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TRANSCRIPT
A Review of developments in
The Global & Indian Steel Industry
Monthly edition
Issue No. 15
May 2017 (covering April 2017)
Compiled on behalf of Indian Steel Association,
Mr. Anup Kashyap
Strictly for internal circulation
Our eight Full Members are:
• JSW Steel Ltd
• Steel Authority of India Ltd.
• Tata Steel Ltd.
• Rashtriya Ispat Nigam Ltd.
• Essar Steel Ltd.
• Jindal Steel & Power Ltd.
• Bhushan Power & Steel Ltd.
• Bhushan Steel & Strips Ltd.
Our seven Affiliate Members are Monnet
Steel, INSDAG (Institute for Steel
Development and Growth), KISMA
(Karnataka Iron and Steel Manufacturer’s
Association), Gerdau Steel, Visa Steel,
Jindal Stainless & Electrosteel Steels.
About Indian Steel Association
GLOBAL DEVELOPMENTS
Source: The Economist Intelligence Unit, Global Forecasting Service
Country-wise Growth Forecasts
2017 - 2021
As of April 19th ,2017;
The assumptions for forecasts are available on the website of the Economist Intelligence Unit
In % 2017 2018 2019 2020 2021
IndiaReal GDP Growth 7.2 7.8 7.5 7.5 7.8
Inflation 4.6 4.8 4.9 4.7 4.6
ChinaReal GDP Growth 6.6 4.5 4.6 5.2 4.9
Inflation 2.2 1.9 2.0 2.7 2.5
U.S.AReal GDP Growth 2.2 2.1 1.0 2.0 2.0
Inflation 2.5 2.1 1.3 1.7 1.9
JapanReal GDP Growth 1.1 0.6 0.8 0.2 0.8
Inflation 1.2 0.9 0.9 1.2 0.7
RussiaReal GDP Growth 0.9 1.3 1.5 1.7 1.6
Inflation 4.4 4.6 4.4 4.7 4.6
Source: World Steel Association;
Region wise Crude Steel Production
As Per World Steel Association
5
RegionJan – Mar 2017 in
(‘ 000 Tons)
Jan-Mar 2016 in
(‘ 000 Tons)% Change
EU-28 42,510 40,936 3.8
Other Europe 9,470 8,263 14.6
CIS 25945 24955 4.0
N.America 29297 27355 7.1
S.America 10388 9567 8.6
Africa 3409 2977 14.5
Middle East 7501 6766 10.9
Asia 280615 266192 5.4
Oceania 1414 1304 8.4
Source: World Steel Association, MT-Million tons
Top Crude Steel Producing nation
As Per World Steel Association in March 2017
Rank Nation2017
(in ‘000 Tons)
2016
(in ‘000 Tons)
% Change
2017/2016
1 China 71,995 70,701 1.8
2 India 9,000 8,316 8.2
3 Japan 8,885 8,726 1.8
4United
States7,003 6,770 3.4
5 Russia 6,185 6,100 1.4
6South
Korea6,100 5,731 6.4
7 Germany 3,882 3,811 1.9
8 Turkey 3,111 2,729 14.0
9 Brazil 2,850 2,506 13.7
10 Ukraine 2,105 2,205 -4.5
Source: World Steel Association
Top DRI Producing nations
As Per World Steel Association
According to World Steel Association, world’s top ten nations with regards to Direct
Reduced Iron (DRI) output during Jan-Mar , 2017 is as follows:
Rank Nation Output (in ‘000 tonnes)
1 Iran 4,005
2 India 3,663
3 Mexico 1,489
4 Saudi Arabia 1,140
5 UAE 953
6 Egypt 901
7 Qatar 545
8 Canada 364
9 Argentina 303
10 Venezuela 219
Source: World Steel Association, in MT-Million tons F-Forecast
Top Finished Steel Using Nation
As Per World Steel Association in 2016,2017(F) & 2018(F)
Rank Nation 2016 2017 (F) 2018(F)
1 China 681.0 681.0 667.4
2 United States 91.6 94.3 97.1
3 India 83.5 88.6 94.9
4 Japan 62.2 63.0 63.4
5 South Korea 57.1 55.5 54.6
6 Germany 40.3 40.7 40.8
7 Russia 38.1 38.8 39.9
8 Turkey 34.1 35.1 36.5
9 Mexico 25.4 25.7 26.4
10 Italy 24.2 23.6 24.1
Source-World Steel Association, Press release on 21st April 2017
global steel demand to increase in 2017
-A study report by World Steel
• World steel forecasts that global steel demand will increase by 1.3% to 1,535.2 Mt in 2017, following
growth of 1.0% in 2016. In 2018, it is forecast that global steel demand will grow by 0.9% and will
reach 1,548.5 Mt.
