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Chief EditorRakesh Dubey, Tel: +91 91633 48159, E-mail: [email protected]

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

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

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Dear Readers,The Supreme Court’s cancellation of all 122 telecom licences issued in 2008 by ex-telecom minister A. Raja has evoked several strong responses. There is widespread worry about the impact that the cancellation could have on the already weak investment climate in India.

The court says that all companies whose licences have been scrapped have the chance to win back the spectrum they have lost through auctions, for which the telecom regulator, TRAI, will lay down rules soon. But it needs to be seen whether the companies whose licences have been scrapped – and whose investments have been jeopardised – have the strength to come back for auctions?

Meanwhile, in the international arena, a delay by debt-ridden Greece in accepting the terms of a bailout gave investors little reason to cheer. Athens allowed another deadline to slip by as political leaders failed to respond to bailout terms from the European Union and International Monetary Fund.

Coming back to India, the government forecast a 6.9 percent annual growth for the fiscal year that ends in March, a tad below the 7 percent to 7.5 percent growth predicted by several government officials.

This is the slowest pace since the 2008 financial crisis, restrained by the Reserve Bank’s inflation-fighting campaign and government gridlock.

It would mark a sharp decline from the prior year’s 8.4 percent growth rate, and a reversal of fortune for a country that until recently aspired to double-digit growth like China. Tight monetary policy and political paralysis at home has discouraged investment.

In the midst of this, latest World Steel Association (WSA) figures showed India maintained its position as the fourth largest steel producer in 2011, despite a 5.7 percent output growth as against the world average of 6.8 percent. India produced 72.2 million tons (mt) steel last year over 68.3 mt in the previous year.

Although it is hard for India or for that matter any country in the world to counter China’s supremacy in the steel sector with a record production of 695.5 mt in 2011 with second largest producer Japan producing a distant 107.6 mt of steel, but the quest for at least going up the ranks is still there among the Indian policy makers.

Even as the government put up brave targets of triple digit production figures, we in Steel Insights tried to delve into the current status of expansion projects and the future plans as the country seemed to be striving hard to reach at least 90-95 mt of capacity in a year’s time. Majority of the additional capacity will be coming through brownfield projects.

In the Special Focus section, we take a look at what the different sections of the steel vertical feel about the growth prospects in future and what steps they are taking to achieve its goals.

Happy reading. Warm regards,

Rakesh DubeyChief Editor

STEEL INSIGHTS 4 FEbruary 2012

COnTEnTs

49 | FEATUREIndian auto sector may return to growth path in FY13SIAM forecasts double digit growth for FY13

40 | CoRpoRATE UpDATESesa Goa net falls 35% in Q3Sesa Goa aims to 20 mt of iron ore production next year

24 | CoRpoRATE UpDATE ExxonMobil targets steel grease marketExxonMobil growth to come from both brownfield and greenfield projects

20 | SpECIAL FoCUSEssar aims to focus on consolidation post expansionEssar Steel to focus on penetrating new markets

6 | CovER SToRYSteady steps on way to 100mtIndian corporates take firm steps towards the 100-mt production target

27 ‘Adhunik operating at 100% capacity’ 28 KISWOK to invest `145 cr on capacity expansion 29 SAIL takes giant strides towards “Vision for 2020” 32 RINL reports impressive performance in Q3 34 JSWQ3profitdips56% 35 EssarSteelnowIndia’slargestflatsteelproducer

at 10 mtpa 41 NMDC signs contract for steel plant 41 ACL gets statutory clearances for Purulia project 42 IronorepricesfirmupinJanuary 44 Scrap import prices soften in Jan 45 SpotcokingcoalpricesflatinJanuary 46 Ferro alloys show sluggish movement 47 Sponge iron sector slashing production to combat

adversities 48 INSDAG launches drive to set up fabrication units

in rural India 51 Newsteelpolicylikelybyfiscalend 52 India 4th largest steel producer in 2011: WSA 53 Indian steel industry may witness changed

scenario post Feb-Mar 54 Porttrafficup0.3%y-o-yinApril-Dec 55 Railways Apr-Dec commodity freight up 4.6% 56 Macroeconomic indicators of India 58 Steel production falls on weak global demand 60 Internationalflatproductmarkets:Chinafirmin

otherwise dull scene 61 International long product markets: Prices remain

soft on lack of demand 62 Domesticflat&longproductmarkets:Prices

move up despite weak demand 64 Ferro alloys and metals price trends 65 Iron ore export data for Jan 2012 66 Market price data Jan 2012


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India maintained its position as the fourth largest steel producer in 2011, despite a relatively moderate 5.7 percent output growth as against the world average of 6.8

percent, latest World Steel Association (WSA) figures showed. Recording an increase of 6.8 percent in 2011 over 2010, global steel production hit a record 1,527 million tons (mt). In comparison, India produced 72.2 mt steel in 2011 against 68.3 mt in the previous year.

Although it is hard for India or for that matter any other country to challenge China’s supremacy in the steel sector – China finished with a record production of 695.5 mt in 2011 while Japan came a distant second with 107.6 mt – the quest for a higher rank and increased global share continues to drive the India’s steel sector and its policy makers.

For some time now, the country has been striving hard to reach the milestone capacity of 100 mt. The progress to this end has been rather slow, but not off the track. As it stands now, India is striving hard to reach at least 90-95 mt of capacity in a year’s time.

The majority of the additional capacity will be coming through brownfield projects even as there are blurbs of some greenfield projects here and there. Several brownfield expansions have already come on-stream this (financial) year (2011-12).

Interestingly, there is a decent mix of expansion coming in from both private and public sector companies. Decent capacity augmentation came onstream in public sector players including SAIL and RINL (3-mtpa expansion and Essar

Steady stepson way to 100 mt

Tamajit Pain


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expansion at Hazira). Among the private players, Essar, JSW, Jindal Steel & Power and Tata Steel are leading the pack.

In recent years, India’s experience with greenfield projects has not been very pleasant. Nevertheless, players like JSPL, Tata Steel and JSW are making inroads into this segment with plans to add significant capacity through greenfield expansions.

JSPL plans to set up 6 mtpa capacity each in Patratu in Jharkhand and Angul in Odisha. The unit in Odisha would be further taken forward to 20 mtpa by 2020. Tata Steel, too, has chalked out a greenfield project for Kalinganagar in Odisha where work has already started. The company is optimistic about beginning production by the end of financial year 2014. JSW, meanwhile, is focusing on the West Bengal project and expects to commission the first phase of 3 million tons (mt) of its greenfield integrated works at Salboni by 2014.

Apart from these, there is a new entrant in the steel business. NMDC, the iron ore major, is also coming up with two greenfield projects – a 3-mtpa unit in Chhattisgarh and a 2-mtpa unit in Karnataka. However, the NMDC units are unlikely to come on stream before 2014.

Overall, as per estimates of the steel ministry, the country is likely to witness a capacity addition of around 10-15 mt in the current financial year. In 2010-11, India’s production capacity was around 78 mt. By optimistic estimates, industry sources expect installed capacity to reach around 95-98 mt by the end of FY13 and the major contributors to this would be SAIL, JSW, JSPL and NMDC.

Among the major Indian steelmakers, industry sources feel, SAIL would continue to dominate the sector in terms of capacity addition in the Twelfth Plan period (2012-17). Close on the heels would be RINL, another PSU, and Tata Steel. As already mentioned, the Twelfth Plan would also see a new entrant in the steel business – iron ore major NMDC Ltd.

