Steel Insights - Feb 2013

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Steel Insights, February 2013 3

Dear Readers,

The year began on a positive note for the Indian steel industry. India’s rank in the world order of steel production remained unchanged at fourth with an output of 76.7 million tons, despite logging the highest growth of 4.2 percent among major producing nations in 2012. There was no change in the top three slots with China, Japan and the US retaining their positions in respective order. India was the world’s fourth largest steel maker in 2011 and 2010 as well with a total production of 73.6 mt steel and 69 mt respectively. The country had clinched the third spot in 2009, but lost out to the US since 2010.

Does this signal anything for the industry? It surely does. It shows that even though India’s steel industry is faced with numerous hurdles such as sluggish demand, raw material shortages, inflow of capital, infrastructure and land acquisition, it is set to become a powerhouse.

The pattern of steel demand would continue to change and manufacturers who are able to roll out value-added products could see their revenues improving. For instance, the product mix demand from different sectors such as automobiles or real estate would vary. New grades of steel and customised products would see more takers.

According to analysts, though there could be supply constraints in India in 2013, steel prices are likely to remain under pressure due to a steady stream of imports. Currently, India imports nearly 7-10 million tons of finished steel. Meanwhile, the green field projects in the country continue to encounter obstacles. Therefore, steel companies are looking into brown field expansion. The global capacity utilisation for steel mills is below 80 percent. However, it is more than 90 percent for India.

The big news is that India is set to get a new steel policy in a month. The policy is expected to iron out issues related to foreign direct investments, land acquisitions and environment clearances. The draft has been circulated for final comments and it would be announced soon. The policy is also trusted to throw light on solutions to problems plaguing the sector.

While dwelling on these various developments, in this edition of Steel Insights, we particularly focus on the foundry industry and examine how it is gearing up to meet challenges. Also, there is a special feature on coking coal and met coke which delves on India’s requirement for the key inputs and supply constraints going forward.

Happy reading!

(Rakesh Dubey)

EDITORIAL

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Executive EditorTamajit Pain, Tel: +91 91633 48065, E-mail: [email protected]

Editorial BoardDr Abhirup Sirkar, Professor Economics, Indian Statistial Institute (ISI)Dr Amit Chatterjee, Consultant and former Advisor to MD, Tata Steel LtdJayant Acharya, Director (Commercial & Marketing), JSW Steel LtdK Ranganath, former CMD, KIOCLVikram Amin, ED (Strategy and Business Development), Essar Steel LtdRana Som, Former CMD, NMDC Ltd

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Letter to the Editor

4 Steel Insights, February 2013

COnTEnTs

Call 9163348243 for more details

38 | FEATUREProactive budget needed to solve issues: NerurkarDuty on steel grade limestone, dolomite and iron ore should be reduced to zero

30 | SPECIAL FEATUREIndia examines options as Chinese demand chart coking, coke trend By 2016-17, coking coal demand is expected at around 90.2 mt and import would more than double.

29 | INTERVIEW Iron ore an area of concern: SandvikIn India, revenue is approx. 20 percent below target on iron ore mining ban, lack of new projects.

26 | INTERVIEWTech upgradation need of the hour at HEC: MisraHEC is planning to invest `750 crore for next four years on upgradation process.

6 | CoVER SToRyFoundry sector needs to focus on sustainable growthIndia can tap global casting demand estimated at 110 mt and growing at 5-10%.

20 Green energy solutions need of the hour 34 Steel consuming sectors maintain

sluggish growth 36 Indian iron ore imports set to rise over

time 39 Auto industry posts marginal growth in

December 40 India ranks top in production growth 42 JSW expects steel demand to grow in

2013-14 44 Mining impasse hits Sesa Goa profits 45 Gujarat NRE reports higher Q3 profit

despite sharp fall in met coke prices 47 SAIL April-Dec steel production rise

marginally 48 Tata Steel annualized crude steel

production likely at 8.35 mt in 2012-13 49 RINL lights up ignition furnace at Sinter

Plant No 3 50 Wining combination in flat products

equipment 55 BSP gets new Skin Pass Mill 56 Industry pins hopes on steel demand

growth 57 Iron ore handling by major ports down

54.5% y-o-y in Apr-Dec 58 Railways iron ore handling up 13%

m-o-m in Dec 59 Macroeconomic indicators of India 60 Global crude steel production rises y-o-y

in 2012 61 Domestic flat & long markets 62 Domestic raw materials


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The Indian foundry industry has indeed come a long way since the time metal castings as an industry started in the later part of 19th century. Since then, the Indian

foundry industry has been successfully facing the challenges of producing high precision and high quality castings conforming to international standards. In spite of that, experts feel that the industry has a long way to go in order to establish itself as the best castings producer in the world in terms of quality, quantity, delivery and price.

Tamajit Pain

Foundry sector needs to focus on sustainable growth

Foundry sector needs to focus on sustainable growth


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World foundry industry

The Census 2011-12 conducted by Modern Casting, USA, reported that the global casting production in the year is 98.59 million tons (mt) of iron, steel and non-ferrous castings. The output has been contributed by nearly 49,391 foundries from 33 countries.

However, considering the unlisted foundries, the number of operating foundries globally will be approximately 55,000 and world casting production would be approximately 105 mt. On examining the nature of castings produced the world over, it can be seen that approximately 48 percent of the total casting production consists of grey cast iron products, 25 percent ductile iron, 1 percent malleable iron, 10 percent steel castings and 16 percent non-ferrous castings.

Out of the total production, China produced 41.26 mt in 2011-12, while India produced 9.99 mt of castings. Therefore, the countries ahead of India are China and USA (10.00 mt). According to industry experts, Asia’s casting production is approximately 67.5 percent of the world casting production. The Asian countries primarily under consideration are China, India, Japan, Korea, Taiwan, Pakistan, Malaysia and others.

The new emerging castings producing countries are UAE, Saudi Arabia, Bahrain and Muscat.

An evaluation of the achievements shows that China and India have increased their production by nearly 30 percent in the last

five years, while USA’s and Japan’s annual production have come down by 15 percent and 6 percent respectively in the last five years.

This shows that Germany with 8,933 tons production during 2011-12 is on the top and China with 1,375 tons production is at the bottom, while India with 2,221 tons production is in between in the production curve.

Indian foundry industry

India has over 4,500 foundries and several others in the small and medium and large scale sector. A number of modern foundries with state-of-the-art facilities have come up in recent times.

According to industry estimates, the annual turnover in India of all the foundries put together has reached a figure of around `60,000 crore. The installed capacity is estimated to be 15 mt and capacity utilisation is approximately 60 percent. It is expected that casting production in India will touch 15 mt in the next three years and 20 mt in the subsequent five years.

The present employment in Indian foundries is approximately 2 million people directly and indirectly and additional manpower needed for every million ton of production is approximately 2 lakh, directly and indirectly.

An analysis of the Indian casting production shows that in the last seven years, production has doubled. However, because of recession, the production had dropped by 11.98 percent in 2008-09 compared to the previous year. But the situation has reversed. In 2011-12, production has increased by 10.43 percent compared to the previous year.

Strong points

The strengths of the Indian foundry industry lie in the fact that it has a large base which is spread all over the country. India has a traditional legacy of metal casting and manpower is available at a reasonable cost. The industry is now making efforts to train them and retain them, industry officials said.

Another advantage is that of access to latest technology and support by various government bodies and availability of vast natural resources. Indian foundries are successfully facing the challenges of producing high precision and high quality castings conforming to international standards.

Moreover, the country has a large transportation and railway network and there is an expectation of 50 to 60 percent increase in offloading of cast components by major developed countries of the world.

Major constraints

The continued rise in prices of important raw materials like pig iron, steel scrap, low ash coke, ferro alloys and other material have crippled the industry. The foundry industry is under tremendous pressure but seem to be working individually to face the situation. In the last seven years, the price of major raw materials started increasing substantially from November 2007 and reached a peak in September 2008.

World casting production, product-wise (million tons)

Year Grey Iron Ductile Iron Malleable Iron Steel Non-Ferrous Total

2009-10 37.62 19.94 1.04 9.03 12.71 80.34

2010-11 43.26 23.45 1.1 10.22 13.64 91.67

2011-12 45.87 24.78 1.38 10.34 16.22 98.59

Source: The Institute of Indian Foundrymen

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From then it came down substantially under the influence of recession and currently prices are on an increasing trend.

However, the industry had fixed price long term contracts without any escalation clause. Added to this is the problem of old equipment and technology, especially in the small scale sector.

Industry experts say the Indian foundry industry is a case of inverse relationship between technological sophistication in terms of scientific inputs in molding, melting, and mechanisation and the number of firms adopting such systems. In the last decade, a lot of work has been done on introducing new processes and using them to the maximum possible advantage. However, the corresponding growth in the production and supply of critical equipment has not taken place internally. It is essential to encourage manufacturers of critical equipment to locate their units in India to tap the huge export market that is building up.

It is to be noted that despite the introduction of new processes, over 90 percent of the world’s casting production is through green route.

The other ailments of the industry are low production per unit, shortage of skilled manpower, insufficient research, delay in payment by customers, inability to ensure prompt delivery at short notice, shortage of power, high energy cost and higher import duties of raw materials compared to competing countries.

The ferrous foundry industry is highly energy intensive. Energy cost is almost 15-20 percent of the manufacturing cost and cost of energy in India is very high in comparison to other countries. This factor wipes out competitiveness of the sector not only in the export front but also in the domestic front.

Automation

Information technology and automation are playing an increasingly important role in growth of the industry currently and have found a wider range of acceptance in foundry industry to tackle technical problems.

Automation is required because of the following factors:

♦ Increasing labour cost ♦ More process variation due to more

human involvement which leads to heavy rejection

♦ Customer requirement on quality and delivery is going up

♦ People switching over to other industries due to favourable working conditions

♦ Physical work causing health hazards to workforce

Thus more and more foundries are using robots for material handling. It is predicted that in future robotics based work would be created to add content and value to the product.

Green foundry

Foundry operations have significant environmental impacts both within and beyond foundry plant. While the primary focus of metal casting technology is production of sound casting economically, it is increasingly necessary to take into account the effect of the process on the environment and its communities.

The key to foundry pollution prevention is to undertake comprehensive examination

COvER sTORy

India’s casting production, product-wise (million tons)

Year Grey iron Ductile iron Malleable iron Steel Non-ferrous Total

2009-10 5.05 0.8 0.06 0.88 0.653 7.44

2010-11 6.18 0.984 0.069 1.07 0.75 9.05

2011-12 6.79 1.09 0.06 1.14 0.9 9.99


Production highlights of world’s 10 top casting producing nations

Country 2010-11 2011-12

China 39.6 41.26

USA 8.24 10

India 9.05 9.99

Japan 4.76 5.47

Germany 4.79 5.46

Russia 4.2 4.3

Brazil 3.24 3.34

Korea 2.23 2.34

Italy 1.97 2.21

France 1.96 2.05

Rest countries 11.63 12.17

Total 91.67 98.59


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of the operations in the facility with a goal of minimising the creation of all types of foundry waste products. Foundry industry depends on a range of natural resources which are consumed during production. Some of this can be re-circulated within the foundry plant but portion is lost in the surroundings both within the plant and outside. Environment impact caused by the foundry industry due to emission of air, release of water, contamination of land and other local environmental and community issues need to be analyzed thoroughly and preventive action needs to be taken in this regard.

All foundries should work for a ‘green foundry’ concept. Minimization of emissions, efficient use of raw materials and energy, optimum utilisation of the process, recovering and recycling of the waste materials and substitution of harmful material are important facets of adopting green foundry techniques.

For foundries, focal points are air emissions, efficient use of raw materials and energy, waste reduction along with any recycling and re-use options.

The best available technique needs to be used in order to optimise the management and control of internal flaws to prevent pollution. Also there is need to create better and better techniques for environment protection.

Castings demand

Demand for castings is ever increasing. The present day demand for castings globally is estimated to be about 110 mt with product value of over $150 billion. With 5-10 percent of expected growth, the demand for castings will increase substantially over a period of time.

The wind energy sector is expected to grow at 25-30 percent in the coming years. The additional requirement for ductile iron castings in the sector alone will be approximately 1 mt of which India’s requirement will be 0.08 mt.

India has a stable domestic demand, which has helped the foundries to survive the recent global meltdown. The order book position of most of the foundries who are equipped to produce quality castings is very good. India remains a high growth region for small cars, tractors and two wheelers. Demand for castings in the domestic market is over 6 million tons per annum (mtpa) at present.

61st Indian Foundry Congress Steel Insights Bureau

Kolkata hosted the 61st Indian Foundry Congress (IFC), an annual flagship event of the Institute of

Indian Foundrymen (IIF) between January 27-29, on the theme “Building Brand India - The Casting Edge”. The event was held concurrent with the International Foundry Exhibition (IFEX 2013).

With over 800 delegates and 250 exhibiting companies, the 61st Indian Foundry Congress and IFEX 2013 foundry exhibition drew over 4,000 trade visitors. In addition to technical presentations by Indian and international authors, the IFC featured an Energy and Environment Forum, Student Forum, Cast Source buyer-seller meet, prominent industry speakers and a host of international participants from Germany, Italy, China, Japan, UK and USA.

Founded in 1950, IIF is an all-India industry association representing the foundry sector and comprises foundries, foundrymen, professors, academicians, foundry equipment vendors and foundry input suppliers, with a current strength of over 3000 members. Headquartered in Kolkata, with four regional offices in Kolkata, Delhi, Chennai and Mumbai and 27 chapters across India, IIF is a member of the World Foundry Organization (WFO), UK and of the Confederation of Indian Industry (CII).

Speaking on behalf of the domestic foundry sector, Harsh K. Jha, president, IIF said: “The Indian foundry industry is the second largest producer of castings in the world with a production of 8 mt annually, behind China, which is far ahead at 35 mt. There are more than 4,500 foundries in India of which 85 percent are small-scale units, 10 percent are medium-

size and 5 percent are large-scale units. The industry is labour-intensive, employing 500,000 people directly and 150,000

people indirectly.” The smaller units are dependent on manual labour but most medium and large units are partly or fully mechanized and many larger foundries meet world-class standards.

Major foundry clusters include Jalandhar, Ludhiana, Batala, Agra, Howrah, Pune, Mumbai, Belgaum, Kolhapur, Solapur, Rajkot, Chennai, Hyderabad, and Coimbatore. Ravi Sehgal, chairman of the 61st IFC said: “Castings produced include ferrous, non-ferrous, aluminium alloy, graded cast iron, ductile iron and steel for application in automobiles, railways, power sector, pumps, compressors, valves, diesel engines, cement, electricals, textile machinery, sanitary pipes and fittings, engineering industries, machine tools and special applications. Grey iron castings form the majority at 68 percent of total castings produced.”

“The theme for this year’s meet is ‘Building Brand India - The Casting Edge’. Foundrymen must thus make an effort to offer the right product mix, quality and price in order to reach out to the world. Eastern India has taken up the challenge to set up new foundries, and with this the industry is once again growing in strength in India,” Sehgal said.

Anil Vaswani, joint secretary and treasurer of the 61st IFC said: “The mission and vision of IIF is to make the foundry industry an attractive proposition for all stakeholders, with government support, through technology upgrades, competitiveness, enhancement of operational efficiency and capital infusion. The focus is on development of foundry clusters and common facilities for foundries.”

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Industry experts feel that the world is looking at India as a source for their cast components and India can tap this opportunity.

At present, the total casting export from India is over 1 percent of the total world requirement. If all the foundries put their might, this share could go up to 10 percent providing immense opportunity to our foundries.

Rise in buyer expectation

The foundry industry is facing challenges from industries all over the world. In this global competition the rule of survival of the fittest will apply and only the best and the competent will survive the race.

According to industry experts, the only criterion for survival is quality, quantity, delivery and price. For the manufacturers the message is to tighten their belts and fall in line quickly or be ready for the fallout.

In the global arena, the buyers’ expectations have also soared sky high and buyers just expect excellent quality of castings as and when they need at a lower price. Buyers also expect continuous improvement. The castings which were declared ‘ok’ till now are now being declared substandard and rejected.

With every supply the buyers give a list of improvement expected in the next supply and current supply may be either rejected or accepted as a special case. Variable schedules are also a factor affecting foundries.

Foundry cluster

In both industrialised and developing countries, there is increasing evidence that clustering and networking can help small and medium enterprises to boost their confidence.

Small scale enterprise clusters are tools to effectively implement and support initiatives aimed at enlarging the production base, conquering market niches, accessing export markets, triggering growth, offering employment opportunities and redressing regional economic imbalances.

There are several successful clusters functioning in India at Agra, Batala, Belgaum, Chennai, Coimbatore, Howrah, Jalandhar, Kolhapur, Ludhiana, Pune and Rajkot. Foundry clusters and national cluster for export promotion of cast products together can bring a lot of comfort to the industry in coming years.

Benchmarking

According to experts in the industry, there is an imperative need for benchmarking of products to improve competitiveness. Following are the areas where benchmarking is required:

♦ Rejection level ♦ Yield ♦ Energy consumption ♦ Productivity ♦ Effective floor utilization ♦ Raw material consumption ♦ Inventory level management ♦ Delivery period ♦ Development of lead time ♦ Emission level of dust and fumes ♦ Generation of wastes ♦ Manufacturing costs

Future

The Indian foundry industry is expected to grow at 10-20 percent per year for the next five to seven years provided proper government policies are in place. Domestic and export demand and increased manufacturing and outsourcing activities could also take the industry forward.

A foundry unit in operation

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Many industry players believe that based on the present growth pattern, India will advance her position shortly as the second largest casting producer in the world, leaving behind the USA which is presently in the second position.

As the demand for good quality castings increase over time, foundries capable of producing and supplying castings as per customer requirement will have a bright future. However, Indian foundries have to convince the foreign buyers about their ability to produce cast products of global standards.

Moreover, to be globally competitive, Indian foundries have to urgently upgrade themselves technologically, train manpower continuously and benchmark with global standards to produce quality castings and to create a brand image.

It is expected that there will be ample scope for Indian foundry operators to forge alliance with their counterparts in the developed countries. A feasible approach is through technology transfer by the foreign foundry to its Indian counterpart with equity participation with a view to establishing a

manufacturing base in India with 100 percent buyback arrangement.

The technology transfers and absorption in such cases would mean transfer of knowhow, equipment and training of Indian foundrymen. These alliances would, however, help abolish middlemen and trading houses who otherwise import castings at a minimal price and supply directly to the foreign buyers. It will help the foundry operators to gain access to foreign markets with higher margins.

The industry feels that the following goals need to be taken up by the Indian foundries to improve their performance: • To establish India as the Asian hub for

cast components• To implement schemes to attract and

retain the best manpower available in the country and abroad

• To accept the challenge of greening the foundry industry

• To attract latest technologies from all over the world

• To adhere to delivery standards – quality, quantity, delivery and price – it is feared

that export of poor quality castings by some of the smaller manufacturers would result in poor image of Indian foundries in export markets.

• Capacity building among smaller foundries and the ability to meet customer requirements of machined castings

• Reducing long investment lead times and delays in environment clearances which result in project uncertainty.

• Meet cost challenges like increasing cost of raw materials, power, manpower etc

• To develop competitive overseas market

For achieving the above goals the industry needs to take into consideration the following initiatives: • Indian foundries need to invest more

on R&D on various fields to reduce production costs and for producing high quality castings consistently.

• Reduce rejection of castings by mapping best casting production processing and refrain from adjusting production processes without thorough study.

Foundry-men engaged in casting operation

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• Benchmark all process parameters based on best practices in similar units which are performing well.

• Benchmark pollution norms of the developed countries to ensure minimum damage to environment

• R&D to target for producing high quality strategic castings which command high selling prices

• Improve manpower efficiency and capabilities and providing education and training of foundry personnel at all levels

• Provide continuous training in modern technologies

• There is a need for centralised R&D centres for foundry clusters with necessary testing facilities and effective participation of foundry experts.

• Increased mechanization, monitoring and controls for improved productivity

• Value addition by producing ready to use components/sub-assemblies

Growth drivers

The new National Manufacturing Policy of the government of India approved recently, envisages to increase the share of

manufacturing in GDP to 25 percent from present 15 percent and to create additional 100 million jobs by 2022.

