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EDITORIAL Dear Readers,
T
he Indian steel industry is set for a bumpy ride. World Steel Association in its short range outlook recently said that 2012 steel consumption growth would be 5.5% at 73.6 million tons (mt), down from earlier estimates of 6.9%. In 2013, the demand would grow 5% at 77.3 mt. The downtrend was because of the ongoing un-favorable conditions across manufacturing and housing sector. The two sectors consume around 55% of India’s steel production. The Association forecasted global apparent steel use to increase 2.1% in 2012 and 3.2% in 2013, which is considerably lower than the 6.2% growth achieved in 2011. Hans Jürgen Kerkhoff, Chairman of Worldsteel Economics Committee, said earlier the economic situation deteriorated during the second quarter of this year due to continued uncertainty arising from the debt crisis in euro zone and a sharper than expected slowdown in China. These factors have weighed heavily on business confidence and manufacturing activities around the world. As a result momentum in both the developed and emerging part of the world weakened considerably. However, the situation is expected to gradually improve in 2013 on the basis that the euro zone crisis can be contained, the US successfully deals with the fiscal tightening due in 2013 and the economic stimuli measures secure a soft landing in China. Adding to the woes of the industry, Odisha has stopped giving permits to iron ore mining companies other than for captive mining. This would lead to a plunge in exports to about 25 mt this fiscal from 60 mt in the last. The move is also likely to hit the domestic iron and steel sector as it could lead to greater imports of more expensive iron ore by steel mills, boosting end-product prices during a period of weak demand. Odisha’s move follows a mining ban in Goa, while Karnataka has only just begun to ease the mining ban. The three states together account for the bulk of iron ore output in India, the world’s No. 3 exporter. The eastern state is also demanding penalties from 103 companies for excessive mining. Experts feel the iron ore production is expected to fall to 100 mt this year from 160 mt last year. Meanwhile, overall steel demand from auto, construction and capital goods sectors is still dull. Even after the input cost fall in the last quarter, the Indian steel industry has witnessed a subdued demand growth of 2.8% during July to September as against 7.7% in the previous quarter. Only companies having raw material inventory will have some cushion but that too only for one or two months but times are very trying. At this juncture, we at Steel Insights examined the requirement for beneficiation of low grade Indian iron ore, which would reach 206 mt by 2016-17 from 116 mt in 2011-12. Steel Insights also met Sanat Bhaumik, the senior vice president (flat products) of Danieli India to know about Thin Slab Casting and Rolling process and Danieli’s innovations in this technology. Happy reading!
(Rakesh Dubey) Steel Insights, November 2012
3
Contents 30 Spot coking coal prices firm up in October 32 Ferro alloys remain stable in October 35 Auto sector downtrend continues, sales dip in September 36 India’s steel imports up 38% y-o-y in H1 38 JSW Steel Q2 net profit soars 40 Nippon-Sumitomo merger to put pressure on Indian firms 41 ArcelorMittal profitability dips 42 SAIL production up 7% y-o-y in Q2 43 Tata Steel launches new hot rolled products brand ‘Tata Astrum’ 43 Posco to get additional land in 2 months 44 Verma stresses on RINL marketing strategies 45 Iron ore, new steel projects are of prime interest 46 Iron ore handling by major ports down 43% in H1 47 Railways commodity freight revenue down in September m-o-m 48 Macroeconomic indicators of India 50 Global crude steel production remains unchanged 52 Domestic flat & long markets 56 Price data 57 Production data 58 Ferro alloy price trend 59 Iron ore data 60 Summerised ferro alloys import data 61 Summerised ferro alloys export data
6 | Cover Story
Iron ore beneficiation need of the day Beneficiation will conserve limited high grade lumpy ore and optimize mine utilization
20 | INTERVIEW
Thin slab casting tech for HR coil production Thin slab casting achieves energy and cost savings over conventional hot strip mills
26 | FEATURE
Odisha plans to channelise ore trade The state plans to appoint a designated state agency to bring transparency and generate more revenue
34 | FEATURE
Alloy makers expect demand to rise in March quarter Demand to pick up as European mills will return to market with depleted inventories
37 | FEATURE
India’s steel demand to grow 5.5% in 2012: Worldsteel Slowdown in demand because of unfavorable domestic and external economic conditions
Call 9163348243 for more details
4 Steel Insights, November 2012
Cover Story
Iron ore beneficiation ...
... the need of the day Tamajit Pain
A
recent report of the working group on steel pegged India’s steel capacity to reach 149 million tons (mt) by 2016-17 from the present 90 mt. It forecast production to reach 115 mt by that time. If there is one thing that needs immediate attention if these projections are to be achieved, it is enhancement of iron making capacity in all three routes of BF, DRI and
6 Steel Insights, November 2012
liquid iron process routes followed by BOF, EAF and IF for steel making. The steel policy assumes that around 60 percent of the new steel capacity would come up through the blast furnace and BOF route, 33 percent through sponge iron and EAF/ IF route and about 7 percent through other routes. Therefore, blast furnace route of iron
making would continue to dominate the iron production in India followed by the sponge iron (DRI) route. Lumpy iron ore (-30+10mm) and agglomerates like sinter and pellets form the feed for the production of pig iron in blast furnace, whereas, steel scrap, lumpy iron ore (-18+6mm) or pellets are the feed for sponge iron production. There is a consensus in industry circles
Cover Story that in order to achieve growth in steel making there is a need for increased raw material security and requirement for removal of the bottlenecks pertaining to new projects and expansion of old projects. Iron ore is the basic raw material for steel production. Haematite and magnetite are the most prominent of the iron ores found in India. Of these, haematite is considered to be the most suitable for iron making because of its high grade quality and lumpy nature. Almost 98 percent of the domestic consumption is haematite iron ore. The main consumers include sponge and pig iron makers. India is bestowed with large resources of iron ore, which occur in different geological formations. However, major economic deposits of iron ore are found associated with volcano – sedimentary banded iron formation of Precambrian Age. Geographically, the Precambrian banded iron ore formations are distributed in five broad zones, wherefrom haematite is mined. Reserves
Most of the iron ore deposits in India were explored during 1950s and 1960s with the advent of integrated steel plants in the public and private sectors. Exploration agencies laid emphasis on establishing source of iron ore whose grade was 60-63 percent Fe keeping in view the availability of haematite ore and technical knowhow of steel making at that time. Consequently zones of lower grade ores were overlooked. However, exceptions were made where low grade ore deposits were found associated with high grade types. Almost all the five major zones were explored for high grade ores and exclusive low grade ore deposits were ignored then. As per United Nations Framework Classification (UNFC) of mineral resources, total resources of iron ore in the country
Statewise distribution of hematite iron ore resources in India
Karnataka, 12%
Odisha, 34%
Jharkhand, 26%
is around 28.52 billion tons. Haematite is estimated to be around 17.88 billion tons – has about 8.09 billion tons under “reserve” category and 9.79 billion tons under “remaining resource” category. Total resources of magnetite is estimated at 10.64 billion tons – has under reserves category a mere 0.02 billion tons while 10.62 billion tons is placed under remaining resources category. A closer look at the grade-wise share of haematite reserves in the country shows that the cut-off grade of +60 percent Fe has only been taken for exploration programme as against present threshold of 45 percent Fe and hence reserve estimates are significantly on the lower side. Almost all the present day production of steel products comes from haematite reserves. Magnetite reserves are not exploited for domestic consumption as these are mostly in eco-fragile areas of Western Ghats. Existing resources of haematite merely account for around 28 percent of the total iron ore resource of the country. In India, haematite reserves and resources are mostly confined to the states of Odisha (42 percent and 34 percent), Jharkhand (29 percent and 26 percent), Chhattisgarh (11 percent and 19 percent), Karnataka (11
Zone A
Singhbhum (Jharkhand), Cuttack (Odisha)
Zone B
Dantewara & Durg (Chhattisgarh), Chandrapur & Gadchiroli (Maharashtra)
Zone C
Bellary-Hospet Belt (Karnataka)
Zone D
Goa, Ratnagiri (North Karnataka)
Zone E
Metamorphosed BIF along the West Coast in Karnataka/Kerala
8 Steel Insights, November 2012
Others, 4%
Chhattisgarh, 19%
Prominent iron ore zones
Source: Indian Bureau of Mines
Goa, 5%
percent and 12 percent) and Goa (6 percent and 5 percent). The balance (1 percent reserves and 4 percent resources) are spread across Maharashtra, Andhra Pradesh, Uttar Pradesh and Rajasthan, according to the recent Vision statement by Indian Bureau of Mines. About 2.5 tons of r.o.m. iron ore or 1.7 to 2 tons of processed iron ore is required for per ton of steel production. To meet the projected steel production of 115 mt per annum by 2016-17, the r.o.m requirement would be around 206 mt per annum. Iron ore supply
India is completely self-sufficient with regard to iron ore but the projected growth in steel production may adversely impact iron ore supply going forward. The existing reserves of haematite (averaging around 63 percent) are the only source of iron ore and these reserves may not last beyond 15-20 years maximum at the present rate of steel production. Hence to meet future and projected targets, additional domestic resources have to be created. With high grade iron ore reserves under the threat of depletion despite revision of threshold value of iron ore to 45 percent Fe and 35 percent Fe (from haematite ore and siliceous haematite ore respectively), it is obligatory on the part of the mining industry to consider exploitation and utilisation of low grade iron ore, which were till now sidelined as waste, for effective utilisation. A fresh exploration strategy will have to be formulated with cut off/threshold grade ores as target, the Indian Bureau of Mines Vision document said. Majority of the hematite ore reserves (over 85 percent) in India are of medium to
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Cover Story Current status of ore mining
The mining industry is currently run in fragmented leaseholds and operated by captive and non-captive units producing iron ore in the ratio of 25:75. Since creation of a beneficiation unit is capital intensive, it may not be possible for a small and medium sized unit in the non-captive sector to invest in such a venture. However, a large number of small mines located nearby can form a consortium to have their beneficiation facility. According to the Indian Bureau of Mines, a custom mill for beneficiation needs to be introduced, whereby the fines from small mines in the vicinity of the facility could be received, blended, processed, in a centralised processing unit and the concentrate thus produced could be pelletised or sold to appropriate market. Such a consortium would need to work on certain defined objectives:
Essar’s slurry tank in Paradip
high grade. Selective mining coupled with processing of entire r.o.m. iron ore makes their use possible directly in blast furnace or coal based DRI plants in the form of quality calibrated lumps. This resulted in usage of higher percentages of lumpy iron ore i.e. around 45 percent in iron making in India as against 15-20 percent lumps used globally. Only processed iron ores are used in iron industry. Iron ore processing in India is restricted to meet the physical standards as it is inherently medium/high grade. Therefore, all the integrated steel plants deploy multi-stage crushing, washing and sizing of r.o.m. ore to produce lumps (-30+10mm) and sinter feed size (-10+0.15 mm) material. Non-captive sector supplying lumps to coal based DRI plants resorts to multi-stage crushing and screening to meet the size requirement. This practice generates large amount of fines (-10/-6 mm) and slimes (-100 mesh/0.15 mm) which get unused at the mine site. Indian iron ores are fragile in nature and mining and processing generates substantial amount of fines. The proportion of lumps and fines in general is around 2:3. These stacked fines, slimes and the category of available low grade resources falling in between threshold value and saleable grade constitute the potential source for producing usable grade iron concentrate after beneficiation.
10 Steel Insights, November 2012
This will not only utilise existing discard material for recovery of value but also conserve limited high grade lumpy hematite reserves of the country. Extensive R&D work was carried at various laboratories in India at IBM’s ore dressing laboratory on low grade iron ore, iron ore fines (-10mm) and classiflier/tailing pond slimes (-100 mesh). The flow sheet developed on almost all types of ore showed the possibility of producing concentrate suitable for sinter and pellet making. By taking advantage of the process route to beneficiation the existing operators must look towards beneficiation as a means to overcome the crisis of supply of high grade ores. The capital cost of 250 tph beneficiation plant works out to be around `100 crore. The cost of beneficiation in respect of fine for sinter feed will be around `200 per ton whereas for pellet feed it would be in range of `250-350 per ton.
♦♦ C onsistent supply of raw material for which they must sign an MoU amongst themselves; ♦♦ S eek government intervention for land, power, fuel, and water management so that they could be made available at subsidised rate; ♦♦ S eek relief by way of import duty waive off on imported technology and equipment for setting up such beneficiation facilities as a measure of incentive. The potential areas for such activities are Odisha and Jharkhand and Bellary Hospet sector in Karnataka. The beneficiated fines need to be agglomerated before its use. Beneficiation and agglomeration of these materials for iron making is the call of the day and India should take the right direction to meet its growth targets, according to the mines ministry.
Iron ore production, consumption and export Production (in million tons)
Domestic Consumption (in million tons)
2009-10
218.55
2010-11 2011-12 (provisional)
Year
Export Quantity (in million tons)
Value (in `crore)
90.62
117.37
41794.85
208.00
111.40
97.66
41295.86
169.66
116.30
61.80
Not Available
Source: For finished steel - Joint Plant Committee; Ministry of Steel, For production and consumption of iron ore – IBM, Ministry of Mines; For export of iron ore – MMTC, Department of Commerce
Cover Story The primary use of incorporating agglomerates in the blast furnace is to utilise the fines generated during various stages of mining and processing as blast furnace being a counter gas current reactor, these fines cannot be directly used as they hamper gas flow. The present facility in the country for processing and utilisation of beneficiated fines through agglomeration is highly inadequate particularly in the non-captive sector, according to industry experts. This has led to large amount of fines (around 70-75 percent of the total fines production) getting exported. Sintering and pelletisation
The government’s current National Steel Policy suggests encouragement of sintering and pelletisation so as to utilise these iron ore fines which make up 90 percent of the present exports. Agglomeration of iron ore fines involves two methods – sintering and pelletisation. Sintering is the agglomeration of technique of iron ore fines in the size range of -10+0.15 mm to produce clusters by incipient fusion at high temperature. Sinters are porous and brittle and that is why sintering process of agglomeration is restricted to integrated steel plants using blast furnace route and mini blast furnace of non-captive sector only. Almost all the integrated steel plants have their own sintering plants (except IISCO) to cater to its own needs and consume the entire generated fines for sinter making. The non-captive producers deploying mini blast furnace for hot metal production use limited amount of fines for sintering after beneficiation.
Many integrated steel plants have moved proposals to incorporate a portion of pellets in the blast furnace burden to replace the calibrated lumps
However, huge quantities of fines are left unused at present at various mine sites even after their export. The total installed sintering capacity in India is 39 mt. However, the production was 31 mt as of 2009-10. Pelletisation is another mode of agglomeration applicable for fines below 325 mesh size. Pellets are hard and compact and therefore they can be transported over a long distance as they can withstand the rigours of handling i.e., repeated loading, unloading etc. Pellets are viable and therefore can be produced and sold everywhere. Pellets therefore will pay a very important role in iron making in both blast furnace as well as coal based DRI units. In India, pellets are selectively used in gas based DRI units whereas the integrated steel plants consider them unviable. This notion is however fading away now. Many integrated steel plants have moved proposals to incorporate a portion of pellets in the blast furnace burden to replace the calibrated lumps because of their superior chemistry, quality and strength in addition to enhancement of productivity. Therefore, pelletisation is likely to come up in a big way in India.
