Bar Cutting Rejected Bloom

Price in `/t is basic

Price in `/t is basic

Outlook

Outlook

The flat steel market has been stable over the month of May. Even the dips in prices in April have been recovered in May. The flat steel market exhibits a stable outlook over the next couple of weeks. Demand and supplies are forecasted to remain low as demand for white goods is on a decline.

However, producers are reluctant to offer discounts as profit margins have already been squeezed to the maximum.

The long steel market has seen an oscillatory movement over the month of May. Demand for long products is not encouraging especially when prices have been prohibitively high. With the Government intervening to keep prices under check, the market could assume some stability.

However, mild price rises cannot be ruled out under the current circumstances when infrastructure sector is in motion.

The future is uncertain but buyers can hope for secondary producers to ramp up production to cater to the growing market needs.

Price trend as observed in the auction held at metaljunction for long products Following graph shows the price trend observed in the auction services of Metal Junction for the months of April & May 2012 for different long products.

Percent change (m-m, q-q, y-y basis) Products

Apr’12 Price (Avg.)

May’12 Price (Avg.)

Defective Billet

33058

32441

TMT Bar Cutting

--

MM End Cutting

` change (M-M)

` change (Qtr-Qtr)

` change (Yr-Yr)

-1.87

2.83

14.40

--

--

--

--

33737

31989

-5.18

4.33

19.14

Rejected Bloom

28635

29024

1.36

5.38

17.92

Plate Cutting

32414

32118

-0.91

2.96

12.48

All set for weak markets Indian steel market and industry participants are braced for sluggish demand and weak sentiment in the domestic market in the coming few weeks. Concern over the nation’s economic slowdown amidst global economic uncertainties, persisting inflation, and the depreciation of the rupee are pressuring market sentiments.

The silver lining lies in the data from the steel ministry’s Joint Plant Committee (JPC), which showed that domestic steel consumption grew 7.7 percent year-on-year. This has kept market players in the hope that the scenario is expected to improve in the coming months.

The Indian economy grew by 5.3 percent in JanuaryMarch, showing a 9-year low for the quarter. GDP growth was at 6.5 percent for FY 2011- 12, compared to 8.4 percent in 2010-11.

Analysts feel that the risk of regulatory intervention on prices, given the government of India’s priority to tackle inflation, continues to exist. Despite steel being a deregulated commodity, the government may exert indirect control on steel prices as seen in the past, to bring in more stability into the steel market.

STEEL INSIGHTS 72 JUNE 2012

Market Report Price trend in domestic flat & long steel sector on a quarterly basis Billet 100*100 mm