The other significant features are single window clearance mechanism to cut red tape and the high priority for skill development. The private sector will be given standard deduction of 150 percent of expenditure for skill development institutes.

The government has notified 10 National Manufacturing Investment Zones, which are mega integrated townships with world class infrastructure. Moreover, the government is offering a host of incentives like exemption from capital gains tax and liberalised labour and environment norms to promote these zones.

Also, the government is closer to implementing the goods and service tax and has set ambitious power generation capacities in the Twelfth Plan and plans to invest $1 trillion during the Plan period (2012-17) in power and infrastructure.

Focus areas

The Indian foundry industry currently generates revenue of $12.5 billion and exports worth $2 billion. In this context, the role of

the foundry industry will be very crucial to support the manufacturing and engineering industry in the coming years, according to A.K. Anand, director, The Institute of Indian Foundrymen – FIC, New Delhi.

The industry will have to focus on sustainable growth and take steps to achieve the following targets by 2020 in a phased manner:

♦ Production to go up to 25-30 million tons per annum

♦ The productivity per unit to go up to 4500 tons per annum

♦ Productivity per man to go up to 40 tons per annum

♦ Specific energy consumption to go down by 10 percent

♦ Increase share of aluminium casting to 15 percent

This is possible only by creating additional capacity by improved productivity by using modern design and manufacturing tools, technology and processes and by promoting investments in modern plants, according to Anand.

For example, for increasing the scale of operations the model of China can be taken into consideration. China has 30,000 foundries with average production per unit of 1,400 tons per annum. As per reports, they plan to reduce the number of foundries to 10,000 and increase the per unit production to 5,000 tons per annum, thus closing down inefficient units.

The Indian industry will need to invest an estimated $9-10 billion by 2020 in the next 10 years for capacity expansion and upgradation to support manufacturing.

Thus although the foundry industry is successfully facing the challenges of producing high precision and quality castings conforming to international standards, it has a long way to go to achieve the status of the best castings producer in the world. Actions taken by the industry has been showing positive results but there is a need to pay attention to R&D activities to reduce production costs and for producing high quality castings consistently.

With 9.99 mt of casting production in 2011-12, India has become the third largest castings producer in the world. It is expected that shortly India will become the second largest casting producer in the world next only to China.

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IIF signs MoU with Japan Foundry SocietySteel Insights Bureau

The Indian Institute of Foundrymen (IIF) a pan-India body representing the foundry sector, has entered into a MoU with the Japan Foundry Society, the largest organization of foundrymen in the world, for Green Business Foundry.

The MoU was signed at the 61st Indian Foundry Congress which got underway in Kolkata on January 27. The move will help implement cost-effective and eco-sensitive ‘green’ manufacturing standards across the country’s $12-billion foundry industry.

“This comes at a time when a whopping `600 crore worth of investment is expected to be invested in the foundry industry in West Bengal and the rest of eastern India,” said Ravi Sehgal, chairman, organising committee of 61st IFC and IFEX 2013.

The three-day meet, being organised by IIF will have two concurrent events – IFEX 2013 and Cast India Expo. It is being attended by over 800 delegates from China, Germany, Italy and Japan, which are major hubs of the global foundry industry.

“The 61st IFC has a range of programs and informative technical seminars addressed by reputed speakers, and an internationally attended exhibition of the latest machines and technology. Also, cast buyers of repute will be visiting to source their annual requirements, and industry representatives will be discussing their perceptions of the current scenario of the industry,” Harsh K. Jha, president, IIF said.

With 9.9 mt cast components, India is ranked among the top three globally with annual exports of around $2 billion. However, its share in the global market is below 2 percent.







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Green energy solutions need of the hour

development of technology and process in making effective solutions to the problem including development of renewable energy sources for various technical purposes, efficient technology to have less energy use and techniques to recover waste heat etc.

Efforts should be made to minimise use of fossil energy, which is the basic cause of environmental problems or find out the possibility of an alternative energy use.

The world metal production and energy requirements reveal that steel industry alone requires 8.1 percent share of the total world energy. The energy use share by five major metal industries is nearly 10 percent indicating that metallurgical industries are the major energy consumers in the world.

Industry sources opine that energy audit should necessarily be carried out in metallurgical plants including iron and steel and aluminium industries to identify quality, quantity and cost of various energy input sources, assessment of the current pattern of energy consumption, identification of potential areas of energy economy, the energy waste in the system, fixing targets for energy saving potential and implementation of measures for energy conservation.

Energy use

Steel can be produced by using four different routes and their energy requirements are also different:

♦ Blast furnace – basic oxygen furnace – continuous casting (BF – BOF – CC) route

♦ Direct reduction of iron ore - electric arc furnace – continuous casting (DRI – EAF – CC) route

♦ Smelting reduction – basic oxygen furnace – continuous casting (SR – BOF – CC) route

♦ Electric arc furnace – continuous casting (EAF – CC) route

BF-BOF-CC route is the oldest method of making steel and is dependent on a particular energy source (metallurgical coke) which has limited supply in the world. 31.1 GJ energy is needed for steel making by the primary route starting from iron ore. The actual value of energy consumption can vary from the best available technique in the world to 16.7 GJ per ton. The blast furnaces consume maximum energy (54 percent) of

Tamajit Pain

India is emerging as an industrial nation in the world with significant economic growth. Metallurgical industries are also

expanding rapidly particularly in primary metal production providing growth in economy, needed for a prosperous nation.

Metallurgical industries are known as hazardous and polluting industries since they generate huge amount of solid wastes like slag, tailings, red mud, heavy metals, anode slimes etc toxic effluents, flue gases, discharges of thermal emissions and noise are common with the process.

For example, steel production process (BF-BOF) is highly energy intensive and releases about 2.3-3 tons of CO2 per ton of crude steel. SO2 emission ranges 1.2-

1.4 kg per ton while NOX generation is approximately 1.8-2 kg per ton of crude steel. Slag and flue dusts are generated as solid waste which is about 1-1.4 ton per ton of finished product. Fugitive dust emissions, ground water contamination and solid waste disposal are the main problems, according to industry experts.

This not only affects the flora, fauna, terrestrial and aquatic ecology but also health of the population in the vicinity of the plant. The environmental problems can be minimized by decreasing the energy use by undertaking short and long term goals. The short term goals include conducting energy audit to know the energy use or loss pattern, avoiding and reuse of waste energy and adopting energy efficient technology.

The long term project should involve

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the total requirement of the process, which nearly 31 GJ per ton of steel.

Since 1970, efforts are being made to minimise the coke rate and replace it as far as possible by other energy sources such as oil and coal, depending on the availability and economics and had been decreasing as a result of substitution by oil and non-coking coal injections.

To find an alternative for metallurgical coke, the DRI-EAF-CC route was developed in 1970s that used non-coking coal or natural gas as the main energy source for iron making. The iron thus made was converted into steel using electric arc furnace. The non-availability of such large quantity of electrical energy was restricting the growth of the steel sector. Both coal and natural gas can also be used as the primary energy source to produce DRI using two different technologies. The coal based DRI plants use 12.6 GJ per ton energy, while has based plants need only 9.5 GJ per ton for producing sponge iron as the product.

In case of coal based plants, the unused energy is more than 70 percent mainly in the form of waste char and hot gases. The waste char and hot gases are exploited for power generation to avoid wastage. The char is pulverized and fired in boiler to raise steam to generate power. In case of gas based plants, the heat loss is much less and further effort is needed to recover heat from flue gases. The spent gas is recycled in the system thus reducing the demand for the fresh energy source.

To become non-dependent on electrical power which comes from a different industrial

sector (power plants) the third route (SR-BOF-CC) was evolved in 1980. This is the most recent method of steel making using non-coking coal and oxygen as the main energy sources. Many processes under this group have been developed but only two technologies (COREX and FINEX) have reached the commercial stage. The COREX plant, first in India and third in the world, was initiated in 1999 at Bellary by JSW. The commercial FINEX plant is planned to be set up in India for the first time by Posco near Paradip in Odisha.

The COREX plant uses non-coking coal as the energy source along with pure oxygen

to cause combustion and minimize the nitrogen content in the gas. A typical unit requires 36.9 GJ energy by consuming 1 ton of coal and 700 m3 of oxygen to produce 1 ton of steel and 4700 kWh power. This process produces two products (steel and power) with nearly equal energy intensity share. This is the reason why such plants are called steel and power plants. The power generated in excess of its own need is exported to national grid. The plant technology involves coal gasification and its use for reducing iron ore. In this process the excess reducing gas consisting carbon monoxide is utilized to generate power.

The fourth route (EAF – CC) is a very old method of steel making which has gained importance in the recent times in view of the energy crisis. This method involves the melting and casting of steel which requires less energy. Typical EAF steel melting uses 2.44 GJ of energy to produce 1 ton of steel. This energy is derived from 410 kWh per ton electrical power (1.47 GJ) and heat of oxidation of Carbon (0.56 GJ), silicon, manganese etc. In addition, 0.16 GJ of energy is provided by burning some fuel to preheat the scrap.

Thus energy requirement is different for four different routes of steel making and use of energy is different due to technological changes. However, efforts have been taken reduce energy consumption in every process.

Energy efficiency

Foundries are energy intensive production

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units where adoption of the best energy solution provides great energy saving potential.

According to foundry industry officials, currently foundries are effectively recycling their materials. More than 90 percent of all cast parts are made from re-melted scrap metal.

The costs for energy and materials in foundries are in average responsible for 40 percent of all costs. Melting and solidifying metals require a high amount of energy. Physical laws determine an average energy input of 2000 kWh per ton of final casting product. This adds up to a total energy consumption of 18 billion kWh.

The foundry industry is energy intensive and has an important role to play from an environmental point of view while seeking to develop and play an important role in the development.

According to industry experts, some energy efficient processes that need to be followed include:

♦ Operate the furnace at its constant rated power

♦ Install an automatic power factor controller

♦ Cooling towers with change of blades from aluminium to FRP

♦ Introduction of low wattage compressor ♦ Replacement of partially loaded motors

with smaller capacity motors ♦ Use of natural light through the use of

transparent roofing sheets ♦ Replacement of high speed diesel fired

burners with furnace oil fired burners ♦ Replacement of conventional copper

ballast with HF electronic ballast ♦ Replacement of filament indication

lamps in control panels with LED lamps ♦ Use of 36 watt slim tubes instead of 40

watt conventional fluorescent tubes ♦ Increase emissivity of heat treatment

furnaces by coating the hot face

Green energy

Although efforts have been made to reduce energy consumption in the past, one has

to solve the ecological problems rooted with the use of fossil fuels. Therefore, efforts should be made to find green energy solutions through hydrogen as a renewable reductant and energy source for the iron and steel industry.

According to experts in the field, hydrogen is an ideal reductant for iron making since it can be produced without any undesirable gases in it. The product of the reduction reaction is water which would be recycled in the nature without resulting in any environmental problem. The hydrogen has been used successfully to produce high quality iron on a commercial basis in the world by H-iron techniques.

This method is not used presently in the normal iron and steel production due to economic reasons however this may be possible in future if hydrogen gas in available in abundance as a renewable energy. It may also be possible to modify the currently used gas based process for DRI production exploiting pellet or lumps in hydrogen, industry sources said.


R Misra, Chairman & MD, HEC

Tech upgradation need of the hour at HEC: Misra

are expecting the business to improve marginally in the coming fiscal.

Our orders are usually big in nature, hence our business is hit even if we miss one of them.

We are also in the business of turnkey projects from designing till commissioning of projects. So orders also come in from there.

What is the demand scenario at present?As far as the demand scenario is concerned, PSUs are delaying their orders. At the same time, private sector customers want to procure the products at a lower cost as they are in a cost cutting mode. Hence, it is getting difficult for us to match their requirements.

Are you focusing on any particular industry at present for business?We are looking at the steel plants. The coke oven batteries, especially, have become very old and there is a need to change them. Earlier they used the wet quenching system but now they need to use dry quenching system. Batteries also need to be changed. These usually work for 15 years but they have already crossed 20 in most of the SAIL plants. Hence, an immediate change is the need of the hour.

What are your offerings for the Indian mining industry?In the lower range we have 5 m3 shovels and 10 m3 shovels all of which are electrically operated. So, these require electrical lines and the cables should be drawn to such points where these machines are being used. We are also supplying another big machine called drag line for overburden removal in opencast coal mines. The weight of the machine is about 2,000 tons and the system costs about `150 crore.

We have received an order from Coal India Limited for three such walking drag lines. We have already supplied one and

Sanjukta Ganguly

Heavy Engineering Corporation Ltd (HEC), the public sector integrated

engineering complex based out of Ranchi, has been battling the odds of technological obsolescence and lack of skilled manpower for some time now. That has been adversely impacting the profitability of the company of late.

In a free-wheeling conversation with Steel Insights, the chairman and managing director of HEC, R. Misra, said that only a successful technological and infrastructural upgradation can boost the profit margins of the company. Plans are being chalked out accordingly, he said. He also spoke about the state of the mining industry and the present order book of the company.

Excerpts:

What will be HEC’s focus area and plans in the near future?We have been making profits for the last six years, but even that has been very nominal. Turnover has increased by only one and half times. Technological obsolescence and lack of trained manpower are some of the main reasons for such low profits. We need younger people with new ideas to carry this company forward.

Perfection is an important component of the foundry business. The slightest defect in casting can get it rejected. That is why it has now become imperative that the old plants should be replaced as they have become obsolete. The machine building tools and forging plants were set up in the early 1960s with equipment imported from the erstwhile USSR and Czechoslovakia.

However, following the breaking up of both the regions, the sourcing of these equipment has become difficult. Technological upgradation, however, is now the biggest need. Without further investment on upgradation, it is impossible to move forward.

What is the proposed investment for this upgradation?We are currently planning to invest about `750 crore for the next four years on this upgradation process. We are not planning to build any new plant but we want to make our existing plants energy efficient. We are consuming about 750 Kilowatt of energy at present. It can come down roughly to about 600 Kilowatt once upgradation is done.

Are you collaborating with any other company for this technological upgradation?Being a public sector company, we have to pass through a transparent tendering system at every stage. We will tie up with whichever company clears all requirements and comes through the process.

What is your outstanding order book right now?Our outstanding order book right now is `1,700 crore. However, as we are passing through a recession now, there is a delay in placing of new orders. Mainly we are in the business of supplying equipment to steel plants and SAIL, for instance, has already placed its orders for the modernisation process.

The pace of orders in the mining sector has also slowed down. Are you expecting any improvement in the scenario? We have already submitted tenders against a lot of requirements by various companies. It is a fact that the orders are being hampered owing to the current situation. However, we

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the rest of the order is being executed. One machine is about 4-5 storeys high and the erection of the machine takes about eight to 10 months. Its length is about 96 metres. These machines will be deployed mainly in the northern coalfields in the Singrauli coal mines.

We also have the expertise in supplying

overhead cranes to SAIL which can operate at a very high temperature which can pour liquid pig iron, liquid steel on a 24-hour basis. Recently we have supplied three such cranes of 450-tons capacity to Bokaro Steel Plant (BSL). Altogether, right now, we have orders for more than 100 such machines.

Are you getting any orders from abroad?Recently, we have got an order from Bangladesh which is under execution at present. The order is of supplying under floor wheel lathe to the Bangladesh Railways. The tool that we will provide is very sophisticated and can automatically detect what should be the optimum size of the wheel plate and can change it once it gets deformed.

We have the expertise to produce these kind of machines but we are mainly an India focused company. This order from Bangladesh has been our first international order.

Are you interested in acquiring more international clients for your products?Although we are already supplying machines to the Bangladesh Railways, at the moment we are just keen on upgrading our plants and supplying primarily to Indian companies. We are planning accordingly. But, if we continue to get more orders from abroad, we will definitely also look at supplying to them.



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Steel Insights Bureau

Sandvik Mining is a leading global supplier of equipment and tools, service and technical

solutions for the mining industry, and their products span the entire range including rock drilling, rock cutting, rock crushing, loading, hauling and material handling.

Sandvik AB subsidiary Sandvik Asia Ltd has its headquarters in Pune and manufacturing units in five places. President of Sandvik Mining India, Soumitra Banerjee, talks to Steel Insights on the company’s focus areas in India, its current concerns as well as its outlook for the new year.

Excerpts:

What are the focus areas for Sandvik in India? Our major strength in the Indian mineral sector is on iron ore and underground hard rock. Thus, a lion’s share of our revenue is from underground hard rock and iron ore and the related after market.

In coal, we do not have any presence in surface and load haul segments at present. Instead, our focus is on underground for continuous mining in Bord and pillar operations and development work in Longwall mining.

In the Indian mining sector, currently we are not covering the entire segment. Our entire product range would come when the market opens up. As of now, imports are sourced from Finland and Sweden. We have manufacturing plants in India for rock tools, but not for mining equipment as such.

What is your reading of the current scenario of mining in the country?There are mixed signals coming from India. Some people have invested heavily on

captive coal blocks. This had both positive and negative effects. There were a lot on controversial things, but also some positives coming out of it.

Currently, iron ore is an area of concern for us. As I said, a sizeable chunk of our revenue comes from this segment. Goa has stopped exports altogether. Production has been affected substantially in Karnataka. The progress of captive blocks is very slow. In Odisha, steel mills are affected due to various government notifications restricting mining of ore in the state.

Overall, the Indian government is working on various policy initiatives to properly develop the mining sector. But the speed of such policymaking is very slow.

How has been the year 2012 for Sandvik Mining, globally and in India? What is the outlook on 2013?In 2012, despite the economic uncertainties, Sandvik Mining globally achieved its budgeted revenue targets. 2013 would be even more challenging and if we can achieve 8 to 10 percent growth in topline, it will be a very reasonable performance considering the outlook.

In India, the revenue performance is approximately 20 percent below the target as the new mining projects did not come up as per expectation. This is particularly true for coal and underground hard rock greenfield projects. Iron ore was also extremely weak due to ban on mining in major states like Orissa, Karanataka and Goa.

What is your level of presence and turnover in India?Our mining equipment revenue from India is around `250 crore. Besides, Sandvik has presence in materials technology, tubes used in fertilizer, machining and tooling in India. For these we have five plants. Sandvik’s India subsidiary Sandvik Asia Ltd has its headquarters in Pune and manufacturing units in Pune, Mehsana, Hosur, Hyderabad

Iron ore an area of concern: Sandvik

and Chiplun. The company has its research and development centre in Bangalore. Its businesses in India include materials technology, tooling, mining and construction equipment.

Overall, Sandvik has its presence in India for nearly 60 years now. Our total turnover from the Indian operations is around `2,600 crore.

What is your current market share in India?In India, competition is intense. There are a number of international players present in the mining equipment sector. Almost everybody is affected due to the slow progress in the country’s mining sector. This includes Metso, Caterpillar and Terex. India accounts for around 2 percent of our global turnover. The major markets are Australia, South Africa and Canada. Russia and CIS countries are coming up and Sandvik is doing a lot of work in those countries.

What is the scenario in the Chinese market?In China, we are seeing a slowdown in both the segments of construction and mining equipment. Due to Chinese slowdown, Australian miners supplying ore to that country are facing problem. Also, coking coal imports by the country was down in 2012.

In our case, China’s share in our global turnover is around 7-8 percent. We have a manufacturing set up in that country. Besides, Sandvik mining has manufacturing facilities in France, Sweden, Finland and Australia.

Lastly, what was the impact of the recent split of Sandvik’s global mining and construction divisions?The objective of this split was to gain increased customer focus. Today, aftermarket demand from these two divisions is entirely different and we are reaping benefits of increased focus.

Soumitra Banerjee, President, Sandvik Mining India


India examines options as Chinese demand chart coking, coke trend

current lead runners China and Japan. Among these two, China (despite importing around 45 to 50 mt of coking coal in 2011) is much more self-sufficient, producing the vast majority (over 500 mt) of the dry fuel from its own mines to feed its giant steel plants. Japan, in contrast, is almost entirely dependent on imports.

Between the two, India should find greater resemblance to the island nation of Far East Asia. As they grow their steel output, the Indian steel mills would increasingly face the problem of import dependence for coking coal procurement. But whether they will take a lesson from their Japanese counterparts – the well-knit Japanese Steel Mills (JSM) – in turning their weakness into strength, and dictating terms in international price benchmarking, is a matter to wonder about.

