Steel Insights - May 2012 by mjunction services ltd

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 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 Advertising Soumitra Bose, Tel: +91 92310 00232, Email: soumitra.bose@mjunction.in Sumit Jalan, Tel: +91 91633 48243, Email: sumit.jalan@mjunction.in Subscription Rachita Das, Tel: +91 91633 48045, Email: rachita.das@mjunction.in Toll Free No.: 1800 4192 000 1. Press 8 for publication Email: publication.tbss@mjunction.in Design Debal Ray, Ishawer Kumar Sriwastva, Sobhan Jas For suggestions, feedback and queries, please write to steelinsights@mjunction.in

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Dear Readers, After a slowdown in 2011, the global economy is showing signs of recovery in 2012. Growth is expected to pick up in most parts of the globe in the second half of the year. Financial conditions have also improved and risk appetite has returned, fanning capital inflows into emerging markets. However, despite the upbeat mood in US, Asia, and other parts of the world, major fragilities are still present. Risks about the resolution of the euro area crisis remain and geopolitical uncertainty could push energy prices sharply higher. These factors could upset the recovery in the US, as consumer sentiment remains tied to gas prices and global developments. Back home in India, GDP growth is projected to moderate to 6.9 percent in 2012 (from 7.1 percent in 2011), before picking up slightly to 7.3 percent in 2013. The lowered growth outlook in 2012 is due primarily to the ongoing slowdown in investment. The latter reflects a combination of global, cyclical, and structural factors. For instance, global uncertainty has hurt domestic business sentiment and encouraged firms and investors to delay implementation of investment projects. The recent slide of the Indian rupee against the dollar because Indian macroeconomic concerns must be giving sleepless nights to the finance minister. Reports that India was reviewing its tax treaty with Mauritius sparked fears of outflows from foreign investors. Coming back to steel, India’s finished steel consumption rose 6.8 percent to 70.9 million tons (mt) on the back of 7 percent growth in finished steel production at 73.4 mt in 201112. This is in sharp contrast to steel consumption growth of 10.6 percent in 2010-11 at 65.6 mt on the back of 8.9 percent growth in finished steel production at 66 mt. This shows that both consumption and production have contracted in 2011-12 because of the global economic slowdown. In the current issue, we at Steel Insights concentrate on the flat steel products segment, which made up half of the total steel production in the country. The rate sensitive flat steel product consuming sectors of automobile, capital goods, consumer durables among others are set to see a rebound with the cut in interest rates following the repo rate cut by the Reserve Bank of India (RBI). The May issue also has a special corporate update on Essar’s pellet plant at Paradeep, which is set to substantially reduce steel making costs of the leading flat steel maker. The issue also delves in detail on the ferro alloys sector, which of late experienced low demand as steel makers struggled to handle the overall economic slowdown. Happy reading.

Disclaimer: This document is for information purpose only. Certain information herein has been acquired from various external sources believed to be reliable. While we have taken reasonable care to compile this report, we in no way assume any responsibility for any error or discrepancy in regards to information contained herein. Readers are requested to make appropriate judgment without any prejudice or compulsion.

(Rakesh Dubey)

Contents 30 BSP achieves 109% capacity utilization as SAIL ramps up production 35 RINL adds a new feather to its cap 37 JSW Steel Q4 crude steel production up 26% y-o-y 38 Posco environmental clearance suspended 39 US import duty to benefit Welspun 40 WMI Konecranes bags JSW Steel order 41 JSPL consolidated net profit up 5% in FY12 42 Export duty pulls down chrome ore prices 43 Ferro chrome export dips on low global demand 44 Ferro alloy prices rise between Dec and April 47 Power to drive ferro alloy industry 48 Iron ore softens on low steel price 52 Ferrous scrap prices may remain firm in May 53 Buying support pushes up coking coal 55 March car sales keep recovery hopes alive 56 Steel Ministry signs pact with Afghanistan 57 India’s steel use to grow 6.9% in 2012: Worldsteel 58 RBI cuts repo rate by 50 bps 59 More rate cuts needed to revive steel demand 60 Iron ore handling by major ports down 30% 61 Indian Railway’s FY12 commodity freight revenue up 10.7% 62 Macroeconomic indicators of India 64 Global March crude steel output up 9% m-o-m 65 International flat product markets: Low demand keeps prices soft 68 International long product markets: Mixed trend amid largely low demand 70 Domestic flat & long markets: Markets await monsoons, remain soft 73 Domestic raw materials market: Pig iron prices show uptrend in April 74 Production data 75 Price trend: Ferro alloys & metals price trends 76 Iron ore export data for April 2012 77 Indicative market price for April 2012

6 | Cover Story

Customer needs fuel flat sector growth Steel makers will have to add value to their products and scope exists more in flat segment

24 | Interview

Steel demand to be 140 mt by 2020, says Vikram Amin He expects steel demand to grow 8-10 percent for the next four to five years

26 | SPecial UPDATE

Extra pellets, if any, will be sold: Essar Steel Securitization of raw materials for the Hazira plant is of prime importance

45 | SPECIAL Focus

Rohit Ferro to set up ferro alloy plant in Oman Company plans to set up a ferro alloy plant with four furnaces of 33 MVA each

50 | Interview

“There is no alternative to iron ore beneficiation” In 30 years high grade ore deposits in India could be depleted leaving only low grade ore

Call 9163348243 for more details

STEEL INSIGHTS 4 MAY 2012

Cover Story

Customer needs fuel flat sector growth Tamajit Pain

he fiscal 2011-12 has just ended and the steel production data shows India produced 73.41 million tons (mt) of finished steel, a growth of 7 percent over the previous fiscal. Out of this flat product production was about 36.86 mt or half of the total steel production in the country. This is enough evidence that the flat products segment has slowly but steadily occupied pride of place in the steel sector. The requirement for sophisticated value-added steel used in the automotive, heavy machinery and physical infrastructure sectors has increased over time, forcing the consuming sectors to resort to imports. This has led to flat steel imports of about 6 mt and apparent flat product consumption of around 37.2 mt during the current fiscal. According to industry experts and Steel Insights research, out of the total production of flat products in 2011-12, around 24 mt was produced by prime steel makers like SAIL, Tata Steel, Essar, JSW, JSPL and JSW

Ispat. The remaining amount of about 13 mt was estimated to have been produced by secondary steel makers. This shows that unlike the long steel industry in India, flat steel makers are mostly organised players with the capability to meet the sophisticated needs of the ever growing demand of the customers. The writing on the wall is clear. Steel makers will have to add value to their products and the scope for value addition exists more in the flat segment. The comparatively low reduction in import of flat products vis-à-vis long products is a clear indicator that all the required grades of special steels are not being made by domestic manufacturers. The companies will have to increasingly use more superior technology to use raw material in a more effective way and produce value added steel as per the requirements of the customers. However, there is a perception in the industry that pricing power will not be there with manufacturers of flat products as most of the capacity coming on-stream in the next 18 months is in the flat segment. The big players in India will add a total flat steel capacity of about 15 mt in the next 12-18 months, leading to a glut situation, putting a pressure on pricing, some analysts believe. But the industry feels differently. With increasing demand for sophisticated and

STEEL INSIGHTS 6 MAY 2012

Cover Story customized material, there is an opportunity for the flat steel makers. According to some experts, Jindal Steel & Power, SAIL, Tata Steel and Usha Martin are among the companies that will benefit as they have a mixed portfolio of flat and long products and do not depend on only one segment for growth. Consuming sectors An analysis of the consuming sector growth shows that passenger vehicle sales grew 21 percent in March 2012 as customers pre-poned their purchases ahead of the fiscal measures announced in the budget. Similarly, improved demand from the infrastructure sector pushed up construction activity in March. Construction activity is expected to remain stable until the monsoons begin in June. The capital goods sector grew over 10 percent due to the low base effect. But the growth rate is expected to fall in March-April 2012 owing to the slowdown in economy. The consumer durables sector grew at 6-7 percent suggesting a weak demand side. But there is possibility of improvement in demand going forward. Products Indian steel producers produce hot rolled coils, skelps, hot rolled sheets, cold rolled coils and sheets, electrical sheets and slabs among others, but there are many specialised products, which are currently not being produced within the country,

leading to their imports from countries like China, Germany, Japan, Korea, Russia and Ukraine. According to sources in major auto companies, Indian steel companies still lack specialisation in supplying special grades of automotive steel required by them and most of the materials are still imported. Leading car makers in the country like Renault, Hyundai, Maruti, General Motors etc, too are using a lot of specialised automotive grade steel that is being imported. The fact is that Indian carmakers import most, if not all, the steel they require. The cold-rolled steel produced by domestic steel makers is not to the grade specified by carmakers in India, and so they choose to import steel of the desired grade. However, if anything, domestic steel makers should view this as an opportunity, since a large captive market exists in India, according to sources in the auto industry. Expansion The situation, however, is likely to change going forward. Companies like Essar, JSW, Tata Steel and SAIL have put in place new production lines under which they are producing specialised flat products. With the new specialised production lines, the situation is such that these companies will have to look at other markets to sell their products, some experts believe. With new facilities coming on stream, these producers will have to look at developed markets in Europe and the Middle East to sell their products, they feel.

Import, export, availability, stock & apparent consumption of iron & steel April 2010 - March 2011 ‘000 tons

CATAEGORY

PLATES HR COIL/STRIP HR SHEETS

NON ALLOY FLAT

Apparent Consumption

Stock as on

Total Production For Sale

Imports

4,621

802

235

5,187

13,138

2,346

478

15,006

Exports

Availability

As on 1-APR2010

Apparent Consumption Variation Over Last Year(%)

As on 31-MAR2011

Variation in Stock

Current Yr.

Last Yr.

207

326

119

5,069

4,774

6.17

568

743

176

14,831

14,245

4.11

571

582

567

604

-6.13

CR COIL/SHEETS

6,717

1,148

283

7,582

277

245

-32

7,614

6,344

20.03

GP/GC SHEETS/COIL

5,556

353

1,312

4,597

239

178

-61

4,658

4,513

3.21

152

317

469

466

424

9.94

ELECT. SHEETS TIN PLATE (incl. ww) PIPES/FITTINGS TMBP TIN FREE STEEL

TOTAL NON ALLOY (FLAT) ALLOY FLAT GRAND TOTAL

230

170

339

-2

341

358

-4.64

1,859

608

1,288

1,285

1,165

10.3

46.39

70.6

32,861

5,298

3,036

35,123

1,338

1,558

220

34,903

32,469

7.5

1,829

636

155

2,309

2,304

2,154

6.96

34,690

5,934

3,191

37,432

1,381

1,607

226

37,207

34,623

Source: Steel Ministry

STEEL INSIGHTS 8 MAY 2012

Cover Story Production, own consumption, production for sale of iron & steel April 2010 - March 2011 ‘000 tons

MAIN PRODUCERS CATAEGORY

OTHER PRODUCERS MAJOR PRODUCERS

RINL

SAIL

TSL

TOTAL

ESSAR

ISPATJSW

JSPL

OTHERS

JSWL

TOTAL

“Less : IPT / Own Consumption”

“Total Production for Sale”

PLATES

2,520

2,592

1,020

381

173

454

2,029

4,617

HR COIL/STRIP

3,262

1,947

5,209

3,195

2,308

358

4,281

1,799

11,941

4,012

13,138

HR SHEETS

157

108

265

195

138

333

571

CR COIL/SHEETS

683

1,095

1,778

907

209

2,496

4,306

7,918

2,975

6,721

GP/GC SHEETS/COIL

222

449

671

328

234

983

3,366

4,910

5,556

ELECT. SHEETS

152

TINPLATE

223

230

PIPES/FITTINGS

1,775

1,859

TMBP

TIN FREE STEEL

TOTAL NON ALLOY (FLAT)

7,014

3,671

10,685

5,644

2,751

739

8,071

12,013

29,218

7,042

32,861

ALLOY FLAT

479

1,858

2,359

630

1,829

GRAND TOTAL

7113

3671

10784

5667

2751

739

8550

13871

31577

7672

34690

NON ALLOY FLAT

Source: Steel Ministry

SAIL SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the company’s iron ore, limestone and dolomite mines. The company has the distinction of being India’s second largest producer of iron ore and of having the country’s second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. Bhilai Steel Plant: 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 Automobile sector growth (%)

longest rail tracks of 260 metres. The flagship unit of Steel Authority of India Ltd (SAIL) located in Durg district, some 30 km west of Chhattisgarh capital Raipur, produced 5.13 mt of hot metal, 4.90 mt of crude steel and 4.29 mt of saleable steel in the just ended financial year. The Bhilai Steel Plant (BSP) has crossed yet another milestone in its ongoing expansion and modernisation plan with the erection of lower tower structure for the Blast Furnace (BF) 8. The BF 8 project is an important component of the 7 mt modernisation & expansion plan of the BSP – the flagship entity of the Steel Authority of India Limited (SAIL) The contract for installation of BF 8 had been awarded to a consortium of Paul Wurth, Italia (PWIT), Paul Wurth, India (PWIN) and L&T. Bokaro Steel Plant: Bokaro is designed to produce flat products like hot rolled coils, hot rolled plates, hot rolled sheets, cold rolled coils, cold rolled sheets, tin mill black plates (TMBP) and galvanised plain and corrugated (GP/GC) sheets. Bokaro has provided a strong raw material base for a variety of modern engineering industries including automobile, pipe and tube, LPG cylinder, barrel and drum producing industries. At present it houses five blast furnaces with total capacity to produce 4.5 mt of liquid steel. The plant is undergoing a mass modernisation drive after which its output capacity is expected to cross 10 mt. The first shop of Bokaro Steel Plant got the ISO 9001 certification way back in 1994, and its SAIL JYOTI products enjoy a loyal market. Tata Steel

Source: SIAM

Keeping in line with the growth projections in the Indian STEEL INSIGHTS 10 MAY 2012

Cover Story

automotive segment along with changing steel usage trends, Tata Steel Limited (TSL) is all set to expand both in terms of capacity as well as capability to cater to this growing need. One of the prime private steelmakers of the country, TSL is all set to commission its first thin slab compact rolling line with a capacity of 2.4 million tons per annum (mtpa) shortly, as per company sources. Further, TSL, in a joint venture (JV) with Japan’s Nippon Steel, would come up with its second continuous annealing and processing line by fiscal 2014. This would entail an investment of ` 2300 crore, with a capacity of 600,000 tons per annum (tpa). The JV would source steel from TSL’s Jamshedpur units and is a part of the company’s strategy to produce value added steel. The JV would cater to the needs of Indian automotive customers for high grade cold rolled sheets. In addition to this, TSL’s 6 mt Kalinganagar project would also cater to this segment, which is envisioned to be a fully equipped end-to-end steel mill. Interestingly, India’s share of global vehicle production is projected to grow to over 5 percent by the year 2015. This would translate into increased consumption from the automotive sector, mainly in flat products, from 9 to 20 percent and at par with developed nations. Moreover, the industry has been predominantly dependent on the imports of steel due to several issues associated with the capacity of domestic steelmakers.

Thus, this made the automotive segment an area of strategic importance for TSL. As a result, TSL had set in ‘Four Phases of Modernisation’ as early as 1980. It is, in fact, in the third and fourth phase of the program. In 1993, TSL set up a new 1-million-ton (mt) hot strip mill capable of producing steel as desired by the automotive segment. With the setting up of this project, the company began its foray into this segment by serving commercial vehicle manufacturers. This mill, in tandem with the growing demand from the auto sector, was later enhanced to 4 mt capacity, apart from providing inputs for the company’s cold rolling mill. As the years progressed, TSL came up with a cold rolling mill complex equipped with India’s first pickling line and tandem cold mill and hot dip galvanising line for the auto segment. This project was designed with the help of Nippon Steel. It will be interesting to note here that the automobile customers measure the performance of a supplier on five broad parameters – quality, cost, delivery, development and management. Thus, with the growth of the auto industry in the country, the requirements have matured and service demand in terms of quality has become more stringent. Responding to the need of the hour, new investments in the areas of inspection and facility upgradation have been made to address the specific requirements of the auto segment. Cost reduction is another important focus area for the automobile manufacturers. Catering to this area, TSL came up with customer value management initiative through its customer service teams. The objective was to transfer value to the customers in terms of non-price benefits through localisation and value engineering, among others. Further, the automotive industry being a volatile market, with demand fluctuating on a monthly, level, there was a big challenge to provide complete satisfaction in terms of delivery. Consequently, TSL set up service centres near customer locations to cater to the demand with need-based processed material and just-in-time delivery. Now, TSL is continuing its foray into the grades of steel which are still being imported. Thus, the company is investing in new technologies to produce grades of steel which will be

Capital goods sector growth (%)

Consumer durables sector growth (%)

Construction sector growth (%)

Source: Insights Research

* IIP (2004-05 Series)

Source: CSO

* IIP (2004-05 Series)

Source: CSO

STEEL INSIGHTS 12 MAY 2012

Cover Story used in future in the automobile segment. It will be interesting to note that the steel used for vehicles in the developed nations is more of high tensile and galvanised varieties. Thus, the Indian auto manufacturers are likely to tread on the same path. In fact, in India, steel used in export models and new launches already indicate this shift. JSW Steel During the December quarter of 2011-12 JSW Steel got the new product approvals for steel for ball bearing for FAG Schaeffler India. The new product approvals also included steel for transmission component for Heavy Commercial Vehicles for Tata Motors. Saleable steel sales for nine months ended December 2011 included 4.19 mt of rolled flat products and 1.23 mt of value added products. The projects under implementation included HSM-2 phase II, which is expected to be completed by September 2012 and Cold Rolling Mill-2, which is expected to be completed by FY14 end. The company’s 10-12 mtpa expansion is scheduled to be completed by FY14 end. The company has taken up a 0.8 mtpa CRM Mill project at a cost of `330 crore, for which the environment clearance is in process. The implementation period for the project would take 18 months from the zero date and reduce the dependence on few large customers. The new project would benefit JSW with a larger share of value added downstream market. Currently, JSW offers the entire gamut of steel products – hot rolled, cold rolled, galvanised, galvalume, pre-painted galvanised and pre-painted galvalume. Last year, the company set up of its new 2.4 mtpa capacity unit in Vijaynagar in collaboration with JFE to cater to the automotive manufacturers of the country in a more efficient manner. JSW has plans to commission its state-of-the-art Continuous Annealing Lines for CRCA of approximately 1.9 mt capacity, along with 0.4 mt of Hot Dipped Galvanising / Galvanneal variety, meeting the quality requirements of the auto industry.

Product

Location

Capacity (MnT) 2010-11

2011-12

2014-15

Crude Steel

Vijayanagar

6.8

10.0

12.0

HRC

Vijayanagar

6.7

8.2

CRCA

Vijayanagar

0.825

2.7 (incl. 2-CAL’s, each of 0.925 MnTpa)

Hot Dipped Galvanised

Vijayanagar

NIL

0.4

Source: JSW

Meanwhile, the Indian auto makers are 100 percent reliant on imports of special steel grade, as the country does not have the technology to produce it. Keeping this in perspective, JSW is looking forward to penetrate further in the steel service centres (SSC). The objective remains simple – customised products for the end user and just-in-time delivery. Essar Steel Essar Steel Ltd is a fully integrated flat carbon steel manufacturer – from iron ore to ready-to-market products – with a current capacity of 14 mtpa. The company’s products find wide acceptance in highly discerning consumer sectors such as automotive, white goods, construction, engineering and shipbuilding. Essar Steel is one of India’s largest exporters of flat products, exporting to the highly demanding US and European markets, and to the growing markets of South East Asia and the Middle East. A number of major client companies have approved Essar’s steel for their use, including Caterpillar, Hyundai, Swaraj Mazda, the Konkan Railway, and Maruti Suzuki. Essar Steel has acquired extensive quality accreditations and the lean team gives the company one of the highest productivities and lowest manpower costs among steel plants internationally. Essar Steel’s Hazira complex recently announced doubling of its capacity to 10 mtpa. This expansion makes the Hazira Steel Complex the largest single location flat steel producer in India and the fourth largest single location flat steel producer

JSW’s Vijayanagar Plant

STEEL INSIGHTS 14 MAY 2012

Cover Story globally. With this expansion the complex will be able to offer the entire range of flat products from thin strips and thick plates to pipes, cold rolled and coated products. This steel plant will play a major role in making Gujarat a global industrial hub catering to the needs of capital and consumable goods, shipbuilding and automobile sector. Being a port-based plant, its strategic location makes it a ideal gateway for meeting the global demand for steel. Domestically the complex will provide world-class steel to meet the diverse needs of various industries, while also making the Hazira Steel Complex a national hub for Essar Steel to provide a range of steel products to the rest of the country. This is in line with the Vision 2020 that envisages taking India’s steel capacity to 200 mtpa. Complete portfolio of flat steel products • New compact strip production (CSP) mill is capable of producing thin gauge strips of thicknesses as low as 0.8 mm • C SP along with the hot strip mill (HSM), plate mill, pipe mill and other existing downstream facilities offer the ability to produce the entire range of value-added flat steel products • O ver 70 percent percent of the basket of products are value added, thus positively impacting margins • Caters to all customer segments The company has a downstream capability hub at Pune (Maharashtra), which houses a 0.6 mtpa cold rolling plant, a 0.5 mtpa galvanizing plant, a 0.4 mtpa color coating plant, and a 0.65 mtpa pickling line. Steel distribution Essar Steel is the first steel company to set up an end user distribution chain for steel products under the brand names Essar Hypermart and Essar Expressmart. Hypermart is the world’s largest steel retail chain with a network of over 375 retail outlets across India, Indonesia, Nepal and the Middle East. Essar Steel’s processing and distribution facilities are the largest in India with an aggregate annual capacity of 4 million tonnes from its facilities in Pune (Maharashtra), Hazira (Gujarat), Bahadurgarh (National Capital Region), Chennai (Tamil Nadu), Bhuj (Gujarat) and Dubai (UAE).

from 8 mm to 120 mm in thickness in widths of 1500 mm to 3500 mm and coils in thickness range of 8 mm to 25 mm in widths of 1500 mm to 2500 mm. JSPL Steckle mill is equipped with walking beam type of reheating furnace where slabs are re-heated at a temperature of 1,250 degrees Celsius and rolled in a mill with 2 hi-reversing type roughing stand and a 4 hi-reversing type finishing stand. To ensure excellent surface quality, high pressure de-scalers are provided at the entry and exit points. An auto level 2 width and thickness controlling system coupled with heavy leveller assures close dimensional tolerances and an increased level of flatness control. Right from the slab charging and plate production to the conclusive stage, fully equipped inspection facilities are in place. JSPL plates and coils are of premium quality in terms of dimensional adherence and internal soundness owing to its clean raw material, sound steel refining facilities and an efficient rolling mill. JSPL producers plates and coils complying to BIS 2062 specifications up to E450 grades besides a wide range of international standards and steel grades as per EN, DIN, JIS, ASTM, etc. The mill is approved by various societies such as LRS, DNV, ABS and GL for shipbuilding steel, besides, having accreditations such asISO 9001:2000, ISO 14001:2004 , OSHAS 18001, CE, ADW-2000 and certification by IBR for boiler grade steel, besides being a well known steelmaker. Important features of JSPL Plate & Coil Mill testing facilities: • Fully equipped sample preparation workshop. • Computerised tensile testing machine • Digitalised hardness tester • EN and ASTM impact testing machines • 100 T- Bending Cum Folding Machine • High magnification metallurgical microscope with image analyser • A Direct Reading Optical Emission Spectrometer with gas analytical channel

Jindal Steel & Power Ltd JSPL is equipped with India’s first state-of-the-art plate mill that started producing plates and coils of 3.5 metres and 3 metres width, respectively, for the first time in the private sector. JSPL’s plate cum coil mill (Steckle Mill) of 1 mtpa capacity located at Raigarh, Chhattisgarh, produces plates ranging

JSPL’s Raigarh unit

STEEL INSIGHTS 16 MAY 2012

Cover Story • Offline Ultrasonic Testing machine • Drop Weight Tear Test (DWTT) machine • Chemical lab equipped with muffle furnace for R&D quality Product Specifications Discrete Plates