Bloom 150*150 mm

Wire Rod 6 mm

Angle 50X50X6 mm

TMT Bar 10 mm

Joist 125*70 mm

Channel 75*40 mm

HR Coil 2.00 mm

CR Coil 0.63 mm

GP Sheet 0.63 mm

GC Sheet 0.40 mm

Kolkata May’11

36965

35220

43660

42505

41050

41110

41840

42440

47290

54245

55720

Aug’11

37630

35910

44235

43015

41615

41780

42685

42395

47685

54060

55725

Nov’11

38660

37535

44190

44940

43015

42795

44340

45915

51395

55560

56615

Feb’12

39435

38275

44915

46175

44505

44585

44845

45935

51680

55120

56425

May’12

41785

40600

48030

49860

48200

47815

48955

47060

52705

56095

57505

May’11

37300

35540

44540

43310

40890

41060

42280

43020

48380

51540

54650

Aug’11

38080

36370

45325

44115

41500

41850

42715

43140

48140

51990

55400

Nov’11

38910

37840

45090

46065

43235

43935

45305

47565

51960

53730

56580

Feb’12

39510

38460

45900

46790

44550

45080

45440

47610

51720

54210

55000

May’12

41850

40730

48635

49950

47680

47860

49700

49085

53380

55090

57260

May’11

38100

36000

44890

43425

41630

41705

42375

42145

46720

53170

55080

Aug’11

38260

36200

45615

43990

42210

42380

43085

42270

47505

54445

56250

Nov’11

39600

38150

45695

45815

43835

43930

45275

47920

51710

55975

56405

Feb’12

40690

38730

46805

47845

45250

45390

46040

47910

51710

55855

56420

May’12

43080

41190

51350

51305

49090

49365

50190

49830

53600

57390

57825

May’11

37475

34760

45450

44000

42150

42125

42495

42010

47530

58915

60425

Aug’11

37490

34615

45320

43865

42930

42830

43210

42035

47500

58480

60620

Nov’11

38855

36840

45295

45375

43905

44145

45485

47600

52175

60780

61600

Feb’12

39990

37570

45950

47055

45290

45585

45715

47575

52280

59840

60850

May’12

41870

40030

49760

51130

49085

49310

49880

49470

53445

61195

61870

Delhi

Mumbai

Chennai

Source: JPC. All prices quoted above are in `./t, all inclusive.

STEEL INSIGHTS 73 JUNE 2012

Market Report

Domestic raw materials market

Ferrous scrap imports come to a standstill Anondo Kumar Dutta

Pig Iron Pig iron prices saw an uptrend as raw materials became costlier and demand for exports increased. Amidst mayhem in long and silence in flat product market, the Indian canvass was in

Ingot, M. Scrap Trend 38000 37000 36000 35000

Price(Rs./t)

F

oreign exchange rates are weighing heavily on importers in every Indian port, with shredded scrap offers pegged at $450 per ton cfr Nhava Sheva. With the rupee weakening over `56 per dollar, importers are refraining from imports and are looking in the domestic market for transactions.

Added to the fact that the government is trying to dampen soaring inflation and the upcoming monsoon season reducing construction activity, scrap buying is weak.

Indian steel makers are using less imported scrap and replacing it with domestic scrap or alternative raw materials such as direct-reduced iron. While Chennai has been active this year, exporters from US East Coast ports, the UK and Western Europe still favour container shipments to South Asia. Even ship-building scrap has increase prices by over `1,000 per ton in the last fortnight. In the meantime, the Indian government has come out with new regulations to try and cap fraud in the metal scrap sector. It has released new criteria for enlisting agencies who give pre-shipment inspection certificates.

34000 33000 32000 31000 30000 29000 28000

1 2 3 4 5 1 2 3 4 1 2 3 4 5 ek ek ek ek ek ek ek ek ek ek ek ek ek ek We 2 We 2 We 2 We 2 We 2 We 2 We 2 We 2 We 2 We 2 We 2 We 2 We 2 We 12 1 1 1 1 1 1 1 1 ' ' ' ' ' ' ' ' ' '1 r r r r r r r r r y y '1 y '1 y '1 y '1 Ap Ap Ap Ap Ma Ma Ma Ma Ma Ma Ma Ma Ma Ma Ingot at Ghaziabad Ingot at Mumbai

Ingot at Raipur M.Scrap at Mandi

Ingot at Mandi

Source: NCDEX

for some flickers with pig iron prices rallying at some centres due to shortages of materials. With the crude steel production plummeting by 2.4 percent and 3.5 percent respectively with SAIL and TATA in April ’12 YoY ensuing shortage in of pig iron has caused some flutter in this insignificant quarter.

Pig iron rates are currently being quoted at `25,000 to `26,000 a ton in other domestic markets, up by a marginal `300

Price Trend of Ingot, Melting Scrap Ingot at Mandi

Ingot at Ghaziabad

Ingot at Raipur

Ingot at Mumbai

Apr’12 Week 1

36617

36707

33429

34679

Melting Scrap at Mandi 31617

Apr’12 Week 2

36243

36450

32885

34750

31243

Apr’12 Week 3

36326

36523

32841

34741

31326

Apr’12 Week 4

36456

36386

32873

34759

31456

May’12 Week 1

35556

35594

32778

34328

30556 29725

May’12 Week 2

34725

34823

32746

33886

May’12 Week 3

34271

34439

32496

33436

29271

May’12 Week 4

35178

35214

32673

33796

30178

May’12 Week 5

35681

35455

32664

33991

30681

All prices quoted above are average price in Rs./t, basic

Price Trend as observed in the auction held at Metal Junction for Scrap Products

% (m-m, q-q, y-y basis)

Apr’12 Price (Avg.)

May’12 Price (Avg.)