India’s coking coal procurement

As of today, all of the major Indian steelmakers – SAIL, JSW, RINL, Tata Steel, JSPL, Essar – procure some part or their entire requirement of coking coal from overseas miners. Only the integrated steel plants – such as SAIL and RINL – get some portion from Bharat Coking Coal Ltd (BCCL), the only significant producer of coking coal in India.

Tata Steel is a notable exception, having acquired coking coal mines (through joint ventures) in Australia (Bowen Basin in Central Queensland) and Mozambique (Benga Coal Project). The company mostly sources the fuel from its own overseas operations for its steel plants in Europe, Asia and elsewhere. This, however, remains a rarity in the Indian steel vertical. Except for very few players – that includes coke maker Gujarat NRE Coke Ltd – acquisition of coking coal mines have not been on the radar of the Indian corporate entities.


Much in contrast with iron ore, India is critically short of coking coal as a natural resource. The proven

reserve of coking coal is only 17.9 billion tons, much less than the vast proven reserves of non-coking coal of 99 billion tons. Of the total proven coking coal reserves, deposit of prime coking coal is only 5.3 billion tons, official data shows.

More importantly, the quality of coking coal available is quite inferior, so much so that sometimes costlier imports prove more economical.

As of 2011-12, India’s coking coal consumption was around 50 million tons (mt), of which around 33 mt was met by imports, 85 percent of which came from Australia.

With the growth in steel demand to 113.3 mt by 2016-17 from 65.61 mt in 2011-12, coking coal demand in the country is set

to jump. By 2016-17, coking coal demand by India’s expanding steel sector is expected to be around 90.2 mt and import would more than double, according to an estimate by the working group on steel.

However, strangely enough, there is hardly any concern about the increasing requirement of coking coal in the country.

With such high growth in imports, India would possibly become the largest importer of coking coal a few years on, surpassing

Break-up of coking and non-coking reserves (in million tons)

Depth Range (m)

Coking Non-coking High Sulphur

Grand TotalPrime Medium Semi coking Superior Inferior Ungraded

0-300 0.00 11566.45 466.38 21585.76 129038.81 9894.48 1290.64 173842.52

0-600 4043.42 4067.00 0.00 202.42 5899.58 0.00 0.00 14212.42

300-600 0.00 5869.61 758.14 12362.80 49294.31 15436.32 202.00 83923.18

600-1200 1269.64 5165.48 482.61 2505.12 7144.89 4951.29 0.00 21519.03

0-1200 5313.06 26668.54 1707.13 36656.10 191377.59 30282.09 1492.64 293497.15Source: Geological Survey of India (GSI)

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Nevertheless, almost all the major Indian steelmakers have embarked on very aggressive expansion plans to increase installed capacity. SAIL has aimed to increase its annual hot metal production capacity from the current 13.8 mt to 24 mt by FY13.

Accordingly, the company’s coking coal import could increase from current 13 to 14 mt to 21 mt by the next few years. Similarly, the annual coal consumption of JSW, the country’s largest private sector steelmaker, will reportedly double from current 7.4 mt to 14 mt by next two years.

Even if the Indian steel sector fails to achieve the targeted 10 percent production growth annually, coking coal consumption by all the major steel companies would grow immensely by 2020. SAIL has targeted to have a capacity of 60 mt by that year. RINL, another public sector unit, has chalked out an expansion from current 6.3 mtpa to 20 mtpa by 2020. JSW, on its part, has planned 34 mtpa production by then, from 14.3 as of March 2011. Most of this expansion would be undertaken through Blast Furnace/Basic Oxygen Furnace (BOF) route, which require coking coal as primary raw material. Attempts are being made by a few companies to adopt the Corex/Finex technology, whereby thermal coal can be directly used for ore reduction and melting work. But the initial investment requirement is substantial and there is significant technology barrier in terms of patent rights.

As a result, such prolific expansion in India’s steel making capacity cannot but be achieved without a huge surge in coking coal imports. As estimated by Mark Pervan, Head of commodity research at the Australia and New Zealand Banking Group (ANZ), India may triple coking coal imports as early as 2015. He estimates that India’s coking coal

imports will go up from current 30 mt to 90 mt by 2015 surpassing Chinese coking coal imports. By comparison, China’s coking coal imports may be at most 70 mt by 2015.

“I think India will become a bigger importer than Japan and China, the current leaders in importing coking coal,” Pervan was quoted as saying.

While ANZ estimate may seem to be a little on the higher side, another estimate by Merlintrade & Consultancy Ltd put India’s coking coal imports at 90 mt in 2020.

Global supply scenario

Currently, the coking coal market is overwhelmingly dominated by mining giants including BHP, Walter Resources, Peabody,

Massey, Banpu, Xstrata, Yanzhou, Glencore, Anglo, Arch, Rio, James River. The major supplier countries are Australia, US and Canada.

The global trade of coking coal stood at around 260-280 mt in 2012. The big three importers – China, Japan and India – together accounted for around 155 mt of this market.

As estimated by Merlintrade & Consultancy, total seaborne trade would increase to around 415 mt by 2020, of which the top three importers – India, China and Japan – would claim a share of 271 mt or 65 percent. This, however, may be a conservative estimate. If India can achieve its planned expansion, and Japan’s consumption does not come down dramatically, the share of these three countries may go up further.

On the supply side, Australia would continue to dominate the market with export of 255 mt in 2020, with a share of 61 percent, same as in 2010. While new suppliers like Mongolia, which has started feeding the Chinese market, would come up in due course, Australia’s domination would hardly wane. US, on the other hand, is likely to see a drop in exports; this however would not impact the Indian companies which do not receive much of the material from that country.

Estimated requirement of raw materials and other inputs by 2016-17

Input Materials Unit Estimated Consumption 2011-12

Estimated Consumption 2016-17

Additional Requirement by 2016-17

Coking Coal Million Tons 43.2 90.2 47.0

Non-coking Coal Million Tons 35.3 28.4 -

Iron Ore Million Tons 115.0 206.2 91.2

Natural Gas MMSCMD 7.2 13.541 6.341

Ferro Alloys in ’000 tons 2152 3673 1521

Refractories Million Tons 1.29 1.97 0.69

Source: Working group on Steel

Top met coal seaborne exporters (in mt)

Country 2008 2009 2010 2020

Australia 134.3 130.0 158.8 255.0

US 35.3 29.9 47.8 25.0

Canada 25.4 20.1 27.0 50.0

Others 25.6 22.5 30.5 85.0*

Total 220.6 202.5 264.1 415.0

*Including: Colombia, Russia, Indonesia, Mongolia, New Zealand and Mozambique

Top seaborne met coal importers (in mt)

Country 2008 2009 2010 2020

Japan 66.5 52.5 62.6 71.0

China 6.9 37.0 53.0 110.0

India 26.8 26.8 37.2 90.0

South Korea 21.9 15.0 18.4 38.0

Brazil 17.9 15.0 18.4 38.0

Others 81.0 51.0 66.3 75.0

Total 221.0 202.0 260.7 415.0

Source: Merlintrade & Consultancy Ltd

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In coming years, experts say, the demand boom from China and India would lead to a demand-supply gap in global trade of coking coal. This is particularly feared for premium quality coking coal market, where there will be not enough resource to supply. The share of high quality coking coal, in countries having significant coal deposits, is less than 1 percent of proven reserves. The requirement however is much above that percentage.

Also, there would be limited new production from countries like Mozambique, Indonesia and Mongolia, at least until 2015-16. US may have already reached the stage of decline and is expected to see steady fall in exports, going forward. Canada may emerge as a bigger player, but Australia’s shipping constraints would pose a threat.

A major factor leading to tightened supply scenario could be the fast depletion of China’s own reserves. Coking coal reserves comprise about 20 percent of the country’s total coal reserves, but in terms of production, its share is higher than that. According to industry reports, the thick coal seams in Shanxi coal mine is already showing significant thinning. If the country decides to conserve its own resources for future, there would be massive pressure on the global market. This could be a likely scenario; given that the country’s coking coal import has increased eight-fold in a gap of two years (2008-10).

In the long run, the tightening of supply would intensify competition among the mining companies for tapping new sources. The recent fierce competition among mining giants for long term rights of Mongolia’s

Tolgoi coal mine is a case in point. The aggressive bidding for properties coupled with growing supply gap would invariably lead to pricing pressure for this vital raw material.

2013 outlook

Notwithstanding the long term expectations, the met coal market saw a softening of prices in much of 2012. As of now, the big question is whether the spot prices in the international market will see a recovery in 2013. The analysts generally believe the prices would not show any major turnaround this year.

Credit Suisse and Dahlman Rose & Co see average prices remaining lower in the range of $171-180 per ton FOB Australia when compared to 2012’s average of $191 per ton FOB.

While marginal improvements are expected in terms of steel demand in 2013, significant gains are thought to be unlikely. Credit Suisse, for example, sees the met coal market as “structurally well supplied”. It has estimated that 2013 will see an excess of 10 mt of met coal, so any gains should be “fairly muted”.

Other banks appear to agree, though differing in the magnitude of the over-supply, which Morgan Stanley puts at 4 mt. Only Goldman Sachs sees a possible shortage of met coal, anticipating a net deficit of 1 mt this year.

India Inc. looks elsewhere

With insignificant coking coal reserves, India is substantially dependent on met

coal imports to make manufacture. Being well aware of this weakness during contract negotiations, Indian mills have embarked on an active hunt to diversify their coal supplies, and of late Mozambique has been the centre of their attention. Large mills such as JSPL, JSW Ispat and Tata Steel are amongst the big steel players to have secured supplies.

However logistical issues continue to hamper Mozambique from becoming big in the spot market, with supply estimates recently downrated by some.

While India has Mozambique, China has Mongolia, which since mid-2010 has overtaken Australia as the top supplier of met coal to China, contributing slightly more than a third of Chinese imports (Australia now supplies under 25%).

Some projects are also currently in the pipeline to push landlocked Mongolian HCC to the seaborne market, with the potential to give Australian miners a run

Annual production capacity of some players in India

Company Annual production capacity (tons)

Tirupathi Fuels Pvt ltd 110,000

United Coke Pvt Ltd

Antai Balaji Coke 120,000

Fairdeal suppliers 300,000

Narayani Coke 300,000

Ennore Coke 180,000

Saurashtra Fuels 700,000

Krishna Coke

Visa Steel 400,000

Bengal Energy Limited 600,000

Carbonedge Industries 90,000

Global Coke Pvt Ltd 600,000

OSD Coke Pvt Ltd

Sathavahana Ispat Pvt Ltd 400,000

BLA Industries

Uttam Galva 432,000

Maa Shakti Coke 1,100,000

Bhatia Coke & Energy Ltd 300,000

Balaji Coke Industry Pvt Ltd 120,000

Austral Coke & Projects

Gujarat NRE Coke pvt Ltd 1,434,000

Shree Coke Pvt Ltd 110,000Source: Insights Research

3.00

2.60

2.50

2.50

1.301.20 0.60

Tata Steel Bhilai Bokaro RINL Durgapur Rourkela IISCO

Integrated steel plants with captive coke making plant (in mt)

Source: Insights Research

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for their money. However, all is not rosy in Mongolia, with unattractive regulatory and fiscal developments proving something of a disincentive.

Other suppliers, such as the USA, have continued to play an active role in the seaborne met coal market from time to time, but the country has always been a swing-supplier to Asian-Pacific markets, since its home ground still remains the Atlantic region.

However, as demand conditions in Europe faltered in 2012 due to the continuing economic malaise, US suppliers actively pursued Asian customers, particularly when they saw opportunities to be price competitive with Australian suppliers.

Current trend in Indian coke market

Along with coking coal, India also suffers from inadequate domestic production of met coke. Currently, the demand deficit in local market is around 13 mtpa. With the expected increase in demand (to the tune of 15~16 mtpa in next 4-5 years), the deficit is likely to increase to 28 mtpa. Import of coke into India stood around 2.1 mt in 2011-12. The slow steel market is keeping the LAM coke market slow too at present.

Coke plants across India & capacities

Currently, coke plants in India have an installed capacity close to 30 mt. The integrated steel mills have their coke making capacities around 19 mt. The secondary steel producers have captive installed capacity of 4 mt. Merchant coke plants have installed capacity of 7.2 mt.

Challenges in meeting coke demand

The Indian steel industry is currently is

currently facing huge challenge to meet its coke requirements. Although most of the integrated steel plants are already in the process of increasing their coke making capacities, the deficit of metallurgical coke in India is expected to increase from current 12 mt to 25 mt by 2015.

Besides low production, the logistics sector poses a major challenge. There is urgent need to increase the number of ports on the coast line and dredge the river ports to reduce cargo movements through rail and road.

The internal logistics cost in India is very high. The local freight for 100 km is equal to 5,000 mile sea freight in eastern India where major steel projects are on. Also, pilferages (to an extent of at least 1 percent) need to be controlled. There is need to enhance the berthing facilities and regulate the intra-port transportation of imported cargo. Allocation of more rail rakes for the speedy movement of coal is yet another pressing need.

Over and above all these, the delay in getting environmental clearances poses a major hurdle in implementing new and expansion projects.

China’s coke card

While the Indian industry struggles to meet its growing met coke requirement, a new development in neighbouring China has come to take the market by surprise. Recently, China has allowed full liberalisation for its metallurgical coke export sector – a development which may have varied implications for the domestic coking coal consumption.

Prior to 2008, when a 40 percent export duty was slapped on met coke exports, China

was the world's largest coke exporter in the seaborne market (at 15 mtpa). While many market participants feel that exports are unlikely to revive to that level, a modest 6-8 mt of coke is expected to be exported out of China this year.

Applying a widely accepted coal-coke conversion factor of 1.3, this potentially puts an increase of approximately 7.8-10.4 mt on to Chinese coking coal demand.

However, this increase is unlikely to jolt seaborne prices as much of it would be sourced from Mongolia, which is closer to many Chinese coke ovens located in the inland provinces of Shanxi and Hebei.

Another possible spill-over effect of China's new ruling on coke exports could be a possible displacement of some coking coal supplies elsewhere if importers decide to decrease their captive coke making operations and import Chinese met coke instead. Nevertheless, whether this trend will actually catch up with the Indian market is still a matter of guess, industry sources said.

sPECIAL fEATuRE

Major buyers in IndiaThe major buyers in the Indian market include the following players: 1. Tata Steel 2. Steel Authority of India Ltd (SAIL) 3. Jindal Steel & Power Ltd (JSPL) 4. Adhunik Limited 5. Concast Limited 6. Other secondary steel manufacturers




sPECIAL fEATuRE


Much to the dismay of the Indian steelmakers, the steel consuming sectors in the country have

continued with sluggish growth in recent months. This was in line with the slow growth of the economy which is expected to post modest growth numbers in the current fiscal.

The slow growth was particularly evident in the automobile sector. According to data available, there was a steep decline in commercial vehicle sales during December and a slight decline in passenger vehicle sales during the period. Trade sources attributed the lack of improvement in trade to the slow economic growth in the country, which has a direct bearing on commercial vehicle sales.

Also, the high interest rate continued to plague the passenger vehicles market. The sector growth was expected to remain under pressure in January 2013 but a slight improvement is likely by the end of February 2013 on the back of repo rate revision by

the Reserve Bank of India (RBI) by 25 basis points.

The growth trend has been a little better for the construction sector, where industrial and infrastructural projects worth `1.8 trillion have already been commissioned during April-November, 2012-13, according

to industry sources and trade data. In the fourth quarter (Q4) ending March

2013, around 1,700 projects are scheduled to get commissioned in various industries such as steel, gas transportation, power generation and distribution. It is expected that construction activity will be in full

Automobile sector growth

Source: SIAM

Steel consuming sectors maintain sluggish growth


sPECIAL fEATuRE

swing during the last quarter of 2012-13, the sources said.

However, the cumulative growth in cement production (April-November, 2012-13) has decreased from 7.7 percent to 6.7 percent. Cement production and demand is estimated to increase in the fourth quarter as construction activity picks up with pending projects due for completion by year end.

In contrast, capital goods contracted by 7.7 percent in November 2012 over November 2011. According to sources and industry officials in the sector, the remaining period of 2012-13 would continue to show de-growth due to high interest rates. Nevertheless, the decrease in interest rates in 2013-14 is likely to revive project expenditure which in turn should lead to a much-awaited revival in the sector, officials said.

The consumer durables sector also showed sluggish growth trends and grew by only 1.9 percent in November 2012 compared to November 2011, pulled down by the high base effect.

Industry sources said inventory build-up to meet the festive demand led to extra production in October and this high inventory led to lower production in November. The sector is expected to clock better growth figures in the fourth quarter aided by the low base effect, officials felt.

Meanwhile, the white goods sector has continued with the growth trend, aided by the low base effect from the previous year. However, trade sources said a lull in the growth of white goods is expected for the next few months, due to the post-festive season drop in sales.

Although the IIP contracted by 0.1 percent in November 2012, dragged down by poor performance by all three sectors: manufacturing, mining and electricity but upwards movement of the PMI, based on higher export orders and increased factory activity, suggests that industrial production will be much healthier for January-February period of 2013.

Mining is also expected to get a slight boost post January 2013 as a few mines start operations in Karnataka after being declared suitable to resume operations.

With construction also set to pick up pace in the coming months, economic growth is expected to be positive in January-February 2013.

Capital goods sector growth

Source: CMIE Analysis

Consumer durables sector growth

Source: CMIE Analysis

Construction sector growth

Source: CMIE & MOSPI


fEATuRE

extension period. The authority has stayed the resolution after hearing complaints of several merchant miners of Odisha.

“The latest move will increase iron ore availability in the country, which was affected to some extent after the Odisha government in its October 3 circular issued a new guideline for the second and subsequent renewal of iron ore, manganese, chromite and bauxite mines in the state,” industry sources said.

According to the circular, if the mineral from the mining lease is being used for captive purpose, the areas to be renewed shall be limited to the captive requirement of 30 years of the existing capacity of the mineral industry of the lessee.

The circular had severely affected availability of iron ore in the country as well as steelmakers without any captive iron ore mines.

It said the leases awaiting second and subsequent renewal but operating under the clause of deemed extension will be covered by this policy. However, in such cases, mineral production may be limited to captive consumption only.

After this resolution, several merchant miners have been affected in the absence of their own plants. Against this resolution, the miners had knocked the door of the revision authority.

With the staying of the circular, miners with forest and other clearances can start their operations immediately, while those without forest clearance have to wait for some more time, industry sources said.

In Goa, resumption of mining depends on a directive from the Supreme Court. Once the mining ban was lifted, production was likely to be capped at 25 mt, analysts and industry sources said.

Export duty

At a time when the steel industry is reeling under a severe shortage of iron ore, following the suspension of mining in Goa and Karnataka and the imposition of a cap on mining in Odisha, miners are seeking a drastic cut in the export duty on the commodity.

The mining industry, represented by the FIMI, is also seeking the railways charge uniform freight rates on iron ore.

In FY10, the ministry of finance had imposed five percent duty on the export of

Indian iron ore imports set to rise over time


The severe shortage in iron ore supplies from Karnataka and Goa, where mining was stopped following

a Supreme Court directive, and the cap on production in Odisha have led to India becoming a net importer of iron ore this financial year. Till 2011, India was the third largest exporter of iron ore.

According to industry sources, between April and December 2012, India imported an estimated 6 to 7 million tons (mt) of iron ore. Some steel mills such as JSW Ispat, Bhushan Steel and Essar Steel have been importing ore for their port-based steel plants. JSW Ispat has also used imported iron ore for its plant in Salem and is considering importing the commodity for its plant in Bellary, too.

An export duty of 30 percent, coupled with the Railways’ high freight rates on iron ore exports, also led to the sharp fall in exports.

According to the Federation of Indian Mineral Industries (FIMI), India’s iron ore exports fell 62.3 percent to 15.05 mt in the April-November period, against 39.95 mt in the corresponding period of the previous year. Since November, no iron ore exports from India were recorded.

The steel industry expects the availability of iron ore to fall further in the next financial

year (2013-14), owing to several constraints in many iron ore-producing states.

While the Supreme Court has allowed Category “A” mines in Karnataka to resume mining, only four mines have done so in the last few days. So far, these mines have produced about 1 mt of ore, which has been put up for auction.