Furnace Normalized Plates

Width 1500 mm - 3200 mm

Max. Length 13 meters

Thickness 8 mm - 120 mm

Thickness 40 mm – 80 mm

Max Length : 14 meters Max plate weight ; 23 Tons Cut to Length Plates

Hot Rolled Coils

Width 1500 mm to 2500 mm

Thickness 8 mm – 25 mm

Thickness 8mm – 25 mm

Length 6000 mm – 12500 mm

Max Coil Weight : 25 MT

Applications General engineering & structural fabrication

Railway Wagons

Pressure vessels & boilers

Oil & Gas pipelines

Bridges & Flyovers

Shipbuilding

Earthmoving equipments

TSPDL Tata Steel Processing and Distribution Limited (TSPDL) is a wholly owned subsidiary of Tata Steel. With eight large processing units, 15 sales locations and a host of partners like external processing agencies, suppliers, retailers and other stakeholders, today TSPDL is India’s largest steel service organisation. The past 12 years brought astounding changes in the Indian growth scenario and TSPDL maintained its strong growth path with commitments to quality processing, innovations and customer focus. Keeping in view the rapid expansion, consolidation, technology changes and an increasing number of steel consumers and OEMs, TSPDL has embarked on a series of expansions and ventured into new business areas like rebar processing, stainless steel and plate fabrication and roll forming operations. In 12 years, the company has a combined processing and distribution volume over 1.3 mt. TSPDL is equipped with processing plants at Jamshedpur, Faridabad, Pune, Tada, Pantnagar with a processing capacity of 2.5 mtpa, all integrated with SAP R/3 ERP package. It is also coming up with new facilities at Sanand, near Gujarat, for roll forming and stretch bending. TSPDL commenced its operations with its flat product processing business. The company has gained proficiency in

Process Flow : Plate Mill

Source: JSPL

STEEL INSIGHTS 18 MAY 2012

Cover Story various processing such as HR processing, CR processing, GP and GC processing. TSPDL’s latest venture has been stainless Steel, branded as TRYNOXTM. Various processes such as plate burning, roll forming and stretch bending initiatives have been started at Tada and Pantnagar. TSPDL adheres to strict quality standards that have resulted in serving successfully its top OEMs for 12 years. The company has eight processing centres all over India and 17 distribution/sales locations. Automotive companies are increasingly eyeing for newer technology to achieve higher productivity, higher yields and thus lowering costs in the supply chain. TSPDL is closely working with Auto companies to identify such improvement opportunities. TSPDL as Tier 1 supplier is using Roll Forming and Stretch Bending technology to manufacture high precision automotive components for Auto majors. TSPDL serves the requirements through just in time delivery to assembly lines. Uttam Galva Steels Uttam Galva Steels Limited is one of the largest manufacturers of cold rolled steel (“CR”) and galvanised steel (GP) in Western India. The company is into the business of procuring hot rolled steel (“HR”) and processing it into CR and further into GP and colour coated coils. In galvanised coils, it specialises in making ultra thin sheets, which could be as low as 0.13mm thickness. The excess capacity of CR which is not used for galvanizing is converted to value added grades in Cold Rolled Closed Annealed (“CRCA”) coils, cut to length sheets and also sold as Full Hard CR in the overseas markets. More than 50 percent percent percent of the company’s products are currently exported to 147 countries worldwide and it has a customer base in many advanced markets such as Australia , France , Germany , Greece , UK and the USA to name a few. In the Indian market, the company has established itself as a major player for the supply of CRCA to manufacturers of automobiles, white goods, general engineering and drums and barrels segment. The company is also a large supplier of galvanised coils and sheets to the construction industry. The company’s manufacturing facilities are located at Khopoli, in the state of Maharashtra, India, which are close to Nhava Sheva and Mumbai ports. This provides the company with easy access to imports and export of raw materials and finished goods. A close proximity to the ports gives the company the advantage of lowering its transportation costs. The company’s domestic sales are also within a radius of 500 km from its manufacturing facilities to domestic companies. The company has expanded and modernised its operations at Khopoli which have increased its cold rolling capacity to 1 mtpa as of March 2010. The company has also increased its GP capacity to 750,000 mtpa as of March 2010. The company has also added a new colour coated line (Uttam Spectrum) with a capacity of 90,000 tpa as of March 2010. Due to its high quality products and brand image in the market, the company expects that its increased volumes will be easily absorbed into the domestic and export markets.

The company now has an entire range of cold rolling Reversible mills i.e. 20-Hi, 6-Hi, 4-Hi and newly commissioned twin stand 6-Hi mill. It is now in a position to process HR coils of different grades, thicknesses and widths and is able to meet virtually the entire thickness/width range of CR/GP/GC coils for various end-use sectors. A significant portion of the company’s CR coils and GP/GC, coils/sheets are in the higher value added thin gauge segment. The company believes that the above measures will further strengthen its position as one of the leading companies in the CR and GP/GC market. With around 77 percent percent of the CR production being transferred to the GP/GC, the level of value addition is significantly enhanced. The company has always focused on novel and high value-added products. Its new colour coating line caters to a niche set of consumers. As part of its modernization program, the company has also invested in improving production and overall quality of its manufacturing processes and finished products and Intends to increase its production of higher value- added products. Automobile industry A late revival in automotive sales helped the industry register a positive growth during the year 2011-12. According to SIAM data, car sales climbed only 2.2 percent in 2011-12. High interest rates and rising fuel costs had deterred buyers during the first half of the year leading to negative growth during that period. Total sales in the fiscal year stood at 2.02 million cars. With this, for the first time in history, car sales crossed 2 million in a financial year. The growth rate for overall domestic sales for 2011-12 was 12.24 percent. Sales of trucks and buses, a key indicator of economic activity, rose an overall 18.2 percent during the year. Passenger vehicles segment grew at 4.66 percent during April-March 2012 over the same period last year. Passenger cars grew by 2.19 percent, utility vehicles grew by 16.47 percent and vans by 10.01 percent during this period. The overall commercial vehicles segment registered a growth of 18.20 percent during April-March 2012 as compared

STEEL INSIGHTS 20 MAY 2012

Cover Story to the same period last year. While medium & heavy commercial vehicles (M&HCVs) registered a growth of 7.94 percent, light commercial vehicles grew at 27.36 percent. Three-wheeler sales recorded a decline of (-) 2.43 percent in April-March 2012 over same period last year. While goods carriers grew by 6.31 percent during April-March 2012, passenger carriers registered a decline of (-) 4.50 percent. Total two-wheeler sales registered a growth of 14.16 percent during April-March 2012. Mopeds, motorcycles and scooters grew by 11.39 percent, 12.01 percent and 24.55 percent respectively. The cumulative production data for April-March 2012 shows production growth of 13.83 percent over the same period last year. In 2011-12, the industry produced 20,366,432 vehicles of which the share of two wheelers, passenger vehicles, three wheelers and commercial vehicles were 76 percent, 15 percent, 4 percent and 4 percent respectively, the data shows. During April-March 2012, the industry registered a growth of 25.44 percent in exports of automobiles from India. Passenger vehicles registered growth at 14.18 percent in this period. Commercial vehicles, three-wheelers and twowheelers segments recorded growth of 25.15 percent, 34.41 percent and 27.13 percent respectively during April-March 2012. For the first time in history car exports crossed half a million in a financial year. However, industry experts say that overall, even though demand growth rate may have cooled over the last couple of months, the outlook for the year, and indeed beyond that, remains positive. “A spike in fuel prices and increase in lending rates may have caused customers to re-evaluate their purchases, but with more auto companies starting their own lending services, with interest rates lower than market rates, we expect there will be resurgence in demand,” an auto industry expert said. It is expected that demand for steel from the automobile sector in India will remain consistent, and increase over the next few years. This is primarily due to the fact that new brands are setting up shop in India, and existing carmakers are adding capacity. Ford, for example, is setting up a new plant in Gujarat with an installed capacity of 200,000 units with an aim to make India its global “small car hub”. Peugeot is firming up plans for India, and is expected to set up a plant of similar capacity. Honda and Toyota are ramping up capacity too as they prepare to launch new ‘volume’ models in the `4-5.5 lakh range. Demand, therefore, looks set to grow. The Indian car market is expected to touch 2.5 million units a year by the end of 2012, and double to touch 4.5 million units per year by 2020. So the demand for steel will always be there, even as automakers explore other materials. Given the cost advantages India offers, more and more global automobile and component players are scaling up their presence in this country. Few major key findings like per head disposal income in India is growing at CAGR of 12.11 percent, car stock per 1000 population is expected to increase at a CAGR of 9.14 percent and new passenger car registration

is expected to grow at a CAGR of 11.41 percent indicate that India is becoming the next auto hub. White goods sector Virtually every large multinational - including BlueStar, Samsung, LG, Philips, Electrolux, Whirlpool, among others - has set up production facilities in India to manufacture appliances. The overall trend towards higher foreign participation in this sector has also translated into government reducing levies and duties. For instance, duties on air conditioners have come down to 16 percent from the all time high of 40 percent. Besides consumers have benefited hugely as they now have products that meet global quality standards as well as offer more consumer-friendly features such as energy efficiency. A combination of changing lifestyles, higher disposable income, greater product awareness and affordable pricing has been instrumental in changing the pattern of consumer expenditure. The consumer durables industry, which includes white goods, televisions, VCD and DVD players, and audio systems, has been one of the segments to experience increased demand. Though the white goods sector has been affected in the short term owing to the growing interest rates and inflation, experts feel it is unlikely to have a long-term effect. According to an industry expert, the key demand drivers for he Indian white goods industry would be falling prices and increasing affordability, focus on rural market, rise in living standards, increased competition due to the entry of large players and growth in organised retail. All these factors are supported by growing disposable income. Thus, it is understood that this would result in increased usage of steel in this segment, primarily flat steel. The main steel products used for the white goods segment include, cold rolled close annealed, galvanized plain or galvanized skin passed and prepainted galvanized iron (PPGI). However, these days there is a slight shift in the trend of the steel requirement from the white goods segment. “A migration is slated to drift from conventional coatings to PPGI,” said the official of the prime white goods company. Meanwhile, with this kind competition and growth the steel makers are also witnessing some challenges, one of the biggest being stringent quality requirements and just in time delivery. Further, with growing competition from imported goods, the industry is veering towards one-stop solutions along with a full product basket. Thus, at times it becomes difficult to meet the critical quality attributes. According to industry experts, integrated steel units with value chains extending right up to retail will hold the key for the growth in market share of the steel maker. However, input cost worries dogged the steel makers as they strived to raise capacity. It needs to be seen how they maintain their growth as the country aims at 120 mt of overall steel making capacity in the next three-four years from 84 mt capacity in 2011-12 even as it remains a net importer of value added flat steel.

STEEL INSIGHTS 22 MAY 2012

interview

Steel demand to be 140 mt by 2020, says Vikram Amin Rakesh Kumar Dubey & Tamajit Pain

ssar Steel, the only domestic steel producer with the entire gamut of flat steel products encompassing hot rolled coils and sheets, cold rolled, galvanised, colour coated, heavy plates and large diameter pipe products, expects the overall flat products demand being in the range of 135-140 million tons by 2020. However, on the supply side there are uncertainties surrounding the number of greenfield projects that will come to fruition. Thus, based on current expectations, India will be a net importer of steel in 2020. The company, which caters to all end user segments like oil & gas, construction, shipbuilding, wind power, defense, yellow goods, white goods and auto, expects that the flat steel segment will continue to be serviced largely by the integrated steel producers unlike the long product segment where 70 percent of installed capacity continues to be with the secondary sector units. In a free-wheeling interview to Steel Insights, executive director - strategy & business development, Essar Steel, Vikram Amin, said he expects flat steel consumption to grow at 8-10 percent for the next four to five years but adequate measures need to be taken to curtail imports and protect the domestic steel industry. Excerpts:

How would you describe the growth of the flat steel segment over the last few years in India? Flat steel apparent consumption in India grew at over 11 percent from 20 million tons (mt) in FY 2007 to 31 mt in FY 11. This has primarily been driven by the auto, consumer durables and construction sectors. What is the current flat steel production share in India out of the total steel production in the country? Out of the total finished steel production of around 72 million tons per annum (mtpa) in FY12, around 50 percent is flats. This has changed from the early 2000s when flat products production share was closer to 40 percent. What is the current operating capacity of Essar Steel? Our current 14 mtpa global steelmaking capacity encompasses the 10 mtpa steel complex at Hazira and 4 mtpa at Algoma, Canada. How different is your product offerings compared to others? Who are your major consumers in India and overseas? Can you please elaborate on the quality aspect of the products? We are the only domestic steel producer with the entire gamut of flat steel products encompassing hot rolled coils & sheets, cold rolled, galvanised, colour coated, heavy plates and large diameter pipe products and thus cater to all end user segments like oil & gas, construction, shipbuilding, wind power, defense, yellow goods, white goods and auto. The diverse product portfolio is further strengthened by a 5-mtpa processing and distribution network of seven service centres in India and one each in the UK, UAE and Indonesia and retail network of over 375 outlets all over India. As part of our Quality Policy, we are committed to provide high quality products through Quality Management System consistent with the requirements of ISO/TS 16949:2002 and always strive for total customer satisfaction by meeting their implied and stated needs

Vikram Amin, ED, Strategy & Business Development, Essar Steel

“Flat segment will continue to be serviced by integrated producers”

In India, the flat segment is dominated by primary steel makers. How do you see the situation going forward? Flat steel capacities require a certain scale which makes it more capital intensive compared to long products. Moreover, the application segments of flat steel products e.g. auto, oil & gas, power etc. require adherence to most stringent quality

STEEL INSIGHTS 24 MAY 2012

interview

“India will be a net importer of steel in 2020” and process parameters and these continue to improve to set the global standards and the increasing demands of the end user industries. As such, the flat segment will continue to be serviced largely by the integrated steel producers unlike longs where 70 percent of installed capacity continues to be with the secondary sector units. However, the more efficient in the secondary sector may get better organised and inefficient ones may close down in the long term.

However, with the increase in the import duty to 7.5 percent on non alloy flat steel products, there have been instances of increasing imports of ‘boron contained carbon steel’ in guise of alloy steel at 5 percent import duty. Apart from this, imports are taking place from Korea and Japan at concessional import duty (3-4 percent) under FTA. With additional domestic flat steel coming on stream, adequate measures need to be taken to curtail such imports and protect the domestic steel industry. How do you see flat steel demand panning out in India as China maintains its growth trajectory?

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?

The investments in steel intensive sectors like automobiles, shipbuilding, airports, power (thermal/hydro/wind) oil & gas and construction will have a multiplier effect and create demand for flat steel products in varied grades and forms. While China’s growth is expected to taper to around 4 percent, India is expected to gain momentum. We expect the flat steel consumption to grow at 8-10 percent for the next four to five years.

India’s import of flat steel products in FY 2011 stood at 6.5 mt and for FY 2012 was around 5.5 mt. Traditionally, India has been importing value added grades in plates, sheets and coils for construction and auto segment. However, with new capacities being put up by Indian steel producers including Essar Steel, this is going to come down further. In fact, surplus flat steel capacity is expected in the short term in India.

What kind of overall steel capacity in India do you expect in the near future, say by 2020? We see the overall demand being in the range of 135-140 mt by 2020. On the supply side there are uncertainties surrounding the number of greenfield projects that will come to fruition. Based on current expectations, India will be a net importer of steel in 2020.

STEEL INSIGHTS 25 MAY 2012

SpecIal Corporate update

Extra pellets, if any, will be sold: Essar Steel Tamajit Pain & Sanjukta Ganguly

he Ruias-controlled Essar Steel has built a pellet plant – On April 9, Essar Steel commissioned the pellet making a facility that converts ore fines into high grade usable facility in Odisha. The company will use ore dumps in the lumps – in Odisha and a slurry pipeline to bring the ore state to convert them into usable lumps. Essar already has an to the port for shipping them to its steelmaking plant on the 8-mt pellet plant in Vizag. western coast, at a total project cost of `4,200 crore. The project Essar Steel buys bulk of its iron ore through offtake at Odisha will integrate its steelmaking process and reduce agreements with state-owned NMDC, private miners in steel production cost by about 42 percent. Odisha, and captive mines in Jharkhand and Chhattisgarh. The Indian steel industry, which was riding the Essar Steel has commissioned a 6-million-tons-percommodities boom over the past four years, is currently annum (mtpa) pellet unit at Paradip in Odisha, in the first grappling with slowing sales phase of the 12-mtpa plant in international markets and to be ready by 2013. Once weak demand locally. Tight completed, the facility would “Securitisation of raw materials for the availability of iron ore has be India’s largest pellet plant. Hazira plant is of prime importance” already pushed mid-sized In January, it had completed steelmakers to down shutters the expansion of its Hazira in some states. facility, making it the However, Essar’s close collaborations with group country’s largest single location flat steel maker with 10 mtpa construction companies and new production processes will capacity. The integrated facility includes a 12-mtpa iron ore bring down their cost of production of steel to $750 a ton beneficiation plant at Dabuna and a 253-km slurry pipe line compared with a global benchmark of about $1,300 for a plant connecting Dabuna and Paradip. It will reduce the operating of similar size. costs per ton and improve the cost competitiveness. The slurry The facility includes a 10-million-ton (mt) steel plant, a pipeline apart from being a cost reduction initiative is also the pellet plant and a beneficiation plant of 12 mt each, a slurry most environment friendly way of transporting raw material pipeline and service centres. for the pellet plant. STEEL INSIGHTS 26 MAY 2012

SPECIAL Corporate update The pellet plant in Paradip along with Vizag’s capacity of 8 mtpa will fully secure the iron ore requirements for Essar Steel in India. “Odisha is emerging as a big destination for investments in the country and Essar is committed to be a part of this growth story. For Essar, this pellet plant is a crucial piece in its quest to achieve complete vertical integration,” Essar Group chairman Shashi Ruia said. Essar Steel is setting up an iron ore beneficiation plant at Dabuna to upgrade the quality of low grade iron ore fines from 54 percent Fe content to over 63 percent Fe content. The iron ore fines will then be supplied through 253 km slurry pipe line from Dabuna to Paradip. Essar Steel’s managing director and chief executive, Dilip Oommen, and Essar Steel’s head – Paradip Complex, Odisha, Pramod Gupta, spoke to Steel Insights during a plant visit at Paradip in Odisha. Excerpts:

Essar pellet plant at Paradip

What are the projects that have been undertaken in Paradip and Vizag? Gupta: The project in Vizag includes an 8-mtpa beneficiation plant at Kirandul, 267 km slurry pipeline and a port based 8-mtpa pellet plant. The project in Paradip includes a 12-mtpa beneficiation plant at Dabuna, a 253 km slurry pipeline and a port based 12-mtpa pellet plant. What are the highlights of the first phase of the pellet plant commissioned in Paradip? Gupta: The plant is designed to use low grade iron ore fines. The transportation mechanism through the slurry pipeline is an innovative and environment friendly mechanism that we have taken up. The plant will benefit the nation and Odisha

Odisha – the lifeline of Essar Steel

by using resources within the country. The project is planned with the ability to use low grade iron ore fines that are unused and not easily consumable. The other unique features include Fluxed pellet production for use in multiple iron making technologies – Corex, Blast Furnace and Direct Reduced Iron, slurry filtration by filter press and air drying of filter cake, higher capacity mixer having improved features and all buildings are independent and have a modular design. The project in Paradip will have 120 mw of dedicated power capacity. What are technologies being undertaken for the pellet plant? Gupta: There are three technologies available – shaft furnace,

Improved Process Flow Sheet For Orissa Project

STEEL INSIGHTS 27 MAY 2012

SPECIAL Corporate update Grate-kiln

travelling grate and grate kiln. We have opted for Travelling Grate, which has the following advantages: ♦♦ No dust and chip generation, which would overload the de dusting system and cause uneven cooling. ♦♦ Easy adaptation of temperature profile to raw material requirements and superior process flexibility. ♦♦ Stationary refractory - reduced maintenance cost-increased plant availability. ♦♦ Direct Recuperation Principle-Reduced overall energy consumption.

By when will the slurry pipeline be commissioned? Oommen: By the end of June. Even then, some minor things like the actual beneficiation plant will remain. But isn’t pellet a high-cost business? During downturns in the steel industry, such plants are the first to be shut down.

Oommen: Once you get the fines, what do you do with those? Either pelletise or use in sinter. Or, there are some newer processes today that are using fines to convert those into iron. But why should a pellet plant be really a waste? Already, we are getting so many calls Some part is done through from interested companies who want to buy our excess grate kiln technology, which “When all expansions get complete in pellets. Since we are short of has the following advantages: ♦♦ Higher CCS of the product. 2012-13, we will see a big drop in costs” pellets as of now, we have said no. But yes, you are right. ♦♦ Uniform pellet properties Usually, $30 per ton is the with lower standard world benchmark for pellet deviations. production, and ours is lower. ♦♦ Lower fuel consumption, about 5-10 percent less, because

of non-usage of Hearth Layer. ♦♦ Good reducibility and sufficient mechanical strength during reduction are two most important properties demanded from pellets by the BF/DRI/Corex operators. What will be the input requirement for the plant?

Gupta: Around 14 litres of furnace oil, 15-16 kg per ton of met coke and 15-16 kg of limestone is required for the plant.

You will be producing 20 mt of pellets by 2013, but your need is 15 mt. Will the excess be sold in the open market? Oommen: The primary objective is to make sure that the investments do not go waste. Securitisation of raw materials for the Hazira plant is of prime importance. It is always good to have extra capacity than run short. If there is extra production beyond the requirement of Hazira complex, yes, it will be sold.

Travelling grate

STEEL INSIGHTS 28 MAY 2012

SPECIAL Corporate update for mines. We have got prospecting licences (PL) for mines in Chhattisgarh and Jharkhand. We will focus on the mines for which we have got PL, especially in Chhattisgarh. We are working on it. Obviously, there are issues in Chhattisgarh because of insurgent issues. We are working with the state government, which is coming a long way to help us. What kind of benefits will you see once the expansion projects are over? Oommen: When all expansions get complete in 2012-13, we will see a big drop in costs. And, we will have an entire range of products to sell. With that entire range of products, we will make significant earnings before interest, taxes, depreciation, and amortization (Ebitda). We will be at the lowest or the first quartile producer of steel. We will be making an Ebitda of at least $130-140 a ton.

Iron ore dumped at Essar’s plant at Paradip

Your slurry pipelines have been in focus for a long time. These have been rendered useless by insurgents on a couple of occasions. How would you secure the Paradip pipeline? Oommen: There are two slurry pipelines. One is from Kirandul to Vizag, which has been attacked by insurgents. We have mitigated risks to a certain extent by moving the material by rakes. Also, we have put up some facilities like additional pressure filter in Vizag to bring the capacity of the pellet plant quite close to the total capacity, even without the slurry pipeline. As far as the Odisha one is concerned, what have we learnt? One is we have laid the pipeline closer to highways, so that it is more accessible. Two, we have set up a grinding facility in Paradip. This means if there is an interruption in the slurry pipeline, pellets can still be produced by getting fines to Paradip up to a capacity of 4 mt.

Odisha?

Gupta: Yes we have a memorandum of understanding with the Odisha government for setting up a 6 mt steel plant subject to state support for land acquisition. We have also applied for captive mines in the state.

What are your plans for captive iron ore mines? Oommen: We do not have captive iron ore mines. We are dependent on NMDC. It takes care of the 8-mt requirement at Vizag. As far as Odisha is concerned, we have tied up with private miners. In fact, an estimated 200 mt of iron ore dumps are available in Odisha alone. Also, we have applied Induration Process – Comparison Capacity in mill mt

Magnetite

Magnetite/ Hematite

Travelling Grate

107.3

44.8

Grate-Kiln

Technology

Limonite / Hematite Cumulative Weathered Ore 86.6

34.4

273.10

83.2

36.6

5.6

137.40

Shaft Furnace

2.6

3.1

30.70

Other Processes

1.8

0.6

2.40

Do you have plans to set up a steel plant in

Source: Essar Steel

STEEL INSIGHTS 29 MAY 2012

Corporate update

BSP achieves 109% capacity utilisation as SAIL ramps up production Sanjukta Ganguly

tate-run Steel Authority of India’s (SAIL) production in the 2011-12 fiscal stood at 13.5 million tons (mt), up 5 percent over the previous fiscal, on better capacity utilisation of its plants. With capacity utilisation at 116 percent, SAIL’s output was at 12.89 mt in 2010-11, a growth of 2 percent over the previous fiscal. According to reports, production would be much higher in the current fiscal since two blast furnaces would start production before the end of March 2013. SAIL has embarked on a whopping `72,000-crore expansion plan, intending to take its steel-making capacity to 24 mt by 2013-14. SAIL, the leading steel producer of India, in an attempt to ramp up its production at various major plants throughout the country, has witnessed its production facility at Bhilai to operate well above the rated capacity in all major areas of production during the 2011-12 fiscal. In fact, SAIL’s Bhilai Steel Plant (BSP) achieved a capacity utilisation of 109.1 percent in hot metal, 125 percent in crude steel and 136.2 percent in saleable steel. The plant concluded 2011-12 with annual production of 5.13 million tons (mt) of

hot metal, 4.90 mt of crude steel and 4.29 mt of saleable steel. The plant loaded 4.35 mt of saleable steel for dispatch during the year, according to a statement released by the company. In order to compensate for the shortage of coke, a strategic decision was taken to source BF coke from alternative sources. In all, about 3.70 lakh tons of hard coke was procured from outside sources including Neelachal Ispat Ltd, IISCO Steel Plant, RINL, Columbia and others. BSP has reached another major milestone with the erection of one leg assembly of lower tower structure at blast furnace no.8. The BF 8 project, an important component of the 7 million ton (mt) modernisation and expansion plan of Bhilai Steel Plant, has made good progress, it said in a release. Ore production BSP’s mines registered total iron ore production of 7.83 mt, recording a growth of 1.60 percent over last year. A growth of

STEEL INSIGHTS 30 MAY 2012

Corporate update Sl No.