% change(M-M)

% change(Qtr-Qtr)

CR Coil End

Products

32657

32440

-0.66

0.84

% change(Yr-Yr) 1.28

WRM Material

32453

31825

-1.94

-2.86

18.91

Side-End Shearing

31363

30516

-2.70

0.38

19.53

Pipe Cutting

27150

--

--

--

--

CR Gas Cut

32000

30881

-3.50

8.89

12.56

Coil End Cutting

29217

30452

4.23

6.08

13.49

STEEL INSIGHTS 74 JUNE 2012

Market Report Following graph shows the price trend observed in the auction services of Metal Junction for the month of April & May 2012 for different scrap products.

Wtd.Avg.Price(Rs./MT)

38000

in the past few weeks. Secondary producers say that pig iron demand from electric arc furnaces has been good in the past couple of weeks, as against the falling demand from foundries.

In present lines, MMTC’s latest tender for the export of pig iron for first-half June shipment attracted higher-priced bids.

Sold via tenders, MMTC Transnational Private Ltd (MTPL) posted the highest-priced bid at $475 per ton fob India.

Scrap Products Price Trend

34000

Outlook The secondary scrap has tried to remain stable in the month of May, even though market sentiments are down. However, the future seems bright for the domestic ferrous scrap market as importers are refraining from making deals and are looking at domestic offers only to book immediate requirements.

As steel majors have reduced crude steel production based on subdued market trends, a short supply condition could exist for a couple of weeks only. Along these lines, a mild hike in prices can be expected, but could normalise in the long run.

30000

26000

22000 ek 1 ek 2 ek 3 ek 4 ek 1 ek 3 ek 4 2 We 2 We 2 We 2 We 2 We 2 We 2 We Apr'1 Apr'1 Apr'1 May'1 May'1 May'1 May'1 CR Coil End

Side-End Shearings

CR Gas Cut

WRM Material

Turning & Boring

Coil End Cutting

Price in ` per ton is basic

The table gives the price trend in Domestic Metallic sector on a quarterly basis Pig Iron

Melting Scrap H M S-I

Melting Scrap H M S-II

Sponge Iron (Coal Based)

May’11

31065

23985

23130

20355

Aug’11

32260

25470

24845

24095

Nov’11

32915

27375

26625

24500

Feb’12

33300

29500

28875

25625

May’12

33615

30500

29625

30000

May’11

30900

26000

25500

22500

Aug’11

34600

26850

26100

24750

Nov’11

34500

27000

27500

27000

Feb’12

33750

29000

29500

27500

May’12

35800

30000

29500

28750

May’11

28500

NA

NA

18000

Aug’11

29000

NA

NA

18500

Nov’11

29000

NA

NA

19000

Feb’12

32400

NA

NA

26600

May’12

30520

NA

NA

29230

May’11

27560

27200

22880

19500

Aug’11

27830

25725

24675

21000

Nov’11

28880

24680

23630

21530

Feb’12

32550

26515

25465

23100

May’12

36140

26780

25740

23400

Kolkata

Delhi

Mumbai

Chennai

Source: JPC. All prices quoted above are in `/t, all inclusive.

STEEL INSIGHTS 75 JUNE 2012

annexure

SPONGE IRON MANUFACTURERS ASSOCIATION DRI Production 2011-2012

CPTY L/T

APR

MAY

JUNE

JULY

AUG

SEPT

OCT

NOV

DEC

JAN

FEB

MAR

TOTAL

A. GAS BASED ESSAR STEEL LTD.

70.00

375834

329878

357746

404956

344175

267557

208613

181845

205147

247686

207905

206352

3337694

JSW ISPAT STEEL LIMITED

16.00

105682

104632

88570

99348

121087

102534

96970

77761

75328

90310

102454

125231

1189907

WELSPUN MAXSTEEL LTD.

10.00

80360

66930

67635

55297

53430

34550

36135

51425

44530

39050

35690

57385

622417

TOTAL GAS BASED

96.00

561876

501440

513951

559601

518692

404641

341718

311031

325005

377046

346049

388968

5150018

AARTI SPONGE & POWER LTD.

0.60

4799

3049

2853

3786

2171

2651

3502

2907

1960

3288

2600

2765

36331

ACTION ISPAT & POWER LTD.

2.00

10456

11512

12836

9368

7592

7564

4980

5623

5707

8194

6931

7209

97972

ADHUNIK CORPORATION LTD.