State-owned National Mineral Development Corp (NMDC), which has been allowed to produce 1 mt a month from its Karnataka mines, is able to produce only about 700,000 tons due to logistical bottlenecks.

FIMI estimates production in Karnataka during 2013-14 at about 15 mt, assuming more mines in Category A and B resume mining. The estimated production would include about eight mt from NMDC.

All steel mills operating in India might have to either import iron ore or shut operations, according to analysts. The Odisha government has capped iron ore production at 52 mt. For miners whose leases are pending for renewal, capacity has been restricted to meeting only their captive requirements.

However, there was some respite after the Union Mines Ministry’s revision authority stayed the enforcement of Odisha government directive that barred merchant miners to raise minerals during their deemed


fEATuRE

iron ore fines. This was raised to 20 percent in FY11 and 30 percent in FY12. Between February 2010 and March 2012, the railways increased freight nine times. Today, it is about four times the domestic freight for iron ore (`2,600 a ton). FIMI says as a result of these factors, iron ore exports have turned unviable.

In a pre-Budget memorandum to the ministries of finance and railways, Fimi has urged for a cut in export duty and railway freight to ensure the industry recorded high exports.

“The export duty of 30 percent on iron ore fines is a deterrent to the effective functioning of the Indian mining industry. During our recent interaction with the ministry of finance, we requested the government to reduce export duty on iron ore fines in Budget 2013-14 to 5 percent,” said R.K. Sharma, secretary general, FIMI.

Earlier, the ministry of mines had also requested the finance ministry to reduce duty on iron ore exports. Sharma said India was losing ground in global markets — its share in iron ore exports to China fell from 20 percent in 2007 to 11 percent in 2011 and eight percent in the first half of 2012. This financial year, the country was also losing foreign exchange due to imports, he added.

Fines are a co-product of producing calibrated lump ore. The ratio of lumps generated to fines is 30:70.

However, steel industry executives said, “Reduction of duty on exports will not help the domestic steel industry, which is already facing a huge shortage of quality raw material. Why should India reduce its duties when countries such as Australia and China

have imposed 25 percent and 30 percent duty on iron ore and coal, respectively? There is no necessity for India to reduce the duties.”

Basant Poddar, managing director, Mineral Enterprises, said the Karnataka mining industry’s priority now was to restart mining, adding that as of now, it would do well not to worry about the duty structure.

FIMI has also sought the duty on iron ore imports be brought on a par with the duty on iron ore exports. Currently, import duty on iron ore lumps and pellets is 2.5 percent.

Odisha fines prices stable, lumps down

Meanwhile, prices of iron ore fines remained stable in Odisha while that of lumps declined marginally in the last one month, according to an official in an iron ore mining company.

Iron ore with iron content of 63 percent remained unchanged at `2,600 per ton ex-mines in Odisha as on January 17, according to the official. However, prices of lumps with 63 percent iron content were quoted at `6,900-7,100 per ton ex-mines.

The fines prices have remained stable because of marginal rise in fines demand in the region, he said.

Indian private miners based in Odisha, have preferred to keep their prices unchanged for mid- January on low production, confusion on 50:50 sale of iron ore to industries based in Odisha and stable sponge iron prices in the country.

NMDC, India’s largest iron ore producer, is likely to declare its prices in the first week of February, which will give a further direction to the market.

Prices in different markets in India

Company Size GradePrice (ex-Mine)

17-Dec 8-Dec 14-Nov 31-Oct

NMDC

6-20mm 65 5080 5400 5400 6070

10-150mm 64 4210 4480 4480 5040

Fines 64 2600 2600 2600 2697

Rungta

5-18mm 65 7650 7650 7560 7650

5-18mm 63 7250 7250 7250 7250

10-30mm 65 6900 6900 6900 6900

10-30mm 63 6500 6500 6500 6500

Essel

5-18mm 63 7225 7225 7225 7225

10-30mm 63 6475 6475 6475 6475

Blue Dust 63 2600 2600 2600 2600

Iron ore availability to improve in 2013-14:

JSW SteelJSW Steel expects availability of iron ore in the next financial year will be in the range of 19 to 21 million tons (mt), while the steel industry in Karnataka requires 30 mt.

“However, the company is exploring the possibility of using dumps with very low quality,” JSW said in a statement.

“Non-availability of iron ore and poor quality of ore impacted the productivity by 20 percent. Most of the sponge iron, pig iron and pellet plants in the state of Karnataka are either closed or operating at around 20 percent capacity. Integrated steel players capacity utilisation is at around 70 percent,” JSW said.

The stock piles of 25 mt ore more or less were auctioned but NMDC is not able to produce even after lapse of 17 months from the date of permission by Supreme Court, 1 mt of iron ore per month, it said.

So far, only six mines of Category ‘A’ resumed operations when Supreme Court approved resumption of mining in Category ‘A’ in September 2012. These mines produced 0.71 mt so far, but produced ore is not put to e-auction. On this backdrop, the company expects improvement in availability of ore as the balance stock pile of around 1 mt would be auctioned.

“Besides six mines, the balance four mines of Category ‘A’ will also resume production in Q4 FY’13 and all these mines together are permitted to produce 5 million tons per annum (mtpa),” JSW said.

The company expects that the Supreme Court will consider resumption of mining in Category ‘B’ mines with permitted production of 6 mtpa. NMDC is expected to enhance production to 8 to 10 mtpa, JSW said.

The recommendation of CEC to cancel Category ‘C’ mines and auction them to end users is expected, it added.


fEATuRE

Proactive Budget needed to solve issues: Nerurkar


The Indian steel industry will greatly benefit if the Union Budget 2013 takes proactive steps to solve the lingering

issues of iron ore shortage and continued delay in project approvals, H.M. Nerurkar, managing director at Tata Steel, said.

“The Indian steel industry is facing problems due to shortage of iron ore and continued delay in project approvals. The industry will benefit from proactive actions on these fronts in the Union Budget,” Nerurkar said in an e-mailed statement.

“The first six months of the current fiscal have seen a 40 percent jump in steel imports. In order to protect interests of the domestic industry, the Budget needs to revisit last year’s hike in excise duty and take steps to discourage dumping of products in India,” he said.

In line with the government’s policy of reducing import duty for raw materials for making steel, import duty on steel grade limestone, dolomite (which is presently 5 percent) and iron ore (which is currently 2.5 percent) should also be reduced to zero, Nerurkar said.

Given the priority accorded to infrastructure in the Twelfth Plan (2012-17), and the expectation that the private sector would contribute half the envisaged investment of `50 lakh crore, the Budget should also look at introducing special incentives to encourage capital goods industries, he added.

Assocham proposal

In light of the huge scarcity of coking coal, Assocham has mooted a proposal to amend the definition of ‘coking coal’ with a view to promote and encourage the steel industry to shift to new and advanced technologies.

In a proposal submitted to the ministries of coal and steel, the chamber said traditionally, steel is made through blast furnaces by utilising coke made out of coking coal. Coking coal is converted into coke in

the coke ovens and such coke is used as fuel to charge the furnaces; as reductant to reduce the consumption of iron ore used.

Steel and power sectors are the major consumers of coal. In order to fulfill the huge requirement of these sectors, Government allows both them to import coal at concessional rate of import duty. Coal used in the power sector is defined as steam coal and attracts 1 percent import duty, whereas coal used in steelmaking is defined as coking coal and attracts zero rate of import duty.

Coal for utilisation in the steel industry is defined at S No. 122 of Custom notification 12/2012 as “coking coal - means coal having mean reflectance of more than 0.60 and swelling Index or Crucible Swelling Number of 1 and above”.

However, “we would like to mention that the above mentioned parameters are too technical and sensitive. It would be worth to mention over here that the departmental labs are not equipped to test these parameters creating delays and giving rise to litigation which ministry itself wants to avoid. Therefore we need to simplify the definition of coking coal based on end use application like in the case of steam coal,” the chamber said.

The scarcity of coking coal across the world has resulted in the use of economically efficient alternatives for manufacturing of iron and steel through new and advance technologies. These advanced and environment friendly technologies can utilise even thermal coal or weaker coking coals for iron and steel making. Presently, the Indian steelmakers deploy COREX/PCI/FINEX technologies and utilise thermal coal and weaker coking coal for making steel.

Although these coals are used for steel making, they cannot meet the parameters of coking coal as defined at S No. 122 of custom notification 12/2012. Coals not meeting the parameters in test but being used for metallurgical purposes in COREX / PCI / FINEX, are being charged to duty as “other coals” at the rate of 5 percent. This has defeated the well intentioned objective of the government to provide relief to steel industry.

Therefore, Assocham has suggested that tariff description for “coking coal” (coal having mean reflectance of more than 0.60 and Swelling Index or Crucible Swelling Number of 1 and above)* should be substituted by the description ‘metallurgical coal’, or “coals for use in iron & steel making using any technology such as Blast Furnace, COREX, PCI or FINEX”.

The chamber further notes that the test of mean maximum reflectance (MMR) is very sensitive and there is no facility for testing MMR in Customs Lab at any of the ports. Therefore, the testing of the country’s 23.87 million tons (2011-12 to December 2012 as per Ministry of Commerce figures) imports of coking coal is to be done at the only centre of CIMFR, CISR, Dhanbad (Jharkhand) which itself is a huge task; voluminous and defeating in purpose. Add to this, the cost of testing each sample is approximately ̀ 33,450.

The process of drawal of sample, its dispatch, testing and receipt of reports is too tardy and time consuming and pending the test reports, consignments are assessed provisionally and test bonds are to be executed in each case. Moreover, the crucible swelling number (CSN) is the other parameter to satisfy the condition of coking coal. A coal having CSN 1 as per load port certificates, certified by international assayers, is tested below 1 by various Customs lab due to varying testing practices/ methods. This gives rise to litigations defeating the well-meaning intentions of the government.


fEATuRE

its $1 trillion infrastructure investment plan in a timely manner. However, the demand for flat steel from automobile, white goods and capital goods sectors is likely to remain modest during the year, it said.

Though Indian steel producers increased prices by `500-1,000 per ton in December 2012, India Ratings expects profit margins in 2013 to remain broadly similar to 2012 levels. This is due to the persistent high cost of steel production and steel producers’ limited ability to pass on higher costs due to subdued demand from end-user industries. The margin pressure will be higher on the producers with no captive raw material linkages.

The cost of funding working-capital requirements remained high despite the marginal reduction in repo rate by the Reserve Bank of India in early 2012. India Ratings expects a gradual reduction in interest rates in 2013 which should provide some relief in interest costs. While higher-rated issuers invariably have access to bank funding and capital markets in certain cases, most issuers in the ‘IND A’ and below categories rely largely on bank financing and are severely affected by high interest costs.

Considering the modest demand scenario, a further rupee depreciation could pressurise the margins of companies producing flat steel through blast furnace route as bulk of coking coal is imported. This is despite import price parity of flat steel products. Moreover, a weaker rupee raises the financial leverage of steel producers with significant un-hedged foreign-currency liabilities resulting in a decrease in financial flexibility. However, the agency expects financial leverage of rated entities to remain within the guidelines stipulated for the respective rating category.

Auto industry posts marginal growth in December


After a negative growth in November 2012, the Indian automakers posted marginal growth in the month of

December 2012. The cumulative production data for April-December 2012 shows production growth of only 2.16 percent over the same period last year.

According to the Society of Indian Automobile Manufacturers (SIAM), the industry produced 1,697,625 vehicles in December 2012 against 1,677,588 in December 2011, with marginal growth at 1.19 percent.

Sales

The overall growth in domestic sales during April-December 2012 was 4.57 percent over the same period last year. However, in December 2012, overall sales grew only marginally by 2.77 percent over December 2011.

Passenger Vehicles segment grew at 8.37 percent during April-December 2012 over same period last year. Passenger Cars declined by -0.33 percent, Utility Vehicles grew by 59.10 percent and Vans grew by 3.71 percent during April-December 2012 as compared to the same period last year. However, in December 2012 passenger car sales fell by (-12.51) percent over December 2011. Total passenger vehicles sales also declined by (-1.13) percent in December 2012 over same month last year, as per SIAM figures.

The overall Commercial Vehicles segment registered marginal growth of 0.74 percent in April-December 2012 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered decline at (-19.13) percent, Light Commercial Vehicles grew at 15.61 percent. In December 2012, M&HCVs sales declined by (-38.34) percent over December 2011.

Three Wheelers sales grew by 4.96

percent in April-December 2012. Passenger Carriers grew by 8.96 percent during April-December 2012 and Goods Carriers registered de-growth at (-10.29) percent during this period.

Two Wheelers registered a growth of only 4.09 percent during April-December 2012. Scooters, mopeds and motorcycles grew by 18.44 percent, 1.80 percent and 0.77 percent respectively over same period last year. However, in December 2012 Scooters and Motorcycles grew by 6.40 percent and 4.83 percent respectively, while mopeds declined by (-6.88) percent over the same period last year.

Exports

During April-December 2012, overall automobile exports registered de-growth of (-2.92) percent compared to the same period last year. Passenger Vehicles grew by 10.52 percent, while the other segments like Commercial Vehicles, Three Wheelers and Two Wheelers fell by -4.76 percent, -20.88 percent and -2.79 percent respectively. In December 2012 Passenger Vehicles, Two & Three wheelers segment grew by 31.59 percent 9.36 percent and 4.63 percent respectively, while Commercial Vehicles declined by -25.79 percent.

Impact on steel sector

Meanwhile, India Ratings, a Fitch group company, has forecasted that the Indian automobile industry would remain modest during 2013. The industry’s growth is expected to be largely driven by the economic scenario in the country which at this point, looks gloomy. In turn, the lukewarm growth in automobiles would affect the steel industry’s growth in the country.

World Steel Association (WCA) has forecasted steel consumption in India to grow at 5 percent in 2013. Steel producers may see a spurt in demand in the medium-term if the Indian government implements



Despite the weak sentiment prevailing in the domestic steel sector, India has emerged as the top ranker in

terms of production growth in the world during April-November, 2012. Announcing this, steel minister Beni Prasad Verma has applauded the Indian steel industry for being the number one in terms of growth rate in steel production amongst the top ten steel producing countries.

During April-November 2012, the Indian steel industry achieved a growth rate of 5.36 percent which was the highest in the world, government said in a statement.

During the period China stood third with a growth rate of 3.36 percent. The world’s average growth rate of steel was just 0.97 percent during this period.

“I take pride in announcing that the growth rate achieved by India is five times the world average growth rate of steel. I congratulate the industry stakeholders on achieving this feat and sustaining this remarkable growth,” the steel minister said.

“Today, India is the fourth largest steel producer in the world. It is my dream to see India become the second largest in the world. All the main and major public and private sector steel plants must gear up to achieve this goal in the coming years,” Verma said.

The country’s total steelmaking capacity stood at 92 million tons (mt) till September 2012, a marginal rise from the last recorded capacity of 89 mt as on March 2012, a steel ministry official told Steel Insights. Much of the increased 3-mt capacity was in the induction furnace segment, the official said.

India ranks top in production growth

Secondary producers, comprising largely induction furnace units, had produced around 33.15 mt of steel in the April-December period of 2012-13 out of the total finished steel production of 56.56 mt during the period, initial provisional steel ministry data showed.

Steel delegation to Singapore

Meanwhile, representatives from Indian

World steel production - ranking of countries (growth wise)

(million tons)

Sl. No. Country Apr-

Nov ’11Apr-

Nov ’12%

Growth

1 India 48.85 51.47 5.36

2 Turkey 23.06 24.00 4.07

3 China 461.44 476.93 3.36

4 Russia 45.36 46.68 2.89

5 USA 57.66 58.23 0.98

6 Japan 71.49 72.09 0.84

7 South Korea 45.94 46.19 0.53

8 Brazil 24.06 23.35 -2.94

9 Germany 29.87 28.73 -3.83

10 Ukraine 23.73 21.99 -7.35

Source: Steel Ministry

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steel mills and steel ministry were on a three-day visit to Singapore in January 2013 to seek investments from fund houses like GICS and Temasek among others to ensure finance for their expansion plans, industry sources said.

The delegation was led by Union Steel Secretary D.R.S. Chaudhary and comprised representatives of both public and private sector firms. They met officials from

Singapore’s leading bankers, FIIs, mutual funds and private equity firms, the sources said.

Meetings with people based in Singapore dealing in coal for the steel sector was also fixed up.

India’s steel capacity is projected to grow to 200 mtpa by 2020, calling for an investment of $110 billion in the next six-seven years.

SAIL chairman C.S. Verma had earlier said India needs to put in place a funding agency only for the steel sector, on the lines of Power Finance Corporation.

The working group on steel industry for the Twelfth Plan, which pegged `2.5 lakh crore investment in the sector up to 2017 for adding 60 mtpa capacity, had also raised concerns about the means of funding in the sector.

India Ratings & Research, a Fitch group company, expects credit profiles of its rated steel producers to remain

stable in 2013, driven by continued slow growth in domestic steel demand.

The majority (92 percent) of the ratings are on stable outlook and most of them are below ‘IND BBB-’, which reflects the inherent risks in the steel sector.

World Steel Association (WSA) has forecasted steel consumption in India to grow at 5 percent in 2013. Steel producers may see a spurt in demand in the medium-term if the Indian government implements its $1 trillion infrastructure investment plan in a timely manner. The demand for flat steel from automobile, white goods and capital goods sectors is likely to remain modest in 2013, given the continued slow economic growth, India Ratings said in a statement.

Though Indian steel producers increased prices by `500-1,000 per ton in December 2012, India Ratings expects profit margins in 2013 to remain broadly similar to 2012 levels. This is due to the persistent high cost of steel production and steel producers’ limited ability to pass on higher costs due to subdued demand from end-user industries. The margin pressure will be higher on the producers with no captive raw material linkages.

The cost of funding working-capital requirements remained high despite the marginal reduction in repo rate by the Reserve Bank of India in early 2012.

India Ratings expects a gradual reduction in interest rates in 2013 which should provide some relief in interest costs. While higher-rated issuers invariably have access to bank funding and capital markets in certain cases, most issuers in the ‘IND A’ and below categories rely largely on bank financing and are severely affected by high interest costs.

Considering the modest demand scenario, a further rupee depreciation could pressurise the margins of companies producing flat steel through blast furnace route as bulk of coking coal is imported. This is despite import price parity of flat steel products. Moreover, a weaker rupee raises the financial leverage of steel producers with significant un-hedged foreign-currency liabilities resulting in a decrease in financial flexibility. However, the agency expects financial leverage of rated entities to remain within the guidelines stipulated for the respective rating category.

The Indian iron ore mining industry is undergoing a difficult phase given regulatory intervention in various states. Even though this intervention bodes well for the domestic industry in the long-term, in the short-to-medium term, steel producers will continue to face inadequate availability of domestic iron ore and may have to import for meeting their requirements. India’s steel-making capacity is slated to cross 100 mt in 2013 which will require about 160-170

mt of iron ore. However, there could be a shortage of about 30 mt given the on-going challenges in the mining sector.

A negative outlook may arise from continued weak macroeconomic environment in India which could adversely affect financial and liquidity profiles of issuers beyond that expected by the agency. Positive rating changes are unlikely in 2013, with India Ratings being more likely to take rating actions on a company-basis rather than on the sector as a whole.

In line with India Ratings’ expectations, most of the issuers’ credit profiles, though weakened in 2012, remained within the rating categories. Steel producers’ margins in 2012 contracted due to high input cost driven by high raw material prices and the depreciating rupee. In 2012, due to greater-than-expected liquidity issues and high leverage, India Ratings took negative rating action in two cases and the outlook on two issuers was revised to Negative. However, the agency upgraded the ratings of two issuers and an issuer’s Outlook was revised to Stable from Negative due to an improvement in credit profiles.

India Ratings-rated steel producers include Steel Authority of India Limited (‘IND AAA’/Stable), Tata Steel Limited (‘IND AA’/Negative), Rashtriya Ispat Nigam Limited (‘IND AA’/Stable), Uttam Galva Steels Limited (‘IND A’/Negative), Usha Martin Limited (‘IND A+’/Negative).

India Ratings outlook for steel remains stable

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CORPORATE

JSW expects steel demand to grow in 2013-14


The Indian economy has bottomed out and is expected to turn around in 2013-14 to stimulate steel demand

growth, while imports, mainly from FTA countries, remain a concern, JSW said in a statement.