Products

Details Used in high speed and heavy haulage tracks for changing the track of the locomotives and rakes, Thick Web Switches are basically manufactured from Thick Web Asymmetrical rails, which are suitably forged at one end to match the original symmetrical section of the track. At present these switches are being imported by Indian Railways (IR). On request from IR, Bhilai successfully developed the End-forged Thick Web Asymmetrical Rails. Railway Board has approved the trial order for 60 Kg thick web switches for Western, South-Central & Northern Railways.

End-Forged Thick Web Asymmetric Rail for Indian Railways

Atmospheric corrosion resistance steel These plates are meant for manufacture of Bogie frames by BEML for use in Delhi Metro Project by Delhi Metro Railway Corporation plates in JIS 3114 SMA 490BWN Ltd., (DMRCL), which will be substituting the present imports from Korea.

ASTM A 537 class 1 plates with impact The plates are intended for Project of M/s IOTL for Brahmaputra Petrochemical Complex of Brahmaputra cracker & polymer Ltd., test in transverse direction Lepetkata, Assam.

Dual grade Boiler quality plates in ASTM A 516 grade 60 with Grade 70

ASTM 516 grades are of fine grained steel used for intermediate and low temperature applications. It is the International practice to supply plates conforming to both these grades (60 & 70) with respect to chemical and mechanical properties to facilitate the customers to keep stock of the plates and use as per the design requirements.

SAIL-TMT Fe 550 EQR/IS 1786 Fe 550 D – High strength earth quake resistance quality bars

The TMT Steel bars are having good earth quake resistance property combined with very high strength so as to build tall towers where lower weight to strength ratio is required thereby replacing FE 500 EQR / Fe 500 D.

BSEN 10025-2 S 275J2+N-Moderate strength with Low temperature impact toughness

This grade has been developed against the requirement of M/s Siemens Transport systems for manufacturing Railway Passenger Bogie for their overseas order. The chemistry has been suitably formulated to achieve high impact energy values with moderate mechanical properties.

Channel 400x100 in the grade BS EN 10025-2 S 235 JR+AR for Overseas Project

Channels in this grade have been produced for the first time and around 140 T has been supplied to M/s BHEL for their Overseas Project at Sudan.

The plates have been supplied to M/s Titagarh Wagons limited. These plates are meant for use in fabricating High Speed Light Wagons DIN EN 10028-3: P355 NL1 - Weldable for export to France. The steel with micro alloying was produced with strict control of sulphur. Impact properties were achieved at extra fine grain Pressure vessel Plates low temperature.

BS EN 10028-2 P355 GH with PED certification

Plates conforming to Ultrasonic testing Plates conforming to Ultrasonic testing standard, more stringent compared to ASTM A 578 level B standard, in 20 mm thickness have as per EN 10160 S1E1 been developed for M/s Enercon for Wind Mill applications.

BSEN 10025 S 235 JRAR GRADE Beam 600

UT Plates conforming to ASTM A 578 Level A & B were developed to meet an existing order of 280 T from M/s Simplex, Bhilai in Plates conforming to Ultrasonic testing BSEN 10025 S 235J0 grade with UT as per ASTM A 578 Level C under Third Party inspection by Tata Projects Ltd., (TPL). Based as per the ASTM A 578 Level C on the successful trials, enquiries for supply of Plates conforming to ASTM A 578 Level C from M/s Siemens Transportation System (Aurangadabad) and Neyveli Lignite corporation (Chennai) have been accepted.

The steel has very low sulphur and requires tensile properties at elevated temperatures for M/s Thermax. M/s TUV have authorised BSP to produce the plates in this grade with Pressure Equipment Directives (PED) certification, which is mandatory requirement for exporting Boiler Quality plates to European countries.

Beam 600 in this grade was developed against the requirement of M/s BHEL for overseas jobs. Trial order of 144 T was fulfilled in October-2012. Further M/s BHEL order for 900 T was fulfilled in February-2012.

3 percent over last year was recorded in Iron Ore production from Dalli mines. A growth of 8.2 percent over last year was registered in total iron ore fines dispatches. Production of limestone from the plant’s captive mines at Nandini during the year was 0.212 mt which is 10.2 percent higher than last year. The plant’s ore handling plant handled 15.6 mt of material out of which 7.86 mt material was unloaded at OHP.

was recorded in production of rails and structurals at RSM. With the changing market scenario, the performance of export loading of saleable steel improved by 5.34 percent compared to last year, the main contribution coming from finished plates (1,75,955 tons). The plant also loaded 24,600 tons of UTS-90 rails for export to Sri Lanka. The total volume of export loading was 2,29,566 tons as compared to 2,17,936 tons in 2010-11.

Thrust areas Thrust was maintained throughout the year on production of more volumes of special value added steel in the mills for better NSR. In fact, the component of Special Steel production and value added products (2.77 mt) in saleable steel production at 64.5 percent surpassed the ABP target of 63.5 percent, registering a marginal growth with respect to last year’s 64.3 percent. There has been a significant growth of 6.3 percent in production of cast blooms from SMS 2. The component of Concast production in total crude steel also increased to 52.6 percent as compared to 50.90 percent. A growth of 0.5 percent STEEL INSIGHTS 31 MAY 2012

Corporate update packages have been ordered and these packages are under various stages of execution, he said. On the other hand, according to company sources, BSP continued to accelerate its expansion drive and made substantial progress on all the major schemes planned under 7 mt expansion program. In fact, a total of seventeen turnkey projects and thirty non-turnkey projects are underway currently. Work on various project packages for new and upcoming units are on in full swing with civil, mechanical and structural erection work of massive proportions undertaken and executed at different project sites. While Blast Furnace 8 Project Work has progressed

Applications for lease renewal pending

CS Verma, Chairman, SAIL

Product development In keeping with its aggressive product development strategy of developing one new grade every month, BSP successfully developed and rolled as many as 12 new products, meeting a variety of end usages, both in India and abroad. Besides the 12 new grades developed and supplied to cater to requirements of customers, the Bhilai Steel plant continued with its efforts to commercialise the products already developed in previous years. In addition to this, the plant fulfilled a fresh order for rolling longer plates from Midhani Slabs for space application by ISRO. The plant also loaded 2419 tons of high conductivity rails (R-52 Kg) to Kolkata Metro, according to company sources. First phase of modernisation The current phase of modernisation and expansion of SAIL is likely to be completed by 2013, Union steel minister Beni Prasad Verma said in Parliament. He said the public sector company has undertaken modernisation and expansion plan at its various plants including five integrated steel plants at Bhilai, Bokaro, Rourkela, Durgapur and Burnpur and special plant at Salem to enhance its crude steel production capacity from 12.8 million tons per annum (mtpa) to 21.4 mtpa in the current phase. The indicative investment/expenditure in respect of SAIL which is likely to be incurred for current phase of Modernisation and Expansion is `61,870 crore. Besides, a provision of `10,264 crore has been kept towards investment in existing mines under Raw Material Division (RMD) and Development in Rowghat Mine. Expansion of Salem Steel Plant (SSP) has already been completed in September, 2010. For other plants, all major

s many as 12 of the total 13 applications for renewal of iron ore mining lease of Steel Authority of India Ltd (SAIL) is pending with Jharkhand government, Steel Minister Beni Prasad Verma said in Parliament. The Steel Authority of India Limited (SAIL) has been granted 13 iron ore mining leases (Chiria-6 leases, Gua-4 leases and Kiriburu-Meghahatuburu mines-3 leases) in the State of Jharkhand. “The renewal of mining leases is pending with State Government except one lease i.e., Budhaburu lease of Chiria for which in-principle approval has been granted,” Verma said. The minister further said Environmental Clearance (EC) has been obtained for 3 leases of Kiriburu- Meghahatuburu mines and for 3 leases of Chiria mine. Environmental clearance proposals for one lease of Chiria and one lease of Gua mine are awaiting approval of Ministry of Environment and Forests (MoEF). In respect of three leases of Gua, the MoEF has asked the state government to take appropriate control measures, he said. Similarly, Forest Clearance (FC) for two leases of Kiriburu and Megahatuburu mines is valid, Verma said. However, for main working lease, Stage-I Forest Clearance has been granted by MoEF for existing as well as new pits (South-Central Blocks) for which compliance of conditions is pending because of finalisation of Wildlife Conservation Plan (WCP) by the State Govt, he said. Forest clearance for Dhobil lease of Chiria mine is valid. However, for another three leases, Stage-I Forest Clearance has been granted by MoEF for which compliance of conditions is under progress. Forest clearances of two leases of Gua are pending with the MoEF for grant of Stage-I clearance. However, for another two leases, the MoEF has asked the state government for clarifications.

STEEL INSIGHTS 32 MAY 2012

Corporate update

Anutosh Maitra takes over as CEO of BSL

nutosh Maitra has taken over as the Chief Executive Officer (CEO) of Bokaro Steel Plant (BSL) recently, the company said in a statement. He has taken over from S.S. Mohanty, director (technical) of Steel Authority of India Limited (SAIL), who was till now also serving the additional charge of CEO of BSL, the statement said. Maitra, a metallurgical engineer from REC, Rourkela had joined SAIL on April 18, 1980 as a graduate engineer in Rourkela Steel Plant (RSP). He was also earlier posted as executive director in secretariat of chairman, Steel Authority of India Limited (SAIL). swiftly ahead with work on erection of furnace shell on in full swing, the project for installation of Air Separation Unit in Oxygen Plant 2 is also in advanced stage. Project for expansion of Ore Handling Plant with new facilities has also made good progress. Civil and structural work for the universal rail mill and bar and rod mill is progressing at a steady pace. Besides, work on installation and expansion of power systems and air separation unit for supplying oxygen to new units is in advanced stage. While work on construction of flyovers is progressing, expansion and modernisation of rail peripheral yard has begun. Heavy equipment for different project packages is now moving in, standing by for installation, according to information available with Steel Insights. Plant-wise details of modernisation and expansion at SAIL plants Plant

Product

Bhilai Steel Plant Drugapur Steel Plant Rourkela Steel Plant Bokaro Steel Plant IISCO Steel Plant Salem Steel Plant

Crude steel Crude steel Crude steel Crude steel Crude steel Crude steel

Existing capacity (mtpa)

Capacity after expansion (mtpa)

Indicative investment (`cr)

3.93

7.0

17,266

1.80

2.2

2,875

1.90

4.2

11,812

4.36

4.61

6,325

0.50

2.50

16,408

0.0

0.18

1,902

Source: Steel ministry

Rourkela sinter plant In addition to BSP’s introduction of new grades of steel, SAIL has also commenced production of a new sinter plant with an investment of `690 crore at its Rourkela facility. The plant has

a machine area of 360 sq metre and capacity of 3.8 million tons (mt) per annum, according to reports. At a sinter plant iron ore fines and other fine materials are agglomerated at a high temperature enabling them to fuse together to make a single mass without changing much of their chemical properties. The sinter plants are part of SAIL’s ambitious `72,000 crore modernisation and expansion plan to increase hot metal production capacity from the current 14.6 mtpa to 23.4 mtpa. Bokaro plant Another SAIL plant, the Bokaro Steel Plant (BSL) is poised for quantum growth with the inauguration of two of its rebuilt Coke Oven Batteries (COBs). The two coke oven batteries were inaugurated by SAIL chairman C.S. Verma in presence of director (personnel) B.B. Singh, director (technical) & BSL CEO S.S. Mohanty and other senior officers and employees of the plant. Re-built at a cost of `500 crore, the two COBs of BSL are completely emission free, with a high level of automation and increased productivity. Part of the 8-battery complex, these two COBs share the same basic dimensions, while improving upon other technical aspects. Verma also inaugurated the Coil Packaging Line-2 of the new Cold Rolling Mill. It is part of the new 1.2 mtpa Cold Rolling Mill complex, being built at a total cost of `3,000 crore. This mill is in the final phases of equipment testing and commissioning. The products of this state-of-the-art mill are expected to BSP milestones in 2011-12 ♦♦ Inauguration of Civil Work for Hot Metal Handling System under Plant’s Modex plan, on August 8, 2011. ♦♦ Inauguration of Rail Peripheral Yard Project under the Plant’s Modex Plan on August 29, 2011. ♦♦ Work of erection of hot stoves for the new and upcoming Blast Furnace No 8 of Bhilai Steel Plant was inaugurated on September 14, 2011. ♦♦ Inauguration of Work for Erection of Structures for 2nd Sinter Machine in SP 3 on September 26, 2011 for producing 3.706 mt/yr of gross sinter. ♦♦ While refractory laying work has progressed swiftly for new Coke Oven Battery No. 11, laying of slab pavement brick for COB 11 was inaugurated on September 30, 2011. ♦♦ Inauguration of Civil work for the Project for a new by-product plant in the upcoming Coke Oven Battery No. 11 complex on November 15, 2011. ♦♦ Work for Installation of Gas Holder in new SMS III started on October 11, 2011 which comprises of two main packages - a basic oxygen furnace (BOF) shop complex with 3 converters of 160-ton capacity each and annual capacity of 4.11 mt, and a Continuous Casting Plant with 4 casters of total annual capacity of 4 mt. Source: BSP

STEEL INSIGHTS 33 MAY 2012

Corporate update

SCOPE awards for SAIL

Top SAIL official duing a plant visit

meet the expectations of auto-body and premium white goods sectors. The mill capacity will include 0.84 mt of Cold Rolled products and 0.36 mt of coated products. The CR product basket will include Extra Deep Drawn (EDD) Quality, Deep Drawn Quality (DD), Interstitial-free (IF), high strength low alloy steel (HSS), Dual-phase (DP), Transformation-induced Plasticity (TRIP), Bake-hardening (BH), in addition to Commercial Quality, with a maximum tensile strength of 680 MPa. In the current phase of expansion, which started in 2008, the Hot Metal capacity of BSL is slated to go up from 4.59 to 5.77 mtpa. This phase of expansion envisages improvement in techno-economic parameters, removal of obsolescence and induction of new technologies through an infusion of `8,625 crore in modernisation, expansion and sustenance schemes. A number of units have already been commissioned and brought into regular production. With volume enhancement, technological upgradation and provision of a new turbo blower and Coal Dust Injection (total project cost of `1,062 crore), the Blast Furnace-2 will have a productivity of more than 2 tons / M3 / day. Further downstream, the Steel Melting Shop-2 & Continuous Casting Shop complex has been upgraded through the provision of a covered slag yard, computerised process control and a second ladle furnace, resulting in capacity augmentation from 2.85 to 3.35 mtpa. Interim dividend Riding high on improved production during 2011-12, SAIL chairman C.S. Verma presented a dividend cheque amounting to `425.36 crore to Prime Minister Dr Manmohan Singh in the

he President Pratibha Devisingh Patil presented the ‘SCOPE Meritorious Award for Corporate Governance’ for 2010-11, to Steel Authority of India Limited (SAIL). SAIL chairman C.S. Verma received the award from the President at the Public Sector Day celebration held at Vigyan Bhawan in the Capital. The award recognises SAIL’s commitment to practice the highest standards of corporate governance by ensuring transparency, disclosures and reporting that conforms fully to laws, regulations and guidelines. The company promotes ethical conduct throughout the organisation, with the primary objective of enhancing shareholders’ value, while being a responsible corporate citizen. The SAIL chairman said SAIL is amongst the first PSUs to voluntarily allocate up to 2 percent of its profit after tax (PAT) towards corporate social responsibility initiatives. Recently, the company has also framed a Sustainable Development Policy and has allocated funds for its implementation. SAIL’s massive modernisation and expansion plan at an expenditure of about `72,000 crore is in an advanced stage of implementation. This would increase hot metal capacity from the current 14.6mt/ year to 23.4mt/year. Until recently, orders worth of around `56,000 crore have already been placed and an expenditure of around `35,000 crore has been made. In 2012-13, capital expenditure to the tune of Rs. 14,500 crore has been planned.

presence of steel minister Beni Prasad Verma and Secretary, Steel, D.R.S. Chaudhary. The total interim dividend paid by SAIL comes to `495.65 crore, i.e. @ 12 percent of paid up equity capital, for the year 2011-12, as per an official release. In addition to interim dividend, the board of directors of the company would also recommend a final dividend for the year, while approving the financial results for the year 2011-12. It is pertinent to note that since its inception, SAIL has made total dividend pay-outs of `9,392 crore equivalent to 228 percent of its paid up capital. Out of this, payment to government of India is `8,092 crore, besides dividend tax of `1,342 crore. SAIL’s massive modernisation and expansion plan at an expenditure of about `72,000 crore is in an advanced stage of implementation. This would increase hot metal capacity from the current 14.6 mtpa to 23.4 mtpa. Until recently, orders worth of around `56,000 crore have already been placed and an expenditure of around `35,000 crore has been made. A new, 180,000 tpa stainless steel making facility at the Salem Steel Plant has already commenced operations.

STEEL INSIGHTS 34 MAY 2012

Corporate update

RINL adds a new feather to its cap Steel Insights Bureau

lowing-in of the newly constructed blast furnace no.3 of Rashtriya Ispat Nigam Limited’s (RINL) Visakhapatnam Steel Plant which took place on April 25 under the company’s 6.3 million tons per annum (mtpa) capacity expansion programme, added a new feather to the cap of RINL. A spokesperson of RINL said the blowing-in took place in presence of A.P. Choudhary, RINL’s chairman and managing director who congratulated the team of RINL, Dastur Co, Paul Worth, Luxemburg, L&T and all other partners for supply, erection and commissioning of state of the art BF. With the blowing-in of BF-3, hot metal production from the new furnace would commence within next 72 hours, the spokesperson said. In fact, this blast furnace will produce 1 to 1.5 mt of hot metal during the current financial year and has the capacity to produce alone 2.5 mtpa of hot metal once it stabilizes its operations, he added. RINL is presently expanding its capacity from the 3 mtpa to 6.3 mtpa at an estimated cost of `12,500 crore. In addition to the new blast furnace, Turbo Blower, Water system, Power system and auxiliary systems costing around `3,800 crore have been commissioned. The new blast furnace of 3800 cu.m volume will produce on an average 7150 ton/day of hot metal. RINL presently has two blast furnaces producing 3.4 mtpa of hot metal. The special feature of the new blast furnace is environment and energy efficiency like Top Gas Recovery Turbine, Waste Heat recovery from stoves flue, full efficient ceramic burners in hot stoves, cold slag granulation etc. Gas-Insulated Substation On April 6, Choudhary inaugurated the 220 KV Gas Insulated Substation (GIS) and 220 KV Cable at its thermal power plant that will facilitate practically zero maintenance evacuation of power from coke oven and blast furnace. The `85-crore project will facilitate evacuation of power from its 14 MW Waste Heat Recovery Generator of Coke Oven Battery-4 and 16 MW expansion turbine of Blast Furance-3. Both the projects were completed on time that will ensure uninterrupted power supply for integration and stabilization of new units of expansion, Choudhary said after inaugurating the projects. He advised the consultants to look for such newer technology in all spheres even though the cost is high as in long run it helps in reducing break downs and keeps the system in good health.

A P Choudhary, Chairman and MD, RINL

The advantage of the GIS is that it is compact and hence area required is remarkably less than for Air Insulated Substation (AIS) equipment. In GIS, the electrical equipment are totally sealed from the atmosphere in an inert stable gas hence no cleaning is required and therefore no tracking also which makes it maintenance free. The 220 KV GIS equipment imported from France and 220 KV cables imported from Thailand. The unique advantage of Cable is zero maintenance. The intermediaries appointed by Department of Disinvestment under Ministry of Finance have started the process of due diligence and preparation of draft offer documents for the proposed Initial Public Offer (IPO) of Rashtriya Ispat Nigam Ltd (RINL), a company official said. Besides due diligence and offer documents by intermediaries, the Auditors of the company have started the process of re-statement of financial statements so that the IPO could be launched at the earliest, the official said. RINL had been granted Navratna Status on November 16, 2010 by the Government of India subject to the condition that it will get listed in two years from the date of grant of Navratna status. The Government has in the meanwhile approved Disinvestment of RINL holdings by IPO for sale of 10 percent equity, out of Government of India’s 100 percent shareholding. RINL preparation for IPO The intermediaries appointed by Department of Disinvestment

STEEL INSIGHTS 35 MAY 2012

Corporate update

RINL Vizag Plant

under Ministry of Finance have started the process of due diligence and preparation of draft offer documents for the proposed Initial Public Offer (IPO) of RINL, a company official told Steel Insights. Besides due diligence and offer documents by intermediaries, the auditors of the company have started the process of re-statement of financial statements so that

RINL now a public limited company

Steel Insights Bureau

he shareholders of RINL have approved its conversion to a public limited company in the 10th extra-ordinary general meeting (EGM). The present share value of `1,000 is now split into `10 per share along with adoption of a new set of Articles of Association & Memorandum of Association. The company’s CMD, A.P. Choudhary, chaired the meeting. RINL being fully owned by President of India, was registered as a private company as per Companies Act 1956. The under-secretary, Ministry of Steel, Sarita Taneja, and authorised nominee on behalf of the President of India, attended the EGM.

the IPO could be launched at the earliest, the official said. RINL had been granted Navratna Status on November 16, 2010 by the government of India subject to the condition that it will get listed in two years from the date of grant of Navratna status. The government has in the meanwhile approved disinvestment of RINL holdings by IPO for sale of 10 percent equity, out of the government of India’s 100 percent shareholding. Steel Minister Beni Prasad Verma presented a cheque of `1,556.47 crore to Prime Minister Manmohan Singh on April 3, comprising RINL’s payment of dividend worth `271.47 crore and `1,285 crore as redemption of preferential capital. Secretary, Ministry of Steel, D.R.S. Chaudhary, Additional Secretary and Financial Advisor, Machendranathan, RINL, CMD, A.P. Choudhary and Director Finance, RINL, P. Madhusudan were present on the occasion, as per an official release. The Steel Minister lauded RINL’s performance for achieving best ever turnover of `14,457 crore, a significant 26 percent improvement over the last financial year. The company also registered a growth of 6.5 percent in sales volume of 3.5 million tons during the financial year 2011-12. It is noteworthy that RINL’s likely net worth on March 31, 2012 would be `13,800 crore. The Navratna PSU achieved a capacity utilisation of 113 percent during the financial year, producing 3.5 million tons of iron and steel. The organization now plans to enter the next phase of expansion to 11 to 12 mtpa, which is under active consideration of its board.

STEEL INSIGHTS 36 MAY 2012

Corporate update

JSW Steel Q4 crude steel production up 26% y-o-y Sanjukta Ganguly

SW Steel Limited, a leading steel maker of the country and a part of the O.P Jindal group, has recorded 26 percent growth in crude steel production in Q4 of 201112, as compared to the corresponding period of 2010-11, the company said in a statement. However, the company which is engaged in manufacture of flat and long products like HR Coils, CR Coils, galvanised products, galvalume Products, auto grade/white goods grade CRCA Steel, bars and rods has recorded crude steel production in March which was down 3 percent at 0.592 million tons (mt) against 0.61 mt achieved in February. In fact, the company’s output has seen a sharp drop from 0.805 mt recorded in January. JSW production Product

Production ( In million tons) Q4 FY’12

Growth

Crude Steel

2.07

26%

Rolled Products : Flat

1.49

13%

Rolled Products : Long

0.47

67%

Source: JSW

FY12 production JSW Steel achieved a crude steel production of 7.43 mt in FY12 against its target of 8.75 mt. Earlier this year, the company has increased the capacity to 10 mt from 7 mt at its Vijayanagar plant in Karnataka. The company could achieve only 85 percent of its target due to ban on iron ore mining in Karnataka imposed by the Supreme Court, JSW said in a press release. Flat steel production was up 9 percent at 5.36 mt and rolled product output rose 34 percent to 1.52 mt in the year ended March.