0.60

3926

3514

3669

3762

4062

2638

3109

2131

0

0

0

0

26811

ADHUNIK METALIKS LTD.

2.70

16537

14465

3669

14090

8277

22107

18248

5719

12286

14321

11230

10665

151614

AKSHARA INDUSTRIES LTD.

0.60

4763

5044

4133

4375

4162

3705

4371

4202

4483

3792

4250

4334

51614

AMBEY IRON PVT LTD.

0.45

0

0

0

0

0

0

0

0

0

2696

2880

2929

8505

AMBEY METALLIC LTD

0.36

0

0

0

0

0

0

468

3198

2152

3221

3340

2125

14504

ANSHUL STEELS LTD

0.60

2713

3193

2439

388

1422

1645

1141

1507

796

2841

2816

1873

22774

ARYAVRATA STEEL PVT LTD.

0.36

705

715

713

606

662

631

547

760

882

1177

1142

1003

9543

BALAJI SWAMI PREMIUM LTD.

0.20

1081

951

1049

1087

1269

152

310

511

319

979

313

1148

9169

BALDEV ALLOYS PVT. LTD.

0.30

2854

2323

2616

1873

1172

2072

2558

1853

3089

4001

3122

2001

29534

BELLARY ISPAT PVT LTD.

0.20

516

843

439

772

441

1294

0

0

0

193

0

0

4498

BIHAR SPONGE IRON LTD.

1.86

5180

4638

11894

6821

10835

9504

5138

3917

4818

3939

6820

9991

83495

CRACKERS INDIA LTD.

0.60

3585

3227

3115

2564

1683

1702

1650

1500

1600

1741

1914

2008

26289

DHANALAKSHMI SPONGE IRON

0.60

3554

532

473

0

0

0

1303

2681

2499

2702

2455

2706

18905

DIVYAJYOTI STEELS LTD.

0.30

1115

1759

1048

0

0

0

0

0

0

0

651

1046

5619

DINABANDHU STEEL LTD.

0.60

0

0

0

0

602

2268

1898

370

1466

0

0

0

6604

ELECTROTHERM INDIA LTD.

1.80

11759

15330

12042

10852

6789

5897

2901

3869

4093

5880

3880

2468

85760

GALLANTT METAL LTD.

1.00

8687

8895

7165

5223

3876

7017

10370

9853

8858

9711

8435

9520

97610

GAYATRI METALS LTD.

0.30

595

0

562

203

210

0

0

0

0

0

0

0

1570

GANESH SPONGE PVT LTD.

0.90

5220

4960

3965

3460

3690

1870

3135

2570

2505

1955

3155

4315

40800

GODAWARI POWER & ISPAT

4.95

26107

34656

29957

31985

31015

17759

29369

28098

19131

30293

34345

30512

343227

HI-TECH POWER & STEEL LTD.

0.60

3279

4304

3949

3221

2312

3227

3167

2837

3802

1217

156

3952

35423

HOSPET ISPAT PVT LTD.

0.60

0

0

0

0

0

0

0

0

0

0

0

0

0

HOTHUR ISPAT LTD.

0.90

1929

1251

796

738

1443

1203

921

718

1522

2024

1398

1480

15423

HOWRAH GASES LTD.

0.60

2428

2714

2735

2291

1738

2593

2167

2710

1890

2909

3210

3704

31089

HARYANA STEEL & POWER(Est.)

0.60

3000

3000

3000

3000

3000

3000

3000

3000

3000

3000

3000

3000

36000

HARE KRISHNA METALLICS

0.75

7210

5092

8044

4733

8988

9450

8056

9350

8453

9781

5130

9602

93889

JAI BALAJI SPONGE/HEG

3.45

18560

17299

15198

19365

14761

14578

14490

17592

17812

14955

14285

17613

196508

JANKI CORP. LTD.

1.80

7974

7377

7032

9862

11305

10940

18255

12060

12235

14855

14664

17258

143817

13.70

69964

126834

128459

108360

117554

115595

106660

100030

100557

111577

119670

114680

1319940

B. COAL BASED

JINDAL STEEL & POWER LTD. JAI DURGA IRON PVT LTD.