Future scope of exploration of low grade iron ore in India as identified by CGPB Committee Odisha
Bonai-Keonjhar belt, Tomka-Daitari, Umerkote belt
Jharkhand
All major high grade ore deposits contain low grade lateritic ores
Karnataka
Bhagalkot, Tumkur, Chitradurga
Maharashtra
Sindhudurg, Gadchiroli, Gondia
Chhattisgarh
Siliceous Hematitic ore (55-60 percent Fe), lateritic hematite ore (45-55 percent Fe) in all 14 desposits of Bailadila range
Andhra Pradesh
Cuddapah, Kurnool, Karimnagar, Adilabad, Guntur
Source: Indian Bureau of Mines
12 Steel Insights, November 2012
At present, practically none of the integrated steel plants have pelletisation facility. The present level of pellet making facility in the non-captive mine however is too little and needs augmentation of its capacities besides initiating creation of new facilities both in the captive and non-captive sectors. Integrated steel plants can commence beneficiation followed by pelletisation in the immediate future as it had readily available huge stocks of slimes impounded in the tailing ponds. This will not only recover the loss of valuables from slimes but also help in controlling environmental degradation on account of its perpetual stacking. Of late the leading players in the mining and steel industry have realised the importance of pellet making and have begun to incorporate pelletisation facilities. Pelletisation plants in general involve huge capital investments and consume enormous amounts of energy and fuel for grinding and pellet making. Therefore, the capital involved and operating cost of pelletisation plants is very high. The breakeven and economic size of the pelletisation plant is around 1 mt. This involves huge capital investment (approx. `250 crore). Hence, only big players like captive plants can set up pellet plants. However, technology needs to be tailor made for deposit specific iron ore as economic and readily available commercialised technology may not be suitable and would need testing before its implementation. A close look at the market price of high grade lumps versus production cost of quality pellets from mine and processing rejects and slimes after beneficiation would be comparable.
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Cover Story End use grade specification for hematite Lumps, fines & blue dust
Chemical constituents Fe (t)
SiO2
Al2O3
P
65 percent & above
2 percent max
2 percent max
0
Medium grade
62-65 percent
3 percent max
3 percent max
0.1 percent max
Low grade
60-62 percent
4.5 percent max
4 percent max
0.1 percent max
High grade
Thus the process of beneficiation followed by agglomeration will not only conserve the limited high grade lumpy ore but also lead to optimum utilisation of the available valuables from mine and process rejects. This would reduce burden of stacking of tails/rejects that are kept for disposal and will be an effective measure to control environmental degradation. Blast furnace productivity did show a turnaround over the years consequent to utilisation of higher proportions of quality agglomerates in the burden. Observations revealed that 1 percent replacement of calibrated lumps by agglomerated products like sinter or pellet reduces the coke rate by 1.5 kg/ton of hot metal produced. Depending upon the quality of ore and the physical and chemical properties of sinter, it is generally agreed that on an average 2070 percent sinter could be used successfully in the blast furnace.
Aerial view of Essar’s Odisha pellet plant
14 Steel Insights, November 2012
Use of pellets in iron making is advantageous due to improved permeability in comparison to lumpy or sinter. This leads to better solid gas contact resulting in higher productivity and lower coke rate. At present, 15-20 percent of pellets are used in many furnaces along with sinters and lump ore. SAIL intends to incorporate pellets in their blast furnace burden and proposes burden comprising 15 percent lumps, 15 percent pellets and 70 percent sinters in near future. This strategy could open up the opportunity for utilisation of low grade iron ores, fines and slimes which after beneficiation and transformation into pellets could fine larger scope for application. To meet the future target in steel production, integrated steel plants and DRI units whose share in the country’s iron production is likely to be 60 percent and 33 percent respectively would have to
depend largely on pellets to enhance their production. Assuming that integrated steel plants on the whole make use of a minimum of 15 percent pellets (optimum) in their blast furnace burden and taking into consideration the projected target steel production to be achieved, the minimum requirement of pellets would be around 25 mtpa. Further assuming that all coal based DRI units use 50 percent pellets in replacement of high grade lumps, there too, the demand for pellets would be around 25 mtpa. Thus around 50 mtpa pellets would be required in near future. This dependence on pellets would not only conserve the high grade hematite lumps but would also enable effective utilisation of fines and slimes. The surplus production of pellets if any could be supplied to the indigenous coal based sponge iron plants and the remaining could be exported. The recent waiving of export duty by the government of India could make pellet making ventures a viable option. According to the Indian Bureau of Mines, small mine owners must be encouraged to venture into the pelletisation business considering its future demand. The industry has been of the opinion that to improve participation in pelletisation business
Cover Story
An iron ore beneficiation plant in operation
incentivising pellet making industries in the country is essential. The government will need to consider offering some additional incentives in power and water tariff, reducing the royalty on pellet making industry and waiving off import duty so that technology and equipment for setting up beneficiation and pelletisation facilities could be easily imported. Small mine owners will need to be encouraged to establish beneficiation and pelletisation plants as joint ventures so that
there is no dearth of sufficient feed material and availability of capital investment. The sponge iron industry will have to play a key role for development of steel sector. Therefore, thrust should be given to make pellet making which would in turn replace use of high grade lumpy iron ore in the coal based DRI units in the country. Thus steel making necessitated the whole gamut of activities right from mining of r.o.m. iron ore at the threshold value of 45 percent Fe (35 percent Fe for siliceous hematite ore)
The government will need to consider offering some additional incentives in power and water tariff, reducing the royalty on pellet making industry and waiving off import duty so that technology and equipment for setting up beneficiation and pelletisation facilities could be easily imported.
16 Steel Insights, November 2012
to value addition/beneficiation of iron ore, sintering and pelletisation followed by iron and steel making through blast furnace cum BOF/LD or DRI cum EAF/IF processes. Moreover, steel is a long term business and the raw material resources are to be planned at least for a period of 50 years. As India looks into its strength regarding availability of iron ore, the present level of reserves is not encouraging for the projected demand of the ore by 2016-17. We have to ensure that the requirement of input is comprehensively met in quality as well as quantity. This brings to the fore the issue of conservation and beneficiation followed by agglomeration of beneficiated fines. Short term measures
The short term measures include the following: ♌♌ P reparation of feasibility of mining of several small/low grade deposits already identified and proved earlier and the
Cover Story Major players in pelletisation
The process of beneficiation followed by agglomeration will not only conserve the limited high grade lumpy ore but also lead to optimum utilisation of the available valuables from mine and process rejects. enhanced requirement and deployment of appropriate beneficiation technology would have to be ascertained. ♦♦ I mmediate processing of sinter fines being used for sinter making by integrated steel plants for making of quality sinter grade material production (reduction of alumina) after deployment of appropriate beneficiation technology. ♦♦ I mmediate utilisation of available stacked fines (-10 mm) in non-captive sectors and slimes (-100 mesh) impounded in the tailing ponds of iron ore washing plants and stacked sub-grade/marginal grade ore through deployment of appropriate beneficiation technology. ♦♦ I mproving the processing capacity of existing beneficiation facilities to produce quality product. ♦♦ I ntroducing the concept of total beneficiation of r.o.m. ore at 45 percent Fe cut off (for quality lumps, sinter & pellet fines) for optimum utilisation of available reserves. ♦♦ D eveloping new mines beneficiation facility.
with
♦♦ E ncouragement for use of pellets in DRI units (coal based) and thereby discourage liberal use of high grade lumps. Long term measures
♦♦ C onvert the existing hematite resources into reserve by detailed exploration followed by feasibility study. ♦♦ E xploring the possibility of persistence of iron ore (hematite) at depth (beyond 50 meters or from existing pit bottoms of large working mines of hematite). ♦♦ E xploration in freehold area within known iron ore belts must be taken up. Most of the freehold areas within the known iron ore belts have not been explored so far due to lack of iron ore exposure. Besides, ideal lease/relinquished areas may have to be thoroughly assessed by drilling to ascertain the availability of iron ore. Estimated conversion cost per ton of pellet produced from beneficiated concentrate Particulars
total
♦♦ E xploration of low grade iron ore associated with high grade types within the existing mine/lease area. ♦♦ A ugmenting sintering plant capacity by integrated steel plants. ♦♦ C ontemplating pelletisation facility by integrated steel plants and non-captive sectors to accommodate additional concentrate generated from beneficiation of low grade ores, fines and slimes. ♦♦ A ugmenting existing pelletisation plant capacity in non-captive sector.
18 Steel Insights, November 2012
Owner
Cost (Rs)
Power consumption: 65 units/ton @ Rs 5.5/unit
357.50
Fuel consumption: 18 kg of furnace oil @ Rs 30/kg (price-modvat)
540.00
Additives 10 kg of pulverised coal @ Rs 4000/ton
40.00
Bentonite 10 kg @ Rs 2000/ton
20.00
Labour & maintenance Miscellenous Total
1000.00 100.00 1157.50
Source of raw material
Total capacity (in mt)
Essar
Odisha, A.P.
14
JSPL
Odisha
10
JSW
Karnataka
9.2
Tata Steel
Noamundi, Jharkhand
6
SAIL
Gua, Taladih, Kalta mines
6
KIOCL
Karnataka
4
BRPL (Stemcor)
Odisha
4
Bhushan steel & Power
Odisha
4
NMDC
Karnataka
3.2
Mandovi Pellets
Goa
2.5
Bharat Mines
Odisha
1.2
♦♦ E xploration of low grade ores (hematite and magnetite) in the country, other than the mining area already in operation needs to be put in the fast track. ♦♦ E volving suitable mining technology to exploit magnetite ores that are mostly found to occur in environmentally and ecologically sensitive areas of the Western Ghat region. ♦♦ E xploring beneficiation potential of hematite resource namely banded iron formation which is basically banded hematite quartzite (BHQ) or banded hematite jasper (BHJ) forming the base rock of the enriched iron ore deposits. This base rocks contain around 25-35 percent Fe. ♦♦ E volving suitable technology for utilisation of goethite-rich iron ore in iron making. Beneficiation of low grade iron ore would generate substantial goethite rich iron reject (Fe 50-55 percent) which may cause huge environmental problem on account of stacking. ♦♦ F inally, statutory regulations need to be brought to ensure that full utilisation of the mined ore which automatically would lead to adoption of latest efficient technologies of beneficiation and agglomeration.
interview
Thin slab casting, rolling tech for HR coil production Tamajit Pain
T
he direct rolling process for hot strip production, where the thin slab caster is connected directly to rolling mill, has gained large market share rapidly because of its remarkable advantages in term of energy savings and investment cost over the conventional hot strip mills. However, the unquestionable advantages of the first-generation applications of such TSCR plant concepts also entail significant limitations both in terms of productivity and steel grades that can be produced. Since its first pioneering applications in this area, Danieli considered strategic development of new technical solutions specifically conceived to overcome these
20 Steel Insights, November 2012
limitations with the goal of increasing plant production volumes and enlarging steel grades in product mix, in order to cover the gap between “Conventional Mill” and “Thin Slab Casting and Rolling” (TSCR) process routes. Steel Insights met Sanat Bhaumik, the senior vice president (flat products) of Danieli India to know about TSCR process and Danieli’s innovations in this technology. Why are steel producers opting for the “Thin Slab Casting & Rolling process” for HRC production? We all know combining processes will always reduce investment and transformation costs of a plant. So, it is not a surprise that production of hot rolled coils through TSCR route is always going to be cheaper than conventional HSM route. When we produce HRC directly from liquid steel in a single plant we are able to avoid
intermediate storage and reheating of slabs thereby eliminating a few equipment which saves capital cost and ensure no cooling or reheating of slabs saving energy or transformation costs. But we cannot produce all steel grades in TSCR plants and such plants have productivity limitations also. Yes, it is true and only for this reason, since its first pioneering pilot plant in 1985, DANIELI have always tried to implement solutions which combines the best of both thin slab casting & rolling as well as conventional H S M technologies. Danieli’s fTSR plants overcome the quality and productivity limitations but retain the Sanat Bhaumik, Sr. VP capex and opex (flat products), Danieli India
interview advantages of thin slab casting and rolling technology. In what ways are Danieli plants different from others? The differences are mainly in the Caster Design and Configuration of the Hot Strip Mill. What is special about Danieli’s thin slab caster? In the thin slab caster (TSC) area the main special feature is the design of the caster itself. Danieli provides the TSC with Vertical Curved design with its parented Dynamic Soft Reduction (DSR) process. This feature will allow adapting a dedicated roll diagram to cope up with both internal cleanliness and proper ferrostatic pressure during the casing process. In addition, Danieli patented long funnel H2 mould ensures reduction of the stress on the slab during the solidification phase, which is the key factor to cast crack sensitive grades like real peritectic grades. Application
22 Steel Insights, November 2012
of Dynamic Soft Reduction (DSR) is a key factor in ensuring optimal internal quality, under all casting conditions, and not only in a limited range of operative conditions. The Air Mist secondary cooling which allows to fine tune the thermal profile of the slab during solidification in a dynamic way of the casting conditions (such as casting speed, superheat, etc.) with the maximum control range. Danieli thin slab caster also incorporates the unique feature of Independent machine closed circuit cooling for all sensitive elements of the caster (bearings, supports, etc) to monitor and control the temperature of all maintenance sensitive components of the caster regardless the casting speed and reduces the maintenance issues. How do these features contribute to the end product which is HRC?
• H igher casting speeds achievable (up to 8.0mpm). Casting speed is the key point for productivity, safety and quality. • A llows casting of thicker slabs which is beneficial for quality and productivity • Casting at lower speed for some crack sensitive grades and also to avoid risk of breakouts (safer operation) • Lower overall height (< 7.5 meter head) • F lexible speed of operation (2.5mpm to 8.0mpm) with no limitation of thickness • Each segment can be removed individually without disturbing other segments in the line • Dynamic Soft Reduction reduces centre line segregation and helps in refining grain size.
Danieli vertical curved TSC has the following major advantages:
You have also mentioned about hot strip mill configuration. How is it different from other TSCR plants?
• No limitation on metallurgical length (9 – 20 meters).
Starting from its first applications of TSR (Thin Slab Rolling) plants, where
interview all rolling stands are arranged in a single Finishing Mill train operating in tandem, Danieli implemented several mill stands arrangements with separation between Roughing Stands and Finishing stands, in order to apply advanced rolling practices, such as ferritic rolling and thermo mechanical rolling, typically adopted in conventional Hot Strip Mills. These are fTSR (flexible Thin Slab Rolling), QSP (Quality Strip Production) and ETR (Extra Thin Rolling) plant configurations. Where are such plants installed? The only TSR plant is installed in Esfahan Steel (Iran) and the ETR in POSCO (Korea). Danieli has a number fTSR installations in Dong Bu (Korea), Tong Hua, Benxi & Bao Steel (China), MMK Atakas (Turkey), Severstal Lucchini (Italy) and NMDC (the first fTSR plant in India under implementation). The QSP installations are in Essar Algoma (Canada), North Star BHP (USA), Ezz Steel (Egypt) and OMK (Russia). How will such HSM configurations benefit the plant? Separation between the RM and FM trains allows installation of some strategic equipment like intermediate cooling, crop shear and an onboard descaler before the finishing mill. The intermediate cooling section will allow thermo-mechanical rolling or finish rolling of transfer bar with lower temperature. The crop shear can be used to cut the
24 Steel Insights, November 2012
head end of the transfer bar for smooth threading through the finishing mill which reduces the cobble rate particularly during production of thinner gauges. Furthermore, the distance between R2 and F1 ensures higher strip internal quality because adequate recrystalization time is available between R2 and F1 passes. This is a must for rolling API grades.
thin slab casting facility. Tangshan Iron and Steel, China is the first plant in the world overcoming the 3.0 million tons of productivity in 2005 (with 2 strands in operation). Benxi Iron and Steel in China pioneered the production of high Silicon grades since 2008. Posco CEM Plant in Korea is the first ultra high speed thin slab caster (>7.5mpm) in operation since 2009.