Crude steel production breakup for FY12 Product

Production ( Mil. tons) FY 2011-12

Growth

Crude Steel

7.43

16%

Rolled Products : Flat

5.36

Rolled Products : Long

1.52

34%

Source: JSW

JSW Steel clarifies Besides being faced with dearth of iron ore, the company also faced another trouble recently in response to which the company clarified in a statement that JSW Steel (with no captive mines) is not connected with any of the alleged mining activities and the company or any of its group companies have not obtained any benefits from the genuine expenditure incurred either towards philanthropic and social causes for which the Group is committed to or in purchase of land for corporate purposes. The statement was issued by the company in response to the media reports which said that the Supreme Court appointed Central empowered committee (CEC) has submitted its report dated April 20, 2012 recommending extension of scope of CBI investigation against JSW Group Companies. It also clarified that the reports are not based on any order of the Supreme Court as the report submitted by CEC is yet to be considered by the Supreme Court, the statement added. JSW Steel will file its objections at an appropriate time to the CEC report before the Supreme Court and contest the recommendations of the CEC before the Court, the statement further added.

STEEL INSIGHTS 37 MAY 2012

Corporate update

Posco environmental clearance suspended

Steel Insights Bureau

he environment clearance granted to Posco’s mega steel project in Odisha in January 2011 will remain suspended till the environment ministry reviews it afresh, according to the National Green Tribunal held on March 30, 2012. “The environment clearance granted on January 31, 2011 to the project shall remain suspended till such review and appraisal is done by the ministry,” a bench of tribunal comprising Justice C.V. Ramulu and Devendra Kumar Agarwal said. The tribunal pointed out that memorandum of understanding between the Odisha government and Posco states that the project is for steel production of 12 million tons per annum (mtpa) but the environment impact assessment (EIA) report has been prepared only for 4 mtpa steel production in the first phase. It said the MoEF should take a “policy decision” that in projects of such magnitude the EIA should be done for the complete project and not for only a part of it. It has, in fact, directed the environment ministry to review the clearances given to Posco in January 2011. A source, on conditions of anonymity said that the tribunal had not cancelled the clearances granted to Posco in 2007, and added it had just suspended the final clearance given by Jairam Ramesh, the then environment minister, in 2011. However, the source admitted the latest development would cause further delay in the project. The directive has put at risk the single largest FDI (foreign direct investment) in the country so far, in addition to hampering the already poor investment climate in the country. Ironically, the Tribunal’s decision came within a week of Indian Prime Minister Manmohan Singh’s assurance in Seoul regarding the progress of the troubled project. “I recognise that sometimes our processes can be slow but there are effective mechanisms for resolution of problems and differences and a strong rule of law,” Singh said while addressing a gathering of South Korean CEOs. “The government is keen to move forward with the Posco project and there is some progress in this regard,” he added. The tribunal directed the MoEF to review the clearance afresh and attach “specific conditions” which Posco would have to follow in a “defined timeline”. It also directed the MoEF to set up a special committee to “monitor the compliance to the environment clearance” thus granted. The judgment also criticised the government’s decision to grant its clearance while assessing the environmental impact of only a third of the project. Industry feedback According to media reports, the industry termed this as an unfortunate development, but many preferred not to talk about it on record, as the matter was subjudice. Among the few others who expressed their views, Rajiv Kumar, secretary general of the Federation of Indian Chambers of Commerce & Industry (Ficci), said “This will further add to the mounting loss of investor confidence in the country.”

Echoing his views, Industry chamber Assocham said it was a ‘disturbing’ development, which could have an adverse impact on the future investment climate of the country. However, an Odisha government source while speaking on the verdict, said, “The state government has no role to play in this regard” while chief minister Naveen Patnaik said, “We will see what needs to be done.” On the other hand, Union environment minister Jayanthi Natarajan said, “I don’t think the two things (the PM’s assurance to South Korea and the tribunal order) are connected.” She also added that her predecessor (Jairam Ramesh), who granted the clearance to Posco, had followed “very strict and transparent procedure and systems”. Posco roadblocks While the original environment clearances for the integrated steel plant and its captive port were granted in 2007, various protests from green activists and local residents had led to a four-member review committee being set up by the government in 2010. The panel had then delivered a split report, with three members finding the clearances illegal, while chairperson Meena Gupta (who had been the environment secretary when the original Posco clearance was granted) merely recommended additional studies. The government had ignored most of the majority report but partially accepted Gupta’s minority report and issued an order in January, 2011 upholding the clearances, with some added conditions. It is that order that has now been suspended by the Tribunal, since the original clearances themselves cannot be contested at this late date. Hence, the project running into troubled waters once again, many more road blocks still lie ahead. How can those blocks be overcome is to be watched. Officials visit site The officials of Posco-India led by its director K. Lee visited the site of the plant recently after a gap of about six months. As per reports, he also interacted with a few villagers in Nuagaon to assess their reaction before initiating any step to start work on the project. In fact, the South Korean ambassador to India Kim Joong-Keun has been quoted as saying that Posco India is ready to exclude disturbed villages of Dhinkia panchayat at the site of its proposed plant. “We are prepared to exclude the disturbed area consisting of two villages at the project site if the affected people do not wish to cede land,” he said after his meeting with chief minister Naveen Patnaik. Though he was concerned over the pace of the project, he still sounded hopeful about the project, reports pointed out. “If we get additional land from the state government, we may start construction work on the project in the second half of the year,” Joong-Keun said.

STEEL INSIGHTS 38 MAY 2012

Corporate update

US import duty to benefit Welspun Steel Insights Bureau

elspun Corp Limited, a flagship company of the $3.5-billion Welspun Group and the second largest line pipe company in the world, anticipates that there will not be any impact with the recent news that US Commerce Department has recently set a preliminary import duty of nearly 286 percent on a certain type of steel pipe from India to offset government subsidies and a duty of slightly more than 8 percent on the same product from Vietnam, the company said in a filing to Bombay Stock Exchange. A final decision on duty rates is expected in August. However, the above duty is applicable on non API circular welded standard pipes of 16” and below diameter. Welspun is not exporting any product under this category to US and thus shall have no impact on its Indian operations, the company statement added. Welspun is setting up an ERW Plant of 175,000 tons per annum (6” to 20”) and Coating Plant in US to service its clients in North America. This plant is targeted for commissioning by March 2013 and is likely to ramp up to optimal utilisation in 2013-14. This measure by US to protect domestic industry will help Welspun in coming days and shall have a positive impact, the statement further added. New orders

According to a company source, Welspun Corp Limited, has won pipes and plates orders worth `923 crore (143 KMT of Pipes and 32 KMT of Plates) from international and domestic markets in April.

Welspu’s manufacturing facility at Arkansas

With the addition of these orders, the current order book of the company stands at `5,377 crore (approx 787 KMT for pipes, and external plate orders of 49 KMT) without excluding the order being executed in the current quarter. Commenting on the receipt of the new order, B.K. Goenka, chairman, Welspun said, “Continuity of the orders from the export markets further strengths Welspun’s global positioning and is testimony to our enduring emphasis on engineering excellence.” Earlier, in March, the company had said in a statement that it had bagged pipes and plates orders worth `1217 crore (162 KMT of pipes and 39 KMT of plates) from international and domestic markets. With the addition of those orders, the order book of the company stood at `6241 crore (approximately 876 KMT for pipes and external plate orders of 92 KMT) without excluding the orders being executed in Q4 of FY 2012. On receiving this order, Goenka said, “In spite of the global challenging economic environment, new orders of such size from international and domestic customers speak volume about our technological strength. Combined with product delivery and sustainable customer relationship we expect this order book to grow.” According to Welspun Corp Limited authorities, the company which works with a combination of strong culture of ‘Engineering Excellence’ also takes pride in manufacturing and supplying some of the most critical pipelines in the World from its India and US plants. With an installed line pipe capacity of nearly 2 million tons (mt) per annum, the company has set its goals high for the future.

STEEL INSIGHTS 39 MAY 2012

Corporate update

WMI Konecranes bags JSW Steel order Steel Insights Bureau

MI Konecranes, a 100 percent subsidiary of Konecranes plc, Finland, and an eminent player in the steel industry crane market segment, has bagged an order to supply 21 heavy duty cranes to JSW steel worth `58 crore. As per an official release, WMI Konecranes has supplied more than 4,000 cranes and has been a preferred supplier for cranes to JSW Steel right from the inception of their plant. JSW Group has grown to $9 billion in a little over a decade and has presence across various sectors – steel, energy, minerals, port & infrastructure, cement and aluminium. JSW Steel, the flagship company of the JSW Group, the largest private sector steel manufacturer in terms of installed capacity. The cranes to be supplied will be used for the critical coil handling application in the Cold Rolling Mill in JSW steel plant Complex at Torranagallu, Hospet District, Karnataka. These cranes will be intergrated as a part of the stateof-the-art, Automated Coil yard management system in the Coil Rolling Mill of this steel plant. This single order consists of three 50-ton cranes, two 50/10 ton cranes, one 60-ton crane, two 60/10 ton cranes, five 35-ton cranes, seven 35/10 ton cranes and one 15ton crane for maintenance application. All the cranes are fully automatic and backed by the time tested technology of WMI Konecranes of the last four decades. WMI Konecranes has been delivering proven lifting solutions for every stage of the steel making process and supplying most reliable Laddle cranes, charging cranes, shipping area cranes, slab & billet handling cranes, bar, plates and also coil handling cranes which are important part of the complete manufacturing process, as per the statement. The cranes are expected to be delivered to JSW Steel, Torranagallu plant by end of 2012, said vice president of WMI Konecranes India Ltd, Saeesh Nevrekar. He added that this order from JSW Steel is a pointer to the steel company’s acknowledgement of its product quality and customer satisfaction.

STEEL INSIGHTS 40 MAY 2012

Corporate update

JSPL consolidated net profit up 5% in FY’12 Steel Insights Bureau

indal Steel and Power Ltd (JSPL), one of India's leading steel producers with a significant presence in sectors like mining, power generation and infrastructure reported 5 percent growth in consolidated net profit which stood at `4002.26 crore during the financial year ended March 31, 2012 as compared to `3804.01 crore earned during 2010-11. Turnover of the company was also sharply up by 39 percent and stood at `18,208.60 crore while the figure during 2010-11 stood at `13,112.60 crore. The company also reported 16 percent growth in consolidated net profit for the fourth quarter of 2011-12 to `1,161.55 crore, while the turnover was up 42 percent to `5,482 crore. The consolidated cash profit of the company also moved up by 9 percent and was at `5577.67 crore as against `5115.02 crore during 2010-11, the company said in a statement. Q4 sales Sales of steel products grew 39 percent during the quarter, while off-take of pellets and sponge iron was up more than 200 percent during the quarter. Production at JSPL during the entire financial year 2011-12 also showed a significant growth of about 34 percent in case of pellets, 21 percent in case of steel products and 35 percent in case of power. Production for the Quarter IV ended March 31, 2012: Product (MT) Sponge Iron Pig Iron/Hot Metal Pellets Steel Products* Power (million kwh)

Qtr IV 2011-12

2010-11

304314

322335

Growth % 6

393853

426044

1071770

866725

762971

622594

1417

1000

Production for the Quarter IV ended March 31, 2012: Product (MT)

Year

Product (MT) Sponge Iron* Pig Iron* Pellets Steel Products** Power (million kwh) Product (MT) Sponge Iron* Pig Iron* Pellets Steel Products** Power (million kwh)

Qtr IV 2011-12 25,285 2,614 690,566 736,838 557

2010-11 8,258 40,694 224,958 531,104 299 Year

2011-12 78,457 85,428 2,028,330 2,385,224 1,446

2010-11 113,894 201,688 564,510 1,900,338 926

Growth % 206% -94% 207% 39% 86% Growth % -31% -58% 259% 26% 56%

*Sponge Iron / Pig Iron sale is down due to higher captive consumption **Slabs/Bloom/Billets/Structurals & Rails/Universal Plate/Coil/Converted Angle/Channel/ Wire Rod/TMT/Fabricated Beams/Plates

Growth %

2011-12

2010-11

Sponge Iron

1,319,940

1,319,840

Pig Iron/Hot Metal

1,667,851

1,665,581

Pellets

3,736,915

2,787,285

34%

Steel Products*

2,756,881

2,272,692

21%

4,630

3,420

35%

Power (million kwh)

be invested in upcoming steel plants and power projects. “Much of this investment has already been tied up and we don't have any plans to raise funds over the next six months,” Maroo said. Details of sales for the quarter and the financial year ended March 31, 2012 with Naveen Jindal, Chairman & MD, JSPL the corresponding quarter in the previous financial year are as follows:

* Only Slab/Round/Bloom/Beam Blank

Sushil Maroo, CFO, JSPL, said that the company plans to spend about `10,000 crore towards capital expenditure during the financial year 2012-13. Bulk of this capex would

Road ahead According to information available with Steel Insights, the company expects to invest about `6,000 crore in steel capacity expansion and over `3,000 crore in power capacity in the coming days. JSPL also expects to commission its 3 million tons per annum (mtpa) plant at Angul in Odisha in the current financial year (2012-13). In addition, the company is also expanding its steel capacity from the current 4 million tons (mt) to around 18 mt by 2016-17. All these initiatives put together, the company expects to reach greater heights in the times to come, feel industry experts.

STEEL INSIGHTS 41 MAY 2012

SPECIAL FOCUS

Export duty pulls down chrome ore prices

Steel Insights Bureau

he availability of chrome ore increased significantly and prices softened by around 30 percent in the domestic market following imposition of 30 percent ad valorem export duty on chrome ore with effect from April 1 as per provision in the Union Budget proposals for 2012-13, an official of a leading ferro alloys maker said. “Not only is more ore available from Orissa Minerals Corporation (OMC) to Indian companies, the miner has also cut its price to a great extent for the April-June quarter (effective April 1, 2012). The price of OMC, which is the sole supplier of chrome ore in India, is now `11,000 per ton compared with a high of `14,500 per ton for the January-March quarter and before that,” the official told Steel Insights. Prior to imposition of the duty, the miners were exporting chrome ore at much lower prices to China and at the same time charging higher prices from domestic ferro alloy makers on the pretext that they had long term contracts with overseas companies and were under obligation to export, he said. Basically, the miners were exporting chrome ore at the expense of domestic manufacturers, and the impact of this was that Chinese companies were getting chrome ore at a much cheaper price of around `8,000 per ton, while Indian companies were getting it at around `14,000 per ton, he said. There was a huge gap and the cost of production of ferro chrome in China was much lower compared to India. “There was a mismatch and this export duty was very much required,” he added. “Now with the imposition of duty, nobody will think of exporting chrome ore to China or anywhere else. So, definitely a higher quantity of chrome ore will be available to Indian ferro alloy makers,” the official added. Captive blocks The government should consider allotting linked chrome ore and manganese ore

OMC cuts Q1 price

aking a cue from weakness in international price of lumpy chrome ore, Orissa Minerals Corporation (OMC), India’s leading supplier of the material, has cut prices for the first quarter (April-June) of 2012-13 to around `11,000 per ton from a high of `14,500 per ton during the previous two quarters (September-December and JanuaryMarch), an industry source said. The price of imported lumpy ore (40-45 percent) is around $275 per ton. The price of lumpy chrome ore (40-42 percent) from Turkey is around $270-275 per ton (as on April 19, 2012). The price was around $300 per ton in November 2011 and around $450 per ton earlier (July-August 2011). The price of lumpy ore from Albania is around $240 to $260 per ton (as on April 19, 2012). The price of Oman material (36-38 percent) is around $200 per ton. “Prices are slightly down compared to NovemberDecember levels because ore prices largely depend on Chinese demand. As Chinese demand is low, the prices are slightly weak. Prices will move up only if China starts buying,” the source said. mines to ferro alloy makers of the country, an official of a leading ferro chrome maker said. “The government should take a decision that it will not renew the leases of manganese and chrome ore mines. Instead, the mines should be auctioned among end users wherein the highest bidder will get the mine. But there should be a condition that only captive users can get the mines,” the official said. Some of the existing leaseholders of chrome ore have the right to sell the ore, but most of them do not have this right and they are meant for captive consumption. Tata Steel has the right to sell, but they are not selling as they are converting it to ferro chrome and selling in domestic market or exporting,” the official said. “On the other hand, Orissa Mining Corporation Ltd (OMC) is the only company, which has got the right to sell, but it fixes its prices as per trends in the international market even as cost of mining is very low,” he said. “There is no priority in allotment of mines. There are companies like OMC, which does not have plant, and most of the companies in India involved in manufacturing of ferro alloys do not have mines,” he pointed.

STEEL INSIGHTS 42 MAY 2012

SPECIAL FOCUS

Ferro chrome export dips on low global demand

Steel Insights Bureau

ndian ferro chrome makers are finding it difficult to export their produce on weak demand from China, which is the largest buyer of Indian ferro chrome, an official of a leading ferro chrome maker told Steel Insights recently. “Because of a sluggish trend in the Chinese steel market, the prices of ferro chrome are much lower there and thus we (Indian companies) are unable to export to China as their price is even lower than our cost of production,” the official said. “As a result we were forced to shift our export cargos to Europe or US. But we cannot depend on these two regions for export of entire ferro chrome or ferro alloys as they cannot replace China. In the absence of the Chinese market we are forced to sell some amount in the domestic market. But if higher quantity of ferro chrome is available for the Indian market, the prices will fall. And this is what is happening,” he said. At present the supply of ferro chrome or ferro alloys is higher than domestic demand and unless 40-50 percent of ferro chrome that is produced in India is exported, the price will continue to remain under pressure, the official said. Explaining the reason for the current situation, the official said: “Worldwide, the steel mills are operating at lower capacity. Plants in Europe as well as in China are operating at 70 percent capacity. The industry is still not in the way that we would have liked it to be,” he added. There is no demand from construction industry as they themselves are not doing well. Except the auto sector, other sectors are not doing well even now in April, the official felt. “Everything depends on China and we were expecting that

Higher power cost hurting Indian ferro alloys industry

ecent implementation of increased tariff rates by power distribution companies in various states, including West Bengal and Orissa, is severely affecting the profitability of ferro alloys industry of India, an official of India’s leading manufacturer said. “The cost of power used to be around `3 per unit, now it has gone up to `5 per unit. An increase in tariff by `2 per unit means the production cost has gone up by around `8000 per ton, which is an impact of additional around 15-20 percent as the cost of production comes to around `55,000 per ton,” the official said. Power accounts for up to 40 percent of cost of production of ferro alloys, the official added. Under the circumstances, ferro alloys industry will find it difficult to survive in the long run unless they have their own power plant, including linked coal blocks as well as manganese ore mines, the official added. Because of increase in power cost a lot of outstanding amount has come up for payment by ferro alloys makers. Initially when power tariff had gone up, the companies making ferro alloys moved to court and got stay and were making payment at old rates. They were not considering the proposed increase in tariffs in their cost and selling the material, mostly at loss because of poor market conditions prevailing then, he said. “But recently the stay was vacated and now the power utilities have raised bills against old supplies. Companies are facing outstanding dues to utilities of about `25-30 crore per company and they are not in a position to clear the outstanding dues as the material has already been sold at the then prevailing rates,” the official added. “Not only they had not made profits earlier, they have to pay this additional `25-30 crore in arrears to power companies,” he said. The official pointed that unless the market moves, the companies will be facing difficult situation because banks are freezing loan limits because of the inability of manufacturers to repay as the entire cycle has been disturbed.

STEEL INSIGHTS 43 MAY 2012

SPECIAL FOCUS

Ferro alloy prices rise between Dec and April Steel Insights Bureau

he price of ferro alloys have risen by about 10 to 30 percent between December 2011 and April 2012 on slight improvement in demand from steel makers in Europe and the US even as demand from China continued to remain weak, an industry source said. The current prices of all ferro alloys are almost at par with the prices prevailing in August 2011, the source said. The price of silico manganese (60-14) was quoted at $1150 per ton fob as on April 17, showing a jump of 35 percent over the price of $850 per ton quoted on December 15, 2011, while that of silico manganese (65) rose by 32 percent to $1250 per ton from $950 per ton. For ferro manganese (70), the price was quoted at $1100 per ton as on April 19, up 34 percent compared with the price of $820 per ton on December 15, while ferro manganese (75) was quoted at $1150 per ton, up 21 percent compared with $950 a ton on December 15. Ferro chrome (basis 60) was quoted at $1.05 (`70000) per ton fob, including all benefits (3 percent duty drawback and 2 percent other benefit) on April 19, which was 10 percent higher than 90 cents (`63000) per ton fob quoted on December 15, 2011. Ferro silicon price was quoted at $1450 (`70000) per

after the Chinese New Year, the prices will definitely move up, but that has not happened,” the official added. India’s total production of ferro chrome is around 1.2 million tons (mt), of which around 0.7 mt is exported. Monthly export would be 60,000 tons on an average. But current export

ton as on April 19, up 16 percent compared with a price of $1200 per ton as on December 15, 2011. The price of silico manganese (60-14) was quoted at $1,100 per ton in August 2011 and that of 65 grade at $1200 per ton. On the other hand, the price of ferro manganese (65) was quoted at $1200 in August and ferro manganese (70) at $1080 per ton. Ferro chrome and ferro silicon prices were quoted at $1.05 (`70,000) per ton and $1,400 per ton respectively in August 2011. Indicative price of various types of ferro alloys Name of Alloy

Price (April 19, 2012)

Price (Dec 15, 2011)

Price (August 2011)

SiMn (60-14)

$1150

$850

$1100

SiMn (65)

$1250

$950

$1200

FeMn (70)

$1100

$820

$1080

FeMn (75)

$1150

$950

$1180

FeCr (60)

$1.05

$0.90

$1.05

FeSi

$1450

$1200

$1400

Source: Insights Research

is only around 40,000 to 45,000 tons per month as the long term contract materials are still going, while spot deals are not there. So exports are down by about 15-20 percent compared to what it used to be sometime back. “Even the demand from Europe cannot be said to be buoyant. It is just okay kind of thing. Of the total export of around 0.7 mt of ferro chrome annually, the maximum quantity goes to China. On an average around 70 percent of the total export goes to Far East Asian countries and the balance 30 percent to Europe, US and other places,” the official said. Prices The prices of chrome alloys have not gone up much, but manganese alloys prices have increased especially during the last two months (February-March). Overall, the prices are not well right now, but there are issues like appreciation in US Dollar and such other things which is helping the ferro alloys industry to remain afloat. The Chinese market is not that good. Their price is around 92 cents which will work to around `62,000 per ton compared to Indian price of $1.05 or `70,000 per ton. But manufacturers are optimistic that Chinese market will improve very soon because the stock of ferro chrome is very low there.