While the expansion drive is all too welcome, it also poses a serious concern in terms of raw material availability. From where will the Indian steel makers get sufficient coking coal to meet their growing appetite? Coking coal has always been a major pain point as the country does not have adequate reserves. However, with increased capacity coming up, the

problem will grow manifold in coming years. The industry is also increasingly worried about the port infrastructure as it may not be adequately equipped to handle the sudden surge in coking coal cargo. Some of the players have been able to make their own arrangement by developing captive ports, but things are not so bright for most.

At this juncture, Indian steel makers may need to come up with innovative solutions to address these constraints and bottlenecks. Is it high time the leading steel makers joined hands and negotiated with global coking coal miners leveraging on their collective bargaining power for securing coking coal at better price, similar to what is seen in Japan? Can the government play a crucial role in bringing in leading players to discuss such possibilities? These are some crucial issues which will come up shortly as the country embarks upon crossing 100 mtpa crude steel making capacity over the next few years.

SAILSteel Authority of India Ltd (SAIL), a Maharatna Public Sector Undertaking (PSU) under the Ministry of Steel, is one of the biggest steel manufacturers in the country. SAIL is in the process of implementing modernisation and expansion programme to enhance its annual hot metal production capacity from present 13.8 mt to about 24 mt by the year 2012-13. For the first time, the company has undertaken modernisation & expansion plan at this scale simultaneously at all the plants/units. The growth plan, besides targeting higher production, also addresses the need for eliminating technological obsolescence, achieving higher energy savings, enriching product-mix, reducing pollution, developing mines & collieries, introducing customer centric processes and developing matching infrastructure facilities.

Orders for over `52,000 crore have already been placed under this modernisation & expansion plan.

SAIL has set the ball rolling for the company to work on Vision 2020 for the company. Keeping in line the estimated requirement of steel in the country and the potential SAIL has, action plan is underway for achieving 60 mt production by 2020, which would be approximately 30 percent of the Indian steel industry market share.

Towards this direction, SAIL has carried out an assessment of the ultimate potential of plants at the existing locations. The cumulative production of steel at these locations would range 47- 48 mt. The remaining 12-13 mt would be in the form of greenfield investments in the new locations a part of which will be outside India. While stressing upon SAIL’s future plans, scaling up production of steel to such a high level will open a number of opportunities for business diversification. SAIL is contemplating to diversify into areas where synergy exists or which are related to core strength of the company. This diversified portfolio will have an added advantage of de-risking the business from the fluctuations in steel business cycle, besides optimising opportunities in related business areas.


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Merger & Acquisition (M&A)

Merger of Maharashtra Elecktosmelt Limited (MEL) with SAIL: Maharashtra Elektrosmelt Ltd (MEL), the 99.12 percent subsidiary of Maharatna Steel Authority of India Limited (SAIL), has been merged with SAIL. The process of merger of MEL with SAIL culminated with the receipt of the final order from the Ministry of Corporate Affairs in June last year. It has been renamed as “Chandrapur Ferro-Alloys Plant”.

Transfer of Salem Refractory Unit of Burn Standard Company Limited: The Salem Refractory Unit of Burn Standard Company Limited (BSCL) has been transferred to the newly formed subsidiary of SAIL, namely SAIL Refractory Company Limited (SRCL) in December last year. The process of transfer was initiated on 10th June, 2010, when the Cabinet Committee on Economic Affairs (CCEA) approved the financial restructuring of BSCL, and also authorized the Department of Heavy Industries and Ministry of Steel to work out operational steps for the transfer.

SAIL has formally acquired 50 percent of the shares of Steel Complex Limited (SCL) in Kozhikode held by the Government of Kerala (GoK) and taken over the operations of SCL. SAIL-SCL Limited, the joint venture company resulting from the acquisition, is working towards the revival of SCL. The JV is in line with the government’s policy of bringing together synergies of PSUs and strengthening them to be competitive in the market.

Strategic alliances

In order to meet future challenges, SAIL is working on a long-term strategic plan ‘Strategy 2020’, “which will steer the company towards meeting its strategic objectives of achieving profitability through growth and customer satisfaction. Scaling up production of steel to such a high level will open a number of opportunities for business diversification. SAIL is therefore contemplating to diversify into areas where synergy exists or which are related to core strength of the company. This diversified portfolio will have an added advantage of de-risking the business from the fluctuations in steel business cycle, besides optimising opportunities in related business areas.

New strategic initiatives have been taken to augment technological interventions, among which is the newly-launched R&D ‘master plan’ of SAIL aimed at facilitating “acquisition and development of appropriate technologies for sustainable growth”. The other initiatives, related to SAIL’s MoUs with global players such as Kobe Steel of Japan and Posco of Korea are under progress.

Initiatives in this direction are as follows:SAIL has signed a term sheet for JV agreement with Kobe Steel

Limited (KSL), a renowned Japanese steel maker, for setting up a JV company for preparation of DPR for setting up a 0.5 mtpa ITmK3 technology [Iron Making Technology Mark Three] based plant at Durgapur for producing premium grade iron nuggets using iron ore fines and non-coking coal.

Sindri Project: The Cabinet Committee on Economic Affairs (CCEA) in its meeting held on August 4, 2011, has approved the proposal for revival of the closed units of FCIL / HFCL with the stipulation that the BIFR proceedings be expedited and thereafter, the matter including changes, if any, required in bid parameters, be placed before the Committee for a final decision. As per the Cabinet approval, the consortium of SAIL and

NFL has been nominated for revival of the Sindri Unit of FCIL. A new SPV company “SAIL-Sindri Projects Ltd” has already been incorporated on November 8, 2011.

The SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, has won the status of ‘Preferred Bidder’ for blocks B, C and D of the mines with an estimated reserve of 1.28 billion tons of high-grade magnetite iron ore (with 62-64 percent Fe content). The consortium will now have the opportunity to enter into a Hajigak Project Contract with the Ministry of Mines of the Islamic Republic of Afghanistan after formal negotiations, and to receive a license to further explore, develop and exploit the Hajigak iron ore deposits.

For facilitating acquisition of coking coal assets and companies in the mineral-rich countries, International Coal Ventures Private Limited (ICVL) is in the process of identification of coking coal assets and mines which could become a sustainable source of coking coal for the promoter companies.

SAIL signed an MOU with M/s Mishra Dhatu Nigam Limited (MIDHANI) for exploring synergetic business opportunities in production of value-added products, enhanced research and development activities, exchange of technical know-how and joint investment between the two companies. A joint task force team (TFT) has been constituted to identify special steel products which can be jointly developed by utilising the R&D facilities of both companies based on assessment of market demand and subject to techno-economic viability and commercial prudence.

SAIL and Burn Standard Co. Ltd. (BSCL), a PSU under the Ministry of Railways, entered into an MoU, for setting up a Wagon Components Manufacturing Facility (WCMF) as a 50:50 Joint Venture (JV) for the manufacture of cast steel bogies, couplers and related products for use on the wagons running on Indian Railways. The project is planned to be set up on leasehold land under the possession of Burn Standard Co. Ltd. (BSCL) at Jellingham, West Bengal. The Techno Economic Feasibility Report (TEFR) has been prepared by RITES (Consultant).

SAIL signed a term sheet with Hindustan Prefab Limited (HPL), a PSU under the Ministry of Housing & Urban Poverty Alleviation, to engage in the business of prefab structures in steel and cement projects in India. Both the companies intend to produce Prefab steel products (PEB) and Prefab concrete products (hollow core slabs), subject to finalisation of the location and layout of the project.

SAIL is planning to expand the captive power generating capacity at BSP and RSP through its Joint Venture with NTPC by installing 2x250 MW Units and BSP and 1x250 MW unit at RSP. NSPCL is conducting feasibility studies for these power projects and has applied for various statutory clearances like Environment Clearance and allocation of coal and water.