“Pragmatic policies on iron ore mining, speeding up of infrastructure projects and expected interest rate cut by RBI will boost demand for steel,” the company said.

Global economy is expected to grow by 3.5 percent in 2013. The world crude steel production for 2012 was 1,548 million tons (mt), a growth of 1.2 percent coming mainly

from Asia, North America and Russia, while contraction was reported in Europe, the company said.

“Global steel demand is expected to grow by 3.2 percent in 2013, with raw material prices to be less volatile,” it added.

Crude steel production

JSW Steel Limited reported a 8 percent growth in crude steel production in the third quarter of 2012-13 compared to that of corresponding period of last fiscal year.

The capacity utilisation was lower during the third quarter of 2012-13 as compared to second quarter of 2012-13 due to inadequate and poor quality of iron ore available through e-auction.

The company achieved crude steel production of 64.08 lakh tons in the first nine months of 2012-13, showing a growth of 20 percent over the corresponding period of last year.

Projects on schedule

JSW Steel’s New Cold Rolling Mill (CRM-2) Phase 1 and Phase 2 projects at Vijayanagar are progressing satisfactorily and will be completed during 2014-15, the company said in a release.

Non-Grain Oriented Electrical Steel project has been taken up for implementation and is expected to be completed in FY2015, the release said.

Expansion and debottlenecking of coated products facility in Maharashtra from current capacity of 0.925 mt to 1.2 mt will be completed in first quarter of next financial year, it added.

Iron ore availability

JSW Steel expects availability of iron ore in the next financial year will be in the range of 19 to 21 mt while the steel industry in Karnataka requires 30 mt.

“However, the company is exploring the possibility of using dumps with very low quality,” JSW said in a statement.

Crude steel production(in lakh tons)

Product Q3 FY’13 Q3 FY’12 Growth

Crude Steel 20.94 19.39 8%

Rolled Products: Flat

15.69 13.87 13%

Rolled Products: Long

4.83 3.7 31%

Steel production(in lakh tons)

Product 9M FY’13 9M FY’12 Growth

Crude Steel 64.08 53.62 20%

Rolled Products: Flat

46.32 38.72 20%

Rolled Products: Long

13.63 10.57 29%


CORPORATE

“Non-availability of iron ore and poor quality of ore impacted the productivity by 20 percent. Most of the sponge iron, pig iron and pellet plants in the state of Karnataka are either closed or operating at around 20 percent capacity. Integrated steel players capacity utilisation is at around 70 percent,” JSW said.

The stock piles of 25 mt ore more or less were auctioned but NMDC is not able to produce even after lapse of 17 months from the date of permission by Supreme Court, 1 mt of iron ore per month, it said.

So far, only six mines of Category ‘A’ resumed operations when Supreme Court approved resumption of mining in Category ‘A’ in September 2012. These mines produced 0.71 mt so far but produced ore is not put to e-auction. On this backdrop, the company expects improvement in availability of ore as the balance stock pile of around 1 mt would be auctioned.

“Besides six mines, balance four mines of Category ‘A’ will also resume production in Q4 FY’13 and all these mines together are permitted to produce 5 million tons per annum (mtpa),” JSW said.

The company expects that Supreme Court will consider resumption of mining in Category ‘B’ mines with permitted production of 6 mtpa. NMDC is expected to enhance production to 8 to 10 mtpa, JSW said.

The recommendation of CEC to cancel Category ‘C’ mines and auction them to end users is expected, it added.

Q3 net profit

JSW Steel Ltd reported a 19 percent fall in net profit to `137 crore for the third quarter ended December 31, 2012 owing to low capacity utilisation because of inadequate availability of iron ore, inferior quality of ore with low Fe, high alumina and manganese and unreasonable prices for iron ore in e-auctions, the company said in a release.

The turnover and net sales for the quarter stood at `9,121 crore and `8,275 crore respectively, showing a growth of 7 percent and 5 percent over the corresponding quarter of previous year. The operating EBIDTA for the quarter is `1,314 crore with a margin of 15.8 percent.

Due to 4 percent depreciation in the value of the rupee against US Dollar during the third quarter, the loss of `267 crore on restatement of foreign currency monetary items at close of the quarter has been provided. The Company as matter of prudence also made a provision of ̀ 60 crore towards carrying value of its investment in US Plate & Pipe mill. Both the items are considered as exceptional in nature.

The company posted lower capacity utilisation of 78 percent during the quarter due to iron ore shortage.

“The availability of iron ore in the next financial year will be in the range of 19 to 21 mt while steel industry in Karnataka requires 30 mt. However the company is exploring the possibility of using dumps with very low quality,” the release said.

Performance highlights: Standalone (Growth y-o-y)

Products Q3 FY’13 9M FY’13

Crude Steel Production (in MnT): 2.09 8% 6.41 20%

Sales (in MnT):

- Semis 0.08 -25% 0.24 -25%

- Rolled: Flat 1.66 15% 4.99 19%

- Rolled: Long 0.43 18% 1.22 22%

Total Saleable Steel (in MnT) 2.17 14% 6.45 17%

Net Sales Value ( `crores) 8,275 5% 26,139 16%

Operating EBIDTA ( `crores) 1,314 5% 4,612 16%

Profit after tax ( `crores) 137 -19% 1,228 41%

Essar Ports commissions 16-mtpa

terminal at Paradip Essar Ports Limited, one of the leading private sector ports in India and part of the Essar Group, has commissioned its 16 million tons per annum (mtpa) dry bulk terminal at Paradip, taking the aggregate handling capacity of Essar Ports to 104 mtpa, the company said in a statement.

This terminal is primarily meant to handle iron ore and dry bulk cargo, the statement said.

The project involved upgradation and mechanisation of the existing 230m long CQ3 berth at Paradip with installation of a fully mechanised ship loading system with a capacity of 5,000 tons per hour.

It is an all-weather terminal with a capability to handle large ships. The terminal is connected to the stockyard by a 9km long conveyor system having a capacity of 5,000 tons per hour. The stockyard has been equipped with two reclaimers with a capacity of 2500 tons per hour each.

“This is our first project on the east coast of India and is a modern facility with best in class capabilities,” Rajiv Agarwal, managing director of Essar Ports Limited, said, the statement informed.

“The terminal will help achieve better handling rates, improve efficiencies with faster turnaround time for ships and would benefit the Paradip Port and its customers,” he added.

Paradip Port Trust has granted a licence to operate the terminal till 2020 with a provision to extend the license period by further five years.

The terminal will handle iron ore pellets for its anchor customer, Essar Steel, which has commissioned a pellet plant of 6 mtpa and is in advanced stages of construction of the second unit of 6 mtpa taking the total pelletization capacity to 12 mtpa. The terminal would also be used by other users for the movement of their dry bulk cargos, the statement further added.


CORPORATE

Mining impasse hits Sesa Goa profits


Iron ore miner Sesa Goa Ltd has reported a 28 percent year-on-year decline in net profit to `497 crore in the third quarter

of 2012-13 compared with `692 crore in the same period of the previous financial year due to decline in sale on ongoing mining ban in Goa and Karnataka.

The Vedanta Group company’s sales also plunged 91 percent to `227.54 crore from `2617 crore in the same period of the previous fiscal as there was no production and sale of iron ore during the quarter.

If not for the `669 crore profit coming in from Cairn Indian, in which the company holds 20 percent stake, it would have reported a loss of `172,25 crore, said the company.

Operating performance

Iron ore mining operations in both Karnataka and Goa continue to remain suspended due to regulatory restrictions. During Q3, approximately 0.03 million tons (mt) of

iron ore was sold from Karnataka through court monitored e-auctions. There was no production or sale of iron ore during the quarter at the Goa operations, the company said in a statement.

Government authorities have ordered suspension of mining operations of all mining leases in the state of Goa, stoppage of mining transport across the state and suspension of environmental clearances in September 2012.

In October 2012, the Supreme Court ordered suspension of all mining operations and transportation of iron ore of the mines in the state.

As a result, operations at the company’s mines in Goa remain suspended. The company has filed an application before the Supreme Court seeking modification or vacation of the aforesaid order. The hearing in the Court is yet to commence effectively.

In Karnataka, the Supreme Court allowed “A” Category mines to resume mining operations, in line with recommendations

of the Central Empowered Committee (CEC), and is in the process of resuming “B” Category mines including the Sesa Goa mine in Karnataka.

The CEC has approved the company’s Reclamation and Rehabilitation plan at a provisional production capacity of 2.29 mtpa and the company expects to commence mining in Karnataka, subject to receiving the court’s and other necessary approvals.

Value addition

Production of pig iron and met coke increased by 29 percent and 40 percent in Q3 to 82,869 tons and 90,664 tons respectively as compared to 64,163 tons and 64,671 tons in the corresponding quarter of the previous year. The increase is primarily on account of the commissioning of new pig iron capacity during Q2 FY2013 (increase of 375 ktpa taking total capacity to 625 ktpa) and the associated metallurgical coke capacity. The new blast furnace operated partially during the current quarter on account of reduced availability of iron ore.

Sales of pig iron were lower by 8 percent in Q3 to 62,258 tons as compared to 68,020 tons during the corresponding quarter of the previous year due to unfavourable market conditions while the sales of met coke increased by 15 percent in Q3 to 79,542 tons as compared to 68,931 tons in the corresponding quarter of the previous year.

During Q3 and the nine-month (April-December 2012) period, power sales stood at 42 million units and 116 million units respectively.

Power sales are not comparable with the previous periods in view of GEPL acquisition in March 2012, and the recent commissioning of the new 30 MW power plant.

During the quarter, Sesa Goa acquired the remaining 49 percent of the outstanding common shares of Western Cluster Limited (thereby taking the equity interest in the project to 100 percent) for a cash consideration of $33.5 million.

Over 48,000 meters of drilling has been completed till December 31, 2012 in the three deposits. The company remains on track to deliver the first shipment in FY2014, it added.


CORPORATE

Gujarat NRE reports higher Q3 profit despite sharp fall in met coke prices


Gujarat NRE Coke Ltd, one of the largest merchant coke manufacturers in India, has managed to report

a substantial increase in its third quarter (October-December) net profit and income from operations despite sharp fall in revenues from its steel business.

“The increased income and profit is a bit surprising because metallurgical coke prices had fallen significantly since October 2011 from a peak of $410 per ton to recent lows of around $287 per ton in December 2012,” industry sources said.

The company had last week reported a net profit of `20.12 crore for the third quarter of 2012-13 compared with a profit of `16.72 crore during the second quarter (July-September) and a profit of only `1.90 crore during the third quarter of 2011-12.

The net income from operations during third quarter of current financial year stood at `527.11 crore, at `331.83 crore during the second quarter and at `335.57 crore during the third quarter of 2011-12.

“The increased profit and income from operations announced by the company for the third quarter of 2012-13 came at a time when the price of met coke had fallen by nearly 10% during the quarter from a high of around $320 per ton as on October 1, 2012 to a low of around $288 per ton as on December 31, 2012,” they said.

The price of met coke was ruling at about $368 per ton as on July 1, 2012 and were at their peak of about $410 per ton as on October 1, 2011 and at $363 per ton as on December 31, 2011, according to data available with ICMW, a high end report on coal.

“The announcement of increased profit by Gujarat NRE Coke on the back of high

income from operations is amazing, especially at a time when met coke prices remained highly depressed and the demand from steel makers was extremely low,” the sources said.

Surprisingly, with the gradual fall in market price of met coke and weakness in demand from steel makers, the income from operations of Gujarat NRE showed a contrasting trend, they said.

“When most of the Indian coke makers were finding it difficult to locate buyers in the market even at low prices because of not so encouraging sentiment in steel industry during the third quarter because of increased imports of low priced material, the higher sales and consequently higher profit by Gujarat NRE is praiseworthy,” they said.

However, a section of other sources attributed better performance of Gujarat NRE during the third quarter to its decision to sell a majority of its products under long term or quarterly contracts with steel makers.

“The increased income might have also come from increased production as the company was working on increasing its capacity and the new capacities might have come into operation recently,” the second section of sources said.

The company, however, did not provide in its filing to stock exchanges as to how much coke it had produced or sold during the third quarter of 2011-12 or in second and third quarters of 2012-13.

Electrosteel Castings reports net profit

Electrosteel Castings Ltd has reported a net profit of `33.09 crore in the quarter to December 31, 2012 against a net loss of `10.78 crore in the comparable quarter in the previous fiscal. In the quarter to September 30, 2012, the ductile iron pipe maker had posted a net profit of `37.04 crore.

Industry sources said the margins were still under pressure but selective order bookings have maintained the revenue levels.

Current order booking was worth six months’ production. Around 60 percent of the company’s revenues come from exports, mainly to Europe and the Gulf region. Electrosteel has presence in UK, France, Spain, Italy, Germany, Jebel Ali, Qatar, Morocco and South Africa.


CORPORATE

Huge steel sales potential in rural India:

SAIL chairmanWith per capita consumption of steel at a level of only 15 kg in rural India, a vast potential exists for steel marketers to enhance sales in the segment, C.S. Verma, chairman, Steel Authority of India Ltd (SAIL) said while reviewing the performance of the eastern region sales force of the company’s Central Marketing Organisation (CMO).

Verma pointed out that with rural incomes rising in recent years and aspirations of the rural populace changing in tandem, strengthening of retail marketing has become imperative to retain the company’s market leadership.

At present SAIL has a countrywide retail network comprising around 2,400 dealers at the district level and around 500 dealers at the taluka/block level. Verma urged his marketing executives to attain higher peaks of achievement by strengthening customer-centric efforts including customisation of products.

Drawing attention to the array of new products that would come into the market upon completion of SAIL’s massive modernisation and expansion programme, currently under implementation, he stressed on further consolidating the company’s market leadership through provision of more value added products and services.

Bhushan Steel Q3 net down 20%

Bhushan Steel reported a 20 percent decline in net profit

at `221.20 crore for the quarter ended December 31, largely due to subdued sales growth and rise in interest payments.

The company had reported a net profit of ̀ 276.62 crore during the corresponding quarter of the previous fiscal.

Net sales of the company was up marginally by 5 percent to ̀ 2,529.07 crore during the quarter vis-a-vis `2,407.06 crore of the October-December quarter of the previous fiscal, it said in a filing to the National Stock Exchange (NSE).

Besides, its interest costs increased by nearly 28 percent to `293 crore, while company’s expenditure was up 6.54 percent to `1,954.68 crore.

In its filing, the company also said its Board has approved capacity expansion projects worth `7,560 crore in Odisha.

“The Board has approved setting up a 0.35 million tons per annum (mtpa) capacity cold rolling cum electrical steel (CRNGO) complex at estimated project cost of `1,560 crore and reaffirming the proposal to set up a 1.8 mtpa capacity pickling Line coupled with Tandem Cold Rolling Mill (PLTCM) at estimated project cost of `6,000 crore, at Meramandali plant in Odisha,” it said.

With installation of these facilities, the company’s total downstream production capacity is proposed to increase to about 4 mtpa by 2016-17, it added.

IMFA posts 14.43% rise in Q3 net profit

Indian Metals & Ferro Alloys Ltd (IMFA), the country’s largest

integrated producer of value-added ferro chrome has posted a 14.43 percent rise in net profit `15.06 crore during the third quarter ended December 31, 2012 up from a profit of `13.16 crore in previous corresponding period.

During the third quarter of FY13, the company’s revenues went up marginally to `311.50 crore from `306.30 crore. However, exports declined to `225.32 crore in the quarter under review against `241.49 crore in the same period last year.

IMFA also commissioned Unit 1 (60 MW) of its proposed 120 MW captive power plant on December 31, 2012. The company also achieved the highest ever monthly production of 4,158 tons from the furnace dedicated to the Posco JV.

Tata Sponge Q3 net up 22.57%

Tata Sponge Ltd, an associate company of Tata Steel, reported a 22.57% jump in its net profit to `20.58 crore

for the quarter ended December 31, 2012 largely on account of higher sales compared with net profit of `16.79 crore during the same quarter of the previous fiscal.

Net sales of the company was up nearly 55% to `196.25 crore during the quarter compared with `126.65 crore of the same quarter of the previous fiscal.



SAIL Apr-Dec steel production rise marginally


The Steel Authority of India Limited (SAIL) has recorded 2 percent growth in hot metal production during

the first nine-months (April-December) of 2012-13 compared with corresponding period of 2011-12. The growth in crude steel production and saleable steel production was 1 percent and 2 percent respectively, the company said in a release.

The production of hot metal during the first nine-month stood at 10.7 million tons (mt) and that of crude steel at 10.09 mt while production of saleable steel stood at 9.25 mt.

The company’s saleable steel production till November was 8.2 mt, which means its production of saleable steel stood at 1.05 mt in December.

On techno-economic parameters, the company managed to improve its energy consumption and blast furnace productivity by 3 percent each, while power generation during the nine-month period increased by 5 percent compared to previous financial year.

The release said that during the first nine-months of 2012-13, Bhilai Steel Plant (BSP) of the company supplied special soft iron magnetic plates for the prestigious India-based Neutrino Observatory (INO) project of Bhabha Atomic Research Centre (BARC), while Bokaro and Salem plants started production of IS 2062 E450 and E350 HR Coils tailor-made for Indian Railways.

In fact, SAIL’s Bhilai Steel Plant (BSP) has registered growth of 4.1 percent, 5.3 percent and 5.3 percent in hot metal, crude steel and saleable steel production, respectively over the corresponding period in last fiscal year.

The plant produced 3.98 million tons (mt) of hot metal, 3.83 mt of crude steel and 3.32 mt of saleable steel during the nine-month period. The plant’s iron ore production was 4.1 percent higher than the same period last year, it said in a statement.

For the nine-month period of from April to December 2012, the plant recorded its best ever production of 117,300 tons of high tensile plates for home sales as against previous best of 107,300 tons in April to December 2008, best ever loading of 109,200 tons of long rails as against previous best of 99,400 tons in April to December 2011 and best ever labour productivity of 331.4 tons/man/year as against previous best of 322.6 in April to December 2010. In production of wire rods and light structural, the plant recorded growth of 10.5 percent and 54 percent, respectively.

Hajigak project

The Indian consortium led by SAIL which had successfully bid for Afghanistan’s Hajigak iron ore concession, is at the final stage of signing agreement for the project, Afghan mines minister Wahidullah Shahrani said.

Speaking recently at the sidelines of the 11th International Mining & Machinery Exhibition (IMME) in Kolkata, the minister said that the SAIL-led consortium, AFISCO (Afghan Iron and Steel Consortium) is expected to sort out soon the issues raised over some conditions put in the agreement.

As per the agreement, the consortium has to start mining within six months of being granted the licence or face cancellation of licence. There is also a condition restricting ore exports from the project.

“These things have been raised during the negotiations and negotiations are moving on. I don’t see any major difficulty in moving forward,” the minister said.

He further said that in 10-12 years, the investment in the project would be around $10-15 billion, which would be one of the biggest single project investments by India abroad.

Meanwhile, another Indian consortium including Hindustan Copper and Nalco has shown interest for Shaida copper deposit

project, the minister said. The bids will be opened “pretty soon, in a matter of days,” he added.

Mushroom design dome at BSP

As an active step towards upgrading the facility, SAIL’s Bhilai Steel Plant (BSP) has installed a ‘mushroom dome’ on the second of the three hot stoves of the upcoming furnace. The dome was successfully erected on Stove No. 2 on November 29, 2012, the company said in a statement.

The erection of dome on Stove No. 1 was done on October 7, 2012. The domes of stoves in BF#8 area have a unique mushroom design to take care of thermal stresses as a result of higher dome temperature. A state-of-the-art technology being introduced for the first time in BSP, the Mushroom design of dome helps in achieving longer campaign life of stoves, the statement added.

The dome, weighing about 100 tons, was assembled outside and placed in position as a single piece on top of the stove at a height of 39 meters. With placement of the dome, the total height of stove increased to 45 meters. The erection activity executed by L&T was done under the supervision of Blast Furnace Zone of the Plant’s Project Department.

Centre of Excellence

Besides focusing on production and upgradation process, this leading steelmaker has also inaugurated a new Centre of Excellence at Steel Authority of India Limited’s (SAIL) Bhilai Steel Plant (BSP).