STEEL INSIGHTS 44 MAY 2012

SPECIAL FOCUS

Rohit Ferro to set up ferro alloy plant in Oman Rakesh Dubey

ohit Ferro Tech Ltd has decided to set up a ferro alloy plant with four furnaces of 33 MVA each along with a power plant and a steel plant in Oman at a total investment of about `3000 crore, a company official said. “We had been looking for a location in the Middle East to set up a ferro alloy plant for quite some, but now we have decided to set up the plant in Oman’s Sohar Free Zone,” Rohit Ferro Tech’s Director Rakesh Agarwal told Steel Insights. The proposal has already been discussed with higher authorities in Oman and the company will soon apply for land, Agarwal said, adding, “Everything is ready and probably by middle of this year, we will start investing our money over there and then start acquisition of land.” “Land acquisition is not a major issue because our project is in a Free Zone. We will just have to make an application and they will allot the land,” he said. Explaining the plan, Agarwal said, “Initially we are going to put up two units of 33MVA, but there will be total four furnaces of 33 MVA at Oman plant. After the ferro alloy plant,

we will go for setting up a power plant and third thing will be setting up a steel plant. The total investment involved in all these is almost `3000 crore.” Agarwal said they will form a joint venture company in Oman in which Rohit Group will have majority stake and balance will be owned by Sohar Bank, which will be their equity partner. That joint venture company will be a subsidy of Rohit Ferro Tech. “We have not yet decided on the equity structure of the proposed joint venture. It could be 80:20 or 60:40,” he said. Vizag plant The 3,000 tons per month ferro silicon (FeSi) plant of Rohit Ferro Tech Ltd is likely to be commissioned by middle of May, Agarwal said. “The plant is almost ready for operation. We are just waiting for power connection for two furnaces of 18.5 MVA each with total production capacity of 3000 tons per month. Hopefully, by end of this month (April) or early next month

STEEL INSIGHTS 45 MAY 2012

SPECIAL FOCUS (May) it should start,” he said. The commissioning of the plant has already been delayed, as it was to be commissioned in December 2011 or January 2012 itself, because of delays in getting power connection, he said. “The problem was the rates which were not frozen for getting the power for the plant largely because of shortage of power in that area. We had applied for power connection, but the authorities were delaying and now the power rates have been finalised at a higher rate,” the official said. Earlier it was supposed to be `2.60 per unit, but now the rate has been frozen at `3.60 per unit. They had proposed an increase of `2 per unit, but ultimately they agreed to a hike of Re 1 per unit. This rate will be effective April 1, 2012,” Agarwal said. Indian Ferro Silicon production capacity is around 0.3 million tons per annum, including those in Bhutan and other neighbouring countries. The capacity of plants in India is only about 0.1 mtpa. Rohit Ferro Tech has the capacity to produce 0.3 mtpa of ferro chrome in its West Bengal plant of which 0.15 mtpa is chrome alloys and 0.15 mtpa is manganese alloys. In NovemberDecember 2011, the company was operating at 40 percent capacity utilisation, but at present it is producing only around 80,000 tons of chrome alloys and the rest is manganese alloys. “We are right now operating at 70 percent capacity utilisation. We have converted our ferro chrome furnace to manganese alloys. In the Bishnupur plant, earlier we used to produce chrome at two furnaces, but now we are producing at only one furnace and have converted the other furnace to manganese alloys,” he said. Rohit Ferro has another plant at Jajpur in Orissa with four furnaces of which only three are in operation at present, he added. The company’s stainless less plant at Bishnupur is also operating at 80-90 percent capacity utilisation with a production of around 7,000 tons of utensil grade steel in November compared to 70 percent in November 2011. The official said that demand for utensil grade is always there in India, especially after some manufacturers like Jindal

Stainless Ltd having switched to other grades of stainless steel making. Power plant Rohit Ferro expects that its 100 MW power plant at Jajpur in Orissa will be operational by early 2014. “We have already placed orders for all the major equipment, including boilers, and we will place order for turbines in early 2013,” Agarwal said. The project is being funded by debt to equity ratio of 1:2. Meanwhile, the company has not been able to make any significant progress on its 500 MW power plant in West Bengal. “We have formed a joint venture company named SKP Power Ltd that will set up the power plant and have started acquisition of land. But the process is a little slow,” Agarwal said. Coal mine There has been practically no development on logistics front for transportation of coal from Rohit Ferro Tech Ltd’s coal mine in Indonesian during the past six months, Agarwal said. “The problem of transportation of coal is still there. We had already started mining of coal, but we are unable to transport the material. Almost 60,000 tons of coal has already been mined, but logistics is a problem,” he said. “The distance from mines to harbour is about 300 km and we have to construct a road there. Although we have already paid a lot of money for construction of road, there are problems in some of the patches as some anti-social elements are not allowing the road to be constructed. Still we are discussing,” he said. The mine has reserves of both semi-soft coking coal and steam coal, Agarwal said. “We are currently mining on a stretch which has deposits of semi soft grade coking coal. We have so far not touched the thermal coal section. It is ultimately to be used (the current grades) for making of coke. The quality is slightly inferior if compared to semi-soft grade of BHP mines in other countries. For example, if the price of BHP’s coal is $240 per ton, our price will be around $210 per ton,” he said. “We had earlier planned to sell the coal in international market and had a firm order from a Chinese company, but we are unable to supply because of logistics issues,” Agarwal said.

STEEL INSIGHTS 46 MAY 2012

eXPERT sPEAK

Power to drive ferro alloy industry

Devanand Chauragde

he ferro alloy industry in the country has developed in a couple of clusters. Durgapur in West Bengal and Raipur in Chhattisgarh are two such clusters. There is also a cluster in Odisha and there is a new one developing around Visakhapatnam in Andhra Pradesh. The major problems of this industry are the high input cost of power as well as ore and stiff competition in the domestic and export markets. In spite of that more and more new ferro alloy units are coming up in line with the bright demand forecast. Most of the new projects are in manganese alloys and most of them are still in the project stage with a capacity of 0.7 million tons per annum (mtpa) in West Bengal and Andhra Pradesh. As per estimates, the increase in production capacity of manganese alloys every year is 35 percent whereas the annual growth in domestic demand is only about 17 to 8 percent. That happens against all odds of high power tariff, huge shortage of raw material, viz manganese ore, chrome ore, power and coke. The estimated production capacity increasing of all bulk ferro alloys is about 4.03 million tons (mt) in the country. Domestic production is around 3.30 mtpa including all bulk ferro alloys and noble alloys etc., against domestic demand of 2.28 mt during the last fiscal. The rest of the production is being exported. Hence the industry is largely dependent on the export market. Since the ferro alloy industry is a power intensive unit, the power cost is about 35-40 percent of its total production cost. The remaining 60 to 65 percent consists of the cost of ore and other raw materials. West Bengal is the largest producer of ferro alloys in the country and produces about 30-35 percent of the country’s total production. Repeated power tariff hikes by state run power utility companies have put the industry in a fix. The West Bengal State Electricity Distribution Company Ltd’s, (WBSEDCL) power tariff is about `5.25 paisa per unit. After considering rebate on load factor, power factor and cash payment discount, it would be cheaper by 50-60 paisa per unit. The average power tariff at the Damodar Valley Corporation (DVC) is about `4.07 paisa per unit, and the power tariff of Durgapur Projects Limited (DPL) power tariff is about `4.20 paisa per unit to the industry. In Andhra Pradesh, more than 30 ferro alloy units are under operation. DISCOM had put this sector under a special power tariff category and had given a concessional power tariff, which is why more new units are coming up in the state and nearly about `5000 crore of investments have been made. However, the government changed its policy suddenly. Now, DISCOM has proposed that the special category will be abolished and the ferro alloy

units will be treated at par with the other HT consumers. In a recent hike, power tariff has been increased from `2.65 paisa per unit to `3.65 paisa per unit for 132 KV line and `4.05 paisa per unit for 33 KV line. The recent power tariff hike has in fact made even exports uncompetitive for the ferro alloy industry which depended a lot on exports. The only advantage for the state is its proximity to the port which puts it at an advantage while importing of raw material or exporting of finished goods. In Chhattisgarh, the Power Distribution Company Ltd (CSPDCL) has recently increased the power tariff from `3.40 paisa per unit to around `4.50 per unit plus demand charges. In this state, most ferro alloy producers have their own captive power plants for their units. In Odisha, in the region wise power distribution areas of NESCO, WESCO, SOUTHCO, and CESU the average power tariff is about is `5.10 paisa per unit. In Madhya Pradesh the power tariff is around `5.30 paisa per unit whereas in Maharashtra the power tariff is around `5.65 paisa per unit. The average power tariff of various states in the country works out to about `4.50 paisa per unit for the industry, which is three to five times higher than the other competing countries. Hence globally ferro alloy units are situated geographically where power tariffs are moderate. A high variation and unreasonable power tariff in various states and poor availability of power in most of the states of India have put an additional burden on alloy producers. At such high power tariff, there is hardly any margin and viability in the production of ferro alloys. An initiative is needed to benchmark power tariff with international standards and to make it uniform across the country in order to enable the ferro alloy units to compete in the global market. Since the ferro alloys industry is dependent on exports, it earns handsome foreign exchange for the nation. In view of the fact that the current power tariff in various states is quite high, it is recommended that the industry be given power at moderate rates. Due to intense competition across the country and from abroad, we have to sell the products at the same price. The price of alloys and ore play a vital role in this business. However the price of ferro alloys is decided by the international market and varies widely. In a highly volatile market, there are a number of factors affecting its prices in the domestic as well as international markets. With a serious demand-supply gap especially in manganese alloys, the biggest challenge now is to sell the finished good. Optimising power tariff can perhaps help to bridge the gap and make the prices competitive. Devanand Chauragde is GM Marketing of the Hira Group of Industries in Raipur

STEEL INSIGHTS 47 MAY 2012

Feature

Iron ore softens on low steel price Steel Insights Bureau

own trending steel prices filtered into the seaborne iron ore market in April as squeezed margins discouraged Chinese mills from paying high prices for their key raw material. Subdued ore buying interest saw the 62 percent Fe cfr quotation for north China material fall to $148/dmt. Meanwhile, Vale’s director of ferrous metals, José Carlos Martins recently said the global iron ore market is going through a “transitional period” with Chinese buyers favouring spot prices rather than a “lagged” quarterly-average price contract. During Q1, around 10-15 percent of Vale’s iron ore sales were negotiated on a spot basis, rather than Platts index prices, he said. “This is not our policy, but we have to follow the market trend,” explained Martins, adding that the global market

already negotiates about 50 percent of the material on a spot basis, while in China the figure is only 30 percent. In addition, Martins disclosed that the new iron ore trading platforms will support the transparency and liquidity of the market, “allowing the creation of new index prices based on physical transactions.” Spot prices recently climbed to US$150 per ton delivered to China on the back of a recovery of Chinese demand. Martins said he is upbeat on the market’s prospects, believing demand could rise and forecasting prices of up to $180 per ton fob. It is “difficult to see prices falling below $120 per ton fob in the future,” he said. Vale’s average Q1 iron ore sales price was $109.26 per ton fob, below the $126.19 per ton fob registered in the same time last year and also down on the $121.38 per ton fob recorded in Q4 2011.

STEEL STEEL INSIGHTS INSIGHTS 48 48 April MAY 2012 2012

feature Partial mining Back in India, the Supreme Court has allowed mining to restart in iron ore mines of more than 50 hectares in Karnataka state after their environmental plans are approved, potentially bringing 4.5 million tons (mt) per year to local steel producers. The move is likely to have little impact on exports, however, which remain stalled as Karnataka has failed to approve any despite a Supreme Court order that it lift its ban on them. India used to export about 100 mt a year of iron ore – half its production – but clampdowns on illegal mining and the government’s desire to keep production for domestic steel mills has slashed that figure. Now, the Karnataka state government will decide the amount of iron ore that each mine can produce up to a limit set by the Supreme Court, industry sources said. This would be in addition to 1 mt that the Supreme Court has allowed state-run NMDC to mine every month. The Federation of Indian Mineral Industries (FIMI) was optimistic the move could herald the resumption of mining throughout the state. In 2011, the Supreme Court banned iron ore mining in Bellary, Chitradurga and Tumkur districts of Karnataka citing environmental violations, and asked a government body to carry out an environmental impact assessment. Last month, the court set a cap on annual iron ore output of 25 mt in Bellary, and of 5 mt altogether from Chitradurga and Tumkur districts. The court has only allowed mines with low environmental violations to extract iron ore and the state government can now set limits within these caps. Last week, the top court asked companies in Karnataka to push ahead with land clean-up for rehabilitation of affected people and reclamation. India to export to Japan India will export 2 mt of iron ore to Japan annually for the next three years and initiate the process for the Japanese government’s equity participation in Delhi Mumbai Industrial Corridor Development Corporation to the extent of 26 percent. “I have conveyed to the (Japanese) minister about our Cabinet approval for renewing the long term agreement for the export of iron ore. An inter-ministerial delegation will be reaching Japan within the next two weeks to formally sign the agreement,” commerce and industry minister Anand Sharma said at a joint press meet with his Japanese counterpart Yukio Edano on April 30. Right now the agreement which will be signed is for 2 million ton per year, the minister said. The issue of Japan’s equity participation in DMICDC was discussed at length at the bilateral meeting between the two ministers based on the leaders’ summit last year. Bilateral trade between the two countries jumped 38 percent in 2011-12 to $ 18.3 billion compared to $ 13.4 billion in the

NMDC hikes iron ore prices

Steel Insights Bureau

MDC has hiked iron ore prices by around 10 percent on rising demand for the raw material used in making steel. The state-run miner’s latest move may prompt key customers such as Essar Steel India Ltd, JSW Steel Ltd and Rashtriya Ispat Nigam Ltd (RINL) to revise their prices upwards. Prices of iron ore lumps have been increased by 10 percent and fines by about 8 percent, sources said. The latest hike ranges from `250-400 a ton. Higher grade ore lumps with 65 percent iron content are now priced at `5,400 a ton, while the fines with 64 percent iron are priced at `2,800 a ton. Iron ore price rise is the latest blow to steel makers without captive mines. Steel makers are already reeling under the impact of the freight hike imposed by the Railways in March. Besides, a weakening rupee has made import of raw materials such as coking coal costlier for them. The rupee has weakened by some 4 percent since April 1. The steel makers have seen disruption in iron ore supplies following the ban on mining in Karnataka. Prices of iron ore lumps have gone up by an average of `600 a ton since the beginning of this year, while fines have appreciated by about `200 a ton. Since January, steel prices have been firming up with large producers, including SAIL and Tata Steel, increasing their prices by `1,000-1,500 a ton on account of improving demand. Steel offtake, which grew at a sluggish pace of around 5 percent in 2011-12, is forecast to grow by 8-9 percent in the current financial year.

previous fiscal after the implementation of the comprehensive economic partnership agreement or CEPA last year. “Our bilateral trade has shown an impressive increase of 38 percent last fiscal after the CEPA was implemented in August 2011,” Sharma said. India expressed its support for the Japanese initiative for a Comprehensive Economic Partnership Agreement in East Asia (CEPEA), which aims at building a more inclusive trade alliance in East Asia.

STEEL INSIGHTS 49 MAY 2012

interview

‘There is no alternative to iron ore beneficiation’ Arindam Bandyopadhyay

s India goes on expanding its steel production, the demand for high grade iron ore will continue to increase in coming years. In 30 years time, all high grade deposits could be depleted, leaving only low grade ores which cannot be used without beneficiation. MBE Coal and Mineral Gurudas Mustafi Technology India, formerly Director and CEO, MBE Humboldt Wedag, is a leading player in ore beneficiation, and can offer solutions to the increasing requirements of the Indian steel industry. In an exclusive interview to Steel Insights, MBE director and CEO Gurudas Mustafi spoke at length about the current status of ore beneficiation in India and its future prospects. Excerpts: What is the current status of iron ore beneficiation in India? In India, the general mining practice is to excavate >58% Fe ore leaving poorer grade material locked in situ or discarded as waste. Since high grade ores are available, so for economic reasons, a simple washing scheme has been industrially practiced for beneficiation which produced fines and slimes in the range of 10-25% and as there were earlier no markets for fines in India; either fines were exported which still continues or discarded to the tailings pond. At the present rate of consumption of high grade ore, if the proved, probable and remaining resources of hematite ores are considered, they are expected to last about 30 years maximum. The tailing dams of all the big iron ore mining companies in India are overflowing creating lot of environmental hazards apart from iron ore losses. So we have no choice but to go for beneficiation of these tailings dam and poorer grade dumped at mine site. Presently there are many iron ore beneficiation projects which are in the planning stages but there are a few operating iron ore beneficiation plants in India. What is the overall demand scenario? What are your views on the ore availability issues facing the Indian steel industry? India’s target of steel production by 2013 is about 120 million tons (mt). So the corresponding demand of iron ore containing 62-64 % Fe would be around 225-250 MT (excluding our export commitments). As explained earlier we are increasingly left with comparatively low grade ores.

Though Indian iron ore is rich in iron, it contains high aluminous impurities which are undesirable for iron making. For an efficient operation of blast furnace, the alumina /silica ratio in the ore should be silica <1.0 and alumina should be <2.0%. Thus the demand for beneficiation is increasing day by day. If we consider only hematite mineable reserves and the growth in steel production, the reserves are likely to exhaust by 2045. But it can be substantially increased if we beneficiate the iron ore ranging from 45-55% Fe. In India we are bestowed with magnetite deposits of much better quality than many parts of the world. If we are able to discover newer deposits of magnetite even of lower grade we may be able to meet the future demand of steel industry. For a steel plant, what are the benefits of ore beneficiation? How far does ore beneficiation help to reduce a steel plant’s coke rate requirement? As mentioned earlier, iron ore in India is aluminous and beneficiation helps to reduce gangue material containing alumina, silica, phosphorus and sulphur. There are some thumb rules like: ♦♦ 1% drop in alumina lowers the coke rate consumption by 14 kg/thm (total hot metal); ♦♦ 0.5% drop in silica lowers the coke rate consumption by 14kg/thm. With a number of steelmakers coming up with their pelletisation plants, do you think the demand for beneficiated ore will see a jump? As the supply of lump iron ore is decreasing, the steel makers are switching to more utilisation of pellets in their blast furnaces. We have huge ponds for low grade fines available which can be used for pellet making. So to use these low grade fines, we have to beneficiate them first through different processes before charging them into the pelletisation plant. With the utilisation of low grade ores becoming more and more necessary, what sizes of beneficiation plants and type of technologies MBE-CMT can offer? MBE-CMT group has, more or less, all the critical equipment required for beneficiation of coal and iron ore. There are different beneficiation processes as we all know, for example in coal the proven processes are Jigging technology, heavy media technology and floatation while in iron ore beneficiation apart from the jigging & flotation process, we adopt magnetic separation. In India, one of the first iron ore beneficiation plants which we set up was in 2006 for Tata Steel at Noamundi mines, which has a designed capacity of 1.8 mtpa, a big one from capacity point of view and especially when compared to the smaller capacity plants which are now also in great demand.

STEEL INSIGHTS 50 MAY 2012

interview In fact, we also built such small capacity beneficiation plants in between for Jindal Stainless & Patnaik Minerals. Considering the requirement and urgency of smaller capacity plants to beneficiate the low grade iron ore, we focused also on this segment where requirement is 100 TPH or less than that also; two such iron ore beneficiation plants with capacities ranging between 200 to 100 TPH are being set up by us in the Bellary area. The beauty in the design of one of these plants is an integrated system with beneficiation sections that will be added in stages with capital generated from its revenue earnings by feeding to pellet plant and thereby reducing also the gestation period. For beneficiation of lump ore, the jigging technology is widely used where we use our BATAC® Jigs while for the beneficiation of the fine ore including the low grade ones, the Medium & High Intensity Wet Magnetic Separators & Flotation route are commonly adopted where we use our PERMOS® Medium Intensity Wet Magnetic Separators, JONES® High Intensity Wet Magnetic Separators and PNEUFLOT® Flotation. BATAC®, “the first under bed – pulsated Jig” and JONES® “with highest magnetic intensity at industrial scale” was invented by us and with a continuous R&D, they still remain

MMDR to favour existing steel units for ore mine

Steel Insights Bureau

he Mines and Minerals (Development and Regulation) Bill, 2011, would give preferential treatment to existing steel units for allocation of iron ore mines, Minister of Mines (independent charge) Dinsha J. Patel said. The government has introduced suitable provisions in the MMDR Bill to allow preferential weightages for existing units with finished products production capacity or with industrial capacity based on minerals, Patel informed Lok Sabha in a written reply. Earlier, the government had set up a high level committee in the Planning Commission under the Chairmanship of Anwarul Hoda to review the National Mineral Policy, 1993. The committee, in its report, had recommen ded that steel making capacities already in existence on July 1, 2006 without captive mines may be given preferential allocation of adequate iron ore reserves within the state without the need to go through the process of tender/ auction. This would be a one-time measure to provide a level playing field, the report said. The minister said that the government had accepted the recommendation of the Hoda Committee, and has made suitable provisions in the Bill in this regard. The MMDR Bill, 2011, introduced in the Lok Sabha on December 12, 2011, has been referred to the Standing Committee on Coal and Steel.

the most preferred equipment. There are some fraternal clones for these machines which are far behind in the race. In India, the demand of pellet feed increases as stocks of lump ore are getting depleted day by day. Though Indian iron ores are rich in iron, but contains high aluminous impurities which are undesirable for iron making so there is no option but to beneficiate the ores. As the government reduces the threshold value to 45 percent, we have to beneficiate the fine low grade ores by magnetic separation and flotation to prepare the pellet feed. If the Fe content is less than 30 percent, can it still be beneficiated? If yes will it be viable considering the cost factor and return on the investment? It depends on the iron ore, the region, the liberation size and the gangue material. If the ore is siliceous (gangue material is mainly silica like in BHQ) or with high silica content in gangue than alumina definitely we can beneficiate through our latest PNEUFLOT® flotation technology by reverse flotation. This siliceous iron ore is mainly concentrated in the Bellary-Hospet and Goa region with some pockets in Barbil region also. In fact, we are one of the first companies which have references of industrial scale iron ore flotation all around the world and in some of the plants we are even recovering 98 percent of iron content from the ore. But we normally suggest a test work for the representative sample in our German Lab so that for the particular ore we could recommend suitable reagents, pH, solid concentration and recovery etc. Yes, it is absolutely economically viable especially with our high capacity and low footprint PNEUFLOT® technology and return on investment is very high as the feed to the plant is waste for a mine owner and this will help to recover from tailing ponds and also help in extracting from low grade overburden. Who are your major clients and competitors, in India and globally? A few of our clients are VALE (earlier CVRD), Brazil, MMX, Brazil, CVG, Venezuela, CMP, Chile, IRASCO, Italy, Rana Gruber, Norway, Assmang, South Africa, BHP, Australia, Tata Steel, JSL, Patnaik Minerals, OMC, MSPL and Janki from India. In the field of iron ore beneficiation there are quite a few other companies like Metso, Outotec, Almineral, Flsmidth etc. What are the major challenges facing the mineral beneficiation industry in the country? The major challenges include land acquisition, environmental clearances, and of course clearances from Ministries of Steel, Forest & Environment and lastly the “will” of mine owners. I feel that all policy makers, including Planning Commission, Ministries of Power, Forest and Environment, bureaucrats and technocrats need to sit together and evolve a common acceptable policy which caters to both environment protection and industry growth. We have to be eco-friendly but at the same time India also needs to develop its industry. We can’t neglect any of the two but decisions have to be quick.

STEEL INSIGHTS 51 MAY 2012

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Ferrous scrap prices may remain firm in May Steel Insights Bureau

nternational ferrous scrap prices are likely to remain firm in May as demand for the material improves in Turkey, China and India, the three major markets. According to market sources, prices may also remain upbeat in European countries, especially Germany. In Asia, except for China and India, the prices may follow the April trend. The April prices showed a steady trend, as per expectation, across the markets. Import prices moved up in India in early weeks of the month but stayed flat later on. Shredded material in containers was quoted at around $485-495 per ton cfr Nhava Sheva, while HMS 1&2 (80:20) hovered around $465-475 per ton cfr. Domestic prices moved in the range of `27,000-27,500 per ton. G o i n g forward, market sources said the increased ore prices, tight supply of ore and higher finished product prices may lead to improved demand for scrap in the country. In Turkey, scrap import prices showed marginal uptrend in April. Prices were up by around $5 per ton cfr. HMS 1&2 (80:20) prices were quoted at $443-448 per ton cfr main Turkish port, compared to $440-446 per ton cfr a month ago. Along with import, scrap generated from Turkish ship breaking industry also showed little price movement during the month, a market report said. China, the other major market, showed slight increase in domestic scarp prices in April. Import prices however remained largely flat. This was mainly due to the drop in iron ore prices and a dip in steel products demand and prices. Prices were also subdued in East Asian markets that saw thin trading during the month. Import prices for HMS

Ferrous scrap prices (In $/ton) Scrap

Market

April 2012

HMS 1&2 (80:20) export fob

Rotterdam

412-418

Shredded scrap export fob

East Coast, US

430-440

HMS 1&2 (80:20)

East Asia

HMS 1&2 (80:20)

Turkey

443-448

Source: Insights Research

1&2 (80:20) was around $460-470 per ton cfr. Taiwan’s scrap demand was low amid an overall adverse sentiment over the power industry’s supply restrictions and expected tariff hike. There was lukewarm demand in Singapore and Vietnam as well. In Japan, Tokyo Steel continued to slash its scrap prices, bringing the rates to a two-month low. Prices also weakened in Korea’s domestic market during the month amid slowdown in demand from end-user industries including construction. The prices of exports from Europe, meanwhile, witnessed marginal gains in April. As of April 30, the prices of exports from Rotterdam stood at $412418 per ton fob, compared to $408-412 per ton fob a month ago. Shredded scrap export prices were quoted at $435-440 per ton fob, about $10 per ton gains over the previous month. In the coming weeks, the sources said, improved demand from the major markets may lead to an uptrend in scrap import prices in the international market. Markets in East Asia however would continue to remain subdued till such time as the steel products market shows any demand uptick.