Tell us about some landmarks achieved by Danieli’s thin slab casting and rolling plants.
Do you think TSCR plants will be able produce replace conventional HSM to produce all grades and quality of hot rolled coils?
There are many such land marks, out of which I would like to specially mention about some plants. Essar Algoma DSPC, Canada was the first plant in the world to cast real peritectic grades since 1997 in a
My reply to this question will be a big “Yes”. In fact all research activities in DANIELI for TSCR technology are targeted to achieve this goal. Lot of progress has been made over the years after the first TSR plant installed at Esfahan Steel, Iran in 1989 with production capacity of only 0.8 million tons per annum (mtpa) for single strand casting line. Today the ETR in POSCO, CEM plant can produce 2.0 mtpa for a single strand casting line. Similarly, TSR in 1989 produced only commercial quality hot rolled coils and gradually more grades were produced in Danieli’s subsequent plants – peritectic in 1997, HSLA in 2000, API grades in 2005, Silicon steel (up to 3.2% Si) in 2009, Arctic API in 2010 and AHSS in 2011. Continuous efforts by a dedicated technology team are trying to reach the ultimate target mentioned by you but it will take time.
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Odisha plans to channelise iron ore trade Steel Insights Bureau
O
disha, the largest producer of iron ore in the country, is mulling channelisation of iron ore trade by appointing a designated state agency in order to bring in transparency and generate more revenue, industry sources told Steel Insights. The single-point trading process is likely to push iron ore rates and impact margins of steel makers across the country who depend on the state for the raw material supply, as many other major producers, such as Karnataka and Goa, have restricted output. The state government plans to create a trading platform by authorising a state run agency, which will float sales tenders on behalf of 150-odd iron ore miners. The process is expected to check under-reporting of mineral prices by some miners and thus bring in more revenue to the state exchequer in the form of royalty, sources said.
26 Steel Insights, November 2012
Sources informed that state-run miner Odisha Mining Corporation (OMC) and state-run MSTC has been called in by the Odisha government for discussions on the issue. An inter-ministerial panel has been formed to take a final decision on this issue in the next two to three months. MSTC has been conducting e-auctions in Karnataka after the Central Empowered Committee appointed them following the illegal mining probe in Karnataka. Odisha is the highest producer of high quality sized iron ore and fines, with annual output surpassing 75 million tons (mt). In the current fiscal, it is expected that the state will produce less than 45 mt ore due to production cap imposed at key mining sites. Many sponge iron makers and other secondary steel producers of Odisha, Chhattishgarh and West Bengal depend on state-based miners to run their units. Some
steel makers based in south India have also started sourcing the raw material from the state after Goa recently banned mining following a probe panel recommendation. In Karnataka, even though the Supreme Court has lifted the ban on mining after 13 months, production is yet to resume in full scale. According to current practices, manufacturers procure raw material from miners at a negotiated price, while others depend on mines run by OMC, which announces its rates every quarter. The introduction of the tender process is expected to push iron ore rates, traders said. After initiating the e-auction process for chrome ore raised in its own mines, OMC is in the process of introducing the same system for iron ore raised from its own mines. Currently, central government PSU National Mineral Development Corporation (NMDC) conducts e-auction of iron ore in Karnataka following the Supreme Court direction. The government of Odisha has been taking pro-active measures to curb iron ore exports in order to ensure raw material supply for over 45 companies, including steel majors Posco and ArcelorMittal, with whom it has signed agreements to set up steel plants. In a recent notification,
feature it has announced not to renew mining leases for those who do not have any mineral development industry under their ownership and said industries having mining areas beyond their captive use must return the surplus land to OMC. India emerging as unknown factor in Asia
India is emerging as the unknown factor for Asia’s iron ore market in 2013, which otherwise looks to be in a fair balance between supply and demand. Analysts expect iron ore prices next year at $120 per ton and for Chinese import demand to gain 6 percent to 774 million tons (mt) from an estimated 730 mt this year. Analysts expect that China will account for the bulk of growth in seaborne iron ore demand, with recession-plagued Europe expected to be steady and modest growth likely from the rest of the world. An increase of 44 mt from China should also be well within the capacity of the main global miners to supply, given what is known of their expansion plans and targets. Brazil’s Vale is expected to produce about 320 mt in 2013, only marginally up from current output levels, which amounted to 317.4 mt in the 12 months to September. The company expects its expansion projects to start coming on line around the end of next year, but for the most part increases in seaborne iron ore supply will have to come from Australia in 2013. The bulk of Australia’s increased output will come from Rio Tinto which is expecting to raise production by 33 mt to 283 mt. BHP
28 Steel Insights, November 2012
Joda order to restrict ore supply The recent order of the Joda mining circle office to 10 miners, who are waiting for renewal of their mining leases to restrict iron ore output only to the extent of their captive plant need until the completion of the lease renewal process is likely to result in 27 million tons (mt) production loss per year. According to industry sources, notices served to 10 miners in Joda will affect more than 60 percent of total 55 mt iron ore output in Odisha as most of them are large mines. Around 100 steel units would be affected because of the loss of supply. The major impact would come from three miners, who do not have any value addition industry attached to their mines and hence will have to stop production as per the new resolution brought in by the state government earlier this month. The three mines are Essel Mining, Kalinga Mining Corporation, Bhanja Minerals. They contribute around 15 mt output with Aditya Birla group owned Essel leading the pack with a capacity to produce 12 mt annually. Besides, the companies who have to slash production as per their captive need are TATA Steel, MISL, KJS Ahluwalia, Steel Authority of India, KayPee Enterprises, RP Sao and KN Ram. These seven mines produce around another 18 mt of iron ore. The order follows a recent state government resolution that mines having value addition industry attached to it will be given priority at the time of renewal of mining leases. Currently, 28 iron ore and manganese mines are waiting for their second or subsequent renewal. The dispatch of production restriction notices to 10 mines in Joda is expected to be followed with similar missives to 18 mines in Koida, Baripada and Keonjhar mining circle soon.
Billiton said it expects a 5 percent increase in output in the year to end-June 2013 over the same period a year earlier, which if extended over the calendar year could mean about an extra 8 mt. Fortescue Metals Group has recently scaled back its rapid expansion plans in the face of slower demand growth from China and market unease over its debt-funded model, but even so it may produce an additional 20 mt in 2013. Taking the three Australians miners together, output may rise in the region of 61 mt, more than enough to meet the forecast growth in China of 44 mt, industry sources said. In fact, it’s enough to suggest that the iron ore market will be in a small surfeit, which in turn suggests limited upside to prices. Of course, forecasts tend to assume that other things remain equal, and for iron ore in 2013 this may not be the case, especially where India is concerned. India used to be the world’s third-largest exporter of the steel-making ingredient, but the industry has been roiled in recent years as the authorities try to crack down on illegal mining and exports and reserve more production for the domestic steel industry. India’s exports fell more than 40 percent in the April-to-June quarter to 12.1 mt from a year earlier, according to official data. Since then, however, a series of court rulings have called into question whether any ore will be shipped out in the next few months and into 2013. The Supreme Court suspended iron ore transport on October 5 in Goa, which usually produces about 50 mt a year and exports almost all of it. This followed a limited resumption of mining in neighbouring Karnataka state, but it’s reasonable to assume that much of this output will be used domestically. The risk is that Indian ore exports, which head mainly to China, will continue to slump as the authorities continue efforts to regulate and organise the industry. Industry feels that a loss of about half, or about 30 mt, would probably be enough to turn the Asian iron ore market into a small deficit, which the major miners might struggle to immediately meet.
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Spot coking coal prices firm up in October Steel Insights Bureau
S
pot coking coal prices firmed up in October after a flurry of trades took supply out of the market, giving producers a chance to raise their offers. Premium low-vol HCCs traded at around $149 per ton fob on October 29, up from $142 per ton fob Australia at the beginning of the month. Low vol PCI prices recovered to $115 per ton on October 29 compared to $103 per ton at the beginning of the month. The semi soft variety was quoted at $100 per ton on October 29 compared to $94 per ton in the beginning of the month. Several transactions were heard done into China between $145-149 per ton fob, sources said. Appetite in China was strong, suppliers said. This coincided with higher indicative bids for the whole spectrum of metallurgical coals. Producers pointed to a clear improvement compared to the lows seen in September, when prices were $5-10 per ton lower. But some Chinese traders were concerned that the large number of spot
30 Steel Insights, November 2012
cargoes sold to China in September and October could pressure prices in November. Industry sources said in excess of 40 spot cargoes were sold into China in September and October. Firm buying interest was evident in India. Buy-side interest was said to be at $145-150 per ton fob, for premium variety. India imports 30-35 million tons per year of coking coal currently. Meanwhile, SAIL and RINL concluded negotiations for the purchase of coking coal with Australian miners, industry sources said. While SAIL had contracted for October and November delivery contracts with BHP
Billiton-Mitsubishi Alliance or BMA, RINL has contracted for October-December contract with both BMA and Anglo American, sources claimed. Sources claimed that SAIL has agreed to pay $155 per ton fob Australia for October despatches and $143 per ton for November despatches. RINL on the other hand is believed to have contracted with BMA to procure prime coking coal at around $170 per ton during the fourth quarter of 2012, the sources said, adding, the steel maker has also contracted with Anglo American at $164 per ton fob Australia.
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Coking coal CFR India ($/ton) Date 4-Sep 10-Sep 11-Sep 12-Sep 13-Sep 14-Sep 20-Sep 21-Sep 24-Sep 25-Sep 26-Sep 28-Sep 1-Oct 2-Oct 3-Oct 4-Oct 10-Oct 11-Oct 12-Oct 16-Oct 19-Oct 25-Oct 29-Oct
HCC Peak Down Region 171.50 161.50 161.00 159.00 157.50 155.50 155.50 154.50 154.50 155.00 156.00 156.00 157.00 157.00 157.50 157.00 159.50 164.00 164.50 164.00 164.50 164.25 166.25
Premium Low Vol 172.00 161.50 161.00 159.00 157.50 155.50 155.50 154.50 154.50 155.00 156.00 156.00 157.00 157.00 157.50 157.00 159.50 164.00 164.50 164.00 164.50 164.50 166.50
HCC 64 Mid Vol 147.50 145.00 145.00 144.00 142.00 139.50 139.50 138.50 138.50 139.50 141.50 142.00 142.00 142.00 142.50 142.00 144.00 146.50 147.50 147.00 145.00 144.50 147.50
Low Vol PCI 125.00 120.50 119.00 118.50 117.50 118.50 118.00 117.50 117.50 116.50 116.50 118.00 118.00 118.50 119.50 120.00 127.50 128.50 129.50 129.50 130.50 132.50 132.50
Low Vol 12 Ash PCI 106.50 108.00 108.00 107.50 107.00 108.00 109.00 109.00 109.00 109.00 109.00 111.00 111.50 111.50 112.00 111.50 114.50 116.00 118.00 117.00 117.00 117.00 119.50
Semi Soft
Met Coke
112.50 112.00 112.00 111.50 111.50 112.50 109.50 109.50 109.50 108.50 108.50 108.50 108.50 108.50 108.00 107.50 112.50 113.50 116.50 115.00 115.50 116.00 118.00
331.00 329.00 325.00 325.00 325.00 325.00 324.00 324.00 317.00 317.00 317.00 317.00 317.00 317.00 316.00 316.00 319.00 323.00 323.00 318.00 317.00 316.00 316.00
India plans to invest about $1 trillion in the infrastructure sector during the 12th Plan period running from April 2012-March 2017. Sources have earlier estimated this would generate some 200-250 mt of steel demand in the period. Met coke prices
Metallurgical coke prices moved in a narrow range in October even as higher offers for CIS material hinted at higher tradable values for 62% CSR material. 62% CSR, 12.5% ash blast furnace coke is quoted at $316 per ton cfr India on October 29 compared to $317 per ton cfr India on October 1. Two new offers for CIS coke were heard in the Indian market. Both were around $310-315 per ton cfr India by different traders, and were said to be approximately 61% CSR. However, end users in need for November cargoes were only willing to consider $300 per ton cfr India for such coke. There was buying interest for 62% CSR and 12.5% ash at `17,500 per ton ex-works east India, while sellers are offering material at `19,500 per ton ex-works east India.â&#x20AC;&#x201A;
Steel Insights, November 2012
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Ferro alloys remain stable in October Steel Insights Bureau
T
he ferro alloy segment in October remained largely lukewarm and stable on soft demand.