In line with the policy framework provided by Electricity Act, 2003 and National Electricity Policy, Electricity regulatory Commissions of various states which mandates all users of captive power generation to either purchase / generate a specified minimum percentage of captive power generated from renewable energy sources (solar, biomass, wind, small hydro etc). A long term strategy to meet renewable energy purchase obligation has been worked out and options are being evaluated for installing captive power generation based on renewable energy sources.

To improve operational efficiency of steel units and to achieve synergy, a number of mergers, acquisitions, strategic alliances and joint ventures have taken place. Details of these are given below:


Recently, speaking at a Global Summit, SAIL chairman C.S. Verma said manufacturing capacity of SAIL will go up to 19 mt next fiscal from 14 mt now, with the start of production in two blast furnaces.

Verma said SAIL’s `12,650-crore capital expenditure plan for the current fiscal was the highest in its history. Next fiscal,

it will go up further to `14,500 crore. The SAIL-Posco joint venture aims to set up a plant at an investment of ̀ 16,000 crore in Bokaro to produce 3 mtpa auto-grade steel at Bokaro.

RINLRashtriya Ispat Nigam Ltd’s (RINL) `12,000-crore brownfield expansion programme for raising capacity to 6.3 mtpa is over and production from the extended facility will start soon.

“The expansion has reached completion and commissioning of various projects is currently on. The steel plant has already produced its first billet from its expansion to 6.3 mtpa earlier in the month,” RINL said in a statement. Billets are used as input material for production of finished steel long products like bars and rods for use in the construction sector.

The blast furnace of 3,800 cubic metres capacity was lighted up in December last year and is all set to commence production shortly. The steel melting shop is also ready and is under integrated commissioning, the company said.

Besides the main production units, auxiliary units such as the power system comprising around 30 major sub-stations, the water system consisting of around 16 major pumping stations and other utility and gas systems have also been commissioned and are under operation.

In May last year, RINL had said its expansion project for raising steel-making capacity to 6.3 mtpa from 3.6 mtpa now at an expenditure of `12,000 crore would be commissioned in the current fiscal.

Meanwhile, the board of the state-owned Rastriya Ispat Nigam (RINL) has approved an investment of nearly `5,000 crore for setting up of a seamless tube mill and installation of a new coke oven battery. The board of RINL has given its nod for setting up of a seamless tube mill at an estimated cost of `2,300 crore.

In addition, the board gave approval for installation of a new Coke Oven Battery-5 at an estimated cost of `2,620 crore at Visakhapatnam steel plant.

RINL chairman and managing director

A.P. Choudhary said the setting up of the seamless tube mill would be done either through a joint venture (JV) with a suitable partner or RINL would implement it on its own in case a JV did not materialise.

The seamless tube mill would have a capacity of 4 lakh tons per annum and will be completed in 30 months from the date of order placement. The company will produce seamless tubes of 5.5” to 18” with a provision to produce even less than 5.5” tubes in the existing layout of the plant. The proposed mill would have the option to produce above 18” tubes by creating additional facilities in future. Only up to 14” tubes are produced in the private sector at present. Once the project to produce 18” and above seamless tubes is completed, RINL will become the only steel plant in India to produce such high dia tubes. The seamless tube mill will cater to the needs of sectors like oil exploration & refining, gas, petro chemicals, power, fertilisers as well as engineering industries, he said.

RINL, being a shore-based plant, would have the advantage to export seamless tubes to neighbouring nations like Malaysia, Singapore and Korea.

RINL which plans to become a 20 million ton plant by 2020, at a single location, would build a new Coke Oven Battery-5 along with By-Product Plant and its associated facilities to meet metallurgical coke needs. MN Dastur & Co, the consultant, has already made the Detailed Project Report.

Tata Steel Tata Steel Ltd has adhered to its long-term strategies, and has set for itself an ambitious plan to emerge as a global steel producer. The company has major manufacturing plants in India, several countries in Asia, the UK and Continental Europe, and supported by integrated mining operations in several geographies, is moving ahead steadily towards its goal.

The company has given top priority to its expansion plans in Jamshedpur and its 6 million tons per annum (mtpa) integrated steel plant in Odisha, formerly Orissa. Equal importance has been given to raw material security through the acquisition of iron ore and coal resources overseas to feed its UK and European plants, while rationalising capacities to make them viable in this period of slack demand.

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The Brownfield Expansion Project at Jamshedpur

Tata Steel is increasing its crude steelmaking capacity at the Jamshedpur Works from 6.8 mtpa to 9.7 mtpa via a 2.9 mtpa brownfield expansion project. The project comprises setting up:i) a 6 mtpa Pellet Plant,ii) two coke oven batteries, each with 0.7 mtpa capacity,iii) a 2.9 mtpa Blast Furnace andiv) an LD Shop and a Thin Slab Caster and Rolling Mill

(TSCR) of 2.4 mtpa to produce hot rolled coil (HRC).

C.S. Verma, Chairman, SAIL

A.P. Choudhary, CMD, RINL


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The expansion project is on at Jamshedpur location whereas work has started in Odisha also. Production will begin by the end of financial year 2014. In Jamshedpur, the company is increasing capacity to 9.7 million tons.

The expansion in Jamshedpur entails setting up a pellet plant and a coke oven battery. This will have some obvious advantages for Tata Steel as the company will not have to buy coke. As far as the pellet plant is concerned, the company will be able to use all its fines completely and the blast furnace productivity will grow.

With the project in place, out of the total capacity of 9.7 million tons (mt), 6.4 mt will be flat products and the balance will be long products. The company at present will not have any expansion in long products capacity.

As far as the flat segment is concerned, the entire expansion will be in hot rolled and cold rolled coils. In addition to this, Tata Steel is also investing in a new JV with Nippon Steel for the annealing processing line which will give it high strength steel for automotives.

In an attempt to further widen its foothold, Tata Steel is looking for opportunities for a second plant in Jharkhand, Chhattisgarh and Karnataka.

With the operations spread across several geographies including South East Asia, India and Europe, Tata Steel is quite well positioned in terms of raw materials in India. However, coking coal is an area of a concern for the steel major. In India, currently Tata Steel has 100 percent captive iron ore and 45 percent coking coal. But with the growth in the company’s production, it has been promised iron ore leases to match the output, both in Jharkhand and Odisha.

In addition to raw material, another main area of concern for the Indian operations is logistics and ports. Keeping this in mind, Tata Steel has been developing the Dhamra port in 50 percent JV with L&T. The port has become operational and will contribute significantly in streamlining of the process as it will be a deep water port which will start getting Capesize vessels.

EssarThe company is one of India’s largest exporters of flat products, exporting to the highly demanding US and European markets, and to the growing markets of SE Asia and Middle East. Essar is all set to take up crucial challenges as it ramps up its production capacity to more than double.

The company will be required to handle around 30 mtpa of total raw materials as it touches 10 mtpa capacity which has been done at an investment of `13,500 crore. But the steel leader has already augmented its port capacity to handle it. In addition, Essar has also invested around `3450 crore for creating crucial supporting infrastructure, which includes a 1015 MW power plant.

Essar Steel’s Hazira complex recently announced doubling of its capacity to 10 million tons per annum. This expansion

The Greenfield Expansion Project, Kalinganagar, OdishaThe Kalinganagar Greenfield Integrated Steel Plant, Odisha will supplement the production capacities of the Jamshedpur Works, producing flat products in premium, value-added steel grades.

The 6 mtpa Greenfield Integrated Steel Plant at Kalinganagar, Odisha, will make hot and cold rolled flat products and will be built in two phases, each of 3 mtpa.