0.48

1281

1208

1365

1351

1207

768

627

1245

1335

1532

281

1857

14057

JAYASWALS NECO INDUSTRIES

2.55

17344

16748

21130

19037

19529

14252

15667

4147

18055

21121

15518

19784

202332

STEEL INSIGHTS 76 JUNE 2012

annexure CPTY L/T

APR

MAY

JUNE

JULY

AUG

SEPT

OCT

NOV

DEC

JAN

FEB

MAR

TOTAL

JAY IRON & STEEL LTD.

0.60

768

448

712

631

489

345

116

534

518

240

0

532

5333

KANISHK STEEL INDUS. LTD.

0.60

2363

2885

1220

2294

2753

1886

1332

1333

2185

1739

2118

2122

24230

MINERA STEEL & POWER

1.20

6591

5942

5034

5588

8614

8017

7511

8805

8349

8361

6828

8469

88109

LLOYDS METAL & ENERGY LTD.

2.70

12604

13455

16743

17122

17064

13754

14885

7660

9349

14250

15337

9606

161829

MGM STEEELS LTD.

1.05

50

0

0

0

0

0

0

2337

1973

8160

9270

9992

31782

MONNET ISPAT & ENERGY LTD.

8.00

66736

65418

55314

71262

71135

67705

76433

70316

73580

71737

71910

77632

839178

NALWA STEEL & POWER LTD.

1.98

14820

15264

13734

14868

15623

15173

13106

14953

14606

14526

13575

14876

175124

OCL IRON AND STEEL LTD.

1.20

9201

9601

8272

8149

8007

7013

8333

9868

7670

10005

9731

9989

105839

ORISSA SPONGE & POWER

2.50

3946

4804

1938

0

0

3284

1446

4103

6189

5867

5331

5964

42872

RAYEN STEEL LTD.

0.60

2370

1132

1104

78

984

512

439

460

669

829

1974

2647

13198

SARDA ENERGY LTD.

3.60

19395

20832

21687

21879

18820

16187

19462

21646

19130

21373

16202

28808

245421

RANGINENI STEEL LTD.

0.25

1057

787

1455

1130

956

335

0

0

0

0

0

0

5720

RASHMI ISPAT LTD.

0.60

2288

1635

1489

1650

2115

1662

1235

1392

2921

2722

2638

3167

24914

RUNGTA MINES LTD.(Est.)

6.30

37000

37000

37000

37000

37000

37000

37000

37000

37000

37000

37000

37000

444000

SKS ISPAT LTD.

2.70

12922

10329

11212

11509

13613

11533

10231

12766

11600

17000

10180

18475

151370

NARBHERAM POWER

1.00

8193

5746

180

8969

2948

0

0

7973

4775

5502

6911

4832

56029

SHRADDHA ISPAT LTD.

0.72

3372

3440

3049

2640

3092

3034

3200

2369

2584

4718

5987

5929

43414

SHRI BAJRANG & POWER

2.10

9305

10891

12385

7340

11645

9092

6726

7708

7637

11624

9714

12572

116639

SHYAM SEL LTD.

1.60

11914

12252

11504

10993

11903

9832

10811

9327

13055

12907

12548

13710

140756

SINGHAL ENTERPRISES LTD.

2.50

13875

13983

15064

11363

13959

9242

11250

12703

15542

14976

14425

16152

162534

SMC POWER GENERATION

2.00

9630

14221

10390

10448

7680

7896

8729

6499

5355

5148

5262

6491

97749

SURANA INDUSTRIES LTD.

1.28

1242

619

2205

963

1952

2680

737

51

0

1157

2535

1806

15947

SURYAA SPONGE IRON LTD.

0.84

900

3036

2286

2665

1283

340

434

0

0

0

0

735

11679

SURENDRA MINING INDS. LTD.

0.60

3514

2945

2983

3111

3514

1249

2914

2542

3147

2847

2955

3862

35583

SREE METALIKS LTD

2.30

13325

11239

8548

7771

5700

4668

4448

5923

4894

7119

3392

6500

83527

SUNFLAG IRON & STEEL CO.

2.55

5034

13032

13399

7982

11992

14096

15316

15287

9327

7531

15417

14031

142444

SURAJ PRODUCTS LTD

0.36

2655

3016

2714

2576

2529

2560

2468

2500

1776

2434

2380

2924

30532

TATA SPONGE IRON LTD.