This new Centre of Excellence was inaugurated at BSP’s Research & Control Lab building by C.S Verma, chairman of SAIL in presence of functional directors of SAIL and CEOs of different SAIL plants who had converged in Bhilai for the 55th Joint Meeting of Production and Productivity Committee of SAIL. The programme was also attended by senior officers of BSP on January 21, 2013, the statement said.

The setting up of the new complex is part of SAIL’s research & development master plan that envisages creation of Centres of Excellence (COEs) at the individual steel plant level which would primarily focus on various product development and improvements in collaboration with key customers and technology suppliers.

CORPORATE


company is expected to report a consolidated net profit of `683 crore, while the net sales would be around `38,228 crore.

Analysts expect the muted growth because of low demand and prices in most part of the third quarter even as prices of raw materials like coking coal and iron ore remained stable.

Going forward in the fourth quarter of 2012-13, however, steel firms may see some pick up in consumption as prices firmed up from December onwards. However, the spot iron ore prices are expected to rise in the fourth quarter even as the coking coal contract for the fourth quarter settled at $165 per ton compared to $170 per ton in the third quarter.


Tata Steel Ltd has ramped up its production in the third quarter of 2012-13, to reach an annualised run

rate of 8.35 million tons (mt) of crude steel production, the company said in a statement.

The company reported crude steel production of 2.09 mt in the third quarter of 2012-13, up 8.29 percent from crude steel production of 1.93 mt in the second quarter of the current fiscal. Saleable steel production was 2.07 mt in the third quarter of 2012-13, up 10.7 percent over saleable steel production of 1.87 mt in the second quarter of the current fiscal.

Sales during the third quarter of 2012-13 stood at 1.89 mt, up 9.25 percent over current fiscal’s second quarter sales of 1.73 mt.

In the April-December period of 2012-13, crude steel production rose 10 percent to 5.83 mt from 5.30 mt in the same period last year. Saleable steel production rose 9.36 percent to 5.68 mt in the April-December period of 2012-13 from 5.19 mt in the same period last year. Sales during the April-December period of 2012-13 stood at 5.20 mt, up 7 percent from 4.86 mt in the same period last year.

The major highlights during the third quarter of 2012-13 included LD#1 achievement of its best ever quarterly production at 0.828 mt (previous best 0.819 mt in Q2 FY2013). The Wire Rod Mill

achieved its best ever quarterly production at 0.109 mt against its previous best of 0.108 mt in Q3 FY2005. The Merchant Mill also achieved its best ever quarterly production at 0.104 mt against its previous best of 0.103 mt in Q2 FY2013.

The company also achieved its best ever flat product sales at 1.087 mt in a quarter against the previous best of 1.008 mt in Q2 of FY2013. During the period, Tata Steel commissioning of Lime Kiln # 8 & 9 and coke battery # 10 in December 2012.

Production and sales

(In ‘000 tons)

Items

Quarterly YTD

Q3 FY’12

Q2 FY’13

Q3 FY’13

Apr – Dec

FY’12

Apr - Dec FY’13

Hot Metal 1902 2070 2276 5791 6400

Crude Steel

1766 1927 2087 5302 5832

Saleable Steel

1732 1869 2069 5192 5678

Sales 1622 1730 1887 4864 5203

Q3 results

Tata Steel Ltd’s board of directors will meet on February 13, 2013, to consider and take on record the audited standalone financial results and unaudited consolidated financial results for the quarter and nine months ended December 31, 2012.

According to analyst estimates, the

New portal versionTata Steel launched a new version of its online portal-Valueabled.com at the Jaipur Literature Festival.

Valueabled.com, with a tagline of ‘values stronger than steel’, is an online extension of TATA Steel’s sustained campaign to inspire the youth to embrace a value driven society. It gives an opportunity to the country’s youth to be inspired, motivate others, encourage change and stand up for values one believes in.

Partha Sengupta VP raw materials and CSI of Tata Steel said that “Valueabled.com is a unique platform that aims to instill the importance of modern day values in the youth of the country and encourages them to participate in the nation building process. The new Valueabled.com has been enriched with new and special features to make it more attractive and user friendly. And to make it more accessible, we have also launched a mobile app ‘Values in Action’. We look forward to seeing exchange of new ideas and thoughts on the platform, and utilising it as a tool to bring about youth awakening.”

A debate section and a ‘Talk the Talk’ section have also been included. These are held periodically on Google hangouts and often feature celebrities, industry experts and motivational personalities, the company said.

CORPORATE

Tata Steel annualised crude steel production likely at 8.35 mt in 2012-13


Boiler-6 of CPP

According to information available with Steel Insights, RINL has lighted up Boiler No. 6 of its proposed coal and blast furnace gas based captive power plant (CPP). With an estimated expenditure of `339 crore, the lighting up the boiler is a major milestone in the enhancement of captive power generation, the company said in a release.

RINL chairman and managing director A.P. Choudhary said, “The commissioning of Boiler-6 will help in meeting the requirement of expansion significantly as the company is putting all efforts to increase its power generation to meet its requirements and also to reduce its dependence on the state grid.”

The boiler, which will generate steam of 330 tons per hour, can operate either with 100% coal or with blast furnace gas and coal in the ratio of 50:50 for generating steam at rated capacity. On January 3, RINL had announced commencement of structural erection work, equipment erection of boiler and other civil works at the CPP as part of increasing its steel-making capacity to 6.3 mtpa.

RINL lights up ignition furnace at Sinter Plant No. 3


Achieving a major milestone in the commissioning of the state-of-the-art Sinter Plant - 3, the Rashtriya

Ispat Nigam Ltd (RINL) said it has lighted the ignition furnace of the 3.6 million tons per annum (mtpa) plant.

“The Ignition Furnace of Sinter Plant No. 3 was lighted up by chairman and managing director A.P. Choudhary on January 8,” the company said in a release.

Earlier on January 3, RINL had flagged off erection works of Oxygen Pressure Reducing Station (PRS) for Steel Melt Shot-2. The sinter plant is being constructed by RINL at a cost of `750 crore. The new sinter plant would help RINL to increase production from its Blast Furnace -3 besides reducing cost of production through energy efficient ways.

The sinter plant was supplied and erected by a consortium of TPE (Russia), while Dastur & Co and McNally Bharat Engineering Ltd provided consultancy services. Siemens, UKG of Russia, Armoto Yunz, Siemens Vie, Alstom India, Voltas, Burner Center and GDC Ltd were involved in the commissioning.

RINL raises product prices by `500/tonRashtriya Ispat Nigam Ltd (RINL) has increased prices of its steel products by around `500/ton in January 2013. The move was led by expectations of an improvement in the overall steel market with signs of increased demand and a firming up of domestic and global steel prices. RINL has registered a growth of 15% and 5% in sinter and iron and steel production respectively.

Sinter production stood at 528,000 tons and was the best ever monthly production achieved since the plant’s inception. Saleable steel production of 270,000 tons was the best achieved in the current financial year, the company said. In order to overcome the crisis due to the power shortage in, RINL is focusing all efforts to increase its captive power generation. The plant registered a growth of 2% in December. Prices for representative steel products for January 2013.

Sl. No. Item GradeRs/ton

VZG LUD CNI MUM CAL

1 Billet 125x125 mm IS 2830 37600 41200 39550 41200 39850

2 Channel 200x75 mm IS2062 Gr.A 46050 46400 46750 45100 45850

3 Rebar 8mm IS1786 Fe500D 45550 46000 46550 45850 45950

4 Round 20.64 mm 55Si7 49150 49300 49250 49300 49250

5 Round 40mm SAE1018 43200 42650 43600 43075 43000

6 Wire rod 7 mm PC115 45000 45500 45250 44650 45150

7 Wire rod 8 mm EQ 44950 45450 45200 44550 45100

8 Pig Iron LSB 25281

The above prices are Branch Level Prices incl. ED/cess and excl. VAT/CST, etc.

CORPORATE

AP Choudhary, CMD unveiling the plaque to mark the inauguration of Sinter Plant 3.


TECHnOLOGy

♦ Plate Mills including all plate finishing lines

♦ Steckel Mills for strip and plate production plants

♦ Cold Rolling Complexes ♦ Tandem and Reversing mills for cold

rolling ♦ Pickling lines for carbon and stainless steel ♦ Electrolytic Tinning Lines ♦ Galvanising Lines ♦ Annealing Lines ♦ Colour Coating Lines ♦ Skinpass Mills for hot and cold

applications

DWU specialises in supply of trendsetting technologies and equipment for flat products production, from caster to hot mills to cold rolling mills and processing lines. In this paper, efforts have been made to highlight some of the special features and recent installations of DWU for cold rolling mills and processing lines.

Cold Strip Mills

DWU is recognised globally as a leader for engineering and manufacturing of complete cold mill complexes for carbon and stainless steels. Starting from hot-rolled coils, DWU processing lines and cold mills are able to produce finished products more than 2 million tons per annum (mtpa) depending on the product mix, meeting the requirements of the most demanding markets, such as automotive industry both for exposed and non-exposed parts, white goods, packing and construction. All DWU processing lines and cold mills have reached their target performances in extremely short time after

Sanat Bhaumik

The whole of steel world is today looking mainly to India where huge investments have been announced

for capacity expansion of all major existing plants and installation of new plants. This also leads to installation of state-of-the-art new rolling mills and strip processing lines as well as upgradation and modernisation of existing mills.

With the purchase of United Engineering on January 1, 1995, Danieli completed its strategic acquisitions of assets and technologies for flat products in the US. This route began in 1991 with a joint venture with United Engineering, followed by another joint venture with Wean industries in 1992 and acquisition of the later in 1993.

The merger of this centennial design experience with the most advanced R&D activities and a front running attitude led Danieli Wean United (DWU) to become the most innovative company in flat products

equipment since the beginning. This front running spirit and the experience enables DWU to design and supply any kind of equipment in flat hot and cold rolling and processing, such as:

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(TSR, fTSR, QSP & ETR)

Danieli Wean United cold rolling mills & processing lines

Winning combination in flat products equipment

Process section of a Continuous Pickling Line

Single Stand reversing cold mills


startup, granting the customers a very fast return of investment.

DWU offers a full range of tandem rolling mills to process materials up to a maximum thickness of 6.5mm from “coil to coil” to “continuous” type for the production of sheet material in order to fulfill the highest customer’s requirements. 4-high or 6-high mill stand configurations are provided with the latest technology for thickness and flatness control, and excellent strip surface quality. They also ensure achieving a final product with the required mechanical properties at the lowest investment costs without compromising the product quality, for medium and large production volumes and varieties.

DWU has reference installations of 106 cold strip mills totalling over 1000 stands in the following areas:

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♦ 2-stand Reversing Mills ♦ Single stand

Reversing Mills ♦ Hot Skin Pass Mills ♦ DCR Double

Reduction Mills ♦ Temper Mill ♦ C o m b i n a t i o n

Reduction Temper Mills

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DWU tandem cold mills can be provided for conventional, continuous, and pickle line coupled applications for production capacities of up to 2,200,000 tons per annum (tpa). Regardless of the configuration, DWU mills are provided with state-of-the-art gauge and flatness controls for the production of commercial and exposed sheet products as well as tin plate. Depending on the product mix and mill configuration, DWU reversing mills (one or two stands) are capable of producing 150,000 to 1,000,000 tpa of commercial, exposed application and tin plate products.

Danieli cold mills are supplied with 4hi, 6hi, 18hi and 20hi configurations. The 4hi and 6hi mills are equipped with Optimised Shape Roll Technology (OSRT).

The New Danieli 6-high 3C mill concept allows a superior range of control range with an original design for roll crossing in a stand of six-high configuration. The operational flexibility and favorable distribution of forces specific to the Danieli 6-high 3C mill allows rationalisation in the use of the stand actuators resulting in lower production and maintenance costs and improved plant efficiency.

The 6hi technology of Danieli incorporates the following major features in the mill:

♦ Work Roll and Intermediate Roll bending

♦ Bending blocks are provided for both positive and negative bendings

♦ Positive bending max 720KN (per each roll neck)

♦ Negative bending max 720KN (per each roll neck)

♦ Work Roll and Intermediate Roll shifting

♦ The total stroke for intermediate roll shifting will be + 200mm with DWU OSRT (Optimised Shaped Roll technology)

♦ Shifting of counter intermediate roll developed by Danieli & C in joint cooperation with Yanshan University.

Hot Skin Pass Mills

Today’s demanding market is pushing steel strip processors to a new high. The requirements for steel strips are of reliable consistent quality at competitive price. This market demand leads to development of newer grades of material at competitive cost. To minimise the overall cost of production for the end users, wherever possible they would prefer to use hot rolled coils over cold rolled coils. This necessitates production of hot rolled coils with tighter tolerances and much better surface finish.

For example, the use of hot rolled strip for pressed components and tube making has initiated requirement of good shape, yield point suppression and specific texture. In the hot rolling process it is not possible to control these parameters due to the fact that rolling takes place at higher temperatures. However, the end products from hot skin passing are produced at ambient temperature where the properties of material are different than at elevated temperature.

TECHnOLOGy

Hot Skin Pass Mill

Pickling section of a DWU PLTCM

TCM section of a DWU PLTCM


To meet the continuously increasing demand for higher quality hot rolled coils by the end users, the hot skin-passing is now widely accepted as the means of improving shape and properties of hot rolled coils especially with respect to strip flatness, elongation and surface roughness. Hot rolled coils from conventional hot strip mills or thin slab casting and rolling plants need further processing like recoiling and skin passing to reduce the rejection rate.

When the strip is used to produce pipes, pressed steel components, etc. its use is beneficial to increase quality and reliability of the end product. With a large reference of Hot Skin Pass Mills worldwide, Danieli is able to supply high quality and state-of-the-art plants to meet the present and future requirements of the ever changing market demand.

Pickling Line coupled with Tandem Cold Mills (PLTCM)

Continuous pickling line coupled with tandem mill provides significant quality, productivity, yield, and cost advantages, eliminating intermediate storages for pickled coils and the necessity of strip threading for each coil entering tandem mill. The combination of these two lines is a mix of high efficient features.

The innovative design for high-speed (400 mpm) Turboflo® pickling process section makes DWU continuous pickling lines the fastest lines worldwide. 4-high and 6-high mill stand configurations ensure excellent quality results in terms of flatness and thickness control. Continuous process eliminates the necessity to thread the strip head end between two consecutive coils resulting in higher line productivity, reduction

of off-gauge material and reduction of coil handling.

Pickling Lines (PPPL/CPL)

Danieli’s solution for the pickling lines includes Push-Pull Pickling lines (PPPL), standalone Continuous Pickling Lines (CPL) and Continuous Pickling Section as a part of PLTCM. For such Pickling lines, DWU has an impressive reference list of 103 installations.

A Push-Pull line can handle a wider range of products than continuous lines - both heavy and light gauge, high carbon and mild steel, and high strength low alloy (HSLA) steel. For these reasons, as well as their lower cost, these are mostly favoured by customers in the secondary steel plants. However, these Push-pull lines also have applications in major steel plants, where they can be used to complement continuous, high production units or to replace older, less productive lines.

A recent DWU push-pull line uses Turboflo® pickling process, which removes the oxide layer very effectively, for unmatched cleanliness on strip surfaces and edges. A two-high temper mill improves strip shape and further enhances the breakup of oxide scale for faster pickling process.

Several units provided can be moved in and out of the line: a dry lube system that applies protective coatings and press working lubricants, a slitter capable of making up to seven cuts depending on gauge and yield strength, and an adjustable-width side trimmer for fast width changes. A turret type

recoiler eliminates time-consuming in-line banding. Such lines can be designed for an all-in-one workhorse that is engineered to deliver higher product yields.

A standalone Continuous Pickling Lines (CPL) or the Continuous Pickling Section as a part of PLTCM will consist of a double pass entry section, Laser or Flash-Butt welder for strip joining, six-strand entry horizontal accumulator, scale breaker (tension leveler), pickling section, exit strip accumulator, side trimmer, etc. All pickling lines supplied by DWU presently are provided with Turboflo® which has the following advantages:• Turboflo® can process the light

gauge strip (0.7/0.8mm) at speeds up to 400mpm without concern for maintaining emersion, as this system offers a flat, straight through strip pass line.

• Turboflo® offers the shortest possible pickling system to meet the established parameters for the pickling line.

• Because of the low volume of pickle liquor contained in the line pickle tanks, the total tank can be quickly drained for any situation.

• Because the need to control strip tensions for catenary is eliminated, high tensions can be utilised through the pickling section which results in excellent strip tracking and less total horsepower required.

• Turboflo® is very thermally efficient and keeps hot fresh pickle liquor in contact with the strip surface at all times.

• Turboflo® provides total isolation of the pickle liquor from tank to tank.

TECHnOLOGy

PLTCM – Pickle Line coupled Tandem Cold Mills

General view of a DWU Pickling line


• The unique cover design eliminates the surge of fluid due to high strip speed toward the exit end of the tanks.

• The special cover design also captures the surging of the pickle liquor due to the high speed of the strip and re-circulates this pickle liquor to achieve more turbulence. The higher the strip speed, the greater the pickle liquor turbulent action becomes.

• Turboflo® eliminates the high surging of pickle liquor due to the high speed operation. Consequently, it does not place the wringer rolls under any high fluid pressure. Therefore, the sealing of the wringer rolls is greatly simplified and maintenance is significantly reduced.

Galvanising Lines (HDGL)

DWU is a world leader when it comes to designing and manufacturing quality galvanising lines (more than 105 galvanising lines supplied since 1948). DWU experience in galvanising extends to 35 countries, over six continents. DWU builds lines that can meet the most stringent galvanising specifications with strip widths up to 72 inches (1830mm) wide and beyond.

These galvanising lines produce coated strips for use in automobiles (Galvanised/Galvannealed), appliances, home-building, building products (Galvanised/Galvalume), and many of today’s demanding products. Coils can be produced in a wide range of properties that include ductility, coating weights, and surface treatment. Because of this experience, DWU produces more galvanising lines than all their competitors combined.

As a world leader, DWU holds the records for many firsts in galvanising lines, some of which are:

♦ First Cook-Norteman Lines ♦ First Dedicated Zinc-Aluminum Line ♦ First Minimum Spangle Coating ♦ First Moveable Coating Pots

♦ First Steam/Air Knives to Replace Rolls

♦ First High-Speed Scrap Bailers

♦ First Strip Side-Notchers

Continuous Annealing Lines (CAL)

The continuous annealing process represents the ideal solution for processing cold rolled strip (ranging from commercial quality to high-strength steel) and black plate with high production rates, high yields and substantial energy savings with respect to batch annealing process. DWU’s history of more than 30 annealing lines ensures top material qualities and high process flexibility for the production of a broad range of steel grades and dimensions. Excellent annealing results, in the automotive sector especially, are achieved thanks to fully automated temperature control, specific annealing cycles and rapid cooling system.

The present generation CALs for autobody quality strip production will generally consist of coil receiving ant entry, a double pass entry section, welder for strip ends joining, vertical looper, electrolytic cleaning section, annealing furnace, exit vertical looper, skin pass and tension leveling section, horizontal and vertical inspection station, coiling section followed by coil delivery system.

At present, DWU has an exclusive alliance agreement with Ebner, Austria for Automotive CAL furnaces. Such annealing furnaces have very sophisticated and fully automatic following heating and cooling zones to achieve the mechanical properties:• Pre-heating section,

• Heating section,• Soaking section,• Slow cooling section• Fast cooling section,• An overaging section• A controlled cooling section

Brief details of the two most recent Continuous Annealing Lines (CAL) for automotive/appliances quality strips are as follows: Customer – Usiminas (Brazil): Start up year 2000, strip thickness: 0.4 – 2.3 mm, maximum strip width: 1865 mm, Grades: HSS/automotive, Furnace capacity: 220 mpm, production 147 tph (Furnace supplier: Nippon Steel)Customer – I/N Tek (USA): Start up year 1990, strip thickness: 0.4 – 2.0 mm, maximum strip width: 1650 mm, Grades: appliances/automotive, Furnace capacity: 450 mpm, Annual production 900,000 tpa (Furnace supplier: Nippon Steel)

Colour Coating Lines (CCL)

DWU colour coating lines respond to the growing demand for pre-coated sheets with high throughput rates and top product

TECHnOLOGy

Annealing furnace of a CAL

Galvanising and colour coating line at Marcegaglia, Italy


quality. They continuously coat hot rolled, cold rolled and galvanised steel strips with a variety of coatings in an almost endless array of colors, patterns, and textures, and can be supplied as stand-alone lines or combined with in-line galvanising process. The coatings are precisely applied through roll coating machines on both sides of the strip that can be coated simultaneously with either the same or different type of coating.