Demand for superior quality flat products in India is rising. The Kalinganagar project will complement Tata Steel’s existing production facilities through the production of premium grades like API, Dual Phase, TRIP steel, Auto-AHSS (Advanced High Strength Steel), high-end galvanised coil and cold rolled coil for general engineering.

The project will comprise major facilities like the Sinter Plant, Pellet Plant, Coke Plant, Blast Furnace, Steel Melt Shop, Hot Strip Mill, Cold Rolling Mill and Raw Material Handling units. Site work is already well under way. So far, five construction power sub-stations have been commissioned.

The boundary work around the plant site has been completed. Construction road and site grading work is under progress. Piling and other civil work in the Sinter Plant, Blast Furnace and Steel Melting Shop areas has also begun.

Having obtained the necessary statutory clearances from the relevant regulatory authorities to set up the plant, the Company is now focused on managing the logistics to do with its construction. The construction site at Kalinganagar is being connected via rail linkages to the nearest railway station and the Dhamra Port to enable efficient transfer of raw material and finished products once the plant is operational.

The Steel Plant will also be connected to the Daitari-Paradip Expressway and the State Highway. The power requirement for the project is to be met through two captive power plants to be installed by Industrial Energy Limited, a joint venture between Tata Steel Limited and Tata Power Limited. Additional power will also come from the installation of Top Gas Recovery turbines and the Coke Dry Quenching process as part of the Company’s environment protection strategy.

The first phase of the project is expected to be commissioned by January 2014. This phase will have a 3 mtpa crude steel capacity feeding hot and cold rolling mills. The second phase, with an additional 3 mtpa crude steel capacity, is scheduled to be completed by March 2015.


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makes the Hazira Steel Complex the largest single location flat steel producer in India and the fourth largest single location flat steel producer globally. With this expansion the complex will be able to offer the entire range of flat products from thin strips and thick plates to pipes, cold rolled and coated products.

Raw material security and flexibilityEssar has adopted an integration and securitisation strategy which has enabled it to keep its costs low even with the expanded capacity. A bulk of its iron ore needs have been secured through offtake agreements with key players like NMDC and captive mines in Jharkhand and Chhatisgarh. In addition, the iron ore beneficiation plants have been set up by the company to facilitate usage of low grade iron ore fines abundantly available in the country.

For its energy requirements, Essar has long-term power purchase agreements and will soon have access to source cheaper coal based power from its captive plants. The offtake agreements combined with the captive mines and easy availability of low grade iron ore dumps provides Essar the necessary raw material security to operate its steel plant in the most cost-effective manner.

Essar has three iron making technologies – HBI/DRI, Corex and Blast Furnace. These technologies give them flexibility in their raw material inputs, be it iron ore or energy, in the following ways:• The complex uses varying grades of iron ore inputs,

including lump ore, fines, slimes, sinter and pellets • The complex uses different energy sources, including

natural gas, coking coal, coke, corex gas, blast furnace gas and non-coking coal

• Raw material costs are optimised to deliver the best value to the customer

Low capital investmentsEssar Steel has invested over `37,500 crore in the business including the recent project expansion. The industry standard

for steelmaking is $1 billion for a million tons of production. Essar Steel incurred a cost of just $750 per ton of steel, which in addition to steelmaking also includes beneficiation, pelletisation and downstream capabilities. On a like-to-like basis, Essar Steel has managed to create this asset at a significantly low capital cost. In some cases, the costs are lower than other steelmakers by as much as 50 percent.

Low cost of production ♦ Essar Steel will be in the bottom 25 percent of the global

cost curve ♦ Essar has the ability to use low grade iron ore fines through

its own 20-mt pellet and beneficiation plants which provide raw material security

♦ Power requirements have been tied up through captive coal- and gas-based power plants

♦ Different iron making technologies provide flexibility in raw material usage

The current projects under execution include the following:

♦ Paradip (Orissa, India): A 12-mtpa pellet plant close to Paradip port

♦ Jodha-Barbil area(Orissa, India): A 12 mtpa iron ore beneficiation plant

♦ Minnesota (USA): A 7-mtpa pellet plant, a concentration plant and a direct-reduced iron plant

♦ Zimbabwe (Africa): Essar will expand its newly launched steel company, NewZim Steel, in two phases:• Phase 1: Plant will deliver a production capacity of

0.5 mtpa within 12-18 months• Phase 2: Increase production capacity to 1.2 mtpa,

including a greenfield multi-fuel cogeneration power plant of 50 MW and an oxygen plant, scheduled to be completed within three years.

Aerial view of Essar Steel’s Hazira complex


COvER sTORy

Complete portfolio of flat steel products ♦ New compact strip production (CSP) mill is capable of

producing thin gauge strips of thicknesses as low as 0.8 mm

♦ CSP along with the hot strip mill (HSM), plate mill, pipe mill and other existing downstream facilities offer the ability to produce the entire range of value-added flat steel products

♦ Over 70 percent of the basket of products are value added, thus positively impacting margins

♦ Caters to all customer segments

Apart from this the company has set up a beneficiation plant of 8 mtpa capacity at Bailadila in Chhattisgarh, which ensures the highest quality iron ore and a pelletisation capacity of 8 mtpa at Visakhapatnam, providing vital raw material for the steel plant at Hazira.

The company also has a 0.6 mtpa cold rolling plant, a 0.5 mtpa galvanising plant, a 0.4 mtpa colour coating plant, and a 0.65 mtpa pickling line at Pune (Maharashtra, India). The company also has facilities at Sault Ste. Marie, Ontario, Canada and at PT Essar (West Java, Jakarta).

JSW Steel JSW Steel, the flagship company of the JSW Group, is a leading integrated steel manufacturer. In fact, it is the largest private sector steel manufacturer in India in terms of installed capacity.

The company is also one of the lowest cost steel producers in the world. It has established a strong presence in the global value-added steel segment with the acquisition of steel mill in US and a service centre in UK. JSW Steel has also formed a joint venture for setting up a steel plant in Georgia. The company

has also tied up with JFE Steel Corp, Japan for manufacturing the high grade automotive steel. JSW Steel has recently acquired a majority stake in Ispat Industries Ltd. This will make JSW Steel India’s largest steel producer with a combined capacity of 14.3 mtpa by March 2011. The company has also acquired mining assets in Chile, the US and Mozambique.

JSW Steel offers the entire gamut of steel products – Hot Rolled, Cold Rolled, Galvanized, Galvalume, Pre-painted Galvanised, Pre-painted Galvalume, TMT Rebars, Wire Rods & Special Steel Bars, Rounds & Blooms. JSW Steel has manufacturing facilities at Toranagallu in Karnataka, Vasind & Tarapur in Maharashtra and Salem in Tamil Nadu. By 2020, the company aims to produce 34 mt of steel annually with Greenfield integrated steel plants coming up in West Bengal and Jharkhand.

JSPLWith an annual turnover of over $2.9 billion, JSPL is a part of the about $15-billion diversified O.P. Jindal Group. From the widest flat products to a whole range of long products, JSPL today sports a product portfolio that caters to varied needs in the steel market. JSPL operates the largest coal-based sponge iron plant in the world and has an installed capacity of 3 mtpa of steel at Raigarh in Chhattisgarh. With a 0.6 mtpa wire rod mill and a 1-million-ton capacity bar mill at Patratu, Jharkhand and a medium and light structural mill at Raigarh, Chhattisgarh, JSPL will shortly be commissioning a plate mill to produce up to 5.00 metre wide plates at Angul, Odisha.