Ferro-manganese
Both producers and traders of high-carbon ferro manganese are reporting a stable market but at low activity level as mainstream prices remain in the range of `51,000-52,000 per ton ex works. Producers disclosed they are still supplying material to both traders at different rates but still within the price range; but conceded the volume of deals is low. Traders were looking for quotations from multiple producers and none were ready to accept counter offer at `51,700 per ton ex works. However, the current trend is unlikely to change for the next week or two until after the Diwali festival. For the export market,
32 Steel Insights, November 2012
offers remain nominal in the range of $10001020 per ton fob Indian ports with no deals reported whilst some others have stopped production. Ferro-silicon
Ferrosilicon producers are expected to raise prices by `1,000 per ton to `71,000 per ton ex works, and although there is no severe shortage of material in the domestic market yet, output reduction from Meghalaya area is enough signal to traders to anticipate higher quotations. According to industry sources, some steel plants have been informed that shipments will be booked at `71,000 per ton ex works and traders with low inventory are hoping to cash in on this as more enquiries are being reported. Spot demand is not great but market participants are anticipating price increase immediately after the Diwali festival. Companies are currently fulfilling their
Chinese Mn ore market turns active on fresh buying
P
utting an end to the dull trend, the manganese alloy market in China turned active in the first week of November on rebound in purchases from steel mills, an industry source claimed. However, despite the trend, the import price of manganese ore for December as well as spot prices remained largely unchanged. Meanwhile, it is assumed that some producers in the Guangzi region may consider shutting down plants due to a large increase in electricity cost which was adjusted up to RMB 0.66 to 0.67 kWh in November. The overall silico manganese market was relatively stable with purchase prices from steel mills at around RMB 7100-7150 for 65/17 material. However, the material was offered in South China at RMB 6600 to 6800, including tax. The spot price of SiMn (65/17) was quoted at RMB 6700-6800 per ton, including tax, in South China, at RMB 6900-7100 in the Northern region and at RMB 7000-7200 per ton in Northeast region. On the other hand, prices of 60/14 material in Guizhou rose to RMB 5850-5950 per ton, while in the Hunan and Guangxi regions to RMB 5900-6000 per ton levels. Meanwhile, China produced a total of 853,000 tons of silico manganese (SiMn) in September, up 13% compared with 754,000 tons produced in August, a media report said quoting Chinaâ&#x20AC;&#x2122;s National Statistics Bureau. The production during the first nine months of 2012 (JanuarySeptember) stood at 7.53 million tons, down nearly 6 percent compared with 7.99 mt produced during the same period of 2011, the report said.â&#x20AC;&#x201A;
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Power crisis hits producers
A
cute shortage of power in most south Indian states is severely affecting ferro alloy producers in the region, according to industry sources. â&#x20AC;&#x153;We are operating with only one of the two furnaces because of power related issues. There has been no improvement in power scenario since July,â&#x20AC;? sources said. The situation is quite dismal and ferro alloys makers alleged that they are getting power for only five days of the week and during peak hours they receive lighting load just enough to heat the furnace. Incidentally, this has resulted in capacity utilisation at 50 percent of the installed capacity. A large number of ferro alloy plants, including those of Abhijeet Group (22 MVA x 8) and Maithan Group (34 MVA), operate in southern India. orders at around `70000 per ton ex works but added there are signs demand will pick up just as any price increase, to compensate for the weak Rupee against the unexpectedly strong Dollar. Ferro-molybdenum
Although mainstream ferromolybdenum quotations stand around `960/kg, more dealers are reporting smaller-tonnage deals at `940/kg but big end-user enquiries appear distant away from spot business. Trading companies have confirmed concluding smaller-tonnage deals at around `940/kg but added they rejected bids at `920/kg even with advance payment as it was doing backto-back business. Molyoxide quotations were at $11.2/ lb CIF Indian ports and traders continued to take unspecified quantity of material in monthly delivery from Western regions. Insiders also reasoned that prospective buyers are likely to wait for any big purchases given the volatility in the exchange rate market and,
although few Western suppliers of molyoxide are reported to be offering material, evidence of few enquiries indicate that converters are operating with material contracted on longterm basis with no need to ask for spot offers. Silico-manganese
Silico-manganese traders are reporting that despite a sudden `1,000 per ton drop in quotations to `50,000-51,000 per ton ex works, continuing low level demand from end-users makes prompt purchases for positioning unrealistic. The market is completely stagnant and except for traders making scheduled delivery there are almost zero new spot enquiries at the moment. Producers insisted silicomanganese quotations are unchanged at `51,000 per ton ex works and argued it would not be possible to consider any lower bids except to run into losses. Producers also informed that the export market remains in the range of $980-1000 per ton fob India and have cited volatility in the exchange rate market as making it difficult to accept lower bids. Higher-grade silico-manganese material remains being quoted in the export market in the range of $1080-1090 per ton fob India, but due to weak demand, more producers are shifting focus on domestic market.
exports were low, yet a weaker Rupee ensured healthy profits were posted for all deals concluded. But traders lament as the tonnage of these profitable deals were very low and demand was far worse than expected. Other producers have stopped production and are doing maintenance work amidst a lack of demand. Offers for high carbon ferrochrome exported to China were indicated at 85-87 cents/lb CFR this week, unchanged since end September. Traders added that the ferrochrome market saw limited spot activity this month as demand from stainless steel producers in the country did not improve even after the long drawn festivities. Ferrochrome exports have dropped in the last few quarters with the introduction of export duties, but statistics indicate domestic players have boosted production from 634,000 tons to over 1 million tons per annum, 26 percent of which is exported to China at a much better price than selling chrome ore. Current prices of high carbon (60%) ferro-chrome is hovering at `67,500/ex-works.â&#x20AC;&#x201A;
Ferro chrome
Demand for ferro chrome exports have failed to pick up after the holidays, as domestic prices were still higher than overseas prices. Companies like IMFA (Indian Metals & Ferro Alloys) have seen a huge drop in ferrochrome production since last quarter. However, though
Steel Insights, November 2012
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Alloy makers expect demand to improve in March quarter
Steel Insights Bureau
I
ndian ferro alloy makers expect prices and demand to pick up from the last quarter (January 2012-March 2013) of 2012-13 as most European steelmakers will return to the market after Christmas holidays with depleted inventories. Apart from steel makers in the Europe, who are operating at 70 percent capacity utilisation levels, traders will also be left with low inventory levels resulting in rise in demand and prices to the extent of around $200 per ton in the March quarter.
The shutting of a silico manganese plant by diversified miner BHP Billiton and others like Transalloys, Ore & Metal and Privat will lead to a supply glut and fall in the inventory levels of the steel makers in Europe, Indian ferro alloy makers said. “This will lead to a rise in demand from the European steel makers in the March quarter,” officials in ferro alloy companies said. They said the appreciation of rupee to `51-52 levels against the dollar from earlier levels of `55 will not lead to a substantial rise in exports of silico manganese immediately because the DEPB benefit will be slashed to
Indicative prices Price as on October 9, 2012
Price as on August 17, 2012
Price as on July 2, 2012
Price as on April 19, 2012
Silico Manganese (60-14)
$960
$950
$1,100
$1,150
Silico Manganese (65)
$1,060
$1,050
$1,200
$1,250
Ferro Manganese (70)
$980
$925
$1,020
$1,100
Ferro Manganese (75)
$1,030
$1,000
$1,080
$1,150
Ferro Chrome (60)
$0.92 (European Grade) and $0.85 (Chinese grade)
$0.93 (European Grade) and $0.89 (Chinese Grade)
$0.95
$1.05
Name of Alloy
34 Steel Insights, November 2012
Medium, small makers shut shop
F
aced with a situation of high raw material, power and labour cost, many medium and small ferro alloy makers in India have shut shop, according to information available with Steel Insights. The ferro alloys industry in India is in very bad shape and they are passing through a period of cut throat competition. All the manufacturers are making losses, banks are squeezing their limits, raw material cost is not coming down, power rates are going up, labour costs are going up and in this situation, companies are under pressure to shut down their plants, sources said. A lot of producers have already cut down their production by around 50 percent due to low demand and sharp fall in prices in September quarter. “If the situation continues for long then a couple of big players will also be impacted and forced to take hard decisions,” a ferro alloy source said. The overall ferro alloys market is currently very weak because of low demand from Europe and China. Europeans are expected to be back in the market by the January-March quarter. Industry officials in India expect that after the European officials are back from their holidays they will start picking up the material because they will have to stock for the fourth quarter. There is no stock of material with most of the steel makers in Europe and they will have no option but to buy. 2.1 percent from October 10, 2012 from 3 percent earlier. However, with the rise in demand from European steel mills, export levels are expected to increase in the next quarter. Meanwhile, manganese ore October prices were down by $0.50 and it is expected to fall by $0.30 in November, the ferro alloy makers said. “November prices will be decided during the current week and it will depend on Chinese demand,” ferro alloy sources said.
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Auto sector downtrend continues, sales dip in Sept
Steel Insights Bureau
T
here is no escaping the economic slowdown, not for the Indian automobile sector. In line with the lukewarm sales in the recent past, the industry showed continued downtrend in September 2012, producing 6 percent less than what it did the same month last fiscal. The numbers showed total production of 1,672,797 vehicles in September 2012 as against 1,773,154 in September 2011. The cumulative production data for AprilSeptember 2012 also showed a production growth of only 2.44 percent over the same period last year. A significant development during the month has been the launch of Maruti’s new model – Alto 800 – which was received well by the market. "So far this festive season, there has been 15 per cent increase in overall
bookings compared to last year. The growth is coming from across our models but the new Alto 800 has also received a very good response," Maruti Suzuki India Chief Operating Officer (Marketing & Sales) Mayank Pareek said. He said since its launch on October 16, the Alto 800 has received a total of 21,200 bookings. Also, Mahindra & Mahindra (M&M) reported record monthly sales in September. Overall, however, the market was marked by lack of demand and this in turn affected steel offtake at the mills leading to increased inventory, industry sources said. Going forward, the industry expects demand to remain subdued during the coming winter months but may pick up slightly during the festive weeks at the end of December. Domestic sales
According to data released by the Society of
Indian Automobile Manufacturers (SIAM), the overall growth in domestic sales during April-September 2012 was 3.62 percent over the same period last year. However, in September 2012 overall sales declined by 9.43 percent over September 2011. The passenger vehicles segment grew at 6.96 percent during April-September 2012 over the same period last year. Passenger cars declined by 0.27 percent, utility vehicles grew by 55.83 percent and vans sales dropped by 5.05 percent during April-September 2012 as compared to the same period last year. However, in September 2012 passenger car sales dropped by 5.36 percent over September 2011. Total passenger vehicles sales grew around 5 percent in September 2012 over the same month last year. The overall commercial vehicles segment registered growth of 3.71 percent in AprilSeptember 2012 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered negative growth of 12.49 percent, Light Commercial Vehicles grew at 16.04 percent. Three wheelers sales recorded marginal growth at 0.59 percent in April-September 2012. Passenger carriers grew by 4.29 percent during April-September 2012 and goods carriers registered de-growth of 13.21 percent during this period. Two wheelers registered a growth of only 3.12 percent during April-September 2012. Scooters and mopeds grew by 20.46 percent and 0.80 percent respectively. During AprilSeptember 2012, motorcycles declined by 0.79 percent over the same period last year. However, in September 2012 motorcycle and mopeds registered negative growth of 18.85 and 10.36 percent respectively over the same month last year. Exports
During April-September 2012, overall automobile exports registered negative growth of 5.96 percent. While passenger vehicles grew by 2.77 percent and commercial vehicles grew only by 1.91 percent, two & three wheelers declined by 3.75 and 30.91 percent respectively in April–September 2012 compared to the same period last year. In September 2012, car exports grew by 10 percent compared to last year September and two wheelers exports declined by over 11 percent during the same period.
Steel Insights, November 2012
35
feature Flat (non-alloy) steel import during H1
India’s steel imports up 38% y-o-y in H1 Steel Insights Bureau
S
teel imports by India was up 38 percent year-on-year in the first six months (April-September) of 201213, with China remaining the top sourcing destination followed by Korea and Japan. The other major exporters to India during the period were Russia and Ukraine. According to the latest (provisional) data available from the steel ministry, total imports by India during the first half of 2012-13 stood at 4.304 million tons (mt), about 38 percent up from 3.117 mt recorded for the same period last year. China’s share in total imports was a high 21 percent at 891,000 tons, while that of Korea and Japan were 18 percent and 14 percent, respectively. Country wise imports in April-Sept, 2012 (in ‘000 tons)
Country
Apr-Sep 12
Apr-Sep 11
Growth %
China
891.04
587.35
52
Japan
622.7
397.86
57
Korea
766.9
604.28
27
Russia
359.78
154.7
133
Ukraine
214.13
238.18
-10
Others
1450.24
1134.71
28
Total
4304.79
3117.08
38
HR coil imports
HR coil/strips made up bulk of the flat (non-alloy) steel imports into India during the April-September period of 2012-13, the provisional data showed. The volume of HR coil/strips was 813,000 tons during the period, which was 27 percent higher than 640,800 tons recorded for the same period last year. Total flat (non-alloy) steel import during April-September 2012 was 2.678 mt, around 30 percent higher than 2.055 mt imported
36 Steel Insights, November 2012
(in ‘000 tons)
Category
Apr-Sep 2012
Plates
during the same period last year. Other than HR coil/strips, CR coil/sheets comprised a significant part of flat (non-alloy) steel imports by the country. Total volume of CR coil/sheets was 775,800 tons, about 8.3 percent higher than 716,200 mt recorded for the same period last year. However, imports of plates showed highest growth of 72% followed by imports of elect sheets, the data showed.
Apr-Sep 2011
Variation %
408.6
237.5
72
HR Sheets
60.6
26.2
HR Coil/ STRIPS
813
640.8
26.9
CR Coil/ Sheets
775.8
716.2
8.3
GP/GC Sheets/coils
224.6
156.2
43.8
Elect Sheets
198
120.9
63.8
TMBP
0.6
0.7
Production, consumption down
Tin Plates
72.4
54.9
31.9
Meanwhile, India’s finished steel production fell by 3.4 percent month-on-month in September 2012 when compared with August, the (revised) provisional steel ministry data shows. The steel ministry releases the revised provisional data at the month end after the release of the preliminary provisional data at the beginning of the month. The data shows that production by SAIL, RINL, Tata Steel, JSW and Essar declined month-on-month. However, production by JSPL recorded impressive growth in September as compared to August. Also, India’s steel consumption fell by 1.3 percent month-on-month in September 2012 when compared with August. The data showed that on year-on-year
Tin Plates w/w
16.6
13.4
24.5
Tin Free Steel
34.1
24.3
40
Pipes
73.8
64.6
14.2
Total
2678.1
2055.8
30.3
Source: Ministry of Steel
basis consumption rose 4.3 percent. Imports rose 22.2 percent month-on-month in September when compared with August and on year-on-year basis imports rose 19.7 percent. Exports rose 2.1 percent month-onmonth in September when compared with August and on year-on-year basis exports rose 38.3 percent.
Steel production, import, export, consumption for Sept v/s August (in ‘000 tons)
Sl no
Item
1
Steel Production
2 3
4
5
12 Sep
12 Aug
% Variation
11 Sep
% Variation
6106
6324
-3.4
5986
2
Import
578
473
22.2
483
19.7
Export
448
439
2.1
324
38.3
Availability (1+2-3)
6236
6358
-1.9
6145
1.5
Variation in stock
306
310
Apparent consumption
6542
6668
Double Counting
-456
-502
Real consumption
6086
6166
Source: Ministry of Steel
127 -1.9
6272
4.3
437 -1.3
5835
4.3
feature
India’s steel demand to grow 5.5% in 2012: Worldsteel
Steel Insights Bureau
A
mid unfavourable domestic and external economic conditions, India’s steel demand growth is projected to slow down to 5.5 percent in 2012 and 5 percent in 2013, according to the World Steel Association (Worldsteel) 2012 Short Range Outlook (SRO) for 2012 and 2013, the half year revision from its April 2012 statement. India’s apparent steel use will reach 73.6 million tons (mt) in 2012 and 77.3 mt in 2013, Worldsteel said. It forecasted that global apparent steel use will increase by 2.1 percent in 2012, which is considerably lower than the 6.2 percent growth achieved in 2011. In 2013 world steel demand will grow by 3.2 percent and reach a record high of 1,455 mt. Hans Jürgen Kerkhoff, chairman of the Worldsteel Economics Committee said, “Earlier this year we were seeing some signs of recovery from the slowdown of the last quarter of 2011 and we expected a better second half performance in 2012. However,
the economic situation deteriorated during the second quarter of this year due to continued uncertainty arising from the debt crisis in euro zone and a sharper than expected slowdown in China. These factors have weighed heavily on business confidence and manufacturing activities around the world. As a result momentum in both the developed and emerging part of the world weakened considerably. However, we expect the situation to gradually improve in 2013 on the basis that the euro zone crisis can be contained, the US successfully deals with the fiscal tightening due in 2013 and the economic stimuli measures secure a soft landing in China. Since the 2008 economic crisis, uncertainty and volatility has become the norm for the steel industry but it is worth noting that world steel demand has maintained positive growth despite all the headwinds and lingering difficulties”, he concluded. Steel demand in China is expected to increase by 2.5 percent to 639.5 mt in 2012 after 6.2 percent growth in 2011. In 2013, government stimulus measures are likely to moderately improve the economic situation. This follows sluggish exports resulting from the global economic slowdown. Thus China’s apparent steel use is expected to rise by 3.1 percent and will reach 659.2 mt in 2013. Apparent steel use in NAFTA is expected to grow by a healthy 7.5 percent in 2012 to 130.4 Mt, due to improvements in construction activities and a strong performance from the automotive industry but in 2013 steel demand growth will slow to 3.6 percent. Apparent steel use will reach 135.1 mt in 2013. Most countries in Central and South America are also facing headwinds from the poor external economic environment as well as domestic tightening. Apparent steel use in the region is forecast to rise by 3.8 percent in 2012, but in 2013 it is projected to grow by 6.3 percent and reach 50.4 mt.