The typical configuration with separate coaters with quick color change feature and two ovens allows maximum flexibility in applying one or two coats on each side of the strip. Further highlights of Danieli technology are high flexibility for processing different strip dimensions and coating compositions, precise coating thickness, special design and control of curing ovens for high efficiency, excellent quality and enhanced environmental solutions.

DWU has supplied 26 Colour Coating lines since 1962. The most recent installation is the state-of-the-art galvanising cum high-speed painting line for the production of

galvanised and painted coils at Marcegag l i a ’ s Ravenna Plant in Italy.

This 350,000 tpa (150,000 tpa painted coils) line will process strips up to 1550mm width in the thickness range of 0.4 to 1.4mm. The major advantages of such combined

line are the low investment costs, high production flexibility (producing either only alvanized, or alvanized and color coated), low operating costs (less coil handling, packaging, degreasing, manpower needs), installation cost reduction, and lower environmental impact.

Electrolytic Tinning Lines (ETL)

DWU tinning technology is characterised by either tinning or chromium plating or a combination of both. Tin plate is mainly used in the packaging industry for its excellent corrosion protection, appearance, strength, light weight, formability and resistance to attack by organic substances both for food and non-food packaging products.

The long experience of more than 100 projects, both for new lines and revamping activities, guarantees that DWU equipment represents the state-of-the-art for electrolytic tinning lines, including cleaning and pickling equipment, tension leveler, tin free steel (TFS) and tin plating equipment, and finishing equipment. An innovative electrolyte

process has been developed to meet the highest demands for top quality products and for healthier and safer operations thus supporting the industry’s effort to produce quality steel at competitive costs.

Outlook

DWU today is the most innovative supplier for flat product equipment in the global steel industry by converting all their innovations into action. This innovaction (innovation + action) has been further strengthened due to smooth implementation of all projects with the in-house automation and process control systems. Danieli also has state-of-the-art manufacturing workshops in Italy, Austria, Thailand and China. This in-house manufacturing facilities and automation competence make Danieli capable of managing the full supply including

mechanical, fluids, process and electrics and automation. This is the best solution to cover the responsibility of the process and to have quick learning curve for the benefit of the end users.

With trendsetting technologies in rolling and processing developed over decades of experience as a partner of the steel industry, DWU is in a unique position to provide the right selection of rolling and processing plants to cater to the stringent requirements of new steel grades with outstanding product quality required in the presently growing market.

Coating section of a DWU CCL

Exit Vertical Looper of a Colour Coating Line

Finished coil from a DWU PLTCM

Finished coil from an Electrolytic Tinning Line

Sanat Bhaumik is senior vice-president (flat products), Danieli India

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

TECHnOLOGy


TECHnOLOGy

BSP gets new Skin Pass Mill


Chairman and managing director of Steel Authority of India Limited (SAIL), C.S. Verma, inaugurated

the state-of-the-art and most advanced Skin Pass Mill (SPM) in India supplied by Danieli for the 1.2 million tons per annum (mtpa) new Cold Rolling Mill complex (CRM III) at the Bokaro Steel Plant (BSP) on January 18.

The following are the brief technical specifications of this 0.9-mtpa SPM:

♦ Capacity : 860,000 tons per annum ♦ Strip thickness : 0.25 to 2.0mm ♦ Strip Width : 800 to 1600mm ♦ Coil weight : 31 tons (maximum) ♦ Mill speed : 1300mpm (max) on no load,

1200mpm (max) operating ♦ Skin pass mode : Both wet and dry skin

passing ♦ Steel grades: CQ, DQ, DDQ, EDDQ,

HSLA, IF, BH, etc. ♦ Yield strength: 140 to 400M/mm2

As a part of the major expansion plan of SAIL, it was decided to install a state-of-the-art new CRM complex in Bokaro Steel Plant to cater to the wide spectrum and high ends of cold rolled steel products in the market particularly targeting the automotive, white goods and appliance sectors.

This new CRM complex has been installed in the premises of Bokaro Steel Plant to produce 1.2 mtpa of cold rolled and galvanised/galvannealed coils using 1.3 mtpa hot rolled coils from the existing HSM. The incoming hot rolled coils will be processed in the PLTCM and BAF before the cold rolled annealed coils are skin passed in this SPM.

This SPM will be able to process very soft materials like IF grades and very high strength steels with necessary elongation, hardness, flatness and strip roughness required by mainly the automotive industry. Designed as a raised mill with strip flow from left to right, it will mainly consist of the following equipment:

♦ Entry section including walking beam conveyors, down enders, coil cars, coil

preparation station, payoff reel with pup coil removal system, entry bridle unit, etc.

♦ Mill stand equipment consisting of mill stand with rolls, chocks & bearings, bending blocks, quick work roll change device, hydraulic wedge for pass line adjustment, backup roll change system, wet skin passing headers and nozzles, anti crimp roll, cobble guards, roll polishing device, etc.

♦ Delivery section consisting of strip blow-off unit, thickness gauge, shape meter roll, hydraulic shear, electrostatic oiler unit, tension reel, belt wrapper, exit coil car and exit walking beam conveyor system.

Danieli’s scope of supply for this SPM also included all auxiliary systems (hydraulic, pneumatic, lubrication, fume & dust extract systems, etc,) and complete electrics and automation systems which were implemented by Danieli Automation. This state-of-the-art Skin pass Mill is the first unit to be inaugurated in Bokaro CRM Complex III.

C S Verma, Chairman, SAIL inaugurating BSP’s SPM


sOCIAL Buzz

has increased by around 2 kgs over the last financial year. “That quite a bit,” she commented to a question by Rajiv Bhutara, director at Maharishi Alloys P Ltd.

The discussion followed the recent announcement by India’s steel minister Beni Prasad Verma who informed Parliament that the present per capita consumption of steel in the country is 59 kg.

The minister further said that the rural market has been identified by the government as one of the areas where the potential of steel consumption can be enhanced further and ministry of steel has launched a campaign for popularising usage of steel in rural areas.

He added that the Institute of Steel Development and Growth (INSDAG) has been frequently conducting training programmes to create awareness about the use of steel. The main producers have already established a wide network of rural dealers/distributors so as to make steel available in the remote corners of the country. INSDAG is also working on revised designs of pre fabricated/semi fabricated applications as well as increasing aesthetics of steel used in various projects.

He said that necessary action has since been initiated to increase and popularise consumption of steel in the country.

The industry insiders hope that the high growth in demand, if sustained, would drive out the various impediments and red tape. This will be the driving force behind overall growth in the industry and will help ease bottlenecks that are putting all kinds of restrictions currently.


What ails the domestic steel sector most? Well, there are a little too many to keep count of. Delay

in project approvals, land acquisition, raw material availability, duty free import of specialised steel – just to name a few of the road-blocks. Yet, there is hardly any slowdown in capacity expansion by the domestic steelmakers. Almost all the major manufacturers including SAIL, Tata Steel, JSW and RINL are indulging in ambitious expansion projects many of which will come on stream during the Twelfth Five Year Plan (2012-17). Ask the industry people about the basic logic behind this apparent contradiction, and you get a unanimous view – demand growth.

In the past, the demand factor was more an assumption than an approximation. But now with the government and the economy graduating to regular record-keeping, such estimates and approximations are becoming available to the public. In a recent discussion at the ISMW platform on LinkedIn, the industry insiders threw light on the quantum of steel consumption/demand growth in the domestic market.

According to Susmita Dasgupta, chief e c o n o m i s t , Joint Plant Commit tee (JPC), the country’s per capita steel consumption

Industry pins hopes on steel demand growth

Tap rural market

While talking about per capita c o n s u m p t i o n , ISMW members noted the recent comments by SAIL chairman C.S. Verma who stressed on tapping the potential in rural India. With per capita consumption of steel at a level of only 15 kg in rural India, a vast potential exists for steel marketers to enhance sales in the segment, Verma said while reviewing the performance of the eastern region sales force of the company’s Central Marketing Organisation (CMO).

Verma pointed out that with rural incomes rising in recent years and aspirations of the rural populace changing in tandem, strengthening of retail marketing has become imperative to retain the company’s market leadership.

At present SAIL has a countrywide retail network comprising around 2,400 dealers at the district level and around 500 dealers at the taluka/block level. The SAIL chairman urged his marketing executives to attain higher peaks of achievement by strengthening customer-centric efforts including customization of products.

Drawing attention to the array of new products that would come into the market upon completion of SAIL’s massive modernisation and expansion programme, currently under implementation, he stressed upon further consolidating the company’s market leadership through provision of more value-added products and services.

Tata Steel expansion

M e a n w h i l e , Tata Steel is expecting to start full capacity production at

Jamshedpur plant this quarter after its modernisation, according to reports.

H.M. Nerurkar, MD of Tata Steel, said that modernisation of the Jamshedpur plant is over and commissioning of 9.7 million tons is almost complete.

Referring to Tata Steel’s Kalinganagar project in Odisha, Nerurkar said the project is going great and is expected to be commissioned in the first phase in 2014.

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.


LOGIsTICs

however, was about 16.04 percent lower than the iron ore traffic moved through the port in the same period last year.

The ports together handled 405.27 mt of traffic during the period, about 3.09 percent lower than 418.20 mt recorded during the same period last year.

They also handled a total of 20.91 mt of coking coal in the period, down 3.68 percent from 21.71 mt handled in the same period last year.

Movement of container traffic in terms of tonnage fell in the April-December period, while that of TEUs also dropped during the period. The major ports handled 89.23 mt of tonnage and 5.76 million TEUs in April-

December period compared to 89.89 mt of tonnage and 5.84 million TEUs in the same period last year.

Among the major ports, Paradip port had the distinction of handling the highest volume of thermal coal of around 15.16 mt in April-December period. Visakhapatnam port handled the highest quantity of 5.15 mt of coking coal during the period.

Movement of coking coal through Paradip, Kolkata, Visakhapatnam and Chennai ports declined during the period when compared to the corresponding period last year.

Five major ports showed negative growth in traffic handling during the April-December period of the current fiscal, while the remaining seven showed positive growth on a year-on-year basis.

In terms of growth, Ennore port topped the list with a 17.51 percent increase in cargo throughput. Cochin port’s growth was lowest at about 0.14 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of 69.49 mt recorded for the period.

The Mormugao port registered the highest decline of 47.36 percent in traffic handling during the period due to a fall in iron ore export.


Movement of iron ore through the 12 major Indian ports dropped sharply by 54.56 percent in

the April-December 2012 period due to restrictions imposed on mining and a hike in export duty on iron ore. The major ports together handled 21.72 million tons (mt) during the period against 47.81 mt in the same period last year.

According to data released by the Indian Ports Association (IPA), Vishakhapatnam port handled the highest volume of 8.79 mt of iron ore in April-December. This volume,

Iron ore handling by major ports down 54.5% y-o-y in April-Dec

Traffic handled at major ports(During Apr-Dec, 2012* vis-a-vis Apr-Dec, 2011)

(*) Tentative (in '000 tons)

PortsApril to December traffic % variation against

prev. year traffic2012* 2011

Kolkata

Kolkata dock system 8666 9392 -7.73

Haldia dock complex 20198 24427 -17.31

Total: Kolkata 28864 33819 -14.65

Paradip 40749 40500 0.61

Visakhapatnam 44201 52646 -16.04

Ennore 12212 10392 17.51

Chennai 39896 41940 -4.87

V.O. Chidambaranar 20951 20853 0.47

Cochin 14893 14872 0.14

New Mangalore 27025 24233 11.52

Mormugao 14918 28337 -47.36

Mumbai 44090 40217 9.63

JNPT 47977 49489 -3.06

Kandla 69497 60910 14.10

Total 405273 418208 -3.09

Source: IPA


LOGIsTICs

domestic users in December rose to `581.75 crore, up 18.72 percent from `490 crore in November.

During the month, the Railways transported 44.5 mt of coal, up 8.83 percent from 40.89 mt in November and revenue earnings from transportation of coal also increased to `3,347.27 crore in December from `3,085.81 crore in November.

Overall, the Indian Railways’ revenue earnings from commodity-wise freight traffic rose month-on-month in December, mainly due to higher transportation of coal and iron ore. Revenue earnings from commodity-wise freight traffic during December 2012 stood at `7491.74 crore, up 8.82 percent compared with `6,884.56 crore earned in November.

Revenue from transportation of cement in December stood at `674.78 crore (8.72 mt) as compared to `629.5 crore (7.96 mt) in November, while that from foodgrains transportation increased to `596.54 crore (4.24 mt) in December from `523.61 crore (3.82 mt) in November.

The Railways revenue from transportation of fertilizers in December rose to `480.23 crore (4.38 mt) from `476.18 crore (4.38 mt) in November.

Revenue from transportation of petroleum oil and lubricant (POL) in December stood at `403.16 crore (3.45 mt), while the same from pig iron and finished steel from steel plants and other points was `440.4 crore (3.01 mt). Revenue from container services was `335.67 crore (3.43 mt) and from transportation of other goods was `501.87 crore (5.79mt).


The Indian Railways transported 9.46 million tons (mt) of iron ore in December, moving up 13 percent over

8.37 mt transported a month ago, according to information available with Steel Insights.

Thus, revenue from transportation of iron ore for exports, steel plants and for other

Railways iron ore handling up 13% m-o-m in Dec

Commodity-wise revenue

CommodityQuantity (in mt) Earning (in ` cr)

Dec’11 Dec’12 Dec’11 Dec’12

Coal

(i) for steel plants 3.98 3.73 169.15 214.51

(ii) for washeries 0.12 0.11 1.12 2.21

(iii) for thermal power houses 27.15 28.32 1,766.91 2,317.78

(iv) for public use 9.76 12.34 611.38 812.77

(v) Total 41.01 44.5 2,548.56 3,347.27

Raw material for steel plants except iron ore 1.12 1.24 99.41 130.07

Pig iron and finished steel

(i) from steel plants 2.39 2.35 306.4 370.98

(ii) from other points 0.71 0.66 62.92 69.42

(iii) Total 3.1 3.01 369.32 440.4

Iron ore

(i) for export 0.38 0.11 107.13 28.24

(ii) for steel plants 5.18 5.19 206.31 233.75

(iii) for other domestic users 3.38 4.16 230.2 319.76

(iv) Total 8.94 9.46 543.64 581.75

Cement 9.37 8.72 562.73 674.78

Foodgrains 3.94 4.24 403.7 596.54

Fertilizers 5.61 4.38 481.76 480.23

Mineral Oil (POL) 3.52 3.45 326.89 403.16

Container Service

(i) Domestic containers 0.79 0.79 78.68 85.79

(ii) EXIM containers 2.67 2.64 224.96 249.88

(iii) Total 3.46 3.43 303.64 335.67

Balance other goods 6.74 5.79 462.79 501.87

Total revenue earning traffic 86.81 88.22 6102.44 7491.74


mACRO OuTLOOk

Source: RBI

58

63

68

73

78

83

88

4042444648505254565860626466687072

INR vs G

BP & YEN

INR

vs U

SD &

EU

RO

USD EURO GBP YEN

INR movement against select major currencies

The INR rose against the USD in January due to inflow of foreign funds into domestic share and debt markets. US non-farm payroll data may decide on INR’s future progress. However, the upcoming stake-sale by the government in state-owned power producer NTPC Ltd is likely to boost FII investment and improve INR versus the USD. If the inflows of USD for the stake sale are large enough, the INR may breach the 53 mark.

105

125

145

165

185

205

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12

Mining & Quarrying ManufacturingElectricity General Index

Source : Govt. of India, MoSPI

The industrial output dipped from a robust 8.3 percent in October to a four-month low of 0.1 percent in November due to poor performance of manufacturing and mining sectors and decline in production of capital goods. IIP grew by 6 percent in November, 2011 while growth was 1 percent in April-November period this fiscal, down from 3.8 percent in the same period in 2011-12.

Index of Industrial Production

110120130140150160170180190200210220230

All Commodities Primary ArticlesManufactured Products Fuel & PowerBasic Metals Alloys & Metal Products Steel

Source : OEA, GoI, Ministry of Commerce & Industry

Wholesale price index (Selected categories)

India’s wholesale price index (WPI) (Base 2004-05=100) stood at 168.6 in December almost similar to 168.8 recorded in the previous month. Also WPI for October this year was revised to 168.5 this month. The index for primary articles group increased by 10.61 percent to 220 from 198.9 in December the previous year. The index for manufactured products group also rose by 5.04 percent to 148 from 140.9 in December 2011. Fuel and power index rose 9.38 percent to 188.9 from last year while index for basic metals and metal alloys rose by 3.37 percent to 165.7 for the month. Steel index however remained unchanged.

7.23

%

7.56

%

7.69

%

7.50

%

7.55

%

7.58

%

7.52

%

8.01

%

8.07

%

7.32

%

7.24

%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

Source : OEA, GoI, Ministry of Commerce & Industry

Inflation rate in India

India’s WPI based headline inflation rose to 7.18 percent in December. This propelled RBI to cut interest rates to boost economic growth rates. October inflation rates got revised to 7.32 percent from 7.45 percent. The slowdown in inflation for December was led by a moderation in the prices of fuel and manufactured goods. Experts opine that manufactured goods will trend lower in the coming months which will bring down inflation rates.

1400000

1450000

1500000

1550000

1600000

1650000

1700000

280000

282000

284000

286000

288000

290000

292000

294000

296000

298000

27-Ja

n-12

10-F

eb-1

224

-Feb

-12

9-M

ar-1

223

-Mar

-12

6-Ap

r-12

20-A

pr-1

24-

May

-12

18-M

ay-1

21-

Jun-

1215

-Jun-

1229

-Jun-

1213

-Jul-1

227

-Jul-1

210

-Aug

-12

24-A

ug-1

27-

Sep-

1221

-Sep

-12

5-O

ct-1

219

-Oct

-12

2-N

ov-1

216

-Nov

-12

30-N

ov-1

214

-Dec

-12

28-D

ec-1

211

-Jan-

1325

-Jan-

13

in Rs crore

in m

illio

n $

in Million $ in Rupees crore

Source: RBI

Foreign Exchange Assets

India’s foreign exchange (forex) reserves increased by $77.6 million to $295.74 billion for the week ended January 27. Forex reserves had decreased by $580.3 million to $295.67 billion for the week ended January 18. Foreign currency assets (FCA) went up by $79.3 million at $261.70 billion during the week ended January 27. While it got lowered lower by $646.8 million at $261.62 billion in the previous week. Gold reserves value remained the same at $27.21 billion for the two weeks under consideration. The special drawing rights (SDRs) dropped by $0.5 million to $4.43 billion during the week ended January 27, while it had increased by $2.3 million to $4.43 billion during the previous week. Reserves with IMF went down by $0.2 million to $2.38 billion for the week ended January 27.

Macroeconomic indicators of India



mARkET REPORT

Chandrika Mitra

World crude steel production for the 62 countries reporting to the World Steel Association

(Worldsteel) rose by 1.2 percent to 1510.133 million tons (mt) in 2012 as compared to that reported in 2011 at 1491.086 mt. Again, crude steel production for December 2012 was higher by 3.62 percent compared to December 2011.

In 2012, Asia produced 982.711 mt of crude steel, an increase of 3 percent over 2011 when production stood at around 955.208 mt. The EU produced 169.428 mt of crude steel in 2012, down by 5 percent compared to 177.468 mt produced in 2011. North America’s crude steel production in 2012 was 121.863 mt, 2 percent higher than 118.961 mt of 2011.

China, the single largest producer, produced 708.784 mt of crude steel in this year, an increase of 4 percent as compared to 2011, when production stood at 684.275 mt. China’s share of world crude steel production increased from 45.4 percent in 2011 to 46.3 percent in 2012.

Elsewhere in Asia, Japan produced 107.235 mt of crude steel in 2012, a slight decrease of 0.33 percent compared to 107.595 mt last year. India’s production for 2012 stood at 76.715 mt, up 6 percent compared to 72.206 mt 2011. South Korea produced 69.321 mt during 2012, a 1 percent increase on the same period in 2011.