With the development rights for 20 billion tons of El Mutun Iron Ore Reserves in Bolivia, JSPL plans to invest $2.1 billion in the next few years on mining and on setting up an integrated 1.7-mtpa steel plant, 6-mtpa sponge iron plant, 10-

Projects commissioned during 3QFY12

Alamatti Project: ♦ 71km water pipe line from Alamatti Damto

Vijayanagar works ♦ Commissioned in Nov 2011

Slurry Pipe Line Project: ♦ A part of Beneficiation-2 Project ♦ Commissioned in Dec 2011

Projects under implementationparticulars Expected Completion

CPP –IV (300MW captive thermal power plant) FY12 endHSM –2 phase II Sep 2012Beneficiationplant–II(3modulesoutof7already commissioned) Sep 2012

Cold Rolling Mill –2 FY14 end10 MTPA to 12 MTPA expansion FY14 end

New projects ♦ Setting up cost reduction and integration projects for

JSW Ispat in a SPV named Amba River Coke Limited (a wholly owned subsidiary of JSW Steel)

♦ Total cost of projects: `2,140 crores

project Coke oven plant pellet plant CRM MillCapacity 1 MTPA 4 MTPA 0.8 MTPAProject Cost `975crores `835 crores `330 croresEnvironmental Clearances In Place In process In process

Implementation period Dec 2013 21 months

from zero date18 months from

zero date

BenefittoJSWIspat

•Assured availability of good quality coke

• Improved productivity

•Assured supplies of pellets

•Reduce dependence on a few large customers

BenefittoJSWSteel

• 25% return on investment

• 25% return on investment

• Larger share of value-added downstream market


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mtpa iron ore pellet plant and 450-MW power plant in the South American nation.

The company has already secured land to start the project and commercial dispatch of iron ore has commenced in Bolivia. The company will start construction on the DRI, pelletisation and steel project. These are expected to become operational in the next 3-4 years.

Through its 100 percent subsidiary Jindal Steel & Power (Mauritius) Ltd., Mauritius (JSPLM), JSPL has acquired Shadeed Iron & Steel Co. LLC (Shadeed) in Oman. Jindal Shadeed has installed a 1.5 mtpa gas-based Hot Briquetted Iron (HBI) plant with an investment of $500 million and started commercial production from the Oman plant four months ahead of schedule in December last year. The company will be setting up a steel plant and rolling steel mills in Oman in the next two years.

With coal reserves in Indonesia, JSPL has mines strewn across Australia and Africa. The company is also engaged in the exploration of the precious stone in the states of Chhattisgarh and Jharkhand in India.

NMDCState-owned NMDC Ltd has adopted a two-pronged growth strategy through both the organic and inorganic routes to expand its operations.

The company, with a capacity to produce 30 million tons (mt) of iron ore, has forayed into steel making and plans to construct its first integrated 3-million-tons-per-annum (mtpa) steel mill in Chhattisgarh by 2014. It also intends to build a separate 2-mtpa steel mill at Karnataka.

NMDC has been pursuing all its expansion programs and NMDC as part of its forward integration program and value addition is setting up a 3-mtpa steel plant at Nagarnar in Chhattisgarh, for which the land acquisition has been

completed in August 2010 and major packages are being finalised and awarded at a cost of around `6,500 crore.

NMDC’s vertical integration with steel production is not ending with only one steel plant in Nagarnar. The land for NMDC’s greenfield 3-mtpa integrated steel plant was acquired in a record time of 10 months and five major packages of the steel plant have already been awarded to internationally acclaimed companies.

It is aggressively taking up the proposal of steel plant in Karnataka with Severstal, the largest steel producer in Russia. NMDC hopes that the joint venture with Severstal will produce high margin, value added products for the Indian and overseas markets. In the country, the company is in active discussion with Tata Steel for a steel plant in Chhattisgarh where they have land and mine.

NMDC is planning to set up 10 mtpa pipeline for evacuation of iron ore from Bailadila Sector to Vizag with a loop line of 2 mtpa capacity at Nagarnar to cater to the steel plant. This pipeline will help in increasing production of iron ore and supplying to domestic customers like RINL and Essar Steel.

NMDC accounts for about 15 percent of India’s iron ore production and is among the few state-owned firms with “Navratna” status that accords a large degree of financial independence. The company, which holds about a billion tons of proven iron ore reserves, sold 26.5 mt of iron ore in the financial year ended March 2011. It hopes to sell 30 mt in the current fiscal year.

JSPL’s expansion projects

ChhattisgarhEstablishing a 7-mtpa steel plant in phases, a 2-mtpa cement plant and a 1600-MW captive power plant with a total investment of over $6 billion (`30,000 crore).

JharkhandAn 11-mtpa integrated steel plant and a 2600 MW captive power plant in phases, with a total investment of $9 billion (`45,000 crore). The first phase comprising a 3 mtpa steel plant at Patratu near Ranchi is expected to be commissioned by 2012.

OdishaA 12.5-mtpa integrated steel plant and 2600 MW captive power plant in phases, with a total investment of $10 billion (`50,000 crore). The company is investing close to `45,000 crore ($10 billion) in a Coal to Liquid project in Odisha.


sPECIAL FOCUs

Essar Steel entered the steel business with the installation of 0.9 million tons per annum (mtpa) DRI modules in 1989 in Hazira in Gujarat, increased its steelmaking

capacity to 1.5 mtpa in 1993 and further to 3.6 mtpa in 2002. The company then acquired assets of Shree Precoated Steel, Pune, and commissioned the 1.5-mtpa plate mill and 0.6-mtpa pipe mill at Hazira.

It started the Corex unit in 2011-12 and completed the expansion projects, taking steelmaking capacity to 10 mtpa in December 2012.

The company is at present India’s largest and world’s fourth largest single location flat steel maker with all the established routes of steel making – Blast Furnace, Corex and DRI – in operation. It is now focusing on stabilising the increased capacity in an effective manner to tap the maximum benefit.

Beside India, the company has steelmaking operations in Canada (Essar Steel Algoma), United States and Indonesia.

With the expanded capacity, Essar aims to be at par or better than the world standards as it has diversified into various areas like Blast Furnace, Corex, Plate Mills, CSP, Pipe Mills which gives them the entire spectrum of iron making, steel making and rolling. It covers the entire range of products available in flat steel.

In an exclusive interview to Steel Insights, Essar Steel’s managing director and CEO, Dilip Oommen, shared his views on various aspects of the company as well as the steel market.

Excerpts:

For the past few years, Essar Steel had been working on a strategy of complete integration right from raw material sourcing till the finished products which reach the consumers. Do you think you have achieved the goal?Yes. Essar Steel is now a completely integrated steel maker. With 10 mtpa steel capacity, backed by pellet capacity of 20 mtpa, we now have complete control over our requirement of oxides. We have also invested in downstream assets as part of forward integration strategy. We are now in a position to use close to 80 percent of our production in our own facilities either in the form of steel processing or in downstream units to add further value to our end product that is supplied to our customers. A good spread of service centres and retail outlets expand our reach and bring us closer to the customer.

What will be Essar Steel’s focus in the coming years – cost control, raw material security, raw material cost control, seeking of new markets or re-structuring of your product basket?The choice of technology in using low grade ore, raw material security and the use of alternative supply source of cheaper energy enables us to be among the bottom quartile of cost curve globally. The investments in CSP, plate mill and pipe mill will allow us to manufacture flat steel products for high end applications. Today, Essar Steel is able to supply steel to any industry segment. Our focus will now be on reaching

Dilip Oommen, CEO & MD, Essar Steel India

Essar aims to focus on consolidationpost expansion

Rakesh Dubey

“Our focus will now be on reaching out to customers across the globe, penetrating new markets and exceeding customer expectations”


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out to customers across the globe, penetrating new markets and exceeding customer expectations.