• Global economy is gaining strength, but uncertainty escalates- With the risk of global
recession receding and economic performance improving across most regions, a number of geopolitical
changes still create some concern. US policy uncertainties, Brexit, the rising populist wave in current
European elections and the potential retreat from globalisation and free trade under the pressure of
rising nationalism adds a new dimension of uncertainty in investment environments. To balance this,
risks from ongoing conflicts in the Middle East and in Eastern Ukraine appear to be reducing. In the
capital markets, the probable US FED interest rate increase and any appreciation of the US dollar is
likely to have global impact. In particular, it may provoke capital outflows from the emerging economies
and place a risk on corporate debt in the developing countries, which has climbed significantly over the
last few years.
• Oil and other commodities- The pickup in oil prices in 2016 helped the fiscal position of oil
producing countries. In 2017-18 oil prices are expected to show a moderate gain but any spike in oil
prices to the levels seen in 2010-12 seems unlikely despite the recent OPEC agreement on oil
production cuts. Other commodity prices also rebounded due to stronger activities in China, but no
further hikes are envisaged. The mildly rising oil prices may stimulate investment in economies
worldwide.
Source-World Steel Association, Press release on 21st April 2017
global steel demand to increase in 2017
-A study report by World Steel
• Automotive sector will decelerate, but construction sector could pick up- The automotive
sector has been the top performer among key steel using sectors thanks to the consumption driven
recovery in the developed economies, low oil prices and the government stimuli programmes supporting
automobile purchases in several countries. However, this may now be approaching a peak.
The construction, building and infrastructure sector, which accounts for 50% of global steel use, has
been showing a divided picture between the developing and developed economies.This sector has been
a major driver for steel demand in the developing countries driven by urbanisation, but activity in the
developed economies since the 2008 financial crisis has been more subdued.This appears to be about
to change with a recovery in construction activities apparent in the EU through the improving economic
conditions and the potential renewal initiatives for infrastructure in the US.
• China slowdown- The economic rebalancing and reform agenda of the Chinese economy continued
for the first half of 2016, only to be interrupted by the government’s mini stimulus measures designed
to reduce the speed of the decline. This produced a short term boom in infrastructure investment and
the housing market, which stimulated demand for steel and other commodities. As a result, China’s steel
demand showed growth of 1.3% in 2016.While the Chinese economic outlook appears stable and steel
demand continues to remain strong in the early part of 2017, this is expected to gradually decelerate
as the government tries to retighten its real estate policies. China's steel demand is expected to remain
flat in 2017 and then decline by -2% in 2018.
Source-World Steel Association, Press release on 21st April 2017
global steel demand to increase in 2017
-A study report by World Steel
• Developed world- Benefiting from strong fundamentals, newly announced measures related to fiscal
stimuli and rising infrastructure spending, the United States is expected to continue to lead growth in the
developed world in 2017-18. However, despite a recovery in oil prices, a rebound of investments in the
oil and gas sector may be limited given the increased efficiency of shale producers.
The EU recovery is solidifying with many positive developments. Eurozone monetary policy is expected to
remain on its current path, at least in 2017, while fiscal tightening is not expected to strengthen further
and risk of disinflation has significantly receded. If political stability can be maintained, investment is
expected to pick up to provide a further boost to the recovery. Benefiting from the improving global
economy and weak yen, Japan’s steel demand is expected to show a stable recovery.
Steel demand in the developed economies will increase by 0.7 % in 2017 and 1.2 % in
2018.
• Developing world - Having dealt with the structural problems and fall in commodity prices, the
Russian and Brazilian economies are stabilising and expected to show modest growth in 2017. Russian
growth will continue to pick up in 2018 as structural reforms take more effect. After the
demonetisation shock, the Indian economy is expected to resume growth, although on a
slightly weakened basis. The ASEAN countries are expected to demonstrate solid growth
in 2017-18.
However, the region remains vulnerable to currency volatilities associated with US interest rate hikes and
dollar appreciation. Steel demand in the emerging and developing economies excluding China, which
accounts for 30% of world total, is expected to grow by 4.0% in 2017 and then 4.9% in 2018.