Apparent steel use (ASU) in regions ASU, mt
Region
2011
2012 (f)
2013 (f)
153.1
144.5
148.1
Other Europe
33.2
34.4
36.0
CIS
54.8
55.2
57.4
121.3
130.4
135.1
Central & South America
45.7
47.4
50.4
Africa
23.9
25.3
27.3
Middle East
48.2
49.9
52.8
900.6
922.2
947.9
1,380.9
1,409.4
1,454.9
European Union
NAFTA
Asia & Oceania World Source: Worldsteel
With the debt crisis in the euro zone weighing heavily on the economic activities of the countries in the region, apparent steel use in EU 27 is expected to decline by -5.6 percent in 2012. In particular, apparent steel use in Spain and Italy in 2012 is expected to fall by -11.9 percent and -12.6 percent, respectively. The most resilient country Germany will also experience a decline of -4.7 percent in 2012. In 2013, the situation is expected to improve and steel demand in EU 27 will recover by 2.4 percent. Steel demand in Europe, however, remains at a depressed level and economic growth between countries continues to be uneven. Japan’s apparent steel use is projected to increase by 2.2 percent to 65.5 mt in 2012 aided by the reconstruction activities and government stimulus measures. However, the manufacturing sector is struggling with the strong yen and falling exports and in 2013 steel demand in Japan will decline by -2.9 percent to 63.6 mt. In the CIS, apparent steel use is forecast to rise by 0.8 percent in 2012 and by 3.9 percent in 2013, much slower than the 13.8 percent achieved in 2011. Steel demand in 2012 will be 55.2 mt and 57.4 mt in 2013. The developing and emerging world overall will see their steel demand growing by 3.0 percent and 3.7 percent in 2012 and 2013 respectively, whereas in the developed world steel demand will contract by -0.3 percent in 2012 and then grow by 1.9 percent growth in 2013.
Steel Insights, November 2012
37
Corporate
JSW Steel Q2 net profit soars Steel Insights Bureau
J
SW Steel, one of the leading steelmakers of the country has witnessed a positive growth in its second quarter (JulySeptember) standalone net profit which jumped by nearly 547 percent to `822.26 crore from `127.12 crore on higher volumes and rupee appreciation impact. The company has gained around `422.38 crore due to 6.4 percent appreciation in the value of the rupee against US Dollar during the second quarter and this has been treated as exceptional in nature, a senior official of JSW told Steel Insights. “Due to 6.4 percent appreciation in the value of the rupee against US Dollar during the second quarter of 2012-13, the gain of `422 crore on re-statement of foreign currency monetary items at close of the quarter credited to profit and loss account has been considered by the company as exceptional in nature,” the company said in a release.
38 Steel Insights, November 2012
Net sales for the quarter stood at `8833.73 crore, up nearly 16 percent from `7625.06 crore in the corresponding quarter of 2011-12 whereas expenses rose by 16.13 percent to `7826.92 crore from `6739.90 crore, it said. The finance cost rose by nearly 60 percent to `420.75 crore during the quarter from a low of `263.54 crore in the corresponding quarter of previous year, the release added. In fact, the company’s consolidated net sales during the quarter increased by 16 percent to `9475.24 crore as compared to `8133.93 crore in the corresponding quarter of 2011-12 whereas net profit increased by 584 percent to `617.29 crore from `90.20 crore. Production scenario
JSW Steel Ltd’s crude steel production on standalone basis during the second quarter (July-September) of 2012-13 rose by 25 percent to 2.17 million tons (mt) taking the production during the first six months of
Punita Kumar joins JSW Steel as additional director JSW Steel Ltd has appointed Punita Kumar Sinha as an additional director with effect from October 28, 2012. Punita, who is the founder and managing partner of an independent advisory & management firm called Pacific Paradigm Advisors, has over 20 years’ experience in fund management and emerging markets. Prior to setting up Pacific Paradigm in 2012, she was heading Blackstone Asia Advisors LLC and was its chief investment officer. She was also a senior managing director of the Blackstone Group LP. She had also worked with Asia Tigers Fund and Asia Opportunities Fund LP. With the induction of Punita Kumar Sinha, the company currently has a total of 14 directors, out of which eight are independent directors.
Corporate financial year to 4.32 mt showing a growth of 26 percent. The production was up despite constraints in iron ore supplies which forced the company to operate at about 80 percent capacity utilisation during the quarter, the company said in a release. JSW said that its total saleable steel during the quarter stood at 2.17 mt, up by 15 percent and at 4.28 mt during the first half of the year, up by 19 percent. Of the total saleable steel during the quarter, semis accounted for 0.11 mt showing a growth of 39 percent over the corresponding quarter of previous financial year whereas Flat (rolled) sales stood at 1.66 mt, up 13 percent and Long (rolled) sales rose by 19 percent to 0.40 mt, the release said. The sales of semis during the first half fell by 26 percent to 0.16 mt while that of Flat (rolled) and Long (rolled) increased by 21 percent and 25 percent to 3.33 mt and 0.79 mt respectively, the release added. However, HR coils production at JSW Ispat Limited during the quarter stood at 0.64 mt with capacity utilisation of 78 percent. Operating EBITDA stood at `205 crore and net profit at `122 crore after considering
Input crisis to hit Indian steel sector: JSW India’s largest steel maker, JSW Steel Ltd, expects that domestic steel demand will remain study but rising imports and availability of mineral resources will be major deterrents for Indian steel industry. “Rising imports and availability of mineral resources will be major deterrents depriving Indian steel industry a level playing field compared with their global peers,” JSW said in a release after announcing second quarter (April-September) financial results. Indian steel industry has witnessed a subdued demand growth of 2.8 percent during the period JulySeptember 2012 compared with a 7.7 percent growth witnessed during the same quarter of 2011, it said. JSW said import of steel to India from FTA countries is a major concern to steel makers even as the Indian economy is expected to get back in growth mode post recent economic reform announcements. According to the company, global economic situation continues to remain challenging with increasing uncertainties, impacting the prospect of economic growth across geographies. In this context, JSW pointed that continuing recessionary trends in Europe and slowing Chinese economy are expected to hold world steel production at previous year’s level of 1518 million tons. The world’s crude steel production for the first nine months of 2012 at 1149 million tons recorded a marginal growth of 0.6 percent even as some countries like US (5.3 percent), Russia (4.3 percent) and Korea (3.0 percent) have recorded a reasonably good growth in steel production during the first nine months of 2012, it said.
exception items credit of `235 crore which includes Forex gain of `158 crore and write back of provision of `105 crore. Operations abroad
However, the company said that capacity utilisation at its plate and pipe mills in the US was 31 percent and 21 percent during the quarter resulting in a production of 0.08 mt and 0.03 mt, respectively. On the other hand, during the quarter, the iron ore mining company at Chile made two shipments aggregating 0.15 mt and the coal mining company of the US made shipments of 0.02 mt. JSW refutes allegations
JSW Steel Ltd, which has been caught-up in the illegal mining scandal, has refuted allegations that the company indulged in any “criminal conspiracy”. In a statement the company said that, the charge that the company caused losses amounting to `890 crore to the publiclyowned Mysore Minerals Limited (MML) were “misleading”. It alleged that the adverse media coverage, based on the press release of the Central Bureau of Investigation, has caused “irreversible loss/harm” to JSW Steel. “The company and its officials are yet to be served with a copy of the charge sheet,” it said. The company claimed that neither the Lokayukta Court nor any other authority in the State has ever made the charge that JSW Steel has caused losses to MML, despite the two companies operating a joint venture for over a decade. The company had filed case against MML for `216 crore, which was “illegally recovered” from the joint venture, it said. JSW Steel alleged that the governments in the State had failed to abide by an order issued in October 1994 to make available power, water, captive mines and other infrastructure for the company’s operations in Bellary district. The state government’s failure “to place the fact before the public/authorities” has “maligned” the image of the company, it said. Though the company is aggrieved, yet its image is being maligned, it said.
Steel Insights, November 2012
39
Corporate
Nippon-Sumitomo merger to put pressure on Indian firms Steel Insights Bureau
T
are facing slack market condition. Increased competition from abroad may worsen the price and margin pressures,” they said.
he recent merger of Japan’s two leading steelmakers, Nippon Steel and Sumitomo Metal, is expected to A mega merger put pressure on Indian steel manufacturers, As per the arrangement, the new firm, Nippon going forward. The two steel majors, Steel & Sumitomo Metal Corp (NSSMC), which announced their merger on October will be a wholly owned by Nippon Steel and 1, have already pronounced that China Sumitomo Metal Corporation. The merger and India would be their target markets. is aimed at reducing cost of operations and Market analysts believe that it might result leveraging synergies. “The new company in increased competition for the local aims to realise integration synergies quickly manufacturers which would be compelled and become an efficient, profitable and to maintain prices despite slack market competitive logistics company,” the two companies had said. conditions. Earlier, the two companies formed Interestingly, the development comes barely a month after some Indian an alliance in 2002, and said they aim to manufacturers expressed worries over the streamline operations to improve their increased imports of cheap steel from Japan competitiveness amid a shake-up of the and South Korea. They also demanded that global steel industry. Nippon Steel is Japan’s steel be removed from the purview of India’s largest steel company (world’s sixth largest), free trade agreement (FTA) with the two while Sumitomo Metal Industries is the third largest (27th-ranked in the world) in that Asian economic powers. “India has an FTA with Japan and South country. Korea. The economies of these two are not The two Japanese firms produced a doing well, especially Japan. So, they are sort combined 46.1 million tons (mt) of crude of exporting a lot of steel into India at a very low price, taking advantage of such FTAs,” JSW Steel’s chairman and managing director Sajjan Jindal told reporters on the sidelines of an Assocham steel summit. In view of the above concerns, the analysts said, the mega merger which created the world’s second largest steelmaker after Luxembourg-based ArcelorMittal, would add to the pressure on the Indian industry. “For some time now, the Nippon Steel President Shoji Muneoka and Sumitomo Metal President Indian manufacturers Hiroshi Tomono announcing the merger
40 Steel Insights, November 2012
steel in 2011, according to the World Steel Association (WSA), topped only by ArcelorMittal on 97.2 mt. The new firm would replace Hebei Group, which has a production of 44.4 mt, to emerge as the second largest steelmaker in the world. Following the announcements of the merger, the new firm said it aims to boost its annual output to as much as 70 mt tons within the next five to 10 years. Meanwhile, Nippon Steel reported a net 87.5 billion yen ($1.1 billion) loss in the April-July quarter, which it mostly attributed to losses on investments in securities due to weakness in stock prices. According to reports, it is the first takeover in Japan’s steel industry since NKK and Kawasaki Steel joined forces in 2002 to create Japan’s second largest steel maker, JFE Holdings Inc. Impact on market
Although a distant second to ArcelorMittal, the merged entity would have significant impact on the global market. Global competition in the steel industry has intensified in recent years even as demand has been spurred by emerging economies such as China and India. These target markets are undertaking massive construction, infrastructure and manufacturing projects and therefore comprise the bulk of demand globally. In 2011, global steel production stood at 1,527 mt. The supply side is dominated by China, the largest producer, followed by Japan which has a production of around 107.6 mt. Industry sources said the new firm will try to export more to India, where the demand for steel is growing as compared to other consuming pockets. Japanese steel mills have, in the recent past, stepped up exports to the Indian market cashing on the FTA signed between the two countries. This new development may exert further pressure on the Indian steel makers to maintain prices. The newly formed entity, Nippon Steel & Sumitomo Metal Corp., has also said that it aims to expand its global operations, especially in China, India and other emerging countries, where demand is expected to grow, while consolidating operations in the shrinking Japanese market.
Corporate
ArcelorMittal profitability dips Steel Insights Bureau
A
rcelorMittal, the world’s leading integrated steel and mining company with a presence in more than 60 countries, has witnessed a drop of 50.2 percent in the company’s EBITDA to $236 million as compared to $474 million in 2Q 2012. In the third quarter of 2012, lower profitability was primarily driven by North American operations due to lower selling prices and one time labor cost ($72 million impact related to one-time signing bonus and post-retirement benefit costs following entry into the new US labor contract) combined with lower steel shipment volume, the company said in a statement. According to company sources, ArcelorMittal’s net income for the nine month period ended September 30, 2012 stood at $0.3 billion, or $0.17 per share, as compared to net income for 9M 2011 of $3.3 billion, or $2.11 per share. Total steel shipments for the nine month period 2012 were lower at 63.8 million tons (mt) as compared with 65.2 mt for corresponding period of 2011. However, sales during this period decreased by 9.3 percent to $64.9 billion as compared with $71.5 billion for corresponding period of 2011 primarily due to lower average steel selling prices (-8.1 percent) and lower steel shipments (-2.2 percent). Impairment charges during the first nine months of 2012 totaled $199 million, primarily related to the intention to launch a project to permanently close the liquid phase at the Florange site in France ($130 million) and the extended idling of the electric arc furnace and continuous caster at the Schifflange site in Luxembourg. Impairment expenses for 9M 2011 were $103 million relating to a rolling facility in the Long Carbon Americas segment as well as costs associated with the decision to close two blast furnaces, sinter plant, steel shop and continuous casters at Liege, Belgium. Net debt of the company increased by $1.2
billion during the third quarter of Lakshmi N. Mittal, Chairman 2012 to $23.2 & CEO, ArcelorMittal billion, driven by negative operating cash flow (including a $0.3 billion investment in working capital) and negative foreign exchange impacts partially offset by proceeds from asset disposal and an issuance of perpetual securities, the statement said. Management gains plan completed with $4.8 billion savings achieved ahead of schedule while steel shipments of 19.9 million tons (mt) took place in 3Q of 2012, a decrease of 8.3 percent as compared to 2Q 2012 and 5.7 percent below 3Q 2011. On the other hand, 14.3 mt of iron ore produced in 3Q 2012, up by 1.3 percent YoY while 7.1 mt was shipped and reported at market price which was up by 6.7 percent YoY. Challenges
The Q3 2012 fall in the iron ore price and the weaker global economic backdrop adversely impacted steel prices and steel volumes as well as the profitability of the company’s mining operations affecting ArcelorMittal’s expectations for group profitability in the second half of 2012. According to company sources, excluding any proceeds from future asset sales, net debt is expected to be approximately $22 billion by year end since deleveraging is a priority as the company continues to target an investment grade credit rating. According Lakshmi N. Mittal, chairman & CEO of ArcelorMittal, “The already fragile global economy was further impacted in the third quarter of 2012 by the slowdown in China. This resulted in very challenging operating conditions for ArcelorMittal, which are expected to continue in the fourth quarter.” “Against this backdrop, the company is focused on delivering its plan of asset optimisation, net debt reduction and productivity and efficiency improvements,” he added.