Consolidation in India’s steel industry was expected for quite some time, but nothing major has happened during the last few years except a few deals here and there. How do you look at the scenario in the coming years?I do not foresee any consolidation among primary steel makers. But there are opportunities among downstream units. The standalone downstream units may find the going tough in volatile market conditions. It can be an opportunity for primary steel makers to acquire such units. For example, Essar Steel acquired the downstream unit of Shree Precoated Steel in 2009.

Essar Steel does not have raw material security as far as iron ore and coking coal are concerned. How do you intend to achieve this?As I said earlier, Essar Steel has ensured securitisation of its key raw materials. Essar Steel has long-term tie ups with NMDC for the Vizag pelletisation plant and with mine owners in Orissa for the Paradip plant. We have created a pellet making capacity of 20 million tons (mt), which is more than adequate to meet the requirement of Essar Steel. We are also setting up a coke making unit for captive consumption.

Furthermore, our assets of iron ore and coal in the US act as a natural hedge against any unforeseen developments in raw material supply. As far as natural gas is concerned, we are reducing dependence on external gas by replacing it with the byproduct gas generated from the Corex process and replacing some of the NG based power with coal based power.

In Hazira, you have increased the capacity from 4.6 mt to 10 mt. How much of the production is through Corex, blast furnace and DRI route?The DRI route contributes to 66 percent of the production while the Corex and the blast furnace each contribute to 17 percent.

Hazira is probably the only place in the world where one can find a mix of all the three technologies of steel making working simultaneously. What prompted you to go for a mix of technology instead of sticking to your own conventional technology (DRI)?There were a couple of reasons to adopt three iron making

technologies. We have realised that the market for steel making raw materials is becoming very volatile and we need to contain the cost of production. This can be achieved only if one has the flexibility in usage of raw materials. Dependence on one technology may not give that flexibility. Hence, investing in three different technologies made sense. Moreover, the Corex and the Blast furnace generate by-product gases which can suitably replace natural gas at a number of places in the integrated steel complex, thereby reducing our dependence on external natural gas.

You have achieved a target of 10 mt capacity at Hazira. What is the status of your Paradip project and will you go for 15 mtpa or 20 mtpa at Hazira? On completion of the Paradip project, Essar Steel will be the largest pellet manufacturer in India with an annual capacity of 20 mt. At Paradip, we are setting up a pellet plant with an annual capacity of 12 mt. The first phase of 6 mt will be operational during this quarter and the remaining 6 mt by next year.

There are no plans to further scale up the Hazira facility in the near future. Our focus will now be on consolidation of operation and stabilising the newly commissioned plants.

You had planned to set up coke plants at various locations. What is the status of that?We are setting up a coke oven plant at Hazira. This is under implementation and is scheduled to come on stream by the end of this year.

“The raw material market is volatile and we need flexibility of usage. Dependence on one technology may not give that flexibility.”

“We have a technical arrangement with Kobe Steel for auto applications and 20% of our total production is being supplied to the auto sector”


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Presently Essar offers the entire range of flat products from thin strips and thick plates to pipes, cold rolled and coated products. Do you have any plans to enter the long steel segment in future?Essar Steel does not have any plans presently to enter the long steel segment. We anticipate a rising demand for flat steel in the coming years and we will continue to focus on producing flat steel for high end applications. Already the share of value added products in total production is well over 70 percent.

Till very recently, Indian steel makers were not in a position to meet the stringent requirements of some of the automobile and white goods sectors and some of them still depend on imported steel. What is Essar Steel doing to emerge as a supplier of choice to these sectors? As a part of our strategy to be a leading supplier of steel for automobile industry, we have taken various initiatives. We have set up steel processing facilities in all major auto hubs in the country to provide just-in-time delivery to our auto clients which is very critical in auto industry. In order to improve the quality of finished steel, we have set up Batch Annealing facility and electrolyte cleaning facility. In addition, we have a technical arrangement with Kobe Steel to develop products for auto

applications. On account of these measures, 20 percent of our total production is being supplied to the auto sector.

Essar once used to export a significant quantity of its total steel production. What is the situation now? And going

forward, will you focus on exports or domestic sales?The maximum quantity Essar Steel ever exported was 40 percent of its production. This is now

“The option of importing iron ore from the US is always available to us”

“There were no supply issues as far as fines suppliers are concerned. There were some logistical challenges, as our slurry pipeline was rendered non operational”


sPECIAL FOCUs

hovering around 20-30 percent depending on market conditions. We will continue to focus on the domestic market while maintaining this share of export.

Essar’s strategic advantage lies in high level of forward and backward integration. Is there any new effort in this direction?Yes, we have focused on integrating the entire value chain from raw material to manufacturing of niche products. In addition, we have set up a strong application engineering team that works closely with customers to develop products to suit their requirement. This is a part of efforts to expand our product portfolio and find a niche for ourselves in the market place.

What are the plans to further develop the Visakhapatnam pelletisation facility?At the moment, we have no plans to expand capacity at Visakhapatnam pellet facility.

A number of steel plants in India faced problems in procuring iron ore in recent times. Did it in any way affect the performance of Essar Steel? There were no supply issues as far as fines suppliers are concerned. There were some logistical challenges, primarily arising because our slurry pipeline was rendered non operational.

Since you do not have captive iron ore mines, do you think it would be economically viable to use iron ore from your Canadian company to handle a situation like this?First of all, huge quantities of low grade fines are available in Odisha where we are setting up our pellet facility of 12 mtpa. There are not many takers for these fines. We will beneficiate these fines to improve the quality of oxide with Fe content to over 62-63 percent from 52-55 percent. In addition, we have a long term supply agreement with NMDC besides a captive mine in Bailadila. Having said that, the option of importing from the US is always available to us.

Essar Steel has a state-of-the-art plate mill at Hazira with a capacity of 1.5 mtpa, making it one of the widest plate mills in the world. Any plans on this front? The plate mill has given us a firm footing in the Indian market.

It is by far the most modern mill in India capable of producing plates for high-end applications. India imports over a million tons of plates annually. This market is now readily available to us. In addition, many of the users have now started to use plates because of its availability and the advantage it offers. Some of the key markets for our plates are normalised and quenched and tempered product markets.

Moreover, Essar Steel is the only company in India where the American Petroleum Institute has permitted three of our plate grades to use their monograms on the products. This further reinforces the quality of our product and we are keen to establish a presence in this segment.

What is Essar Steel’s current cold rolling capacity? Any plans for expansion? If yes, by how much?Essar Steel has a cold rolling capacity of 2 mt in India. While we are not averse to expanding this capacity depending on market conditions, we have no immediate plans either.

What is the current spread of Essar hypermarts and what are the plans to extend their reach? How much revenue is generated out of the Hypermarts at present?We have more than 600 Hypermarts and Expressmarts across the length and breadth of the country. Around 25 percent of our revenue is generated through this channel.

“The plate mill has given us a firm footing in Indian market. India imports over a million tons of plates annually. This market is now readily available to us”

“We have more than 600 Hypermarts and Expressmarts across the length and breadth of the country. Around 25% of our revenue is generated through this channel”


The total worldwide lubricating grease production is approximately about 1 million tons per year, while the Indian grease market is over 100,000 tons per year, which

is approximately 8 to 10 percent of the total global volume. Unlike other major countries where demand of lubricants has witnessed stagnation, the Indian lubricant market has posted a 5-7 percent growth lately.