Source: World Steel Association,
World Crude Steel Production Statistics
67.866.7
64.9 65.466.3
70.5 71.1 71.1 71.7
68.1 68.370.0 69.4 69.2
67.669.3
70.7
72.7
World Steel Capacity Utilisation in %
▪ As Per World Steel Association,World crude steel production for the 67 countries reporting to the
World Steel Association (world steel) was 145.0 million tonnes (Mt) in March 2017, a 4.6%
increase compared to March 2016.
▪ World crude steel production was 410.5 Mt in the first three months of 2017, up by 5.7%
compared to the same period in 2016.
▪ The crude steel capacity utilisation ratio of the 67 countries in March 2017 was 72.7%. This is
2.2 percentage points higher than March 2016. Compared to February 2017, it is 2.0
percentage points higher.
Source:
Steel Strategist Cost Monitor
- A Report of WSD
▪ After declining for nearly five years in a row, the median cost of the world cost curve sheet
products increased slightly in early 2017 and the cost curve steepened principally due to higher
prices for steelmakers raw materials. Of course, the steeper cost curve-i.e. the difference in cost
between the first and fourth quartile on average-the higher support for the theoretically floor
price of hot rolled band on the world market.
▪ As of March 2017,steelmakers raw material prices have rallied after falling significantly in early
2016
•Iron Ore, CFR northern china had increased 117% to $87 per ton from a low of $40 per
ton in January 2016
•Coking Coal, FOB Australia had declined 49% to $158 per ton from a peak of $310 per
ton in November 2016.
•Heavy Melting Scrap delivered to US mills had increased 88% to $ 290 per gross ton
from a low of $154 per ton in January 2016.
•Prime grade Scrap delivered to US mills had increased 105 % to $ 369 per gross ton from
a low of $180 in January 2016.
•Pig Iron, FOB Brazil had increased 94 % to $ 350 per ton from a low of $ 180 per ton in
January 2016.
•HBI,FOB South America has increased 72%to $ 220 per ton from a 2011 peak of $ 128
per ton in February 2016.
Source: World Steel dynamics; Steel Strategist Cost Monitor Issued on 28th April 2017. Points highlighted have been reproduced verbatim
Source-Strategic Insights #92,World Steel Dynamics Text has been quoted verbatim
Category Wise Steel prices
Focus on Chinese Steel Price
▪ China ex works prices are all over the lot. These
prices are impacted by supply/demand factors, steel
industry sentiments and future prices. There are
many day trackers in China further adding to
volatility.
▪ Hot Rolled Band-The prices fell $ 106 per ton to
$ 370 per ton from $ 476 per ton, a decline of 22
%
▪ Cold Rolled Band-The prices fell $ 118 per ton to
$ 454 per ton from $ 549 per ton,a decline of 24
%.
▪ Discrete Plate- The price fell just $59per tonne to
$393 per tonne from $452 per tonne (February
17th), a drop of 13%.
▪ Rebar-The price fell $59 per tonne to $406 per
tonne from $465 per tonne (February 17th), which
was a decline of 13%.
▪ Steel scrap-The Chinese price fell only $25 per
tonne to $229 per tonne from $254 per tonne, for a
drop of 10%
$ /
to
n
Source-Steel Mint Research
Japan Focus
Trend in Steel Export and Import
• According to Custom data of Japan, Flat
steel imports which includes 7208 (HR
Coils/Plates,7209 (CR
Coils),7225(Electrical Sheets),
7210/7212 (GP/GC) have inched up by
6% M-o-M basis to 0.38 MT in Mar’17
as compared to 0.36 MT in
Feb’17.Korea stood as the major steel
exporter to Japan and exported
2,75,757 tons in March 2017.
• According to Custom data of Japan, Flat
steel imports which includes 7208 (HR
Coils/Plates,7209 (CR
Coils),7225(Electrical Sheets),
7210/7212 (GP/GC) have reported an
increase of 5% M-o-M basis to 2.29 MT
in Mar-17 against 2.18 MT in
Feb’17.Thailand was the major flat steel
importer and imported 384229 per ton
in Mar 17
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Source-Steel Mint Research
South Korea Focus
Trend in Steel Export and Import
• South Korea imported around 11 MT of finished flat in CY16.the country imported 2.9 Mt of finish
flat in the first quarter of CY 17 which was increase as compared to the last quarter of CY 16 by
7% as 2.7 MT was imported in the last quarter of CY 16.
• South Korea is also ranked as world’s 3rd largest exporter.it exported 22.8 Mt of finish flat in CY
16.Quarter one of CY 17 saw the country export graph moving down by 10 %as the country
exported 5.25 MT as compared to its export of 5.8 Mt in the last quarter of CY 16.