Europe segment reports €303-m Q3 loss ArcelorMittal’s Flat Carbon Europe segment for the third quarter of 2012 recorded an operating loss of €303 million which includes restructuring costs but excludes interest and tax costs. The total operating loss now for the first nine months of 2012 stood at €643 million reflecting the continued difficult operating environment in Europe where further weakening of demand has combined with a seasonal slowdown. Compared to Q2 of 2012, the segment’s crude steel production fell 5.9 percent to 6.7 million tons (mt) in Q3 of 2012. Steel shipments for Q3 2012 fell to 5.8 mt, a decrease of 13.8 percent as compared to 6.8 mt for Q2 of 2012 and a decrease of 8.6 percent as compared to 6.4 mt for Q3 of 2011. Sales stood at €4.9 billion for Q3 of 2012, a decrease of 12.5 percent as compared to €5,6 billion for Q2 of 2012. Sales decreased primarily due to lower steel shipment volumes and lower average steel selling prices. Europe has seen declining GDP since the 3rd quarter of 2011 due to continuing decline in investment and consumption, as austerity and record unemployment weigh on demand. No sustained pick-up in Europe is expected before 2014 and the eurozone as a whole is likely to at best stagnate in 2013. PMI remains below 50 for a fifteenth month indicating manufacturing contraction. Apparent steel demand in the European Union in the first three quarters of 2012 is estimated to have declined around 9.5 percent year on year and we expect it to decline by close to 8 percent for the year as a whole. EU demand is now at least 28 percent below 2007 levels.
Steel Insights, November 2012
41
Corporate
SAIL production up 7% y-o-y in Q2 Steel Insights Bureau
S
teel Authority of India Limited (SAIL), the public sector steel behemoth, has recorded a growth of 7 percent in hot metal production in the July-September quarter of 2012-13 over corresponding period last year, with a production of 3.6 million tons (mt), according to information available with Steel Insights. Growth in crude steel and saleable steel production was 5 percent and 4 percent, with production of 3.39 mt and 3.17 mt in the second quarter respectively. There was 6 percent growth in hot metal production and 4 percent growth in production of crude steel as well as saleable steel in September 2012, over the same month last year. Blast furnace productivity showed substantial increase of 8 percent year-on-year in Q2. On the other hand, in the AprilSeptember period of 2012-13 also, 3 percent year-on-year growth was registered in production of both hot metal and crude steel. Improved techno-economic parameters in H-1 of current fiscal supported the growth trend with BF productivity, specific energy consumption and coke rate registering improvements of 4 percent, 3 percent and 2 percent respectively, the statement said. Bhilai production
Bhilai Steel Plant of SAIL produced 2.68 million tons (mt) of hot metal, 2.59 mt of crude steel and 2.21 mt of saleable steel, recording growth of 5.7 percent, 8.1 percent and 6.1 percent, respectively over that recorded in the first half of previous fiscal year, a company source informed Steel Insights. Production of 1.35 mt of cast steel at SMS-2 has been the best ever for any H1 period, surpassing the previous best figure of 1.32 mt recorded in H1 of 2010-11. Production of rails and structurals which stood at 473,700 tons has been the best ever
42 Steel Insights, November 2012
for any H1 period surpassing the previous best figure of 468,300 tons recorded in H1 of 2008-09. Loading of UTS 90 rails at 385,300 tons has also been the best ever for the period surpassing the previous best figure of 379,700 tons recorded in H1 of 2009-10. Loading of long rails at 70,600 tons has also been the best ever surpassing the previous best of 66,500 tons in H1 of 2011-12. The plant continued to maintain its high proportion of special steel grades in total saleable steel production in the first half period (April to September) of current fiscal year. The plant’s wire rod mill recorded a total production of 3.16 lakh tons of special steel grades out of the mill’s total production of 3.20 lakh tons in H1 period. The mill’s special steel production included 1.72 lakh tons of TMT wire rods, 88,360 tons of electrode quality wire rods and 55,770 tons of SWR-10/SAE special grade wire rods.
Work on SAILKobe JV to begin in a year Steel Authority of India Ltd (SAIL) expects to begin construction work within a year on a 50:50 iron making joint venture in India with Japan’s Kobe Steel, industry sources said. The JV – named SAIL-Kobe Iron India – envisages a 500,000 tons per year iron nuggets plant incorporating Kobe’s ITmk3 technology and built in SAIL’s alloy steelworks at Durgapur. The necessary approvals for environmental clearances are under progress and in less than one year the company should be in a position to start the project, sources said. The timing is in line with Kobe’s earlier expectations of beginning construction work in 2013 and commercial operations in 2015. The special steel component in merchant mill’s total production of 3.13 lakh tons in H1 period was 2.19 lakh tons, including 2.14 lakh tons of the earthquake resistant and high corrosion resistant grades of TMT bars. The plant’s plate mill produced 2.42 lakh tons of special steel grades in H1 period including boiler quality, high tensile and copper bearing grades, normalised plates, ship building quality and thicker plates. It is worth mentioning that out of the total exports of 86,361 tons in April to September period, the export of plates have been 72,695 tons. Capacity expansion
SAIL’s capacity expansion of its unit, Rourkela Steel Plant (RSP), is expected to be completed by the end of this year. As part of the ongoing expansion and modernisation, a new state-of-the-art blast furnace is being constructed at RSP, sources said. This new blast furnace will enable the steel plant to raise its capacity to 4.5 million tons per annum (mtpa) from the existing 2 mtpa, according to sources.
Corporate
Tata Steel launches new hot rolled products brand ‘Tata Astrum’ Steel Insights Bureau
T
ata Steel, one of the leading steelmakers of the country, has unveiled ‘Tata Astrum’, a new brand of its Hot Rolled products range, the company said in a statement. With this the Company has made a foray into branding of HR products in the SME segment for the first time and this initiative is aimed at de-commoditising steel and offering the best-in-quality product to customers, the statement said. Tata Astrum follows the success in the market of other Tata Steel brands, such as
Tata Tiscon (rebars), Tata Shaktee (roofing sheets), Tata Steelium (cold rolled sheets), Tata Galvano (galvanized sheets), Tata Structura (hollow sections), Tata Bearings (bearings), Tata Agrico (agricultural implements), etc. Tata Astrum HR coils and Sheets will be produced from two of Tata Steel’s mills at Jamshedpur and will be available in 1.6 mm to 16 mm thickness range. Customers will be served through Tata Steel’s authorised distributors. A total of 42 such distributors have been appointed across the country each of whom will have a tie-up with service centres that will be certified by Tata Steel for quality
Posco to get additional land in 2 months Steel Insights Bureau
A
cquisition of an additional 700 acres of land for the Posco mega steel project which was stalled temporarily due to the company’s lack of commitment on periphery development work is set to be completed in two months, industry sources said. While the state government had acquired 2,000 acres of land, the South Korean steel major needed an additional 700 acres for setting up an 8-millionton (mt) plant in the first phase. The
company, which needed 4,004 acres in all, would later scale up capacity to 12 mt after receipt of the balance land. Though the state government had acquired 2,000 acres of land for the Posco project, only 548 acres was transferred to the company. Despite being the biggest foreign direct investment (FDI) of the country, the Posco’s steel project near Paradip in Jagatsinghpur district has not taken off for several reasons, including delay in land acquisition due to strong local resistance. Significantly, though the memorandum of
products. The material will be supplied to customers in processed form out of the service centres. “Tata Steel is constantly endeavouring to enhance customer satisfaction. With the launch of Tata Astrum, Tata Steel is offering convenience to its customers through consistent availability of ready-to-use quality HR products,” said T. V. Narendran, Vice President, Safety and Flat Products of Tata Steel. The Astrum product range will be used in the Automotive, Earth Moving Equipment, Railways, Fabrication, Construction and Industrial Machinery segments. The size of the domestic market for hot rolled products in the SME segment is pegged at 6 mtpa. Tata Astrum hopes to garner a market share of 17-18 per cent in this segment in FY’14. This is expected to generate revenue of approximately Rs 4,000 crore for the Company, the statement further added.
understanding (MoU) signed between the State Government and Posco for setting up a 12- mt capacity steel plant expired on June 21, 2010, it still remains yet to be renewed. In the recently held meeting between the Posco India’s Chairmancum-Managing Director (CMD) Yong Won Yoon and Odisha’s Chief Minister Naveen Patnaik, Yoon told mediapersons after the meeting that Posco had already submitted the documents for the renewal of the MoU to the State Government. Though the company had initially proposed to set up a 12-mtpa mega steel plant at an investment of `52,000 crore, it revised its plan and reduced capacity of its proposed project to 8 mtpa in view of difficulty in land acquisition. On cost escalation of the project because of the delay, Yoon said it will be assessed after the work starts. He also refused to comment on the closure of the VAL at Lanjigarh.
Steel Insights, November 2012
43
Corporate
Verma stresses on RINL marketing strategies Steel Insights Bureau
S
teel minister Beni Prasad Verma called upon RINL to evolve innovative marketing strategies to perform better and intensify its marketing efforts in rural areas, according to information available with Steel Insights. Verma was reviewing the company’s first half performance. RINL posted growth in hot metal, liquid steel and value added steel production, captive power generation, operating profit and profit after tax during H1 of 2012-13. A marginal shortfall in the Saleable Steel production was registered due of acute power crisis in the Andhra Pradesh as well as heavy rainfall. The weakening demand of long products marginally impacted the sale of long products in the country. RINL took steps like correction in prices to improve sales. During H1, RINL improved its rural marketing network by 69 percent and growth in sales increased to 88 percent. Significant growth was achieved in converter lining life, specific water consumption and labour productivity. RINL paid `1414.51 crore to the government in H1 towards dividend and redemption of preferential capital.
On the expansion front, new Blast Furnace, Oxygen Plant, Turbo Blower, Power and Utility Systems were commissioned and are currently in operation. Order for new Pressure Reducing Station has been placed and is expected to be commissioned by March-April 2013. The balance units viz., sinter plant and wire rod mill would be commissioned by end of 2012. The company signed a Memorandum of Understanding (MoU) with NMDC for transportation of iron ore through slurry pipeline from Bailadilla to Visakhapatnam and setting up of pelletisation plant at Visakhapatnam. RINL also signed a MoU with Power Grid Corporation of India for manufacturing of transmission line towers and another MoU for manufacturing CRGO and CRNO steel. The company’s expenditure on CSR activities grew by 10 percent during the review period. According to industry sources, RINL is also planning to diversify into flat steel production. In fact, the company has ramped up capacity to 6.3 million tons per annum (mtpa) from 3.3 mtpa. Output from these units would consist entirely of long steel products.
Gujarat NRE Coke Q2 PAT doubles Gujarat NRE Coke Ltd more than doubled its profit after tax for the July-September quarter of 2012-13 to `16.72 crore as against `8.04 crore in the same period last year. The total income for the second quarter also registered a rise of around 23 percent which stood at `331.83 crore as against `270.04 crore in the corresponding quarter last year. Gujarat NRE’s Australian coking coal mining subsidiary has been continuously
44 Steel Insights, November 2012
increasing its coking coal production for last few quarters. Gujarat NRE Coking Coal Ltd (GNCCL) has registered a 60 percent rise in the total H1 2012 coking coal production, up to 906,000 tons from 568,000 tons in the corresponding half yearly production in H1 2011. GNCCL also registered the highest quarterly production in a quarter in Q2 2012 which stood at 544,000 tons, while sales increased by 34 percent in Q2 2012 (486,000 tons) over Q2 2011 (363,000 tons).
Govt against foreign majority stake in JVs The Indian steel ministry said that Posco and Severstal cannot have majority stakes in their proposed JVs with state-run SAIL and NMDC respectively, media reports said. Steel minister Beni Prasad Verma told the media that talks are going on and there are problems with regard to the shareholding. “We cannot give them land and all facilities, and still have minority shareholdings in the ventures,” he said. He declined to give a timeline on when the deals are likely to be sealed. He said that “These can be finalised only when Posco and Severstal agree to give our companies 51 percent stakes in both the JVs.” SAIL had signed a memorandum of understanding with South Korea’s Posco to form a JV company at Bokaro in Jharkhand for setting up a 3-mtpa steel making unit in 2011 at an investment of `16,000 crore. NMDC had inked an MoU with Russia’s second largest steel maker Severstal in late 2010 for a 3-mtpa plant initially in Karnataka involving around `20,000 crore investment. Differences on shareholding issues continue to come in the way of formation of the two steel making ventures, as both the foreign firms are insisting on owning majority stakes in them.
Further expansion of crude steelmaking capacity to 11.5-12 mtpa would be for flat steel production of 4-4.5 mtpa. This would include production of hot rolled coil of up to API X100 grade as well as coils to feed a planned silicon steel mill that would produce cold rolled grain-oriented and non-grain oriented steel.
social buzz
Iron ore, new steel projects are of prime interest Steel Insights has started a group on LinkedIn called India Steel Market Watch (ISMW). The readers are welcome to join the group and participate in daily conversations and surveys conducted by ISMW on the online forum. Steel Insights may, at its discretion, publish the results of such surveys and discussions for the benefit of a larger audience.
Steel Insights Bureau
A
s the Indian steel industry wades through a slack market scenario, the community on ISMW identifies issues related to iron ore and new steel projects as of prime interest. News about domestic ore makers facing competitive import offers caught attention of the members who agreed with the reports. There is a unanimous view in the industry about the need for large scale pelletisation in the country and the ISMW could be no different. Yet another major concern is about the long stuck-up steel projects of Posco and ArcelorMittal. However, nobody seems to hold an answer to the land acquisition hurdles, which is likely to take immense proportions going forward. Recently, an industry bigwig said it was becoming difficult to get land in Odisha even at a whopping offer of `12 lakh per acre. One only hopes the government has some solution in mind.
Posco waits on
There is something about Posco India other than steel. Seven years on, the steel major continues to hold patience and remain optimistic. Recent reports say the company is expecting acquisition of 2,700 acres of land for setting up its 8 million tons per annum (mtpa) steel plant near Paradip within 60 days. “The state government has indicated that it will hand over 2,700 acres of land required by us to set up an 8-mtpa capacity steel plant within two months,” Posco-India CMD Yong Won Yoon told reporters after meeting Chief Minister Naveen Patnaik last month. He further said that the company would start physical construction of the project as
soon as it got the required land. If not for anything else, industry sources said, the company deserves a fair treatment for its patience and optimism. Meanwhile, there was little news about the other steel major ArcelorMittal. But a merger between two Japanese steelmakers created ripples in the global steel market. Nippon, Sumitomo merger
The big news in recent past was the merger of Japan’s Nippon Steel and rival Sumitomo Metal Industries, which together created the world’s second largest steelmaker amid intensifying global competition. As of 2011, the two Japanese firms produced a combined 46.1 mt of crude steel, about half of ArcelorMittal’s production of 97.2 mt. Although still a distant second, the new combined entity is sure to be in a position to influence global prices. Industry sources termed the development as a very pragmatic step in view of the intensified competition and cost pressures facing the leading steelmakers in the global market. In fact, cost was the primary concern of the two companies which decided to go for the merger late last year. Met coke demand
In line with the domestic steel market, the metallurgical coke prices remained depressed in recent weeks. This was mainly due to the lack of firm interest in India, a coke maker told ISMW. However, he hoped some buying interest would return soon as historically steel demand rises post-October with construction project work starting off after monsoons. Commenting on the issue, Robert S, experienced corporate finance executive from Australia said, the scenario was about the same in the US. “It appears that there is oversupply in Eastern USA….Cannot see demand increasing until early 2013.”