3.90

27364

23272

20469

22684

27802

23530

8876

13042

31455

20540

26200

28038

273272

TOPWORTH STEELS LTD.

1.65

12482

15605

14052

14081

11448

13981

11785

11496

16232

13898

13002

14119

162181

VANDANA GLOBAL LTD.

2.31

14368

11147

16300

15369

16435

10285

14894

13925

10441

10464

17600

16782

168010

VISA STEEL LTD.

3.00

10376

11734

13733

18301

15922

4490

3756

2861

24408

18007

21126

10914

155628

MPL CEMENT & SPONGE P LTD.

0.09

240

200

192

248

216

216

194

775

258

280

303

183

3305

WELSPUN STEEL LTD.

1.20

12000

11840

10179

10060

9037

7842

11763

10911

11996

12000

11998

12000

131626

YESHASHVI STEEL LTD.

0.30

306

12

287

1633

726

50

0

199

25

1590

663

1154

6645

OTHER UNITS (Est.)

145.00

800000

800000

800000

700000

700000

700000

600000

600000

600000

550000

550000

550000

7950000

TOTAL COAL BASED

257.09

1399327

1463195

1433178

1325530

1328723

1275571

1177838

1154222

1203951

1200446

1202103

1243561

15407645

GRAND TOTAL (A+B)

353.09

1961203

1964635

1947129

1885131

1847415

1680212

1519556

1465253

1528956

1577492

1548152

1632529

20557663

EXPORTS 2011-2012 WELSPUN MAXSTEEL LTD.

10.00

7754

15278

2637

3102

1852

1570

500

0

3040

0

0

0

35733

TATA SPONGE IRON LTD.

3.90

0

2500

2500

2451

869

7500

0

0

0

N.A

N.A

8100

23920

MONNET ISPAT & ENERGY LTD.

8.00

2601

2576

2607

5252

7616

10275

7607

2537

5185

2647

2488

5115

56506

10355

20354

7744

10805

10337

19345

8107

2537

8225

2647

2488

13215

116159

Total

Source: Sima

STEEL INSIGHTS 77 JUNE 2012

PRODUCTION DATA

Production, Imports, Exports, Availability & Apparent Consumption (provisional) April Steel Insights Bureau

(in ‘000 tons) FINISHED STEEL PRODUCERS

Non-Alloy Steel (Carbon)

Alloy Steel

2012-13 (Prov)

2011 - 12 (Prov)

SAIL

808

781

3.5

RINL

242

178

TSL

435

2012-13 (Prov)

2011 - 12 (Prov)

Total 2012-13 (Prov)

2011 - 12 (Prov)

832

804

3.5

36.0

242

178

36.0

452

-3.8

435

452

-3.8

1485

1411

5.2

1509

1434

5.2

ESSAR

442

465

-4.9

442

465

-4.9

JSW ISPAT

305

218

39.9

305

218

39.9

JSWL

870

668

30.2

939

727

29.2

JSPL

113

55

105.5

113

55

105.5

b) Prod. of Major Producers $

1730

1406

23.0

69

59

16.9

1799

1465

22.8

Others

3211

3252

-1.3

300

278

7.9

3511

3530

-0.5

755

699

30

27

785

726

5671

5370

5.6

363

333

9.0

6034

5703

5.8

d) Imports $

500

236

111.9

170

96

77.1

670

332

101.8

e) Exports $

286

284

0.7

29

35

-17.1

315

319

-1.3

e) Availability (c+d-e)

5885

5322

10.6

504

394

27.9

6389

5716

11.8

f) Variation in Stock

470

102

14

-7

484

95

5415

5220

490

401

5905

5621

334

454

81

78

415

532

5081

4766

409

323

5490

5089

a) Prod. of Main Producers

Less : IPT/Own Consumption c) Total Production for Sale

g) Apparent Consumption (e-f) Less : Double Counting Real Consumption

% Variation

3.7

6.6

24

24

69

Source: Steel Ministry

For Classified Advertisements contact Sumit Jalan, +91 91633 48243 or sumit.jalan@mjunction.in