South Korea Trade and Crude Steel Production(All figures in tons)
Commodity Q1CY17 Q4CY16 2016
Production Crude Steel 1,72,55,000 1,75,90,000 6,86,40,000
Import
Iron Ore 1,72,09,411 1,86,84,564 7,16,24,169
Finish Flat 2,91,56,28 27,31,267 1,18,51,803
Ferrous Scrap 15,34,845 14,32,167 56,41,848
Pig Iron 74,394 60,948 3,36,651
Export Finish Flat 52,51,391 58,00,847 2,28,18,198
DOMESTIC DEVELOPMENTS
Source: Steel Mint research
Indian Steel Performance
FY 17 Vs FY 16
• Indian Steel Industry has performed fairly well in FY-17.Country’s Crude Steel output registered
rise of 8.5 %Y-o-Y.
• With increased steel output, better realization from global markets and stagnant domestic
demand boosted finished steel exports from India, India’s export of finished flat and long steel
increased by around 76 % and 62 % Y-o-Y. On the other hand amid imposed trade barriers like
MIP and anti dumping duty finished steel imports to india witnessed decline on yearly premises.
Particulars Country FY 17 FY 16 % Change
Production
Crude Steel India 9,73,85,000 8,97,91,000 8.46
Export
Iron ore India 2,43,45,466 60,37,310 303.25
Long Steel India 7,27,000 4,49,000 61.92
Flat Steel India 53,40,000 30,26,000 76.47
Import
Iron ore India 57,89,750 56,22,065 2.98
Coking Coal India 4,73,70,000 4,77,40,000 -0.78
Long Steel India 4,74,000 6,58,000 -27.96
Flat Steel India 43,97,000 80,61,000 -45.45
Source: Joint Plant Committee, MT-Million tonnes
Status of India’s Steel Trade
• India was a net exporter of total finished steel in April 2017. Export of total finished steel
was up by 142% in April 2017 (0.747 mt) over April 2016 and declined by 54% over March
2017.
• Import of total finished steel at 0.504 mt in April 2017 declined by 23% over April 2016
and also declined (by 16%) over March 2017.
• India’s consumption of total finished steel saw a growth of 3.4% in April 2017 (6.015 mt)
over April 2016 but declined by 22% over March 2017.
Apr 2017 % Change over
April 16
Finished Steel Qty in Mt %
Production for Sale 8.430 8.7
Import 0.504 -22.9
Export 0.747 141.7
App. Consumption 6.015 3.4
Source: Joint Plant Committee, MT-Million tonnes
Trend in Flat Steel Export and Import
• Indian importers have become quite active owing to sharp decline in flat products prices
in global market.
• As per recently released data by Govt. of India, country’s flat steel exports jumped up to
7.18 MT in FY 17 compared to 3.47 MT in previous fiscal year. On the other hand, Indian
flat steel imports fell from 9.94 MT in FY 16 to 6.24 MT in FY 17.
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Source: Steel Mint research
Rise in Indian Bar and Rod Imports
March 17
• Indian Bar and rod imports have gone up by 13 % M-o-M in March 2017.However on
Y-o-Y analysis, FY 17 has seen a sharp fall of 46 %.
• The Imports have seen a sharp fall in fiscal Year 2015-16 as imports directly influenced by
the protective measures which the Indian Government have taken in order to protect the
Indian Steel by implementing the MIP’s and Antidumping Duty on various Indian Steel
commodities.
Indian Bar and rod Import in Tons
Source: Steel Mint Research
Trend in Domestic Steel Prices
• Currently HRC (IS2062) 2.5-8 mm is assessed in the range of INR 41,000 per tonne(ex-Mumbai, INR
41,000-41,500 (ex-Delhi) and INR 41000 - 41,500 per tonne (ex-Chennai).Prices are inclusive of
excise duty 12.5 %.
• Currently CRC (IS513) 0.9 mm is hovering in the range of INR 47,500 per tonne(ex-Mumbai).INR
48,250-48,500 per tonne(ex-Delhi) and INR 46,000 per tonne (ex-Chennai).Prices are inclusive of
excise duty 12.5 %.
• Moreover some manufacturers have also started giving rebates and discounts in the backdrop of
subdued demand in the domestic market
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Domestic Steel Price-INR/Ton
Source: Steel Mint Research,
Trend in Iron Ore export and Import
Mar 2017
• Indian Iron Ore Import were
registered at 0.28 MT in Apr’17.Iron
Ore imports have seen considerable
decrease of 35 % M-o-M and twice as
much Y-o-Y as 0.43 MT Iron Ore was
imported in Mar’17 and 0.93 MT in
Apr last year.