STEEL INSIGHTS 52 MAY 2012

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Buying support pushes up coking coal Steel Insights Bureau

he seaborne coking coal prices firmed up in April on buying support from steel mills. However, some slackness in transactions was witnessed towards the end of April as coke makers and mills were unable to absorb further rises as operating margins were being compromised. Premium low-vol hard coking coal was assessed at $219 per ton fob Australia on April 26 compared to $210 per ton fob on March 28, while 64 percent CSR mid vol was stable at $193 per ton fob on April 26 compared to $184 per ton fob on March 28. The semi soft variety was firm at $134 per ton fob on April 26 compared to $126 per ton fob on March 28. Few transactions were reported amid slow end demand, despite supply tightening on BHP Billiton-Mistubishi Alliance’s ongoing force majeure. However, alternatives were available, particularly from Canada and the US. Though buyers were still uncertain of the quality of these coals, low priced offers meant mills were unwilling to lift bids significantly. India’s Sail and Rinl sealed a Q2 deal with top mining companies, such as BMA, Anglo American and Peabody in a “combined purchase.” The parties involved agreed upon an annual tonnage of coking coal, however prices were set at a quarterly basis: a provisional $205 per ton fob for BMA’s Goonyella (dependent on settlement with the Japanese steel mills) and a finalized price at $210 per ton fob for Anglo’s German Creek were agreed. For second-tier coals, reports were heard about Indonesian mid vol and 60 percent CSR HCC quality coal sold to Japanese and Korean mills at around $210 per ton cfr. Sources said tightening Australian hard coking coal supply had turned Japanese and Korean buying interest to Indonesian qualities. According to some reports, steel production levels in

China had risen over in the last fortnight and as such a growth in demand could be expected. The low demand from India was attributed to a scarcity of iron ore facing the steel sector. The Indian steel plants are still reeling under a shortage of iron ore and have reduced its coal consumption substantially. However, analysts feel coking coal prices are set to rebound as early as July from four straight quarterly declines as China and India seek raw material overseas to fire new steel production. Contract prices that fell to $206 a ton for the quarter ending June 30 may rebound to average $225 a ton this financial year, analysts feel.

Coking coal rice trend in Australia April 2012

374

240

Met coke price trend in India

373 220

372 371

cfr $ per Ton

180

160

370 369 368 367

140

366

HCC Peak Down fob Australia ($/Ton)

Premium hard coking coal prices (premium low vol) fob Australia ($/ton)

HCC 64 Mid Vol fob Australia ($/Ton)

Low Vol PCI fob Australia ($/Ton)

Semi soft coking coal rates fob Australia ($/ton)

365 364 2Ap r 3- -12 Ap r 4- -12 Ap r 5- -12 Ap r 6- -12 Ap r 7- -12 Ap r 8- -12 Ap r 9- -12 Ap 10 r-1 -A 2 p 11 r-1 -A 2 p 12 r-1 -A 2 p 13 r-1 -A 2 p 14 r-1 -A 2 p 15 r-1 -A 2 p 16 r-1 -A 2 p 17 r-1 -A 2 p 18 r-1 -A 2 p 19 r-1 -A 2 p 20 r-1 -A 2 p 21 r-1 -A 2 p 22 r-1 -A 2 p 23 r-1 -A 2 p 24 r-1 -A 2 p 25 r-1 -A 2 p 26 r-1 -A 2 pr -1 2

120 2Ap r3- 12 Ap r4- 12 Ap r5- 12 Ap r6- 12 Ap r7- 12 Ap r8- 12 Ap r9- 12 Ap 10 r-12 -A p 11 r-12 -A p 12 r-12 -A p 13 r-12 -A p 14 r-12 -A p 15 r-12 -A p 16 r-12 -A p 17 r-12 -A p 18 r-12 -A p 19 r-12 -A p 20 r-12 -A p 21 r-12 -A p 22 r-12 -A p 23 r-12 -A p 24 r-12 -A p 25 r-12 -A p 26 r-12 -A pr -1 2

FOB $ per Ton

200

STEEL INSIGHTS 53 MAY 2012

feature China, the largest steel producer, is leading demand growth forecast at almost 10 percent this year. It started about 10 new blast furnaces in the past six months, lifting output to a record in March. India, the third-biggest steelmaker, is set to boost capacity a third to more than 100 million tons (mt) by March in a five-year $1 trillion plan to build roads, bridges and railway networks. Growth in China slowed more than forecast last quarter to the least in almost three years, prompting economists to predict a rebound as the government loosens policy to counter weak domestic and European demand. Gross domestic product expanded 8.1 percent from a year earlier after an 8.9 percent fourth- quarter gain, the National Bureau of Statistics said. Demand for imported coking coal in China may rise 37 percent to 63 mt this year from last year, Australia’s Bureau of Resources and Energy Economics said on March 21. Consumption is projected to increase due to state investment in steel-intensive infrastructure such as highways and rail networks, linking the less-developed provinces in western China to demand centers in the east, it said. Global trade in coking coal may rise 9.6 percent to 297 mt this year, compared with a 0.7 percent drop last year, the Bureau of Resources and Energy Economics said. Meanwhile, India’s coking coal needs may jump 13 mt this financial year as its rising appetite for the alloy drives companies to add capacity worth at least $10 billion in the year that started April 1. Indian demand may support coking coal prices as most of the local requirements are met through imports.

Met coke initial price rise arrested

he 62% CSR (coke strength after reaction) metallurgical coke was assessed at $371/ton cfr on April 27, up from $360/ton on March 28. Greater demand for met coke pushed prices upwards but continued weakening of the Indian rupee and greater availability of cheaper Black Sea produced coke stopped the prices from rising further. September 2012 coke futures contract in north China’s Dalian Commodity Exchanges dropped by RMB 47 per ton ($7.5 per ton) to close at RMB 2,009 per ton on April 27. LAM coke demand, which is currently at 33 million tons per annum (mtpa) domestically, is expected to shoot up to 58 mtpa in the next five years, as steel makers increase capacity, according to industry estimates.

Coking coal mines to be under steel ministry: Verma

Steel Insights Bureau

teel makers want coking coal mines in the country to be brought under the ambit of the Steel Ministry for effective administration. They have also sought government funding for R&D initiatives in steel to encourage collaborative research. The Coal Ministry is basically focussed on development of thermal coal and not much attention is given to the development of coking coal mines in the country. So they should be brought under the Steel Ministry, according to C.S. Verma, chairman SAIL and head of CII’s Steel Committee. Verma was speaking at the CII Steel Summit 2012. Coking coal is a key ingredient for making steel, and domestic steel makers rely heavily on imports mainly from Australia to meet their requirement. It is estimated that India has coking coal reserves of 33 billion tons, which are not exploited adequately. In a bid to achieve the targeted steel production of 200 million tons by 2020, the coking coal mines should be brought under the Ministry of Steel, Verma said. Further, he stressed on the need for timely grant of statutory approval for mine leases and ease in land acquisition process. Indian steel makers’ R&D spend ranged from 0.15-0.25 per cent of their turnover, while their global counterparts spend 2-2.5 per cent of their earnings. Stating that globally breakthrough technologies were possible only through Government aided R&D projects, Verma called for such support in India to encourage collaborative research.

Last year, India imported 13 percent of the 271 mt of coking coal traded globally. Australia is estimated to have shipped 148 mt of the steelmaking ingredient in the year ended March 31, the Bureau of Resources and Energy Economics said in its March 21 report. Coking coal prices touched a record last year after floods disrupted output and shipments from mines in Australia, the world’s biggest exporter of the fuel. Prices have since declined as supplies were restored and demand waned in Japan and in debt- laden Europe. Coking coal prices may range between $220 and $230 a ton this year and may rise higher if a European recovery starts, analysts feel.

STEEL INSIGHTS 54 MAY 2012

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March car sales keep recovery hopes alive Steel Insights Bureau

ar sales in India grew by 19.7 percent in March, a fifth straight monthly increase, fuelling hopes that the industry would see a full-fledged recovery in 2012-13. Domestic sales were up 10.11 percent during the month over the same month last year. According to data released by the Society of Indian Automobile Manufacturers (SIAM), the Indian automobile companies sold 229,866 cars in March. Sales of trucks and buses, a key indicator of economic activity, rose 14.8 percent year-on-year during the month. Domestic sales of passenger cars grew by 19.66 percent during the month. Also, sales growth of total passenger vehicle in the month was at 20.59 percent as compared to March 2011. Commercial vehicle sales registered a growth of 14.82 percent over same month last year. Total three-wheeler sales, however, declined by (-) 9.11

Maruti exports its one millionth vehicle

Steel insights Bureau

aruti Suzuki exported its one millionth vehicle on May 1, 2012. The millionth unit was a red coloured A-star which was to be sold in Denmark. Commenting on the development, Shinzo Nakanishi, Managing Director & CEO, Maruti Suzuki India Limited, said “Two years back, Europe was a strong destination for us. We have aligned our exports strategy in line with the changed scenario in exports market. The market for us has shifted significantly from Europe to non-European countries.” While the A-star, marketed under ‘Suzuki Alto’ and ‘Suzuki Celerio’ badge in international markets was doing well, the company also worked on identifying alternate non European markets. “This strategy worked in our favour and helped us retain our export numbers after European nations withdrew the scrappage incentives,” said Nakanishi. In 2009-10, Maruti Suzuki’s total exports were over 147,000 units, of which over 75 percent were to Europe. By 2011-12, the share of non-EU export sales shot up sharply from 23 percent to 66 percent. In coming times, the company plans to expand its presence in newer markets including the ASEAN region.

percent during the month under review. The growth for two wheelers was 8.27 percent. In March, production grew at a single digit rate of 6.83 percent as compared to the same month last year. Overall automobile exports during the month registered a growth of 17.81 percent. FY12 sales A late revival in automotive sales helped the industry register a positive growth during the year 2011-12. According to SIAM data, car sales climbed only 2.2 percent in 2011-12. High interest rates and rising fuel costs had deterred buyers during the first half of the year leading to negative growth during that period. Total sales in the fiscal year stood at 2.02 million cars. With this, for the first time in history, car sales crossed 2 million in a financial year. The growth rate for overall domestic sales for 2011-12 was 12.24 percent. Sales of trucks and buses, a key indicator of economic activity, rose an overall 18.2 percent during the year. Passenger vehicles segment grew at 4.66 percent during April-March 2012 over the same period last year. Passenger cars grew by 2.19 percent, utility vehicles grew by 16.47 percent and vans by 10.01 percent during this period. The overall commercial vehicles segment registered a growth of 18.20 percent during April-March 2012 as compared to the same period last year. While medium & heavy commercial vehicles (M&HCVs) registered a growth of 7.94 percent, light commercial vehicles grew at 27.36 percent. Three-wheeler sales recorded a decline of (-) 2.43 percent in April-March 2012 over same period last year. While goods carriers grew by 6.31 percent during April-March 2012, passenger carriers registered a decline of (-) 4.50 percent. Total two-wheeler sales registered a growth of 14.16 percent during April-March 2012. Mopeds, motorcycles and scooters grew by 11.39 percent, 12.01 percent and 24.55 percent respectively. The cumulative production data for April-March 2012 shows production growth of 13.83 percent over the same period last year. In 2011-12, the industry produced 20,366,432 vehicles of which the share of two wheelers, passenger vehicles, three wheelers and commercial vehicles were 76 percent, 15 percent, 4 percent and 4 percent respectively, the data shows. During April-March 2012, the industry registered a growth of 25.44 percent in exports of automobiles from India. Passenger vehicles registered growth at 14.18 percent in this period. Commercial vehicles, three-wheelers and twowheelers segments recorded growth of 25.15 percent, 34.41 percent and 27.13 percent respectively during April-March 2012. For the first time in history car exports crossed half a million in a financial year.

STEEL INSIGHTS 55 MAY 2012

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Steel ministry signs pact with Afghanistan Steel Insights Bureau

ays after the SAIL consortium was announced the preferred bidder for Aghanistan’s Hajigak iron ore project, the Indian steel ministry signed an agreement with its Afghan counterpart for cooperation in the field of steel sector. Indian steel minister Beni Prasad Verma and Wahidullah Shahrani, Minister of Mines, Afghanistan, signed a memorandum of understanding (MoU), which will act as a catalyst in the development of Afghanistan and also be a high point in ensuring co-operation and greater economic ties between the two countries. Verma hailed the MoU as a significant measure aimed at strengthening ties with Afghanistan and boosting the socioeconomic restructuring of the country. He also described the MoU as a measure of encouraging investments by public and private sector Indian companies in the Afghan iron and steel and other allied sectors. The Indian minister discussed Afghanistan’s importance from the energy standpoint and its significance as a reservoir of huge mineral wealth. He further said that the country’s great natural wealth could transform it into one of the most important mining centres in the world. Verma expressed his satisfaction over the SAIL-led consortium being selected as a preferred bidder for the blocks B, C and D in the Hajigak iron ore project. He said that after execution of the contract, the consortium would move ahead with exploration and geological studies. The minister also mentioned that SAIL led another consortium is also bidding for copper and gold reserves in Afghanistan. The Afghan Minister expressed his hope that options for joint exploration of Afghanistan’s huge reserves of rare earth metals and ores for metals like tungsten, tin, bauxite, lead, zinc could also be worked out by the two countries. Also present on the occasion were Secretary Steel D.R.S. Chaudhary, SAIL chairman C.S. Verma, NMDC CMD N.K. Nanda and other senior officers from India and Afghanistan. The Indian steel minister also met Afghanistan president Hamid Karzai during the visit.

Hajigak iron ore mine in Afghansitan

Union Steel Minister, Beni Prasad Verma meeting the President of Islamic Republic of Afghanistan, Hamid Karzai.

Earlier, Verma had said the SAIL-led consortium was engaged in negotiations prior to signing of a contract with Ministry of Mines, Government of Afghanistan. In a written reply in the Rajya Sabha, he said there are inherent uncertainties in the quantum and quality of iron ore in the said blocks. Moreover, due to the security risks involved of investing and operating in Afghanistan, difficulties involved in evacuation, long gestation and multi-faceted nature of project and associated infrastructure, the SAIL led consortium has requested the Government of India for providing assistance/ support in the form of loan/aid for the project and ore evacuation, logistics and infrastructure, Verma said in Parliament. Subsidy scheme Back home, the steel ministry has planned to formulate an interest rate subsidy scheme for value-addition in iron ore fines and energy efficiency in the secondary steel plants in India. The ministry had recommended a 5 percent interest rate subsidy for both the plans, an official informed. The government was mooting to offer interest subsidy for iron ore fines processing like pelletisation, beneficiation and agglomeration of iron ore. Once the schemes are ready, these would be sent again for Planning Commission’s nod and then to Finance Ministry. There is huge mismatch in use of iron ore fines domestic consumption and production due to lack in pelletisation in the country and subsidy should encourage the same. The steel ministry was also planning to set up a corpus of `1,000 crore, of which `500 crore was expected from government as R&D fund for indigenous new technology pilot projects.

STEEL INSIGHTS 56 MAY 2012

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India’s steel use to grow 6.9% in 2012: Worldsteel

Steel Insights Bureau

fter a sluggish performance in 2011, the Indian steel industry is expected to resume its high growth trend this year and may see continued high growth in coming years, said Worldsteel’s short range outlook (SRO) which was released recently. “In 2012, India’s steel use is forecast to grow by 6.9 percent to reach 72.5 million tons (mt). In 2013, the growth rate is forecast to accelerate to 9.4 percent on the back of urbanisation and surging infrastructure investment,” the report said. While India’s steel use would see a higher growth, the global average would however not witness the same trend, it said. Instead, Worldsteel forecasts that global apparent steel use will increase by 3.6 percent to 1,422 mt in 2012, following growth of 5.6 percent in 2011. In 2013, it is forecast that world steel demand will grow further by 4.5 percent to around 1,486 mt. Commenting on the findings, Hans Juergen Kerkhoff, chairman of the Worldsteel Economics Committee said, “Despite the market weakening in the fourth quarter of 2011, world steel demand achieved solid growth of 5.6 percent in 2011 due to the recovery momentum seen in the first half of the year. Though we saw a series of negative events in 2011 (including Japan’s earthquake, political turmoil in MENA and flooding in Thailand), their impact proved to be contained mostly locally. The exception was the Euro zone debt crisis which did have global impact and is the main cause behind the deterioration in this new forecast from our previous one issued in October 2011. Signs of stability are now emerging and we expect the recovery to resume in the second half of this year, leading to a higher growth forecast for 2013.” Although the global impact of the euro zone debt crisis has been limited so far, uncertainties continue to exist and this remains the key downside risk to the current outlook, he said. High oil prices and geopolitical tensions in the oil producing regions are also important downside risk factors. “The possibility of a hard landing for the Chinese economy cannot be ignored but at this point we do not attach high probability to this. It should be noted that the most important development in our revised forecast is the continuing slowdown of Chinese steel demand driven by the Chinese government’s efforts to restructure the economy. However, part of China’s projected slower growth is offset by improvement in other emerging markets and the strengthening recovery of the US,” said Kerkhoff. China growth China’s apparent steel use in 2012 is expected to increase by 4.0 percent to 648.8 mt following 6.2 percent growth in 2011.

In 2013, steel demand will again grow by 4.0 percent as the economy enters a less steel intensive growth phase, with the government’s efforts to rebalance the economy and contain the real estate bubble. This projection brings China’s apparent steel use in 2013 to 674.8 mt, 61 percent higher than the 2007 level. Apparent steel use in the US is forecast to grow by a healthy 5.7 percent in 2012. In 2013, the steel use in the US is expected to grow by 5.6 percent to 99.5 mt, bringing it to 92 percent of the 2007 level. For NAFTA as a whole, apparent steel use will grow by 5.2 percent and 5.1 percent in 2012 and 2013 respectively. In Central and South America, apparent steel use is forecast to grow by 6.8 percent in 2012 to reach a historical high of 49.1 mt with Brazil returning to a positive growth of over 5 percent. In 2013, the region’s apparent steel use is forecast to grow by 6.7 percent to reach 52.5 mt, 28 percent higher than the 2007 level. The recovery of steel demand is expected to stall in most of the EU in 2012 as the sovereign debt problems continue to act as a major drag on economic activities in the area, but with some differentiated pictures across the regions. In particular, the financially troubled countries of the region are expected to see their apparent steel use decline further. Overall, apparent steel use in the EU is forecast to slide by -1.2 percent to 150.9 mt in 2012, but a modest recovery of 3.3 percent is expected in 2013. These projections will bring steel demand in the EU to 155.8 mt in 2013, only 79 percent of the 2007 level. Japan’s steel use is expected to decline by -0.6 percent to 63.7 mt in 2012 due to the impact of exchange rate appreciation, despite the reconstruction efforts following the March 2011 earthquake. In 2013 apparent steel use in Japan is forecast to continue to decline by -2.2 percent to 62.3 mt, which is 77 percent of the 2007 level. In the CIS, apparent steel use is forecast to grow by 4.1 percent in 2012 and then by 5.1 percent in 2013. These projections will bring the region’s apparent steel use in 2013 to 59.1 mt, a record for the region. Steel demand in the MENA region is expected to rebound by 5.7 percent in 2012 following a -2.0 percent drop in 2011 due to the impact of the political turmoil in the region. The growth of steel use in MENA is forecast to accelerate further to 8.4 percent in 2013. These projections will bring the region’s apparent steel use to 68.5 mt in 2013. This is a record for the region and 26 percent over the 2007 level. “Our forecast suggests that by 2013, steel use in the developed world will still be at 14 percent below the 2007 level whereas in the emerging and developing economies, it will be 45 percent above. In 2013, the emerging and developing economies will account for 73 percent of world steel demand in contrast to 61 percent in 2007,” the report said.

STEEL INSIGHTS 57 MAY 2012

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RBI cuts repo rate by 50 bps

Steel Insights Bureau

fter a gap of three years, Reserve Bank of India (RBI) Governor D. Subbarao on April 17 slashed short term lending rate by 0.50 percent to 8 percent, a move that will reduce the cost of home, auto and corporate loans. The reduction in the repo rate at which RBI lends to banks, has been prompted by deceleration in growth and softening of inflation. The cut is aimed at spurring GDP growth to 9 percent levels, seen before the global financial crisis that began in 2008, Subbarao said while unveiling the annual credit policy in Mumbai. RBI has pegged the GDP growth rate for 2012-13 at 7.3 percent. It is expected to be 6.9 percent in 2011-12. After two consecutive cuts since January, the Governor, however, retained the cash reserve ratio (CRR) at 4.75 percent. Subbarao ruled out further reduction in policy rate in the immediate future citing persistent upside risks to inflation and possible fiscal slippages driven by higher oil subsidies. It expects the inflation to be around 6.5 percent by March 2013. The decision is likely to prompt the banks to cut lending rates for home, auto and corporate loans, experts said. The RBI has raised lending rates 13 times between March 2010 and October 2011 to contain inflation that had been hovering near double-digit. This had led to clamour by industry to cut rates and spur industrial and economic growth that has slowed down considerably during the past few quarters. The repo rate cut by RBI raised expectations that the move would help revive demand in key economic sectors. But steel industry sources were not very hopeful that it would stoke market sentiment significantly as both prices and demand have been very flat in the steel market for a long time now.

D Subbarao, RBI Governor

People do not have the confidence to invest in real estate or in automobiles. Moreover, domestic steel prices would witness a seasonal downturn in June with the onset of monsoons. Assocham plea The Associated Chambers of Commerce & Industry of India (Assocham) has urged the RBI to effect further reductions in CRR and repo rate, to “encourage fresh investments and spur growth”. The CRR is presently 4.75 percent following a reduction of 75 basis points in mid-March and another 50-point cut earlier in January. At the time, steelmakers looked to these reductions to provide a big boost for the auto and other interest ratesensitive sectors. The Assocham is demanding that the bank cut the CRR by another 75 points when it reviews its monetary policy on April 17. Similarly, the chamber is demanding another 50 point reduction in the repo rate. Assocham said these measures are necessary as “the economy is going through a very difficult patch and business confidence has plummeted.” Meanwhile, India’s real consumption of steel was up 6.8 percent year-on-year to 70.91 million tons (mt) in 2011-12, compared to 66.42 mt a year ago, the steel ministry data shows. In 2012, the country’s steel consumption may grow 6.9 percent and reach 72.5 mt, according to World Steel Association (WSA). It further forecasts that steel use in India would accelerate by 9.4 percent in 2013 on the back of urbanisation and infrastructure investments.

STEEL INSIGHTS 58 MAY 2012

social buzz

More rate cuts needed to revive steel demand 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.

oncerned at the weak trend in steel demand and prices, members of the online forum India Steel Market Watch (ISMW) called for measures from the government and monetary authorities to help the sector stage a recovery. There are fundamental reasons for the weak trend, noted the members, and stated that the government needs to take steps to revive demand. In this regard, the members said that the recent repo rate cut by the Reserve Bank of India (RBI) was a step in the right direction to revive growth in core sector industries, including steel. However, this reduction was only minimal and the apex bank should go for further cuts in coming months to get substantial results. Weak demand for steel

In his analysis of the weekly trends, a member of the forum showed how the market for long steel remained languid over the recent weeks with the demand condition remaining feeble across the country. The dynamics of availability and demand has come to the forefront across the country’s long steel market as the prices, despite April being peak season for construction activity, continued to move south. The demand for the semi-finished steel items is slow due to weak demand for the finished products. As the market continues to move through a gloomy demand situation, the long steel materials suffered a difficult journey. The commencement of the new financial year (FY) was unable to inject any significant momentum into the country’s steel market as the market sentiment remained pale. “The reality doesn’t look very bright as the demand continues to remain slow as the buyers are currently running of short of funds and there is a frequent change in prices making the market volatile and the buyers indecisive,” he added. Billet demand has also been slow due to weak demand in finished products. The ingot market remained sluggish too with frail demand conditions crippling the market.