Sensing the growth potential of the grease market in India, the global industrial marketing advisor, ExxonMobil, and member of National Lubricating Grease Institute, Paul Gives, was in India to participate in the 14th Lubricating Grease Conference at Jaipur in Rajasthan. In a freewheeling interview on the sidelines of the conference, Gives spoke at length to Tamajit Pain about the grease industry in India and ExxonMobil’s plans to meet the demand of the steel industry in the country.

Excerpts:

Please provide an overview of the global grease market as well as the market in India.I will give you an overview of the size of the grease market, which is an important part of the overall lubricants market. The National Lubricating Grease Institute (NLGI) issues a grease production survey each year. The last full survey was completed in the year 2010. The survey shows that the pooled grease market size was 1 million tons (mt) of grease and this represents roughly 2 percent growth over 2009.

The Indian grease market was approximately 100,000 tons, which is between 8-10 percent of the total global grease production. What is interesting to note is that unlike the rest of the world where the grease industry is flat to declining, the Indian market of pooled grease has actually showed significant

growth between 5-7 percent per year for the past several years.Since 2008, the Indian grease market has grown by over

20,000 tons each year. Lithium based greases make up the majority of the grease used in India, representing about 90 percent of the total grease consumed in the country. Of this 90 percent, 5 percent is lithium complex. In comparison, when we look at the global picture, typically the global average for lithium and lithium complex is about 55 percent, while the use of lithium complex is typically about 25 percent.

Now the Indian market is showing some strong growth and showing a movement from lithium to lithium complex for higher performing products delivering higher benefits.

Which industries typically use these lithium based greases?Typically these greases are used in industries like steel, mining, general manufacturing and power generation. In India, we also find a very strong use of lithium based greases.

There continues to be a demand for higher performing synthetic products so we are working on it. Customer

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ExxonMobil targets steel grease market Tamajit Pain

Paul Grives, Global Industrial Marketing Advisor, ExxonMobil


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surveys have shown that there is a demand for lithium complex products and poly urea based products. We have a product called Mobil SHC Polyrex, a high performing synthetic bearing grease capable of delivering under extreme conditions. Mobilith SHC is a fully synthetic lithium complex series of products and to complement that we offer to the steel industry two mineral oil product lines.

One is the Mobil Centaur XHP, a product using new technology for corrosion and water spray resistance, and the other is Mobilgrease XHP series, which is a lithium complex mineral oil product for the steel industry.

What do the future projects look like?The projections are that the market will grow at the same levels in 2011. As mentioned in the NLGI survey, the Indian grease demand is around 100,000 tons. It is set to grow as the core and infrastructure sectors like mining, industries and steel grow as these drive demand for grease.

Where will the growth of your business come from – brownfield or greenfield steel projects – considering the fact that there is limited growth in greenfield projects?I think the growth will come from a combination of both. The ExxonMobil product basket is useful for both existing players in the steel market as well as new entrants.

All our products look at aiding true productivity, safety and long lasting protection. In steel mills most of the injuries that happen are hand injuries caused because of extreme usage of the equipment. Our products offer extensive lubrication properties and this makes it easier for people operating the equipment easier to handle it. By extending equipment life, we also help the facilities generate less waste and that is a benefit to the environment.

Are your products manufactured in India or are they being sourced from other plants?All our products are manufactured globally. Our primary grease production hubs are in the US, in Europe, in France, in Africa and the Middle East, especially in Egypt and China. This global manufacturing network is supported by a very rigorous supply chain to ensure that our globally made product offers reach our customers all over the world.

ExxonMobil users worldwide can be assured of the same level of quality, service and product specifications irrespective of location, thanks to our efficient global supply chain. So whether a user is in China or in the US or in India, the level of performance is the same.

Our overall supply chain is based out of ExxonMobil facilities as well as a very robust distributor network.

Do you have any plans to expand your distribution network in India?Our distribution network is always under evaluation. As demand rises, the network will be continually optimised to make sure that the products reach our customers in a very reliable manner.

Are you planning any innovations to upgrade your products in line with client demand?The two new product offerings for steel are the Mobil SHC Polyrex series of poly urea based greases and the Mobil Centaur XHP 460 series, a new kind of grease of calcium sulphonate.

Calcium sulphonate greases are meant for the extremely wet hot climate of a steel mill. The polyrex series of greases are also extremely good at hot and extreme operating temperatures. They can be used continually at temperatures of up to 170 degrees Celsius.

It is the kind of new technology that the industry is asking for as more and more machines are being made smaller to save on energy.

There will be increased demand for lubricants so that the equipment lasts longer at hotter temperatures. So we have to develop a product or offer product lines that can meet these requirements. A machine with higher oxidative stability, better sheer stability, longer and better equipment protection and equipment life is the need of the hour. We have to get some state-of-the-art technologies which are available in the polyrex series so that the equipment can operate at extreme situations.

The XHP series is a proprietary formulation of calcium sulphonate, which also has specific benefits of tolerance. So, as the industry changes we also have to change accordingly. We have to take feedback from the users as well as the


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manufacturers. With this feedback, our research facilities have to come out with the best balanced formulation.

Where is your R&D centre located?Our primary research and development centre is in New Jersey and it is supported by our long range research centre in Clinton, New Jersey. These two facilities are supported by our global network of technical advisors who are located in different countries. There are quite a few of them in India as well. These people interact with customers.

We also have a wide network of equipment builder group who are deployed in regional centres of excellence. There is a centre of excellence here in India. They interact with the equipment builders to gain insights from the builders. They also go ahead and provide solutions to these builders with a competitive advantage and actually help sell the products. The third part in our whole development scheme is our field people. We have a group of standalone engineers and group engineers called field engineering services or FES. These people keep in touch with the customer. They continuously take feedback and send it back to our research and development areas. That is how we get to know what we must do for the future.

Do you have any plans to develop a manufacturing base in India?We have a globally deployed manufacturing programme. We constantly re-evaluate the needs of our supply chain so that we can go ahead and meet the demands of all our zones. Our constant endeavour is to deliver a globally consistent product to the customers – the right product at the right price and at the right time.

When our supply chain becomes stressed, any new manufacturing hub is always a consideration.

Could you please elaborate on your facility in Taloja?It is a strategic alliance with a very well known Indian grease and lubricants manufacturer who manufactures locally. It is not a wholly owned ExxonMobil facility.

Will you replicate these type alliances if demand grows?If demand grows, the quickest way to respond is repeatable local manufacturing.

Who are the other major players in the grease market in India?When you look at the grease market in India, there are four

major players – India Oil, Castrol, Bharat Petroleum and Hindustan Petroleum. Those four companies have approximately 70 percent of the Indian market of lubricants and grease. The remaining 30 percent are made up of other global majors such as ExxonMobil and other local regional makers.

When we look at the products we offer to the market place, I feel we will be a major player going forward.

Any plans to shore up your market share in India?I am in India to meet with the local team as we prepare our steel programme, which is a market programme that is both on

showcasing our product offered in steel as well as our service offerings to the steel industry. We enjoyed significant success in other areas of the world and we have seen a strong draw from Indian customers including Indian steel customers. We view this as extremely encouraging. So we expect continued demand for our products and provide the kind of value that our customers need.

We cannot talk about specific targets. But it gives us happiness when we see that our Indian customers have had significant success by using our products and how their demand for the products we offer to the market seems to grow.

Can you elaborate on your steel programme?The programme is a marketing programme that helps to explain the products and services we offer as well as the benefits that our steel customers derive out of it. On our website www.mil.com, the whole steel making process and the right lubricant required for it is explained with the help of detailed interactive schematics.

ExxonMobil is selling productivity and the ability to give productive advantage to its customers.