STEEL INSIGHTS 78 JUNE 2012

23

23

59

% Variation 4.3

4.3

16.9

22.2

26.6

% Variation

5.1

7.9

price trend

Ferro alloys & metals price trends Steel Insights Bureau

Ferro alloys & Metals

HC Ferro Chrome (Cr - 60%)

HC Ferro Manganese (Mn - 70%)

Silico Manganese (Mn - 60%, Si - 14%)

MC Ferro Manganese ( Mn - 70%, C -1.5)

LC Ferro Manganese (Mn - 70%, C - 0.1)

Ferro Vanadium

Moly Oxide (Mo - 57% min)

Ferro Titanium (Ti - 30%)

CPC (FC - 98%, S - 1.2%, size 0-10mm)

May '12

April '12

March '12

Ex-works Rs/ ton 70500

70500

73500

Ex-works Rs/ ton 58000

59500

60500

Ex-works Rs/ ton 59000

60500

60500

Ex-works Rs/ ton 81500

79500

73500

Ex-works Rs/ ton 112000

112000

112000

Ex-works Rs/ kg 720

710

705

CIF in US$/lb of moly 14.15

14.55

14.35

Ex-works Rs/ ton 142500

142500

142500

Ex-works Rs/ ton 27500

STEEL INSIGHTS 79 JUNE 2012

27500

25000

export data

Iron ore export data for May 2012 Steel Insights Bureau PORT KOLKATA

DATE

EXPORTER

4-May-12

S.M.NIRIYAT

22,000

12-May-12

ROTOMAC/SHAPING

17,250

14-May-12

FEEGRADE

19,000

KOLKATA Total

PORT

SFI

150,000

2-May-12

BANDEKAR BROS

55,000

4-May-12

CCL

50,000

CCL

82,000

5-May-12

7-May-12

FRPL

77,000

SESA

91,000

SFI

75,000

VGM

55,000

ILPL

45,000

PRIME MINERALS

76,000

SFI 8-May-12 9-May-12 10-May-12 12-May-12 13-May-12

MORMUGAO

55,000

SESA

93,000

CCL

108,100

EXPORTER CCL

170,699

FRPL

74,992

SESA

80,170

SRL

80,694

24-May-12

PTI

44,442

25-May-12

SRL

40,000

26-May-12

SESA

106,000

SESA

51,500

VMS

55,000

SESA

32,000

30-May-12 MORMUGAO Total PANAJI

2,698,947

2-May-12

TE

174,108

5-May-12

VMS

165,000

PANAJI Total PARADIP

QTY (in Tons)

23-May-12

28-May-12

154,000

RBSM

DATE 21-May-12

58,250 1-May-12

MORMUGAO

QTY (in Tons)

339,108 4-May-12

ESSAR

10,000

24-May-12

JSPL

51,080

4-Jun-12

EMIL

29,000

PARADIP Total

90,080

MINESCAP

56,000

2-May-12

RUNGTA MINES LTD

56,523

BANDEKAR BROS

55,000

4-May-12

BOTHRA SHIPPING SERVICES

35,000

FRPL

90,000

5-May-12

SREE BINNI SHIPPING

45,000

MSPL

59,750

BOTHRA SHIPPING SERVICES

30,000

SESA

73,460

JSW ISPAT STEEL LTD.

55,615

FRPL MAGNUM

VIZAG

6-May-12

140,000

8-May-12

55,000

27-May-12 28-May-12

45,100 ATLANTIC SHIPPING

20,000 41,700

14-May-12

SESA

88,000

17-May-12

SESA

51,540

VIZAG Total

328,938

18-May-12

SESA

128,600

Grand Total

3,515,323

STEEL INSIGHTS 80 JUNE 2012

Price data

Indicative Market price for April-May 2012 Steel Insights Bureau

ITEM

Kolkata

(Rs. Per tons)