Steel Insights, November 2012
45
logistics
Iron ore handling by major ports down 43% in H1 Steel Insights Bureau
M
ovement of iron ore through the 12 major Indian ports dropped 43 percent in the in the first half (April-September) of 2012-13 due to restrictions imposed on mining and a hike in export duty on iron ore. The major ports together handled 18 million tons (mt) of iron ore in the April-September period compared to 31.64 mt handled in the same period last year. Mormugao port handled the highest volume of 7.42 mt of iron ore in AprilSeptember. This volume, however, was about Traffic handled at major ports (During April to September, 2012* vis-a-vis April to September, 2011) (*) Tentative
Ports
(in ‘000 tons)
April to September traffic 2012*
% Variation against prev. year traffic
2011
KOLKATA Kolkata Dock System
5754
6203
-7.24
Haldia Dock Complex
14054
17005
-17.35
TOTAL: KOLKATA
19808
23208
-14.65
PARADIP
25629
27996
-8.45
VISAKHAPATNAM
30309
36097
-16.03
ENNORE
7997
6527
22.52
CHENNAI
27128
29269
-7.31
V.O. CHIDAMBARANAR
14037
13852
1.34
COCHIN
10134
9754
3.90
NEW MANGALORE
16736
16042
4.33
MORMUGAO
12656
16406
-22.86
MUMBAI
28789
26662
7.98
JNPT
32653
32348
0.94
KANDLA
44686
41568
7.50
TOTAL:
270562
279729
-3.28
46 Steel Insights, November 2012
37.54 percent lower than the iron ore traffic moved through the port in the same period last year. The 12 ports handled 270.56 mt of traffic during the period, 3.28 percent lower than 279.72 mt recorded during the same period last year. According to data released by the Indian Ports Association (IPA), the country’s major ports handled a total of 15.27 mt of coking coal in April-September period, up 2.93 percent as compared with 14.83 mt handled in the same period last year. Movement of coking coal through Paradip, Kolkata, Visakhapatnam, Chennai, Cochin and Mormugao ports declined during the period when compared to the corresponding period last year. Movement of container traffic in terms of tonnage and TEUs showed an increase in the April-September period. The major ports handled 60.90 mt of tonnage and 3.93 million TEUs in April-September period compared to 59.33 mt of tonnage and 3.89 mt of TEU in the same period last year. Seven major ports showed positive growth in traffic handling during the April-September period of the current fiscal, while the remaining five showed negative growth on a year-on-year basis. In terms of growth, Ennore port topped the list with a 22.52 percent increase in cargo throughput. JNPT’s growth was lowest at about 0.94 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of 44.68 mt recorded for the period. The Mormugao port registered the highest decline of 22.86 percent in traffic handling during the period due to fall in iron ore export.
Logistics
Railways commodity freight revenue down in September m-o-m Steel Insights Bureau
T
he Indian Railways’ revenue earnings from commodity-wise freight traffic fell month-on-month in September due to lower transportation of coal and iron ore. Revenue earnings from commoditywise freight traffic during September 2012 stood at `6,040.96 crore, down 4.54 percent
Commodity-wise revenue Commodity
Quantity (in mt) Sept 2011
Earning (`cr)
Sept 2012
Sept 2011
Sept 2012
151.52
206.65
Coal i) for steel plants
3.78
ii) for washeries
3.87
0.15
0.09
2.17
1.02
20.13
22.05
1299.43
1695.28
7.09
10.09
391.6
606.06
31.15
36.1
1844.72
2509.01
1.24
1.22
91.25
95.39
i) from steel plants
2.15
2.16
239.42
317.79
ii) from other points
0.59
0.57
38.21
49.79
iii) Total
2.74
2.73
277.63
367.58
i) for export
1.03
0.47
265.08
105.93
ii) for steel plants
3.69
5.04
127.59
205.79
iii) for other domestic users
iii) for thermal power houses iv) for public use v) Total Raw material for steel plants except iron ore Pig iron and finished steel
Iron ore
2.58
2.69
181.71
206.35
iv) Total
7.3
8.2
574.38
518.07
Cement
7.66
8.01
438.54
575.41
Foodgrains
3.76
3.57
334.77
488.2
Fertilizers
4.35
4.77
314.53
479.86
Mineral Oil (POL)
3.06
3.2
247.21
328.04
i) Domestic containers
0.77
0.74
71.91
75.55
ii) EXIM containers
2.43
2.49
204.48
216.29
3.2
3.23
276.39
291.84
5.71
4.9
377.94
387.56
70.17
75.93
4777.36
6040.96
Container Service
iii) Total Balance other goods Total revenue earning traffic
compared with `6,328.28 crore earned in August, according to information available with Steel Insights. The Railway’s revenue from transportation of coal fell to `2,509.01 crore in September from 2,537.7 crore in August. The Railways transported 36.1 million tons (mt) of coal in September compared with 36.69 mt transported a month ago. Revenue from transportation of iron ore for exports, steel plants and for other domestic user in September fell to `518.07 crore, down 16.55 percent from `620.84 crore in August. The quantity of iron ore transported fell to 8.2 mt in September from 9.21 mt in the previous month. Revenue from transportation of cement in September stood at `575.41 crore (8.01
mt) as compared to `551.57crore (7.52 mt) in August, while that from foodgrains transportation fell to `488.2 crore (3.57 mt) in September from `597.09 crore (4.22 mt) in August. The Railways revenue from transportation of fertilisers in September rose sharply to `479.86 crore (4.77 mt) from `427.08 crore (4.29 mt) in August. Revenue from transportation of petroleum oil and lubricant (POL) in September stood at `328.04 crore (3.2 mt), while the same from pig iron and finished steel from steel plants and other points was `367.58 crore (2.73 mt). Revenue from container services was `291.84 crore (3.23 mt) and from transportation of other goods was `387.56 crore (4.9 mt).
Steel Insights, November 2012
47
macro outlook
Macroeconomic indicators of India Steel Insights Bureau
89 84 79
INR vs GBP
INR vs USD, Yen
INR movement against select major currencies
73 71 69 67 65 63 61 59 57 55 53 51 49 47 45 43
74 69
Inflation rate in India USD
11.00% 10.00% 9.00% 8.00% 7.00%
9.87%
YEN
GBP
Source: rbi
10.00% 9.46% 7.69%
7.74% 7.23%
7.56%
7.55%
7.25%
7.23%
6.00%
7.81% 7.55%
6.87%
India’s rupee is falling as investors question the government’s ability to implement policies to boost growth, which the RBI predicts will be the least in a decade. INR fell 1.8 percent to 53.8150 per USD last month after rising 5.1 percent in September, when it was the region’s best performer. The INR is expected to fall further in the coming months as foreign investors might not invest in the economy.
Foreign Exchange Assets
5.00%
1700000
298000 296000
1650000
India’s wholesale price inflation accelerated to 7.81 percent in September from 7.55 percent in August as prices of fuel, potato, pulses, wheat and sugar soared. Food articles inflation increased 7.86 percent, while non-food article inflation was up 10 percent. Fuel & power index soared 11.88 percent, while manufactured products inflation was up 6.26 percent. The annual reading for July was revised up to 7.52 percent from 6.87 percent earlier. High inflation rate is likely to pressurise RBI to lower interest rates as its antiinflationary stance has hurt growth. The central bank expects inflation to remain at around 7.7 percent. India’s annual consumer price inflation fell in September to 9.73 percent from 10.03 percent in August, driven by a marginal fall in fuel and food prices.
230 220 210 200 190 180 170 160 150 140 130 120 110
Wholesale price index (Selected categories)
1600000
292000 290000
1550000
288000
1500000
286000 284000
in Rs crore
Source : OEA, GoI, Ministry of Commerce & Industry
in million $
294000
1450000
282000
1400000
280000
in Million $
in Rupees crore
Source: rbi
India’s forex reserves went up by a mere $55.6 million to $295.29 billion for the week ended October 26, as overseas investors withdrew more money from the local markets. Forex reserves may dwindle in the coming week as higher outflows may continue as New York remains virtually closed due to devastation caused by superstorm Sandy.
205
Index of Industrial Production
185 165 145
All Commodities Manufactured Products Basic Metals Alloys & Metal Products
Primary Articles Fuel & Power Steel
Source : OEA, GoI, Ministry of Commerce & Industry
India’s wholesale price index (WPI) (Base 2004-05=100) rose to168.4 in September as compared to 166.6 recorded in the previous month. Also WPI for July this year was revised to 165.8 this month. The index for primary articles group increased by 8.77 percent to 220.7 from 202.9 in September the previous year. The index for manufactured products group also rose by 6.26 percent to 147.7 from 139 in September 2011. Fuel and power index rose 11.88 percent to 188.3 from last year while index for basic metals and metal alloys rose by 7.46 percent to 167.2 on rising prices of the product globally. Steel index however remained unchanged.
48 Steel Insights, November 2012
125 105 Aug- Sep-11 Oct-11 Nov- Dec-11 Jan-12 Feb-12 Mar- Apr-12 May- Jun-12 Jul-12 Aug11 11 12 12 12 Mining & Quarrying Electricity
Manufacturing General Index
Source : Govt. of India, MoSPI
India’s industrial output rose modestly by 2.7 percent in August with the growth driven by consumer goods though not enough to end a long slump in Asia’s third-largest economy. In the April-August period, industrial production expanded an annual 0.4 percent. Manufacturing grew an annual 2.9 percent from a year earlier, statistics office said.
market report
World crude steel production World Crude Steel Production European Union (27)
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
14,962
15,404
14,727
14,240
12,073
14,105
Other Europe
3,081
3,282
3,146
3,261
3,188
3,197
9,570
9,615
9,243
9,172
9,250
9,597
North America
10,684
10,772
9,768
10,014
10,380
9,680
South America
4,075
3,972
3,835
3,934
3,829
3,600
Africa
1,223
1,260
1,209
1,207
1,199
1,161
Middle East
1,736
1,705
1,674
1,404
1,572
1,500
2,959
2,965
2,883
2,610
2,772
2,661
China
60,575
61,234
60,213
61,693
58,703
57,950
India
6,360
6,593
6,375
6,359
6,360
6,155
Japan
9,077
9,224
9,198
9,251
9,207
8,798
South Korea
5,915
6,032
5,764
5,908
5,632
5,602
Taiwan, China Asia
1,783
1,804
1,781
1,761
1,730
1,780
83,710
84,887
83,330
84,972
81,631
80,285
Oceania Rest of the world except China World
485
477
485
494
519
511
68,951
70,140
67,204
67,004
64,939
65,687
129,526
131,374
127,417
128,697
123,642
123,637
50 Steel Insights, November 2012
July12/11
June12/11
Apr12/11
May12/11
Mar12/11
Jan12/11
Feb12/11
Dec11/10
Oct11/10
Nov11/10
Aug11/10
Sep11/10
July11/10
June11/10
Apr11/10
May11/10
Mar11/10
Jan11/10
(in ‘000 tons)
C.I.S. (6)
Africa/Middle East
Feb11/10
Dec10/09
Oct10/09
Nov10/09
Aug10/09
Sep10/09
W
orld crude steel production for the 62 countries reporting to the World Steel Association (Worldsteel) was 123.637 million tons (mt) in September 2012 similar to that reported in August 2012 at 123.642 mt. However crude steel production for September 2012 was higher by just 0.57 percent compared to September 2011. In September 2012, Asia produced 80.285 mt of crude steel, an increase of 1.91 percent over September 2011. The EU produced 14.105 mt of crude steel in September 2012, down by 3.82 percent compared to the same month of 2011. North America’s crude steel production in September 2012 was 9.68 mt, 2.32 percent lower than the corresponding month of 2011. China, the single largest producer, produced 57.95 mt of crude steel in September this year, an increase of 2.2 percent as compared to the corresponding
period in 2011, when production stood at 56.7 mt. Again, m-o-m production saw a fall of 1.28 percent as compared to August’s produce of 58.703 mt Elsewhere in Asia, Japan produced 8.798 mt of crude steel in September 2012, a decrease of 1.01 percent compared to the same month last year. India’s production for September Crude steel production growth rate (Y-o-Y) 2012 stood at 6.155 mt, up 20.00% 3.45 percent 15.00% compared to 10.00% September 2011. South 5.00% K o r e a 0.00% produced 5.602 mt during the -5.00% same period, -10.00% a 1.8 percent increase on the same month China Rest of the world except China World 2011. July10/09
Chandrika Mitra
Aug12/11
Global crude steel production remains unchanged
Sept12/11
In the EU, Germany produced 3.6 mt of crude steel in September 2012, a decrease of 2.2 percent on September 2011. Italy’s crude steel production for September 2012 was 2.4 mt, down by 7.8 percent compared to September 2011. France’s crude steel production for September 2012 was 1.3 mt, a decrease of 3.0 percent on September 2011. In September 2012, Spain produced 1.2 mt of crude steel, 10.3 percent lower than September 2011 In September 2012, Russia produced 6.2 mt of crude steel, an increase of 15.1 percent compared to the same month last year. Ukraine’s crude steel production for September 2012 was 2.7 mt, 8.3 percent less than September 2011.
Turkey’s crude steel production for September 2012 was 3.0 mt, an increase of 1.9 percent compared to September 2011. The US produced 7.0 mt of crude steel in September 2012, down by -3.0 percent on September 2011. Brazil’s crude steel production for September 2012 was 2.8 mt, down by -0.4 percent compared to September 2011. The crude steel capacity utilisation ratio for the 62 countries in September 2012 rose to 77.7 percent from 75.5 percent in August 2012. Compared to September 2011, it is 2.5 percentage points lower It is to be noted that the March to September 2012 data covers 62 countries against 64 in March to September 2011. In January and February 2012, only 59 countries are covered as three African countries, Algeria, Libya & Morocco while two Middle East countries Iran and Qatar did not provide monthly production statistics.
Market Report hand HR Plates of size 8-20MM is at Rs 37500 Ex-Kutch. The rise in inventory level in the market is alarming at the moment, with a number of factors like cheap imports from China, Korea and Japan, weak off take due to slow demand. The domestic demand from the end users sector is also weak, despite the fact that the market expected some move pre festive season especially from the auto sector. Meanwhile the new capacity additions have led to an increase in the inflow of material in the market. Growing imports from Korea and Japan have also added to higher steel supplies resulting in market surplus.