Commenting on the prevailing scenario, Rajiv Bhutara, Director at Maharishi Alloys Pvt Ltd, said the steel prices had “far too excess” increase and had to suffer a fall due to low demand. Raw material costs Meanwhile, raw material costs continued to remain firm, much to the dismay of the steel community. The members of ISMW however noted that coking coal prices may come down significantly in future, while that of non-coking coal would stay high. This should benefit the large producers of steel but affect the small and mid-sized steelmakers. With the gradual recovery in production, it is expected that average coking coal prices in 2012-13 would come down by 20 to 25 percent year-on-year. About iron ore, the members said the price of this critical input is also expected to be firm in the domestic market in 2012-13 as supply constraints continue to plague the market. RBI rate cut Amidst the tight market scenario, RBI’s reduction of report rates (at which RBI lends to other banks) was seen as a welcome move. “This is likely to spur construction and manufacturing activity, providing the much needed fillip to the domestic steel industry hit by input costs and slowing demand. The rate cut makes home and auto loans cheaper, and will provide an impetus to these sectors languishing for a while. While the auto sector may see a more immediate impact, other sectors may take some time to show results,” said Sanjay Chakraborty, analyst, mjunction services limited. “But given the gloomy demand scenario that has dominated market for quite sometime now, such optimism seems to be a bit doubtful at the moment as the market participants would look to judge the situation by holding a conservative attitude towards their purchasing decision in the immediate future,” he added.

STEEL INSIGHTS 59 MAY 2012

logistics

Iron ore handling by major ports down 30% Steel Insights Bureau

ovement of iron ore through the 12 major Indian ports showed a significant drop of 30.39 percent in 2011-12 due to restrictions imposed on mining and a hike in export duty on iron ore. The major ports together handled 60.6 mt of iron ore in 2011-12 compared to 87.06 mt handled in 2010-11. Mormugao port handled the highest volume of 29.37 mt of iron ore in 2011-12. This volume, however, was about 11.26 mt less or 27.71 percent lower than the iron ore traffic moved through the port in 2010-11. The 12 major Indian ports have handled a total of 560.15 million tons (mt) of traffic during 2011-12, 1.73 percent lower than 570.03 mt recorded during 2010-11. According to the data released by the Indian Ports Association (IPA), the country’s major ports handled a total of 27.9 mt of coking coal in 2011-12, down 4.05 percent compared with 29.08 mt handled in 2010-11. The movement of thermal coal through the major ports was up 16.47 percent to 50.83 mt during 2011-12 (April-March), compared to 43.65 mt achieved in 2010-11. Movement of container traffic both in terms of tonnage and TEUs showed an increase in 2011-12. The major ports handled 120.22 mt of tonnage and 7.77 million TEUs in 201112 compared to 114.11 mt of tonnage and 7.54 mt of TEU in 2010-11. Among the major ports, Paradip port had the distinction of handling the highest volume of thermal coal of around 16.41 mt in 2011-12. Visakhapatnam port handled the highest quantity of 6.78 mt of coking coal during the period. Movement of coking coal through Paradip, Kolkata, Chennai and Mormugao ports declined during the period when compared to the corresponding period last year.

Traffic handled at major ports (during Apr-Mar, 2012* vis-a-vis Apr-Mar, 2011) (*) Tentative Ports KOLKATA Kolkata Dock System Haldia Dock Complex Total: Kolkata Paradip Visakhapatnam Ennore Chennai Tuticorin Cochin New mangalore Mormugao Mumbai JNPT Kandla Total:

(in ’000 tons) April to March traffic 2012* 2011 12233 31012 43245 54254 67420 14956 55707 28105 20091 32941 39001 56186 65746 82501 560153

12540 35005 47545 56030 68041 11009 61460 25727 17873 31550 50022 54586 64309 81880 570032

% variation against prev. year traffic -2.45 -11.41 -9.04 -3.17 -0.91 35.85 -9.36 9.24 12.41 4.41 -22.03 2.93 2.23 0.76 -1.73

Seven major ports showed positive growth in traffic handling during the April-March period of the current fiscal, while the remaining five showed negative growth on a yearon-year basis. In terms of growth, Ennore port topped the list with a record 35.85 percent increase in cargo throughput. Kandla port’s growth was lowest at about 0.76 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of 82.5 mt recorded for the period. The Mormugao port registered the highest decline of 22.03 percent in traffic handling during the period due to fall in iron ore export.

STEEL INSIGHTS 60 MAY 2012

Logistics

Indian Railways FY12 commodity freight revenue up 10.7% Steel Insights Bureau

ndian Railways’ revenue earnings from commodity freight moved up by 10.69 percent to `68,965.44 crore during 201112 from `62,299.81 crore earned during 2010-11, according to information available with Steel Insights. The commodity-wise freight traffic volume during the year increased by 5.24 percent to 969.78 million tons (mt) as compared to 921.51 mt reported for the previous year. In March 2012, the Railways’ revenue earnings stood at `7,749.94 crore while the freight traffic volume stood at 93.85 mt. The Railways earned `3,359.66 crore from transportation of 44.77 mt of coal in March 2012, 34.09 percent higher than `2,505.58 crore earned from transportation of 40.22 mt of coal in February 2012. Earlier, the company had earned `2377.11 crore from transportation of 40.58 mt of coal in March 2011. The Railways’ earnings from transportation of iron ore for exports, steel plants and other domestic uses rose to `599.79 (9.65 mt) in March 2012 from `418.72 crore (8.11 mt) in February 2012. In March 2011, Indian railways had earned `1,005.7 crore from transportation of 11.08 mt of iron ore. Earnings from transportation of cement stood at `808.01 crore (10.59 mt) in March 2012, down from `587.4 crore (9.29 mt) earned during the previous month. The earning figure stood at `654.86 crore (10.57 mt) during the corresponding month of the previous year. Earnings from transportation of foodgrains stood at `579.06 crore from transportation of 4.35 mt of foodgrains in March 2012. The figure stood at `451.06 crore (4.26 mt) in February

Commodity

Quantity (in mt) Mar 2011

Earning (in `crore)

Mar 2012

Mar 2011

Mar 2012

Coal i) for steel plants

4.06

4.24

171.04

255.02

ii) for washeries

0.14

0.12

1.49

2.17

27.09

29.6

1636.6

2305.46

9.29

10.81

567.98

797.01

40.58

44.77

2377.11

3359.66

1.23

1.61

95.48

146.77

i) from steel plants

2.37

2.58

288.59

420.19

ii) from other points

0.83

0.85

67.42

79.41

3.2

3.43

356.01

499.6

i) for export

2.14

0.12

561.5

29.39

ii) for steel plants

4.18

5.57

137.62

261.12

iii) for other domestic users

4.76

3.96

306.58

309.28

iv) Total

11.08

9.65

1005.7

599.79

Cement

10.57

10.59

654.86

808.01

Foodgrains

4.23

4.35

410.07

579.06

Fertilizers

2.74

202.56

398.74

Mineral Oil (POL)

3.75

3.66

324.86

406.24

i) Domestic containers

0.92

80.86

95.23

ii) EXIM containers

2.33

2.62

207.17

226.8

iii) Total

3.25

3.62

288.03

322.03

Balance other goods

8.21

8.17

511.76

630.04

88.84

93.85

6226.44

7749.94

iii) for thermal power houses iv)for public use v) Total Raw material for steel plants except iron ore Pig iron and finished steel-

iii) Total Iron ore -

Container Service -

Total revenue earning traffic

2012 and `410.07 (4.23 mt) in March 2011. Revenues earned from transportation of fertilizers in March 2012 was 398.74 crore (4 mt), higher than `382.84 crore (4.74 mt) reported for February 2012 and `202.56 crore (2.74 mt) earned during March 2011. STEEL INSIGHTS 61 MAY 2012

macro outlook INR movement against select major currencies

Macroeconomic indicators of India

67 65 63

59 57

55 53

INR vs GBP

INR vs USD, Yen

51 74

49 47 45

1-Apr-11 11-Apr-11 21-Apr-11 1-May-11 11-May-11 21-May-11 31-May-11 10-Jun-11 20-Jun-11 30-Jun-11 10-Jul-11 20-Jul-11 30-Jul-11 9-Aug-11 19-Aug-11 29-Aug-11 8-Sep-11 18-Sep-11 28-Sep-11 8-Oct-11 18-Oct-11 28-Oct-11 7-Nov-11 17-Nov-11 27-Nov-11 7-Dec-11 17-Dec-11 27-Dec-11 6-Jan-12 16-Jan-12 26-Jan-12 5-Feb-12 15-Feb-12 25-Feb-12 6-Mar-12 16-Mar-12 26-Mar-12 5-Apr-12 15-Apr-12 25-Apr-12

Steel Insights Bureau

USD

YEN

GBP

Source: rbi The INR fell during April from 50.56 to 52.52 against the USD tracking losses in Asian shares and a faltering Euro on concerns about the strength of a global recovery. The value of international investors’ holdings in the Indian market has eroded by $9 billion in the past month when the rupee slid 4 percent against the US dollar. Experts are indicating that the Indian currency is likely to remain under pressure in the next few months. Experts further feel that huge trade deficits and high inflation differentials with our trading partners, in addition to the potential consequences of GAAR, could also result in a falling INR in the foreseeable future.

Inflation Rate in India 11.00% 9.87%

10.00%

9.74% 9.56%

9.68%

9.51%

9.36%

10.00%

9.78%

325000

8.00%

320000

7.74%

1600000

in million $

5.00%

1550000

310000 305000

1500000

in Rs crore

6.89%

6.95% 6.00%

ar ch

-1 2

Fe br ua ry-

Ja nu ar y-

em be r-1 1

Source : OEA, GoI, Ministry of Commerce & Industry

1450000 295000 290000

Headline inflation, as measured by the wholesale price index, eased to 6.89 percent in March 2012 from 6.95 percent in the previous month, even as overall prices rose 0.9 percent during the month and prices of some food items remained stubborn. Inflation for January was revised upwards to 6.89 percent from 6.55 percent estimated initially. Inflation in non-food manufactured products, also called core inflation as it is considered a measure of demand pressure on prices, eased to 4.7 percent from 5.7 percent. Food inflation rose 9.9 percent in the year to March as against 6.07 percent in the previous month. Build up of inflation in the financial year so far was 6.89 percent compared to a build-up of 9.68 percent in the corresponding period of the previous year, a government statement said.

Index of Industrial Production

1400000

5-Aug-11 14-Aug-11 23-Aug-11 1-Sep-11 10-Sep-11 19-Sep-11 28-Sep-11 7-Oct-11 16-Oct-11 25-Oct-11 3-Nov-11 12-Nov-11 21-Nov-11 30-Nov-11 9-Dec-11 18-Dec-11 27-Dec-11 5-Jan-12 14-Jan-12 23-Jan-12 1-Feb-12 10-Feb-12 19-Feb-12 28-Feb-12 8-Mar-12 17-Mar-12 26-Mar-12 4-Apr-12 13-Apr-12

em be r-1 1

De c

tob er -1 1

No v

Au gu st11 Se pte mb er -1 1

Ju ly11

Ju ne -1 1

ay -1 M

-1 1

300000

Ap ril11

ar ch

1650000

315000

6.89%

7.00%

Foreign Exchange Assets

9.46%

9.00%

in Million $

in Rupees crore

Source: rbi India’s foreign exchange (forex) reserves rose by $1.46 billion to $294.60 billion for the week ended April 20, as foreign currency assets, the biggest component of the forex reserves kitty, rose by $1.45 billion to $260.21 billion during the week under review. Forex reserves had risen by $213.8 million to $293.14 billion in the previous week. The value of special drawing rights (SDRs) rose by $5.2 million to $4.45 billion and reserves with the International Monetary Fund (IMF) increased by $3.4 million to $2.90 billion, although gold reserves remained unchanged at $27.02 billion during the week. During the week ended April 13, forex reserves rose by $214 million, from $292.9 billion in the previous week due mainly to an increase of $115 million in the bank’s foreign currency assets.

205

Wholesale Price Index (Selected Categories)

185

210 200

165

190 180 170

145

160 150

125

140 130 120 Feb-12

General Index

110

Source : Govt. of India, MoSPI Index of industrial production for the month of February 2012 stood at 4.1 percent as against a market expectation of 6.6 percent. The statistical department revised the number for January 2012 sharply from 6.8 percent to 1.1 percent on account of wrong data forwarded by the Ministry of Consumer Affairs. Sugar production was wrongly taken at 13.41 million tons (mt), as compared to 5.81 mt. Industrial growth averaged 3.5 percent during the April-February period of FY12. The capital goods sector, which has been suffering from a slowdown, has posted a sharp growth of 10.6 percent in February 2012 over previous year on account of a lower base, as February 2011 had seen a sharp drop. Compared to January 2012 there was a marginal growth of 1.1 percent with most of the balancing equipment showing growth in the segment, indicating companies are resorting to repairs rather than fresh asset creation. Manufacturing output grew at 4.0 percent in February 2012 while electricity sector output grew at 8.0 percent. Mining sector had a reason to cheer as it grew at 2.1 percent after registering contraction in each month since August 2011.

ALL COMMODITIES MANUFACTURED PRODUCTS Basic Metals Alloys & Metal Products

Mar-12

Jan-12

Feb-12

Electricity

Dec-11

Jan-12

Nov-11

Dec-11

Oct-11

Nov-11

Manufacturing

Sep-11

Oct-11

Aug-11

Sep-11

Mining & Quarrying

Jul-11

Aug-11

Jun-11

Jul-11

May-11

Jun-11

Apr-11

May-11

Mar-11

Apr-11

Feb-11

Mar-11

105

PRIMARY ARTICLES FUEL & POWER Steel

Source : OEA, GoI, Ministry of Commerce & Industry India’s wholesale price index (WPI) (Base 2004-05=100) rose by almost 0.88 percent to159.8 in March as compared to 158.4 recorded in the month of February. Also WPI for January was revised to 158.2 this month. The index for primary articles group increased by 2.38 percent to 206.3 from 201.5 in the previous month largely due to rise in prices of food articles. The index for manufactured products group also rose by 0.35 percent to 142.2 from 141.7 in February. Fuel and power index rose 0.46 percent to 174 while index for basic metals and metal alloys rose by 0.31 percent to 162.4 on rising prices of the product globally. Steel index however remained unchanged.

STEEL INSIGHTS 62 MAY 2012

market report

Global March crude steel output up 9% m-o-m Chandrika Mitra

orld crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) was 132 million tons (mt) in March 2012, up by 9 percent as compared to 120.9 mt reported in February 2012. However crude steel production for March 2012 was higher by 1.8 percent compared to March 2011. Production for the first quarter of 2012 was 377 mt, 1.1 percent higher than the first quarter of 2011. In the first three months of 2012, Asia produced 241.7 mt of crude steel, an increase of 1.5 percent over the first quarter of 2011. The EU produced 43.9 mt of crude steel in the first quarter of 2012, down by -3.9 percent compared to the same quarter of 2011. North America’s crude steel production in the first three months of 2012 was 31.2 mt, 6.7 percent higher than the first three months of 2011. China, the single largest producer, produced 61.6 mt of crude steel in March this year, a m-o-m increase of 3.9 percent and as compared to the corresponding period in 2011, when production stood at 51.4 mt. In Asia, Japan produced 9.3 mt of crude steel in March 2012, anincrease of 2.3 percent compared to the same month last year. India’s production for March 2012 stood at 6.2 mt, up1.2 percent compared to March 2011. Overall, Asian markets, in comparison to March 2011 recorded a 3.25 percent increase in production of crude steel as the region closed the March 2012 month with crude steel production of 85.17 mt. In the EU, Germany produced 3.9 mt of crude steel in March 2012, a decrease of -3.1 percent on March 2011. Spain produced 1.3 mt of crude steel in March 2012, -19.5 percent lower than March 2011. EU’s total production in March this year stood at 15.66mt, an increase of 11 percent as compared to February 2012. However, compared to March 2011, production dropped by 3.92 percent. Russia recorded an m-o-m rise in production of 6.58 percent in March producing 6.4 mt, and Ukraine witnessed an m-o-m production rise of 7.52 percent to 2.7 mt of crude steel.

0.5

World crude steel production EU (27)

Dec 2011

Jan 2012

Feb 2012

Mar 2012

Mar’12/ Mar’11 (% change)

15,193

14,193

12,541

14,091

14,123

15,661

3,325

3,084

3,345

3,357

2,904

3,344

9.44%

C.I.S. (6)

9,495

9,144

9,318

9,402

9,064

9,695

-2.07%

North America

9,893

9,745

10,134

10,477

10,147

10,584

3.33%

South America

3,959

3,814

3,795

3,828

4,242

0.44%

Africa

1,206

1,090

1,202

1,201

1,202

1,299

8.84%

Middle East

1,681

1,641

1,718

1,698

1,661

1,625

-5.69%

Africa/Middle East

-3.92%

2,887

2,731

2,920

2,899

2,863

2,924

0.26%

China

54,673

49,883

52,164

56,733

55,883

61,581

3.64%

India

6,150

6,000

6,150

6,100

5,700

6,200

1.24%

Japan

9,478

8,697

8,397

8,630

8,612

9,324

2.32%

South Korea

6,087

5,783

5,950

5,774

5,439

6,019

3.16%

Taiwan, China

1,920

1,860

1,920

1,900

1,780

2,050

2.13%

78,308

72,223

74,581

79,137

77,415

85,174

3.25%

473

434

424

458

548

575

-20.69%

68,860

65,485

64,894

66,916

65,008

70,617

0.25%

123,533 115,368 117,058 123,649 120,891 132,198

1.80%

Asia Oceania Rest of the world except China World

Turkey’s crude steel production for March 2012 was 3.1 mt, an increase of 14.5 percent compared to March 2011. The US produced 7.8 mt of crude steel in March 2012, up by 5.4 percent on March 2011. Brazil’s crude steel production for March 2012 was 3.1 mt, 2.2 percent higher than February 2011. The world crude steel capacity utilisation ratio of the 62 countries in March 2012 increased to 81.1 percent, 1.6 percentage points higher than February 2012. Compared to March 2011, the utilisation ratio in March 2012 dropped by -1.2 percentage points. It is to be noted that the March 2012 data covers 62 countries against 64 in March 2011. In January and February 2012, only 59 countries are covered as three African countries, Algeria, Libya & Morocco while two Middle East countries Iran & Qatar did not provide monthly production statistics.

0.4 0.3 0.2 0.1 0 -0.1

Rest of the world except China

Nov 2011

Other Europe

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

China

(in ‘000 tons)

Oct 2011

World

STEEL INSIGHTS 64 MAY 2012

Steel capacity utilisation ratio

Market Report

International flat product markets

Low demand keeps prices soft 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. However, there was some respite in the US market, where lead times increased on some firmness in demand. Elsewhere, in China, SE Asia, UAE and Europe prices declined on low demand conditions. China dull on soft demand Export offer prices of boron-added commodity-grade heavy plate from China slipped by $5 per ton on the back of softening demand overseas. The most recent offer prices were heard at $635-640 per ton fob. Chinese export offer prices to Korea were pegged at $660 per ton cfr for late June/early July shipment. Import bookings for plates have been dull in April after Korean consumers contracted some tonnage in March. There were few transactions as the Chinese offer prices are unacceptable to Korean clients given the depressed market situation. However, Korean buyers will need to start booking Chinese materials soon to replenish their stocks, sources said. Meanwhile, China’s hot rolled coil export volumes increased significantly in March after order bookings picked up from late-December through January when overseas demand began to improve noticeably. However, Chinese exporters said orders have recently become scarce and shipments might see a notable drop in May or June.

In March China exported 517,549 tons of HRC, up 51 percent from February and 63 percent from January, according to data supplied by the country’s customs. However, over JanuaryMarch, China’s HRC exports totalled 1.176 million tons (mt), down 9 percent from the same period last year. As it has been difficult to close deals since early April, export traders began to trim prices to spur business. Prevailing offer prices for boron-added commodity grade HRC of 3.0mm thickness and above have decreased to around $640 per ton fob from $645 per ton fob. However, traders say transactions remained slow after the price cut. So far, Chinese tier one mills have held their offer prices high at around $645-650 per ton fob and above. Tier one mills have more orders than traders because of their long term contracts. However, traders stressed that high export prices have also dented HRC export orders this month. Meanwhile, domestic HRC prices have decreased due to a slowdown in buying, also feeding into a weakening of export prices. Prices of Q235 5.5mm HRC have decreased by about RMB 50 per ton recently to RMB 4,290-4,310 per ton ($681-684 per ton) with 17 percent VAT in Shanghai and RMB 4,3704,380 per ton with VAT in Guangdong Lecong. US sheet prices may rise Delivery lead times for US hot rolled, cold rolled and hot-dip galvanized coils each rose in April. HRC logged the biggest

STEEL INSIGHTS 65 MAY 2012

Market Report come back in SE Asia. Some traders believe CRC prices are under pressure because the hot rolled coil market in East Asia could be softening. Taiwanese mills were last offering their annealed 1mm base thickness CRC at $720-730 per ton fob for April/May shipments. Taiwanese steelmakers recently hiked export prices by $5-10 per ton for June/July shipments. The mills need to cover for increased production costs due to raised electricity rates, sources note. UAE prices stable

increase, to 4.3 weeks from 3.5, for the period ended April 22. CRC lead times also inched up to 6.4 weeks, an increase from 6.3 earlier, but down from 6.6 in the prior period. At the same time, HDG lead times increased to 6.1 weeks, up from 5.9 the week before and 6 two weeks prior. The lengthening lead times come as some market sources say they are seeing a firming of US spot sheet prices. The sheet assessments remained steady at $670-690/s.t for HRC, $775-795/s.t for CRC and $830-840/s.t for HDG, all ex-works normalized to a Midwest US basis.

Trade in the United Arab Emirates’ flat rolled steel market is slow owing to anticipation of a decline in prices and lack of new construction projects. For now, product prices are stable. Sources are unable to forecast when the market will pick up, but say there are no signs of this happening soon. Local producer prices for hot dip galvanized coil are still at $910-920 per ton ex-works. Import offers for HDG are at $850-890 per ton cfr. Hot rolled coil import offers are at $690700 per ton cfr. However, demand is quite poor and no big transactions have recently been heard. UAE traders note that economic activity in July and August will slow further owing to the Muslim holy month of Ramadan, so the market is unlikely to pick up soon because orders placed now will be delivered in June. Europe prices see downward pressure

SE Asia prices soften Southeast Asian hot rolled coil import prices have softened, with Chinese offers of 3-12 mm thick SS400B material down $10 per ton at $660-670 per ton cfr. The Vietnamese HRC import market appears to be particularly weak amid tight financing and continuing measures to restrict steel buying and demand. Lower-priced HRC import offers for European-origin 2mm base HRC at $650 per ton cfr Vietnam, and Russian material at $660 per ton cfr, could be adding further pressure to the Vietnamese market. Buyers can choose to book large volumes (20,000-40,000 tons) of these rerolling HRC cargoes for June/July shipment. Limited tonnages of Japanese 2mm base re-rolling grade HRC were booked at $670-675 per ton cfr Vietnam. HRC prices are undergoing a correction and suppliers are trying to reduce prices in order to get orders. The current arrival of Chinese SS400B HRC sales concluded in February at recent lows of $630-640 per ton cfr Vietnam could also be a depressing factor. While Taiwanese and Korean mills are targeting $680 per ton fob, Taiwanese HRC offers are available at $680 per ton cfr Vietnam. The Southeast Asian imported cold rolled coil market is quiet this month. Demand has been sluggish because downstream end-use sectors continue to experience slow sales amid the uncertain economic climate. Spot offers of annealed 1mm-based cold rolled coil from China are now priced at around $710 per ton fob, $20 per ton down from targeted export prices a month ago. Some buying took place this month in markets such as South America. But offer prices need to come down further for buying to

Pressure is continuing to mount on prices in the NW European plate market. Low priced offers from southern European rerollers and Ukrainian producers applying downward pressure. There has been a general weakening in the commercial grade market in Europe, and prices have fallen recently. Sources concur that northwest European S235 grade prices are mostly in the range €620-650 per ton ex-works, slightly higher for S355. However, southern European re-rollers are offering material at highly competitive prices of below €600 per ton. Some sources suggest material can be bought as low as €580 per ton ex-works. Tonnages of S235 Ukrainian material was reported to be available for shipment into Europe at $635-640 per ton fob Odessa. A steeper decline has been seen in prices for Far Eastern material, with sources confirming that Chinese origin S235 was being offered at below $650 per ton fob China. Nevertheless, the short lead times available from European mills means that demand for imports remains muted. The flat steel market remained quiet, but producer sources expect a new wave of purchases, as stocks are low at distributors and service centres. Nevertheless, some suppliers are reported to be “panicking” and giving discounts, triggering possible further price reductions. CRC prices could go below the €600 per ton ($793 per ton) ex-works base for Q3 and already the asking price of €630-640 per ton base ex-works was too high compared with transaction market levels. Meanwhile, imports into Europe are slow as European producers’ offers remain competitive.