Delhi

Mumbai

Chennai

15.05.2012

02.05.2012

05.04.2012

15.05.2012

02.05.2012

05.04.2012

15.05.2012

02.05.2012

05.04.2012

15.05.2012

02.05.2012

05.04.2012

PIG IRON

33380

33850

35100

35700

35900

36000

30220

30820

30560

35880

36400

37280

BILLETS 100 MM

41690

41880

41680

41820

41880

42010

43100

43060

42860

41870

41870

43000

BLOOMS 150X150 MM

40490

40710

40910

40700

40760

40900

41210

41170

40810

40080

39980

40880

PENCIL INGOTS

37600

39000

39800

35200

35700

36500

35200

34200

33500

36400

37440

43050

WIRE RODS 6 MM

47900

48160

47640

48110

49160

48810

51350

51350

50010

49670

49850

50020

WIRE RODS 8 MM

47530

47880

47450

47650

48700

48350

50640

50590

49320

49210

49390

49560

ROUNDS 12 MM

47490

47930

47450

47020

47690

48530

48750

48440

48260

48900

49150

50420

ROUNDS 16 MM

47520

47930

47490

47370

47830

48460

48750

48470

48320

48900

49150

50420

ROUNDS 25 MM

47150

47760

47190

47550

47800

48530

48550

48270

48090

48820

48980

50250

TOR STEEL 10 MM

49640

50080

49510

49620

50280

50880

51290

51320

51130

51040

51220

52750

TOR STEEL 12 MM

48560

49030

48550

47740

48410

49350

50440

50380

50500

50480

50660

52190

TOR STEEL 25 MM

48480

49030

48460

48090

48760

49700

50140

50010

50380

49750

49930

51640

ANGLES 50X50X6 MM

48030

48370

47480

47330

48030

48030

48720

49460

48720

49040

49130

49660

ANGLES 75X75X6 MM

47210

47610

46680

46750

47450

47450

47840

48520

47780

48450

48090

49160

JOISTS 125X70 MM

47820

47810

47710

47510

48210

48210

49150

49580

48910

49220

49400

49840

JOISTS 200X100 MM

47640

47960

48020

48030

48560

48210

49030

49460

48660

49400

49400

49840

CHANNELS 75X40 MM

48800

49110

49000

49350

50050

49350

50040

50340

49480

49970

49790

50040

CHANNELS 150X75 MM

48090

48490

48360

48810

49340

48990

48890

49500

48650

48890

49070

49320

PLATES 6 MM

47930

47940

47940

49720

49720

49820

49600

49640

49600

50270

50320

50420

PLATES 10 MM

47930

47940

47970

49720

49720

49820

49660

49700

49550

50270

50320

50420

PLATES 12 MM

48510

48530

48500

50250

50250

50350

50100

50140

50000

50850

50910

51000

PLATES 25 MM

49130

49080

49030

50770

50770

50870

50720

50690

50580

51490

51540

51640

H. R. COILS 2.00 MM

47020

47100

46980

49070

49100

49200

49840

49820

49750

49470

49470

49610

H. R. COILS 2.50 MM

45930

45990

45900

47960

47960

48090

48760

48750

48660

48460

48460

48550

H. R. COILS 3.15 MM

45840

45920

45800

47940

47960

48090

48760

48740

48680

48510

48350

48450

C. R. COILS 0.63 MM

52480

52930

52830

53580

53180

54100

53250

53950

53630

53240

53650

53840

C. R. COILS 1.00 MM

51530

51930

51630

52480

53280

52880

53390

53280

53070

52110

52320

52710

G. P. SHEETS 0.40 MM

57330

57880

56980

57630

58430

58710

58890

58470

58680

61330

61330

61570

G. P. SHEETS 0.63 MM

55570

56620

55870

54580

55600

56230

57350

57430

57030

61350

61040

61400

G. C. SHEETS 0.40 MM

57130

57880

56530

56600

57920

58220

57790

57860

57790

61870

61870

62230

G. C. SHEETS 0.63 MM

55740

56710

55810

54980

56180

56630

57520

57370

57290

61760

60820

61180

30000

31000

34000

29500

30500

32000

NA

NA

NA

26000

27560

28350

29250

30000

32500

29000

30000

32500

NA

NA

NA

24960

26520

27300

29500

30500

31500

28000

29500

30000

28340

30120

29640

22880

23920

25200

MELTING SCRAP H MS-I MELTING SCRAP H M S - II SPONGE IRON (COAL BASED)

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 02 day of every month, (4) Prices are indicative.

The indicative market price is calculated as per the methodology prepared by the committee constituted by members from SAIL, ERU & JPC.

STEEL INSIGHTS 81 JUNE 2012

Tear along the dotted line

STEEL INSIGHTS 82 June 2012 Tear along the dotted line