Domestic flat & long markets
Low demand keeps markets subdued
Outlook
Consistent weakness in demand, capacity addition and increased imports has resulted in rise in market surplus. Amidst the week of festivities and low off take kept the market slow. There is hardly any sign of optimism in the market and the market players are likely to surface it through provided the rupee further appreciates and the imports see an increase. In the interim, the market experts feel some movement in November; however in view of the past few months, the market seems uncertain. Scrap market remains unchanged
T
he domestic flat steel market remained largely sluggish in October on the account of a number of factors. The main attribute to the quietness of the market was that due to the festivity both the buyers as well as the producers were out of the market for most part of the month. Further the sluggishness in demand sustained which coupled with cheaper imports added pressure on the domestic hot rolled coil producers. The market failed to see any movement. The buyers were hesitant to buy. The end user sector also failed to see any revival coupled with the fact that the steel mills are running in almost full capacity. All these factors resulted in building of inventory in the market creating a surplus. Currently
52 Steel Insights, November 2012
the market for HR Coil of size 2.5MM is at Rs 35800 Ex-Delhi, whereas on the other
HR products price trend 34000
Wtd. Avg. Prcie (Rs./MT)
Steel Insights Bureau
As per the market sources, the domestic ferrous scrap witnessed subdued buying interest on the back of low trade in semifinished goods and finished goods. The
32000
30000
28000
26000
Defective HR Plate-Rourkela Cobble Plate Def. Chequered Plat
Semi Rolled Plate Defective HR Plate-Bokaro
Defective Plate HR Shee
Price in `/t is basic
Market Report
Scrap products price trend
Wtd.Avg.Price(Rs./MT)
38000
34000
30000
26000
22000
CR Coil End
Side-End Shearings
CR Gas Cut
WRM Material
Turning & Boring
Coil End Cutting
Price in `/t is basic
trading activities in the eastern markets remained dull due to festivities in the past few days. The offers for HMS are currently going around at Rs 24,500/MT (basic) in the eastern region.
Finished long steel market slow but stable
The demand situation in the finished steel
CR products price trend 37000
Semi-finished market exhibits a slow movement
35000 Wtd.Avg.Price(Rs./MT)
The market for the semi-finished steel items continued to remain slow and slackened. Overall demand of the steel products has been poor for the last few months. The construction sector is yet to come out of the hibernation mode. Billet market is impacted by limited funds invested in projects for infrastructure development as market is not much hopeful of good profit margins. The sales in the first two quarters was not good due to monsoons and weak buying of finished products -TMT, wire rods, etc.
33000
31000
29000
27000
25000
CR Coil End from SPM - I
Defective CR Coil
UACE from HDGL
Defective CRNO Sheet
CR Sheet Cutting
Price in `/t is basic
The market for cast and pig iron too remained sluggish and the producers are holding considerable high stocks with them. All the manufacturing entities in the steel value chain are suffering from excess supply and this is not only affecting the pig iron producers but also integrated prime producers of steel.
Long products price trend 35000
Wtd. Avg. Price(Rs./MT)
market continued to remain feeble with construction & infrastructure sector still remaining weak. The sales of the materials continue to remain low. The long steel market depicted a stable yet a sluggish movement in October. Long product prices exhibited a slightly stable trend over the last few days showing signals of turnaround post festivities. Festive fervor of Durga puja especially in the eastern part of the country kept the transaction activities low for the most of the month of October which is expected to slowly ease out. The demand conditions are yet to pick up and the market is expecting some movements once the Diwali is over. The buyers at the moment have lost their confidence on the market and are skeptic about each move they make.
33000 31000 29000 27000
Outlook
25000
Defective Billet
MM end Cutting
Rejected Bloom
Plate Cutting
Price in `/t is basic
54 Steel Insights, November 2012
The long steel market is expected to remain more or less stable in the coming days with not much movement is expected to be seen right now. Once the festivals are over, the market might see some positive movement around the middle of the month of November.â&#x20AC;&#x201A;
PRICE DATA
Indicative market price for September 2012 Steel Insights Bureau (Rs. Per tons)
Sl. No. 1
ITEM PIG IRON
Kolkata
Delhi
Mumbai
Chennai
32450
35800
29600
35180
2
BILLETS 100 MM
41180
41340
42840
42050
3
BLOOMS 150X150 MM
39980
40260
41680
40360
4
PENCIL INGOTS
35570
32000
35300
38330
5
WIRE RODS 6 MM
47410
48180
50270
49280
6
WIRE RODS 8 MM
47010
47720
49630
48820
7
ROUNDS 12 MM
46810
46810
47730
48330
8
ROUNDS 16 MM
46870
47230
47710
48140
9
ROUNDS 25 MM
46510
47410
47510
47970
10
TOR STEEL 10 MM
48970
49580
50190
50190
11
TOR STEEL 12 MM
47910
47850
49340
49630
12
TOR STEEL 25 MM
47750
48060
49220
49450
13
ANGLES 50X50X6 MM
47110
46980
48790
49290
14
ANGLES 75X75X6 MM
46240
46680
47840
47690
15
JOISTS 125X70 MM
46950
47160
49030
48830
16
JOISTS 200X100 MM
46970
47400
48970
48830
17
CHANNELS 75X40 MM
47970
48830
49790
49770
18
CHANNELS 150X75 MM
47320
48460
49080
48500
19
PLATES 6 MM
47750
49590
49640
50210
20
PLATES 10 MM
47750
49590
49660
50210
21
PLATES 12 MM
48350
50120
50140
50790
22
PLATES 25 MM
48900
50640
50610
51370
23
H. R. COILS 2.00 MM
46800
48800
49780
49350
24
H. R. COILS 2.50 MM
45680
47710
48700
48390
25
H. R. COILS 3.15 MM
45640
47710
48710
48390
26
C. R. COILS 0.63 MM
52100
52380
53560
54260
27
C. R. COILS 1.00 MM
51130
51800
52830
53340
28
G. P. SHEETS 0.40 MM
55880
57030
58730
60310
29
G. P. SHEETS 0.63 MM
54020
53380
57270
59510
30
G. C. SHEETS 0.40 MM
54990
56300
57630
60660
31
G. C. SHEETS 0.63 MM
54010
54680
57370
60230
32
MELTING SCRAP H M S - I
31830
27700
NA
25730
33
MELTING SCRAP H M S - II
28000
27700
NA
24680
34
SPONGE IRON (COAL BASED)
27000
26000
28500
21530
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 01 day of every month (4) Prices are indicative.
56 Steel Insights, November 2012
PRODUCTION DATA
Production, Imports, Exports, Availability & Apparent Consumption (provisional) April - August 2012 Steel Insights Bureau (in â&#x20AC;&#x2DC;000 tons)
FINISHED STEEL PRODUCERS
Non-Alloy Steel (Carbon) 2012 - 13 (Prov.)
2011 - 12 (Prov.)
Alloy Steel
% Variation
2012 - 13 (Prov.)
2011 - 12 (Prov.)
Total % Variation
SAIL
4865
4584
6.1
136
133
2.3
RINL
1242
1323
-6.1
1242
1323
-6.1
TSL
2869
2719
5.5
2869
2719
5.5
a) Prod. of Main Producers
8976
8626
4.1
136
133
2.3
ESSAR
2877
3277
-12.2
2877
3277
-12.2
JSW ISPAT
1708
1546
10.5
1708
1546
10.5
JSWL
5140
4091
25.6
482
479
0.6
JSPL
608
593
2.5
608
593
2.5
b) Prod. of Major Producers $
10333
9507
8.7
482
479
Others
20257
20683
-2.1
1849
1775
4430
4635
256
156
35136
34181
2.8
2211
2231
d) Imports $
3023
2259
33.8
912
e) Exports $
2118
2006
5.6
36041
34434
-659
Less : IPT/Own Consumption c) Total Production for Sale
e) Availability (c+d-e) f) Variation in Stock g) Apparent Consumption (e-f) Less : Double Counting Real Consumption
2012 - 13 (Prov.)
2011 - 12 (Prov.)
% Variation
5001
4717
6.0
9112
8759
4.0
5622
4570
23.0
0.6
10815
9986
8.3
4.2
22106
22458
-1.6
4686
4791
-0.9
37347
36412
2.6
623
46.4
3935
2882
36.5
249
253
-1.6
2367
2259
4.8
4.7
2874
2601
10.5
38915
37035
5.1
-505
40
-655
-505
36700
34939
5.0
2870
2601
10.3
39570
37540
5.4
2508
2174
430
515
2938
2689
34192
32765
4.4
2440
2086
17.0
36632
34851
5.1
Source: Steel Ministry
Steel Insights, November 2012
57
price trend
Ferro alloys & metals price trends Steel Insights Bureau Ferro alloys & Metals
October 2012
September 2012
August 2012
Ex-works Rs/ ton Ferro Silicon (Si - 70%) 70,250
70,250
70,000
Ex-works Rs/ ton HC Ferro Chrome (Cr - 60%) 68,500
68,500
69,000
Ex-works Rs/ ton HC Ferro Manganese (Mn - 70%) 53,500
54,000
53,500
Ex-works Rs/ ton Silico Manganese (Mn - 60%, Si - 14%) 54,500
55,000
58,650
Ex-works Rs/ ton MC Ferro Manganese ( Mn - 70%, C -1.5) 75,500
74,500
77,000
Ex-works Rs/ ton LC Ferro Manganese (Mn - 70%, C - 0.1) 1,19,000
1,19,000
1,12,000
Ex-works Rs/ kg Ferro Vanadium 725
735
790
Ex-works Rs/ kg Ferro Moly (Mo - 60% min) 1,005
1,055
1,015
Ex-works Rs/ ton Ferro Titanium (Ti - 30%) 1,52,500
58 Steel Insights, November 2012
1,57,500
1,52,500
Iron Ore data
Iron ore data for September 2012 Steel Insights Bureau Import Data Port
KANDLA
Date
Country Of Origin
Item Description
Unit Price (in Rs.)
Unit Price (in $)
5 Sep 12
AUSTRALIA
IRON ORE PELLETS
9,909
177.11
5,000
11 Sep 12
UKRAINE
IRON ORE UNFLUXED PELLETS
9,830
174.91
9,948
14 Sep 12
UKRAINE
IRON ORE UNFLUXED PELLETS
9,830
174.91
4,974
15 Sep 12
UKRAINE
IRON ORE UNFLUXED PELLETS
9,830
174.91
4,974
17 Sep 12
AUSTRALIA
IRON ORE PELLETS
9,953
177.10
5,000
21 Sep 12
UKRAINE
IRON ORE UNFLUXED PELLETS
9,577
174.92
4,337
24 Sep 12
MALI
IRON ORE LUPMS (FE 63.50%)
7,362
134.46
1,970
25 Sep 12
UKRAINE
IRON ORE UNFLUXED PELLETS
9,577
174.92
3,482
28 Sep 12
AUSTRALIA
IRON ORE PELLETS
9,893
180.69
5,000
15 Sep 12
SENEGAL
IRON ORE LUMPS (NON SIZED)
6,148
109.39
10 Sep 12
ALBANIA
IRON NI ORE (FE 51.90%)
6,594
117.33
17 Sep 12
ALBANIA
IRON NI ORE (FE 51.90%)
6,629
117.96
Kandla Total MUNDRA
Quantity (in tons)
44,685 406
Mundra Total VIZAG
406 529 28
Vizag Total
557
Grand Total
45,647
Export Data Port
GANGAVARAM
Destination country
CHINA
Date
Product category
1 Sep 12
FINES
Fe content
63.5
Unit price (in Rs/ton)
6,472
552
3 Sep 12
FINES
58
4,070
12,670
5 Sep 12
FINES
58
4,070
Gangavaram Total KOLKATA
CHINA
26 Sep 12
FINES
63.5/63
5,255
24,000 24,000
24 Aug 12
FINES
3,985
400
31 Aug 12
FINES
3,960
53,185
CHINA
12 Sep 12
FINES
JAPAN
15 Sep 12
CHINA
Paradip Total VIZAG
576 13,798
Kolkata Total PARADIP
Quantity (in tons)
53,585 63.5
4,633
48,972
FINES
65
7,674
40,308
LUMPS
65
8,337
30,713
Vizag Total
119,992
Grand Total
211,375
Steel Insights, November 2012
59
Ferro Alloy data Summarised ferro alloys import data July - September 2012 July 2012 Product category
Aluminothermic Chromium
Port
Quantity (in tons)
August 2012
Average unit Price (Rs./ton)
Quantity (in tons)
September 2012
Average unit Price (Rs./ton)
Quantity (in tons)
Average unit Price (Rs./ton)
Product and portwise quantity total (In tons)
Chennai
5
704,202
5
Chennai
150
195,118
442
130,222
Kolkata
66
255,684
222
202,846
288
Mundra
41
181,891
41
Vizag
77
208,956
77
158
94,678
2,250
177
142,771
769
Ferro Chrome
Chennai
2,092
89,037
Kolkata
1,007
83,236
Ferro Manganese
Ferro Manganeso
Chennai Kolkata
522
87,980
1,528
34
99,493
34
21
983,597
75
1,011,501
472
483,228
568
647
477,880
1,845
211,925
999
247,247
3,491
Chennai
39
2,428,113
39
Kolkata
44
2,240,688
44
52
23,778
106
108
25,543
133
Ferro Nickel Vizag
Ferro Niobium
Chennai Ferro Phosphorus
54
24,664
Kolkata Vizag
25
24,820
27
25,896
27
Chennai
1,909
92,178
507
121,633
262
110,878
2,679
Kolkata
1,020
84,200
827
110,301
138
108,890
1,985
Mundra
79
137,190
79
130,637
59
137,394
218
600
76,475
150
77,764
750
Ferro Silicon
Vizag Chennai
200
93,016
200
Ferro Silicon Barium Vizag
24
97,196
24
Ferro Silicon Magnesium
Kolkata
48
94,263
48
Ferro Silicon Manganese
Chennai
4
137,848
4
Ferro Silicon Zirconium
Kolkata
10
257,838
10
Chennai
20
303,751
Kolkata
22
444,196
Ferro Titanium
Ferro Vanadium
20
264,344
40
56
446,768
121
Vizag
20
308,915
20
Chennai
16
1,384,483
16
Monthwise Quantity Total (in tons)
60 Steel Insights, November 2012
7,381
43
4,942
465,730
3,193
15,516
Ferro Alloy data Summarised ferro alloys export data July - September 2012 July’12 Product Category
Ferro Chrome
Port
Quantity (in tons)
August’12
Average Unit Price (Rs./ton)
Quantity (in tons)
September’12
Average Unit Price (Rs./ton)
Quantity (in tons)
Average Unit Price (Rs./ton)
Product and Portwise Quantity Total (in Tons)
Kolkata
12,507
70,416
12,001
69,500
9,444
69,752
33,953
Paradip
14,421
63,978
12,059
65,419
2,051
54,687
28,531
Vizag
19,054
64,714
18,125
64,404
13,135
63,087
50,315
Kolkata
7,660
56,087
5,524
55,927
7,755
55,196
20,938
Vizag
1,365
60,512
1,941
56,483
1,511
53,043
4,817
40
1,010,480
Ferro Manganese
Ferro Molybdenum
Vizag
40
Kolkata
112
75,407
47
86,369
24
79,067
183
Vizag
386
73,960
313
69,993
795
65,837
1,494
22
108,207
1
115,975
23
Ferro Silicon
Ferro Silicon Magnesium
Ferro Silicon Manganese
Kolkata
Cochin
754
83,595
686
80,523
704
81,184
2,144
Kolkata
19,004
58,036
22,937
56,005
16,073
53,289
58,014
9,052
56,200
7,999
58,039
7,057
60,219
24,108
2
1,047,850
2
Vizag Kolkata Ferro Vanadium Vizag
10
1,242,340
20
1,079,661
Cochin
Silicon Manganese
Kolkata
58,033
Mormugao Vizag
Month-wise Total
36,117
2,245 122,687
55,576
30 175
74,830
175
32,166
58,046
36,546
55,915
104,829
100
76,383
140
81,535
240
1,408
53,246
1,705
52,737
5,358
115,389
97,118
335,193
Steel Insights, November 2012
61
Tear along the dotted line
Tear along the dotted line
62 Steel Insights, November 2012