• Indian Iron ore exports have been
down by 25% in Apr’17.India has
exported 3.04 MT material in the
month compared with 4.08 MT in Mar
17.However the exports were up 37%
Y-o-Y compared to Apr’16 with 2.22
Million ton of Iron Ore
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Source: Steel Mint Research,
Rise in Flat steel Export
Mar 2017
• Exports of Flat Steel from India shot up drastically for March 2017 in comparison to Feb
2017.Indian Flat Steel exports have jumped from 0.58 Million ton in Feb 2017 to 1.34
Million ton in March 2017 up by 131 % M-o-M.
• Largest Importing country in Mar 2017 was Vietnam contributing a share of 30 % for
Indian Flat steel exports followed by Italy , Belgium and UAE.
• The top port exporting flat steel from India was Goa followed by Mumbai, Chennai ,Nhava
Sheva and other ports
Country Wise Flat Steel Export in March 2017Port wise Flat Steel export in Mar 17
Source: Coal Mint Research, MT-Million tonne
Trend of Import of Coking Coal in India
April 2017
• Coking Coal imports in India during April 2017 had fallen 0.5 % against that in March
2017.
• During April 2017,3.87 MT of coking coal was imported into India. In March 2017,the
imports were slightly higher at 3.84 MT.
• Amongst the various ports in India, the Mormugao ports had handled the highest volume
of import traffic during the month followed by the Paradip andVisag port.
Coking Coal Imports into India in 2017
in Million Tons
Port Wise Coking Coal Imports into
India in April 2017 in (‘000 Tons)
Source: Reserve Bank of India Bimonthly report released on 6th April , 2017
Highlights Survey of Forecasters on
Macroeconomic Indicator-RBI Report
• Forecasters expect real GVA growth to accelerate by 60 basis points to 7.3 per cent in
2017-18 on the back of a pick-up in industrial and service sector activity. On the demand
side, private consumption growth expectations have been upgraded relative to the
previous survey round.
• Real GVA growth is projected to be supported by marginal downward revision in the
growth forecasts when compared with the previous survey round, due to some
tempering in expectations for industrial and services sectors. From the demand side, both
consumption and investment are rising, with investment demand funded by a higher
saving rate relative to a year ago.
Median Forecast of Growth in Real GVA and components – 2016-17 and 2017-18
in Per Cent(%)
2016-17 2017-18
Real GVA 6.7 7.3
a. Agriculture and Allied Activities 4.2 3.5
b. Industry 6.1 7.0
c. Services 7.6 8.5
Private final consumption expenditure
(growth rate in per cent)11.9 12.1
Gross Saving Rate
(per cent of GNDI) 31.5 31.8
Gross Fixed Capital Formation Rate
(per cent of GDP)27.0 28.8
Source: Reserve Bank of India as on 5th May,2017
Rates at Reserve Bank of India
May 2017
CRR – Cash Reserve Ratio; SLR - Statutory Liquidity Ratio
CurrencyDate
5th May,2017
I USD 64.21
1 EUR 69.93
1 GBP 82.56
100 YEN 56.95
Policy Repo Rate : 6.25 %
Reverse Repo Rate : 6.00 %
Marginal Standing Facility Rate : 6.50 %
Bank Rate : 6.50 %
Reference Rates
Policy Rates Reserve Ratios
CRR : 4%
SLR : 20.50%
Lending/ Deposit Rates
Base Rate : 9.10-9.60%
Savings Deposit Rate : 4.00%
Term Deposit Rate > 1 year: 6.50-7.00%
THANK YOU
DISCLAIMER
The material in this presentation has been prepared by Indian Steel Association (ISA) and is a general background information reviewing the status of the
developments in the global and Indian steel industry as at the date of this presentation. This presentation is strictly for internal use of all the member
companies of ISA, whose names have been stated in the presentation.
Information is given in summary form and does not purport to be complete or all inclusive. The information has been sourced from independent third party
databases, knowledge sources and news reports, and the authenticity of the same has not been independently verified by ISA.
Additionally, any third party forecasts on financial or economic parameters, projections or estimates should not be construed as an investment advice or a
recommendation to any ISA member. Recipients of this presentation from member companies of the ISA should each make their own evaluation of the
contents and adequacy of the information contained in the presentation.
ISA does not undertake any obligation to publicly release any changes to any revisions, modifications or forward looking statements in the subsequent
editions of this bi-monthly presentation. Unless otherwise specified, all information is for the period April 2017 or prior.