In the EU, the EU recorded a decrease of 4.7 percent compared to 2011, producing 169.4 mt of crude steel in 2012. Germany produced 42.7 mt of crude steel in 2012, a decrease of 3.7 percent on 2011. Italy

Global crude steel production rise y-o-y in 2012

World crude steel production in ‘000 tons

World Crude Steel Production Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

Dec 12 /Dec 11 (% change)

European Union (27) 14,228 12,028 14,301 14,161 13,595 11,975 -4.51%

Other Europe 3,264 3,175 3,186 3,020 3,142 2,991 -10.59%

C.I.S. (6) 9,172 9,250 9,280 8,933 8,904 8,925 -4.22%

North America 10,014 10,348 9,592 9,582 9,511 10,087 -0.46%

South America 3,937 3,836 3,835 4,185 3,873 3,603 -5.06%

Africa 1,166 1,213 1,153 1,196 1,151 1,217 1.25%

Middle East 1,404 1,589 1,642 1,634 1,659 1,640 -4.58%

Africa/Middle East 2,570 2,803 2,795 2,830 2,810 2,857 -2.18%

China 61,693 58,703 57,946 59,096 57,471 57,656 10.53%

India 6,359 6,476 6,299 6,604 6,400 6,600 7.32%

Japan 9,251 9,207 8,802 8,836 8,505 8,569 2.04%

South Korea 5,907 5,632 5,661 5,651 5,640 5,811 -2.33%

Taiwan, China 1,761 1,730 1,440 1,675 1,664 1,770 -7.81%

Asia 84,971 81,747 80,147 81,862 79,681 80,406 7.81%

Oceania 494 519 511 504 473 450 6.17%

Rest of the world except China

66,957 65,004 65,702 65,979 64,519 63,637 -1.94%

World 128,650 123,707 123,648 125,075 121,990 121,293 3.62%

produced 27.2 mt in 2012, a 5.2 percent decrease over 2011. France’s crude steel production in 2012 was 15.6 mt, a decrease of 1.1 percent. Spain produced 13.6 mt of crude steel in 2012, a 12.1 percent decrease on 2011.

In 2012, The CIS showed a decrease of 1.2 percent in 2012, producing 111.3 mt of crude steel. In 2012, crude steel production in North America was 121.9 mt, an increase of 2.5 percent on 2011. Annual crude steel production for South America was 46.9 mt in 2012, a decrease of 3.0 percent on 2011.

Russia produced 68.9 mt of crude steel, a 2.5% increase on 2011 and Ukraine recorded a decrease of -6.9% with a year-end figure of 32.9 mt.

Turkey’s crude steel production for 2012 was 35.9 mt, an increase of 5.2 percent compared to 2011. The US produced 88.6 mt of crude steel, 2.5 percent higher than 2011. Brazil produced 34.7 mt in 2012, down by 1.5 percent compared to 2011.

The crude steel capacity utilisation ratio of the 62 countries in December 2012 declined to 73.2 percent compared to 76.1 percent in November 2012.The average capacity utilisation ratio in 2012 was 78.8 percent compared to 80.7 percent in 2011.

It is to be noted that the January to December 2012 data covers 62 countries against 64 in January to December 2011. The 62 countries included 2012 accounted for approximately 98 percent of total world crude steel production in 2011.

Top 10 steel-producing countries

Rank Country 2012 (Mt)

2011 (Mt)

2012/ 2011 (%)

1 China 716.5 694.8 3.1

2 Japan 107.2 107.6 -0.3

3United States

88.6 86.4 2.5

4 India 76.7 73.6 4.3

5 Russia 70.6 68.9 2.5

6South Korea

69.3 68.5 1.2

7 Germany 42.7 44.3 -3.7

8 Turkey 35.9 34.1 5.2

9 Brazil 34.7 35.2 -1.5

10 Ukraine 32.9 35.3 -6.9


mARkET REPORT

Domestic flat & long markets

Markets remain slow on sluggish demand

Tamajit Pain & Sanjoy Chakraborty

Flat steel markets across the country continued to be sluggish as demand remained weak. As market sentiments

continued to be weak, SAIL increased its base prices in an attempt to lift the sentiments.

Nevertheless, given the current situation of the demand which continues to be fragile, the raised prices may not generate much interest. Meanwhile, the appreciation in the rupee has checked the imports which might support the prices. Thus it is the matter of time that would state whether the rise would sustain or not.

The domestic market failed to see any optimism in the market as the demand once again failed to see any recovery. Amidst this situation in an attempt to lift the market sentiments SAIL raised its flat steel prices by up to `800 per ton. Current offer (excluding VAT) from Rourkela Steel Plant (RSP) is at around `40,200 per ton and Bokaro Steel Ltd (BSL) at `41,100 per ton. Plate prices have also gone up by `800 per ton to `38,000 per ton (excluding VAT) from Bhilai Steel Plant.

However, the question remains as how much of this would be accepted by the buyers as the market remained mostly pessimistic about higher prices being achieved given the sluggish demand. The market has been slow

as the buyers are shying away from lifting material. Nevertheless, the imports have been slow due to appreciation in rupee. The average transaction prices for IS 2062 grade A/B structural HRC, 3mm thick and above averages at `33,500-34,000 per ton.

Indian exporters are looking to raise offers for HR coil for March delivery given the rising export offers from China, Japan and South Korea amid higher raw material prices. Chances are fair that Indian exporters may fetch $600-610 per ton, FOB Indian west coast for 2 mm HR coil from European buyers. Considering delivery time and freight charges, Indian exporters might consider increment in export prices.

The imports into the country have slowed down ahead of the Chinese New Year. China is expected to maintain status quo on its prices for this month leaving little room for threat of imports. Imports offers into India were also sparse for Japanese and Korean origin material and the mills there have secured enough order for February production. Thus they will not be aggressive on the exports prices for the time.

Long steel market

The dwindling demand and falling prices which started since mid of January was still visible. The market lacked both strength and interest to make a comeback and ended up in remaining by and large slow and sluggish on all counts. Poor demand from the construction sector, liquidity crisis among the buyers, unwillingness on part of the buyers to go for bulk purchase, economic worries, etc. kept the market down.

The ingot price plummeted expectedly with the expectation of credit easing fading away. With barely two months to go for the culmination of FY’12-13, the revival seems to be lost cause even if there is some cutback in February with barely month to go after that.

The much talked about monetary policy review by RBI turned out to be a whimper with mere 25 basis point reductions in repo rate. Optimism was doused as expectations went rife. Even though it was the first repo rate cut in 9 months market expected 50 basis point roll back to gain foothold. Repo rate now stands at 7.75 percent. The steel market is yet to show a positive reaction to such a policy decision.

The demand from the downstream industry was weak which weighed on the semi-finished steel demand.

The semi-finished market remained shaky over the week as the demand conditions remained frail. The prices of semi-finished steel like billet, bloom, skelp, etc have declined at most locations of the country with buyers shying away from the market. Durgapur & Raipur saw a price drop of around `1,000 per ton.

The finished steel market continued to remain weak and the buyers are not interested in purchasing in bulk at the moment. The crisis in the construction and infrastructure sector continues to plague the finished steel segment.

Domestic HR coil prices (HRC - 2.5mm – cold rolling)

Date Kolkata Kanpur Delhi

04-Jan-13 36490 37050 35910

10-Jan-13 36200 37480 36440

17-Jan-13 35940 37480 36440

25-Jan-13 35680 37050 36440

01-Feb-13 35510 36790 36440

The above prices are in `/MT (basic) Source: Steel Insights Research

TMT prices at Raipur

Dates 23-Dec-12 31-Dec-12 7-Jan-13 28-Jan-13 2-Feb-13

AC-TMT 32800 34210 34800 33110 33010

AC-TURBO 32900 -- 34900 33410 33010

NIRMAN 32600 34300 -- -- --

PRIME GOLD -- 34600 35600 -- --

SUPER 32800 34100 34200 33000 32800

ATLAS 32700 34500 34800 -- --

The above prices are in `/ton (basic) Source: Steel Insights Research


mARkET REPORT

from European exporters, whereas US exporters were heard to have kept offers at around $425 per ton cfr, Mumbai. Although buying interest was limited on factors like falling sponge iron (DRI) prices in domestic market and weak Rupee against US dollar.

Sponge iron

Sponge iron (DRI) prices in some Indian markets eased in January on low buying support, market sources told Steel Insights. In fact, most plants are still operating below capacity, industry sources informed, and manufacturers believe prices are at bottom in view of the disturbed supply of iron ore in the country.

Pig iron

NINL slashed its steel grade pig iron prices further by `500 per ton on January 7, 2013 and reviewed their prices again on January 17. However, on account of the sluggish demand scenario, NINL on January 17 decided to keep the prices fixed at `22,000 per ton (basic). NINL is also offering discounts as high as `400 per ton for bulk purchase over 7,000 tons, bringing down the price to `21,600 per ton (basic). As per the market sources, booking does not seem impressive.

RINL too finding it difficult to dispose their materials as the overall demand continues to remain slackened. In the second week of 2013, RINL managed to conclude a deal of 100,000 tons of Pig iron at `21,400 per ton (ex works Vizag). Now the injection of this 100,000 tons in the market has resulted in oversupply and hence a further correction may be witnessed in the coming days.

NINL and RINL are again expected to review their prices in the first week of February. The direction of their price revision remains unclear at the moment.

Domestic raw materials

Prices show mixed trend in December


The scrap steel market remained sluggish in January on demand worries still haunting the market.

The sentiment remained fatigued with hardly

any hint of real demand in the market. The prices have more or less at its previous levels.

Imported scrap offers to the Indian market more or less remained stable with offers for shredded scrap (containerised) varied from $420-425 per ton cfr, Mumbai,

Melting scrap price trend (` per ton)

Date Mandi Gobindgarh Durgapur Raipur Kandla Chennai Jamshedpur

Dec’12 Week 1 24562 24290 23700 22700 23000 24560

Dec’12 Week 2 24234 24050 23400 22400 22600 24560

Dec’12 Week 3 24424 24058 23100 22460 22800 24560

Dec’12 Week 4 24847 24050 23100 22633 23000 24560

Jan’13 Week 1 25228 23996 24300 22500 23200 24560

Jan’13 Week 2 25180 24390 24300 22560 23500 24560

Jan’13 Week 3 24930 24305 24200 22900 23500 24560

Jan’13 Week 4 24975 23862 24150 22933 23433 24560

The above prices in `/ton (basic) Source: Steel Insights Research

Sponge iron in Indian markets(in `/ton basic)

Date Raipur Raigarh Rourkela

31-Jan 20100 19300 18400

24-Jan 20200 19300 18700

15-Jan 20800 20100 19100

7-Jan 21400 20600 19300

Source: Steel Insights Research


PRICE DATA

Indicative market price for December 2012Steel Insights Bureau

(` per ton)

Sl. No. ITEM Kolkata Delhi Mumbai Chennai

1 PIG IRON 29130 34500 32100 35700

2 BILLETS 100 MM 40500 40860 42680 41630

3 BLOOMS 150X150 MM 39340 39800 41410 40040

4 PENCIL INGOTS 32900 30000 35100 35700

5 WIRE RODS 6 MM 46630 47760 49390 48360

6 WIRE RODS 8 MM 46220 47130 48660 47900

7 ROUNDS 12 MM 46050 46390 46660 47260

8 ROUNDS 16 MM 45870 46810 46690 47170

9 ROUNDS 25 MM 45400 46710 46460 47000

10 TOR STEEL 10 MM 48020 48710 48750 49180

11 TOR STEEL 12 MM 46890 47250 47870 48620

12 TOR STEEL 25 MM 46710 47600 47910 48530

13 ANGLES 50X50X6 MM 46360 45410 47810 47950

14 ANGLES 75X75X6 MM 45110 44820 47110 47230

15 JOISTS 125X70 MM 46180 46630 47810 48000

16 JOISTS 200X100 MM 45700 46810 48140 48000

17 CHANNELS 75X40 MM 46620 48300 48870 48570

18 CHANNELS 150X75 MM 46110 47590 48220 47850

19 PLATES 6 MM 47530 49420 49480 50030

20 PLATES 10 MM 47540 49420 49480 50030

21 PLATES 12 MM 48100 49950 49890 50600

22 PLATES 25 MM 48750 50470 50410 51200

23 H. R. COILS 2.00 MM 46760 48650 49660 49190

24 H. R. COILS 2.50 MM 45510 47590 48540 48130

25 H. R. COILS 3.15 MM 45420 47590 48540 48130

26 C. R. COILS 0.63 MM 51480 52580 53000 53840

27 C. R. COILS 1.00 MM 50330 51680 52200 52920

28 G. P. SHEETS 0.40 MM 55080 57030 56890 59890

29 G. P. SHEETS 0.63 MM 53320 51880 54510 58880

30 G. C. SHEETS 0.40 MM 53380 56000 54950 59710

31 G. C. SHEETS 0.63 MM 53410 52760 54690 59600

32 MELTING SCRAP H M S - I 25000 27000 NA 24680

33 MELTING SCRAP H M S - II 24500 27000 NA 23630

34 SPONGE IRON (COAL BASED) 20250 24500 28900 19950

NOTE: (1) All prices are in Rs./Tonne and has been compiled on the basis of average of Main & Others producers’ price. (2) Prices are inclusive of Excise Duty & Sales / Vat Tax (3) All prices are as on 15 day of every month (4) Prices are indicative



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PRODuCTIOn DATA

Source: Steel Ministry

Production, imports, exports, availability & apparent consumption (provisional) April - December 2012


(in ‘000 tons)

PRODUCERS

FINISHED STEEL

Non-Alloy Steel (Carbon) Alloy Steel Total

2012-13 (Prov.)

2011-12 (Prov.) % Variation 2012-13

(Prov.)2011-12 (Prov.) % Variation 2012-13

(Prov.)2011-12 (Prov.) % Variation

SAIL 7241 6732 7.6 202 199 1.5 7443 6931 7.4

RINL 1974 2080 -5.1 1974 2080 -5.1

TSL 4544 4073 11.6 4544 4073 11.6

(a) Prod. of Main Producers 13759 12885 6.8 202 199 1.5 13961 13084 6.7

ESSAR 4509 4586 -1.7 4509 4586 -1.7

JSW ISPAT 2572 2308 11.4 2572 2308 11.4

JSWL 7795 6324 23.3 936 687 36.2 8731 7011 24.5

JSPL 841 920 -8.6 841 920 -8.6

(b) Prod. of Major Producers $ 15717 14138 11.2 936 687 36.2 16653 14825 12.3

Others 30366 30943 -1.9 2791 2663 4.8 33157 33606 -1.3

Less : IPT/Own Consumption 6695 6530 355 243 7050 6773

c) Total Production for Sale 53147 51436 3.3 3574 3306 8.1 56721 54742 3.6

d) Imports $ 4403 3853 14.3 1387 1131 22.6 5790 4984 16.2

e) Exports $ 3309 2750 20.3 469 298 57.4 3778 3048 24.0

e) Availability (c+d-e) 54241 52539 3.2 4492 4139 8.5 58733 56678 3.6

f) Variation in Stock -608 -155 4 -1 -604 -156

g) Apparent Consumption (e-f) 54849 52694 4.1 4488 4140 8.4 59337 56834 4.4

Less : Double Counting 4822 4301 985 894 5807 5195

Real Consumption 50027 48393 3.4 3503 3246 7.9 53530 51639 3.7


PRICE TREnD

Ferro alloys & metals price trendsSteel Insights Bureau

Ferro alloys & Metals January'13 December'12 November'12

Ferro Silicon (Si - 70%)

Ex-works Rs/ ton

71750 74000 72000

HC Ferro Chrome (Cr - 60%)

Ex-works Rs/ ton

70500 70500 67750

HC Ferro Manganese (Mn - 70%)

Ex-works Rs/ ton

53750 53250 53250

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

Ex-works Rs/ ton

54500 53500 53500

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

Ex-works Rs/ ton

76500 76500 76500

Ferro Vanadium

Ex-works Rs/ kg

960 785 735

Ferro Moly (Mo - 60% min)

Ex-works Rs/ kg

1015 1020 985

Ferro Titanium (Ti - 30%)

Ex-works Rs/ ton

155500 155500 162000

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IROn ORE DATA

Iron ore export data for December 2012Steel Insights Bureau

Port Destination Country Date Product Category Fe Content Unit Price (in Rs/ton) Quantity (in tons.)

KOLKATA CHINA

3-Dec-13 FINES63.5 6,110 10,000

63.5/63 6,110 10,000

7-Dec-13 FINES 63.5 6,110 3,000

22-Dec-13 FINES 55.5 3,596 2,000

26-Dec-13 FINES 62.9 5,484 14,800

27-Dec-13 FINES 54 3,584 5,000

28-Dec-13 FINES55 1,350 16,000

63.5/63 6,082 22,000

29-Dec-13 FINES

54 4,249 7,000

57/56 4,833 17,000

63.5/63 6,625 15,000

KOLKATA Total 121,800

PARADIP CHINA

1-Dec-13 FINES 2,946 6,000

13-Dec-13 FINES 3,596 55,900

14-Dec-13 FINES4,013 1,620

4,013 1,315

31-Dec-13 FINES 3,665 50,000

PARADIP Total 114,835

VIZAG

CHINA

5-Dec-12 FINES56 4,200 11,875

57 4,364 9,900

7-Dec-12 FINES 55.53,663 10,000

3,731 1,000

12-Dec-12 FINES 52 3,437 27,000

13-Dec-12 FINES 52 3,402 1,575

17-Dec-12 FINES 63.5 5,967 29,440

21-Dec-12 FINES55.5 3,618 7,820

55.55 3,618 47,380

22-Dec-12 FINES 54 2,808 18,400

28-Dec-12 FINES 56 3,910 4,226

29-Dec-12 FINES 56 3,910 10,494

JAPAN3-Dec-12 LUMPS 65 7,083 66,446

31-Dec-12 FINES 65 6,454 75,854

VIZAG Total 321,410

Grand Total 558,046


IROn ORE DATA

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Iron ore import data for December 2012Steel Insights Bureau

Port Date Country of Origin Item Description Unit Price (in Rs.)

Unit Price (in $)

Quantity (in tons)

CHENNAI4-Dec-12 BAHRAIN IRON ORE PELLETS 9,748 175.64 10,000

7-Dec-12 BAHRAIN IRON ORE PELLETS 9,748 175.64 10,000

CHENNAI Total 20,000

KANDLA

1-Dec-12 BRAZIL IRON ORE PELLETS 8,567 154.37 10,000

4-Dec-12AUSTRALIA IRON ORE PELLETS 9,197 165.71 5,000

MALI IRON ORE LUMPS 7,209 129.88 1,970

6-Dec-12 AUSTRALIA IRON ORE PELLETS 8,427 151.84 2,000



MALI IRON ORE LUMPS 7,209 131.06 1,970

12-Dec-12 UKRAINE IRON ORE PELLETS 7,906 143.74 7,000


14-Dec-12

AUSTRALIA IRON ORE PELLETS 9,115 165.72 5,000

BAHRAIN IRON ORE PELLETS 8,964 162.99 2,500

SENEGAL IRON ORE LUMPS (FE 63.50%) 7,144 129.88 1,970

UKRAINE IRON ORE PELLETS 8,520 154.90 5,000


19-Dec-12BAHRAIN IRON ORE PELLETS 8,884 161.53 5,000

BRAZIL IRON ORE PELLETS 8,491 154.37 10,000

20-Dec-12 MALI IRON ORE LUMPS (FE 63.50%) 7,144 129.88 2,616

24-Dec-12AUSTRALIA IRON ORE PELLETS

8,209 148.44 5,000

8,351 151.02 2,000

BAHRAIN IRON ORE PELLETS 9,028 163.25 2,422

26-Dec-12 BAHRAIN IRON ORE PELLETS 8,932 161.53 5,000


FINLAND IRON ORE PELLETS (BF ACID 65) 8,067 145.87 3,153

KANDLA Total 93,600

MUNDRA



28-Dec-12 SENEGAL IRON ORE LUMPS 6,085 110.04 1,258

MUNDRA Total 11,258

Grand Total 124,858



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Steel Insights - Feb 2013

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