STEEL INSIGHTS 66 MAY 2012

Market Report

International long product markets

Mixed trend amid largely low demand

Steel Insights Bureau

he international long steel market showed mixed trends as demand remained low owing to the prevailing economic recession in most of the regions. However, there were exceptions like in Saudi Arabia, where the demand remained strong on account of government sponsored projects. Low demand forced Chinese long steel makers to offer discounts on some occasions but the market remained stable. Turkish demand low Turkish rebar mills are still trying to sell May output with offers now at $660 per ton fob Izmir and Marmara to North Africa and Middle Eastern buyers. However, some activity has been registered in the Iskenderun local market in recent days. Traders looking to buy May output observed offers from two of Turkey’s largest producers at $660 per ton fob. The steelmakers are looking to sell to Egypt, matching a level achieved by an Iskenderun steelworks for a small sale to Yemen. Demand is low in the regional export market as large producers elsewhere continue with a policy of carrying over list prices month-on-month. While the Turkish lira has appreciated on the US dollar, prices appear stronger on an exworks basis and tonnage has been shifted. Prices ranged from $677-680-685 per ton ex-works Iskenderun area, depending on volume, specification and delivery period of the domestic business, market participants said.

UK market stable The market for sections and merchant bars in the UK has remained fairly stable, despite some downward pressure on prices from European mills. There are reports of forward prizes for new orders for sections category 1 from European mills at £530-540 per ton CIF UK port (four to six weeks delivery time). Overall stockists with material available for prompt delivery in the country are holding their sections outsell prices at £600-625 per ton delivered, but a trader reported that south European material sitting at the docks was being offered below the £550 per ton mark. In the merchant bar market a source reported a local supplier lowering its sale price by £10 per ton, but other sources stressed the market remained stable. The sales price reported in the country is currently £525 per ton delivered from local producers. European suppliers are offering merchant bars for new orders at £520 per ton delivered and the latest announcement from major Italian producers to increase slightly prices by lifting size extras has not had any impact on the market. Meanwhile, as the UK’s latest GDP figures revealed that the country was back in recession, sources in the structural steel industry report domestic activity was at “reasonable levels”. China prices stable Rebar prices in northern China barely moved in April as Hebei Iron & Steel (Hegang), the bellwether in northern China’s rebar market, settled its early-May prices close to spot levels, helping stabilize the market. Hegang’s 18-25mm diameter HRB400 rebar price for early May delivery was fixed at RMB 4,290 per ton ($681 per ton), and RMB 4,230 per ton for same-sized HRB335 rebar. The price is RMB 50 per ton higher than its April contract price but lower than April’s list price. Market sources suggested that as long as Beijing does not loosen its tight grip on real estate and monetary policy, the market is unlikely to see any substantial recovery. Spot offers in Beijing for Hegang-sourced 18-25mm diameter HRB400 rebar have remained steady at about RMB 4,280-4,290/t, with 17 percent VAT and Hegangsourced 18-25mm HRB335 rebar held at around RMB 4,2104,220/t. Meanwhile, billet prices in northern China have remained stable with rebar weakening slightly. Some traders are not

STEEL INSIGHTS 68 MAY 2012

Market Report very optimistic about May’s steel market as production continues to hover at historically high levels amid a sluggish recovery in demand. Hebei Iron & Steel (Hegang) finalised its contract prices for April, with 18-25mm diameter HRB335 and HRB400 rebar settled at RMB 4,180 per ton ($663 per ton) and RMB 4,240 per ton respectively. These were down from March prices of RMB 4,230 per ton and RMB 4,300 per ton. All prices include 17 percent VAT. Since April 9, rebar spot prices in Beijing have been sliding, and in order to liquidate inventories traders were offering discounts of about RMB 10 per ton. Offers of 18-25mm diameter HRB400 rebar, sourced from Hegang, declined to RMB 4,280-4,290 per ton, with 17 percent VAT, while Hegangsourced 18-25mm HRB335 rebar fell to about RMB 4,210-4,220 per ton. Meanwhile, in Hebei province’s Tangshan city, ex-works prices for 150x150mm Q235 billet from major local mills continued to hold steady at about RMB 3,720 per ton also including 17 percent VAT and on a cash-payment basis. The prices might have bottomed out for now, with some traders were intending to replenish stocks. Meanwhile, H-beam prices in eastern China have remained relatively stable during most of April but, some sources are concerned prices might follow the general market trend

and fall in the short-term. In Shanghai, offers of 400x400mm H-beams, sourced from Ma’anshan Iron & Steel (Magang), were steady at around RMB 4,780-4,800 per ton ($758-761 per ton), with 17 percent VAT. Prices for the same size H-beams from Jinxi Iron & Steel were lower at about RMB 4,760 per ton, traders say. Meanwhile, Magang-sourced 200x200mm H-beams were being offered at about RMB 4,200 per ton with VAT. Saudi Arabia rebar prices strong Consumption of long products, especially rebar, remains strong in Saudi Arabia thanks to new projects funded by the government’s high budget surplus. Prices have remained fairly stable for over a year and local supply is said to be sufficient. However, there are some billet imports by re-rollers. Saudi Arabian rebar is pegged at around SAR 2,900 per ton ($773 per ton), and is not expected to deviate significantly this year. Some billet was recently imported from Turkey at $630-635 per ton fob, and from Ukraine at $625-630 per ton fob. Freight costs vary from $15-40 per ton depending on tonnage. Market demand may slow down in July-August, due to the holiday season and Muslim holy month of Ramadan, but consumption is on the whole expected to remain strong throughout 2012.

STEEL INSIGHTS 69 MAY 2012

Market Report

Domestic Flat & Long Markets

Markets await monsoons, remain soft he domestic market for flat steel products has remained sluggish over the past month. With the onset of the financial year, market participants are relaxed and keen to follow major producers to see their price movements. With majors like JSW Steel raising their prices thrice a month, it is yet to be seen whether these prices are actually being accepted by market participants. Indian mills are presently offering IS 2062 grade A/B structural HRC, 3mm thick and above, at `36,00037,000 per ton ex-works. Prices are expected to cool in the coming weeks as the monsoons are soon to set in the country. The coil import market has remained quiet due to the weakening rupee & high import offers. Offers from Chinese mills continue to average $680-690 per ton cfr India for 3mm thick and above boron-added SS400 commercial grade HRC, without any discounts. Buyers’ price expectations are below $670 per ton cfr but there are no offers at that level. As markets are weak internationally, buyers are reluctant to purchase at these high levels. The domestic long steel market is facing some difficult times as prices are to increase based on the recent hike in power prices. Chhattisgarh power prices are to increase by 20 percent in the coming few weeks. However, the demand for construction materials is subdued and hence, producers are unable to pass on this hike to the buyers. Other regions in Orissa are facing some tough labour issues as the summer heat coupled with the shortage of water has created some shortages in the production lines. Prices for TMT bars are currently trading at `38,00038,500 per ton across major regions of the country. A further correction in price is expected in other regions of the country based on the current scenario of the construction sector. Price trend as observed in the auction held at metaljunction for flat products

36000

Wtd. Avg. Prcie (Rs./MT)

Anondo Kumar Dutta

32000 30000 28000

Defective HR Plate-Rourkela Defective Plate Defective HR Plate-Bokaro Def. Chequered Plate

Semi Rolled Plate Cobble Plate HR Sheet

Price in `/t is basic

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

Mar ’12 Apr ’12 Price (Avg.) Price (Avg.)

% change (M-M)

% change (Qtr-Qtr)

% change (Yr-Yr)

Def. CR Coil

33815

31456

-6.98

-4.56

-0.39

Def. CRNO Sheet

34520

32785

-5.02

4.09

-18.02

CR Coil End SPM-I

33913

34270

1.05

2.30

10.37

CR Coil End SPM-II

35300

35100

-0.57

1.40

12.05

Def. CR Sheet

33050

CR Sheet Cutting

29540

31934

8.11

7.16

13.72

37000

Wtd. Avg. Price (Rs./MT)

Mar ’12 Apr ’12 % change % change % change Price (Avg.) Price (Avg.) (M-M) (Qtr-Qtr) (Yr-Yr) Cobble Plate 31720 30862 -2.70 -1.46 6.69 Def. Plate 29308 30298 3.38 5.21 13.59 Def. HR Plate 27996 31363 12.02 7.54 9.63 Semi Rolled Plate 31232 31098 -0.43 6.81 12.47 SRP Coil Form 31566 ----Def. HR Coil 30976 32228 4.04 4.72 11.48 Def. HR Sheet 32194 34233 6.34 10.97 13.73 Products

34000

26000

Following graphs show the price trend observed in the auction services of Metal Junction for the months of March & April 2012 for different HR and CR products. Percent change for hot-rolled flat products (m-m, q-q, y-y basis)

HR Products Price Trend

CR Products Price Trend

35000

33000

31000

29000

CR Coil End from SPM - I UACE from HDGL Def CR Sheet

Price in `/t is basic

STEEL INSIGHTS 70 MAY 2012

Defective CR Coil CR Coil end from SPM-II Defective CRNO Sheet

Market Report Outlook

Long Products Price Trend 37000

Wtd. Avg. Price (Rs./MT)

The flat steel market has seen mixed sentiments. While prices of hot-rolled products have maintained their ground, coldrolled products have not been able to maintain the same. Prices for hot-rolled have increased by more than 12 percent but prices for cold-rolled have dropped by 5 percent over a month. Steel majors are expected to push for sales for cold-rolled in the coming few weeks. However, demand for hot-rolled has remained steady and majors after multiple price hikes in April are expected to keep prices stable in the coming few weeks.

35000 33000 31000 29000 27000

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 February, March & April 2012 for different long products.

Mar ’12 Apr ’12 Price % change % change % change Price (Avg.) (Avg.) (M-M) (Qtr-Qtr) (Yr-Yr) 33058

0.21

3.87

TMT Bar Cutting

Rejected Bloo

Plate Cutting

MM end Cuttin

Price in `/t is basic

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

Defective Billet

32989

18.07

TMT Bar Cutting

32083

MM End Cutting

31750

33737

6.26

5.85

24.38

Rejected Bloom

28773

28635

-0.48

0.42

17.82

Plate Cutting

31973

32414

1.38

0.89

14.90

Outlook The long steel market has remained subdued over the month of April. Prices have remained steady but that is not expected to last for long. As the monsoons are expected to arrive soon, the construction sector is expected to take a hit and a seasonal drop in demand is likely to happen. In such a scenario, the coming few weeks are to be tough especially when prices of raw materials are on a rise since the last fortnight.

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

Bloom 150*150 mm

Wire Rod 6 mm

TMT Bar 10 mm

Angle 50X50X6 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

37145 36900

35405 35020

44080 43905

42195 42750

40820 41480

41085 41480

41845 42415

42440 42390

46990 46530

53705 54015

54555 54640

Oct 2011 38245 36450 44155 42885 Jan 2012 39570 38425 45160 45990 Apr 2012 41680 40910 47640 49510 Delhi Apr 2011 37360 35660 44540 43310 Jul 2011 37860 36140 45150 43920 Oct 2011 38200 36510 46025 44465 Jan 2012 39460 38410 45900 46790 Apr 2012 42010 40900 48810 50880 Mumbai Apr 2011 38180 36050 44845 43150 Jul 2011 38260 36200 45090 43685 Oct 2011 38260 36200 46020 44615 Jan 2012 40600 38650 46525 47320 Apr 2012 42860 40810 50010 51130 Chennai Apr 2011 37475 34830 44905 43490 Jul 2011 37295 34520 45200 43930 Oct 2011 37330 34560 45595 43670 Jan 2012 39885 37570 45730 46815 Apr 2012 43000 40880 50020 52750 Source: JPC. All prices quoted above are in Rs./t, all inclusive.

41675 44480 47480

41245 44345 47710

42350 44760 49000

42400 46085 46980

48190 51890 52830

53960 55520 55870

54740 54960 55810

40890 41240 42150 44130 48030

41060 41590 42725 44830 48210

42280 42455 43330 45200 49350

43020 43040 43345 47530 49200

48280 47840 49280 52360 54100

51690 51840 52740 53580 56230

52890 53130 54240 52140 56630

41420 41885 42685 45205 48720

41530 42045 42775 45235 48910

42205 42705 43450 45660 49480

42115 42210 42325 47930 49750

46880 47240 47590 51885 53630

53680 54205 54520 55870 57030

55180 55560 56125 55865 57290

41740 42125 42700 45200 49660

41615 42255 42830 45410 49840

41985 42745 43310 45625 50040

41960 42085 42135 47550 49610

47110 47095 47500 52280 53840

57975 59090 59430 59840 61400

59390 60505 60840 59500 61180

Kolkata Apr 2011 Jul 2011

STEEL INSIGHTS 72 MAY 2012

Market Report

Domestic raw materials market

Pig iron prices show uptrend in April Anondo Kumar Dutta

omestic pig iron prices moved up by `300-400 per ton in the concluding week of April after remaining stagnant for the first few weeks of the month. Prices for N-1 grade pig iron from Neelachal Ispat Nigam Limited (NINL) are currently prevailing at `25,800-26,000 per ton for both road & rail deliveries. Meanwhile, prices for N-2 grade are currently prevailing

at `26,200 per ton for road deliveries. In the export division, Cargill posted the highest-priced bid at $476 per ton fob for Vizag’s export tender of basic pig iron. While the supplier has yet to award the tender, some trading sources believed that it would do so despite tight supply in the country.

Scrap Products Price Trend

The following graph shows the price trend observed in the auction services of metaljunction for the months of March and April 2012 for different scrap products.

Wtd. Avg. Price (Rs./MT)

38000

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

34000

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

30000

Mar ’12 Price (Avg.)

Apr ’12 Price (Avg.)

% change (M-M)

% change (Qtr-Qtr)

CR Coil End

32050

32657

1.89

-0.65

9.08

WRM Material

31929

32453

1.64

1.74

21.79

Side-End Shearing

31042

31363

1.03

0.60

21.90

Pipe Cutting

32200

27150

6.42

-4.97

10.37

CR Gas Cut

25513

32000

10.17

10.45

16.24

Coil End Cutting

29046

29217

2.89

-3.38

11.41

Products 26000

22000

CR Coil End

Side-End Shearings

CR Gas Cut

WRM Material

Turning & Boring

Coil End Cutting

Price in ` per ton is basic

% change (Yr-Yr)

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)

Apr 2011

30705

23465

22610

19845

Jul 2011

30850

25480

24440

22420

Oct 2011

33055

26900

25750

24250

Jan 2012

32965

27500

27750

26000

Apr 2012

35100

34000

32500

31500

Apr 2011

32250

25000

24500

22500

Jul 2011

31050

26000

25000

23000

Oct 2011

35400

28000

27500

Jan 2012

33500

27200

27700

26750

Apr 2012

36000

32000

32500

30000

Apr 2011

28500

18250

Jul 2011

29000

18000

Oct 2011

29000

19000

Jan 2012

31780

23000

Apr 2012

30560

29640

Apr 2011

27300

24440

21840

18980

Jul 2011

28150

24560

23515

19335

Oct 2011

28880

23630

22840

21000

Jan 2012

32025

26780

25730

23100

Apr 2012

37280

28350

27300

25200

Kolkata

Delhi

Mumbai

Chennai

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

STEEL INSIGHTS 73 MAY 2012

PRODUCTION DATA

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

(in ‘000 tonnes) FINISHED STEEL PRODUCERS

2011 - 12 (Prov.)

2010 - 11

% Variation

SAIL

9289

10087

-7.9

RINL

2832

2928

TSL

5456

2011 - 12 (Prov.)

2010 - 11

% Variation -7.4

-3.3

2832

2928

-3.3

5157

5.8

5456

5157

5.8

17577

18172

-3.3

17842

18406

-3.1

ESSAR

6149

5645

8.9

6149

5668

8.5

JSW ISPAT

3130

2751

13.8

3130

2751

13.8

JSWL

8691

9143

-4.9

9683

9665

0.2

JSPL

1297

1175

10.4

1297

1175

10.4

(b) Prod. of Major Producers $

19267

18714

3.0

992

545

82.0

20259

19259

5.2

Others

41102

34412

19.4

3557

4220

-15.7

44659

38632

15.6

Less : IPT/Own Consumption

9016

7046

328

630

9344

7676

68930

64252

7.3

4486

4369

2.7

73416

68621

7.0

(d) Imports $

5402

5830

-7.3

1424

834

70.7

6826

6664

2.4

(e) Exports $

3657

3215

13.7

384

422

-9.0

4041

3637

11.1

70675

66867

5.7

5526

4781

15.6

76201

71648

6.4

541

-70

-5

536

-64

70134

66937

5531

4775

75665

71712

3726

4006

1024

1284

4750

5290

66408

62931

4507

3491

70915

66422

(e) Availability (c+d-e) (f) Variation in Stock (g) Apparent Consumption (e-f) Less : Double Counting Real Consumption

4.8

5.5

234

13.2

2011 - 12 (Prov.)

10321

265

234

% Variation

9554

(a) Prod. of Main Producers

265

2010 - 11

13.2

992

Source: Steel Ministry

STEEL INSIGHTS 74 MAY 2012

522

90.0

15.8

29.1

5.5

6.8

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)

April 2012

March 2012

February 2012

Ex-works Rs/ ton 70500

73500

74000

Ex-works Rs/ ton 59500

60500

49500

Ex-works Rs/ ton 60500

60500

51500

Ex-works Rs/ ton 79500

73500

Ex-works Rs/ ton 112000

112000

121000

Ex-works Rs/ kg 710

705

755

CIF in US$/lb of moly 14.55

14.35

15.15

Ex-works Rs/ ton 142500

142500

Ex-works Rs/ ton 27500

STEEL INSIGHTS 75 MAY 2012

25000

30500

export data

Iron ore export data for April 2012 Steel Insights Bureau PORT KOLKATA KOLKATA Total

PARADIP

PARADIP Total

VIZAG

DATE 8-Apr-12 9-Apr-12 17-Apr-12 20-Apr-12 28-Apr-12

EXPORTER ESSEL MINING LORDS BLUETECH R.PIYARELAL RUNGTA MINES LTD RUNGTA MINES LTD

5-Apr-12 8-Apr-12

TAURIAN/YM SONS/AUROGLOBAL GIMPEX AUROGLOBAL BAGA LIBERTY MMTC KALINGA

16-Apr-12 20-Apr-12 9-Apr-12 15-Apr-12 18-Apr-12 24-Apr-12 27-Apr-12

VIZAG Total

12-Apr-12 KAKINADA 28-Apr-12 29-Apr-12 KAKINADA Total 2-Apr-12 4-Apr-12

MORMUGAO

5-Apr-12 7-Apr-12 8-Apr-12 9-Apr-12 10-Apr-12 12-Apr-12 14-Apr-12 15-Apr-12

RUNGTA MINES LTD PROGRESSIVE MINES BAGADIYA BROTHERS RUNGTA MINES LTD SPONGE, BGH EXIM & LOGAN MINERALS KIOCL KIOCL KIOCL BANDEKAR BROS SESA PTI SESA CCL CCL SESA FRPL RNSB SFI TIMBLO SFI CCL BANDEKAR BROS PRIME MINERALS

QTY (in Tons) 18,000 20,000 20,000 23,350 18,000 99,350 24,200 28,000 10,000 4,550 17,600 6,700 36,000 127,050 75,000 27,500 34,500 55,000 9,150 40,640 241,790 55,000 55,000 55,000 165,000 50,950 90,500 150,000 174,934 63,000 56,000 70,000 113,500 57,000 75,000 30,000 147,300 50,000 58,000 75,000

PORT

DATE 16-Apr-12 17-Apr-12 18-Apr-12 20-Apr-12 21-Apr-12 22-Apr-12

MORMUGAO

23-Apr-12 24-Apr-12 25-Apr-12 26-Apr-12 27-Apr-12 29-Apr-12

30-Apr-12 MORMUGAO Total 1-Apr-12 2-Apr-12 3-Apr-12 6-Apr-12 11-Apr-12 13-Apr-12 17-Apr-12 18-Apr-12 PANAJI 22-Apr-12 23-Apr-12

REDI REDI Total Grand Total

STEEL INSIGHTS 76 MAY 2012

CHOWGULE SESA SESA AGARWAL MINERALS PRIME MINERALS POKLE & CO SESA DBB ALPINE MIN METALS BANDEKAR BROS RAJARAM BANDEKAR SESA CCL SESA VELINGKAR PRIME MINERALS

26-Apr-12 29-Apr-12 30-Apr-12

MUKTAR MINERAL SMI SMI VMS MUKTAR MINERAL SESA SMI CCL VMS MUKTAR MINERAL PTI SMI MINESCAPE MUKTAR MINERAL SESA

7-Apr-12 14-Apr-12 17-Apr-12

SAMRUDHA GOLD STAR SAMRUDHA

25-Apr-12

PANAJI Total

EXPORTER SESA SFI BANDEKAR BROS SESA

QTY (in Tons) 90,600 139,804 50,000 99,000 77,650 56,000 165,000 71,500 50,670 164,700 40,000 165,000 60,000 70,900 55,000 55,000 90,600 55,000 83,000 55,000 68,153 3,023,761 54,000 172,000 105,000 165,000 55,000 165,000 172,000 50,000 155,000 50,000 172,500 147,000 33,894 150,000 176,000 1,822,394 55,000 72,780 54,875 182,655 5,662,000

Price data

Indicative Market price for April 2012 Steel Insights Bureau (Rs. Per tons) Sl. No.

ITEM

Kolkata

Delhi

Mumbai

Chennai

16.04.2012

05.04.2012

16.04.2012

05.04.2012

16.04.2012

05.04.2012

16.04.2012

05.04.2012

PIG IRON

33850

35100

36400

36000

30750

30560

36400

37280

BILLETS 100 MM

41880

41680

42010

42860

42180

43000

BLOOMS 150X150 MM

40610

40910

40900

41070

40810

39980

40880

PENCIL INGOTS

39500

39800

36500

34600

33500

39000

43050

WIRE RODS 6 MM

47640

49160

48810

51040

50010

49850

50020

WIRE RODS 8 MM

47530

47450

48700

48350

50230

49320

49390

49560

ROUNDS 12 MM

47750

47450

48980

48530

48100

48260

49970

50420

ROUNDS 16 MM

47750

47490

48910

48460

47890

48320

49970

50420

ROUNDS 25 MM

47410

47190

48990

48530

47720

48090

49800

50250

TOR STEEL 10 MM

49900

49510

51580

50880

51070

51130

51950

52750

TOR STEEL 12 MM

48860

48550

49700

49350

50380

50500

51390

52190

TOR STEEL 25 MM

48680

48460

50050

49700

50080

50380

50660

51640

ANGLES 50X50X6 MM

48150

47480

48380

48030

48850

48720

49310

49660

ANGLES 75X75X6 MM

47390

46680

47800

47450

47840

47780

48450

49160

JOISTS 125X70 MM

47540

47710

48560

48210

49340

48910

49580

49840

JOISTS 200X100 MM

47970

48020

48910

48210

48990

48660

49580

49840

CHANNELS 75X40 MM

48890

49000

50400

49350

49850

49480

49970

50040

CHANNELS 150X75 MM

48520

48360

49690

48990

48890

48650

49250

49320

PLATES 6 MM

47970

47940

49770

49820

49650

49600

50320

50420

PLATES 10 MM

47970

49770

49820

49600

49550

50370

50420

PLATES 12 MM

48490

48500

50300

50350

50070

50000

50910

51000

PLATES 25 MM

49070

49030

50820

50870

50600

50580

51540

51640

H. R. COILS 2.00 MM

47040

46980

49070

49200

49780

49750

49470

49610

H. R. COILS 2.50 MM

45940

45900

47960

48090

48700

48660

48460

48550

H. R. COILS 3.15 MM

45890

45800

47960

48090

48760

48680

48350

48450

C. R. COILS 0.63 MM

52830

54100

53880

53630

53650

53840

C. R. COILS 1.00 MM

51830

51630

52880

53350

53070

52320

52710

G. P. SHEETS 0.40 MM

57080

56980

58710

58680

61330

61570

G. P. SHEETS 0.63 MM

56020

55870

56200

56230

57030

61040

61400

G. C. SHEETS 0.40 MM

57130

56530

58220

57790

61870

62230

G. C. SHEETS 0.63 MM

56110

55810

56630

57440

57290

60820

61180

MELTING SCRAP H M S - I

33500

34000

32000

28080

28350

MELTING SCRAP H M S - II

32500

27040

27300

SPONGE IRON (COAL BASED)

29500

31500

30000

30200

29640

24440

25200

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 77 MAY 2012

Tear along the dotted line

STEEL INSIGHTS 78 MAY 2012 Tear along the dotted line