Will there be a shift in the product segments with the steel mills in India opting for better technology to use non-coking coal?There really isn’t a shift in the product segment when we consider it in the context of a steel mill. We still have cast steel, we still have the Conarc steel so axles, rolls – hot or cold – will still be there.

Yes, we can offer products for different forms of technology and we can offer it to our customers in India if they so want. We have those products in use in other areas of the world. I do not actually see a large shift in the product lines. Some of our products have very broad application and we should be able to meet the ever changing needs of the market place.


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Adhunik Group, the `3,500-crore conglomerate,

is one of the fastest growing groups in India. It is engaged in mining, steel, power, transmission structures and value added products, catering to a vast and quality-focused customer base.

The Group has steel manufacturing facilities in West Bengal, Orissa and Jharkhand and a

cement unit in Meghalaya. Besides, it has a chain of value-added products including carbon and alloy steel billets, auto-grade steel rolled products, rounds and flats (330,000 tpa), TMT bars and wire rods (150,000 tpa), sponge iron (420,000 tpa), pig iron (200,000 tpa), ferro alloys products including ferro manganese, silico manganese, ferro silicon (50,000 tpa) and stainless steel products (120,000 tpa). In the mining sector, it has iron ore and manganese ore mines in Jharkhand and Orissa, respectively. Director Nirmal Kumar Agarwal and executive director (commercial) Y.P. Jain, spoke at length about the current status of the steel industry and the way forward during an interview with Steel Insights.

Excerpts: Steel raw material prices are moving up and although the prices of finished products have gone up, margins are still under pressure. What do you feel? Yes. The margins are under pressure. But the government is giving a push to infrastructure and reducing interest rates. There has been a lot of change in the market scenario in 2012 as compared to 2011. We feel that by March-April the system will be in order.

Prices of some raw materials are also coming down and this will have a positive impact on the steel market. Coking coal prices have come down from $300 per ton to $225 per ton fob Australia. The steel players mostly mix the different varieties of coking coal in the furnace. Therefore, the average price of coking coal is expected to come down further from $200 per ton to $170 per ton in the near future.

First SAIL increased prices of steel in January followed by other primary producers. The secondary producers also followed suit. But the rate of increase of secondary producers was more than the primary producers. Why?The demand has increased and this has led to an increase

in prices. The state-run company’s price rise was a little less as it has to take care of the interest of the country at large. Moreover, the government is focusing on infrastructure and if the price increase is much, it will hamper growth.

There were reports that the steel plants are operating at lower capacity owing to lower demand. What is the situation now?Product prices in the long steel sector have already increased with the rebound in demand. This has led to increase in the capacity utilisation levels of steel mills. Now most of the plants are operating at over 70 percent capacity. Companies in the Rourkela and Jamshedpur belt are operating at full capacity. We are operating at 100 percent capacity.

Your pellet plant has become operational in Jamshedpur. What benefit are you getting from this?The pellet plant is helping our Rourkela and Jamshedpur operations. This has led to a reduction in the cost of production. Previously we used to get pellets at `6,000-7,000 per ton, now we are getting that at `2,000 per ton. This has reduced our overall cost of production.

What is the current steel making capacity of Adhunik group?The total capacity of the Adhunik group at present is around 1 million tons per annum. We are making alloy steel, TMT and billets. This includes the capacities in Durgapur, Rourkela and Jamshedpur. Of this, the total capacity in Rourkela is around 0.45 million tons and in Jamshedpur it is 0.25 million tons.

What are your expansion plans?Our current focus is on consolidation of the existing operations by cutting costs and increasing operational efficiency by securitising raw material supplies.

When will Adhunik’s coal mine block become operational? The steel units of the Adhunik group has coal blocks in Patrapara in Odisha, North Dhadu in Jharkhand and Moira-Madhujorey, West Bengal. The coal mines will be operational by December 2012. The group uses around 2 million tons of coal yearly. Out of this the coking coal requirement stands at around 300,000 tons.

‘Adhunik operating at 100% capacity’Rakesh Dubey & Tamajit Pain

Nirmal Kumar AgarwalDirector, Adhunik Group

Y P Jain, ED, CommercialAdhunik Group


sPECIAL FOCUs

Kolkata based KISWOK Industries Pvt Ltd (formerly Kejriwal

Iron and Steel Works), manufacturing ductile and cast iron products, will spend `145 crore over the next year to double its capacity and tap overseas markets more aggressively.

The company will spend `45 crore at its existing plant at Domjur in Howrah to set up another automatic moulding line, which will take the

monthly production to 7,000 tons from 3,500 tons at present, managing director, KISWOK, Raj Kejriwal, told Steel Insights in an interview at its plant site in Domjur, West Bengal.

The company also plans to buy a fully automatic complete automation line, which will complete total machining, starting from grinding, turning, drilling, ultrasonic, hardness testing and all other operations and finally stacking of 100,000 brake drums per month.

“The project will be the first of its kind in India. This will cost us another `100 crore,” said Kejriwal, adding that it will provide accuracy as per customer’s requirements.

The new line will be procured either from Italy or from Germany. “Negotiations are at an advanced stage and we will conclude the deal soon,” he said.

The company, established by Raj Kejriwal’s father S.S. Kejriwal, chairman, KISWOK, in the year 1957, has established itself as one of the leading manufacturers of ductile and cast iron products in India. KISWOK’s engineering achievements have allowed the creation of the KISWOK Range which covers diverse sectors like automobiles, agricultural, utilities, engineered castings and other industries.

The company is completely debt free and would like to fund the entire expansion through internal accruals. “We expect to spend around ̀ 45 crore from internal accruals for the expansion projects,” Kejriwal said. However, at a later stage, it is likely to raise a small debt component.

KISWOK, which supplies almost 75 percent of its total production to Tata Motors, will continue to do so. Other domestic clients of the company include Larsen & Toubro, IVRCL, Degremont, Nagarjuna Construction, Ramky Infrastructure, Chennai Metro Water Supply & Sewerage Board, Bangalore Water Supply & Sewerage Board and Karnataka Urban Water Supply Sewerage Board, among others. Once the expansion

project is complete, the company will look for newer overseas markets and newer domestic clients.

The company, which exports around 10 percent of its production of ductile manhole covers to UK and the Middle East, will be looking at US markets for automotive products also. “The repetition quality request of the US market is very rigid and we can match that with the technological upgradation being undertaken by the company,” Kejriwal said.

Growth“There is huge growth opportunity in the foundry sector,” Kejriwal said. The company, which posted a turnover of `175 crore in 2010-11, expects to record a turnover of `240 crore in 2011-12 riding on the growth of its foundry products for the automotive sector.

“With the expansion projects and growth in the automotive segment, we expect the turnover to grow to `400-450 crore in 2012-13,” he said. Even as the group prepares to expand its operations, the third generation of Kejriwals is already being groomed to take over the reins. Mayank Kejriwal, director, KISWOK, educated from the University of Michigan, has already started to make his presence felt in the group, which is still being guided by octogenarian S.S. Kejriwal. “We should have world class casting facilities at the right place and monitor the operations properly,” Mayank Kejriwal said.

With the new generation trying to instill in fresh breath in the group, KISWOK is looking at a pan India presence now. “We need to be near the auto hubs,” he added.

Mayank Kejriwal has been responsible for changing the basic profile of the company from being a primarily sanitary castings product maker to more focused automotive sectors like its counterparts in south India. He wants the group to be much more professionally managed as it is difficult to go for large scale expansion by just being a family run business.

The group has also embarked on corporate social responsibilities and activities like subsidized health check-ups for its workers. “We feel that if we give back to society we will get back more from it,” Raj Kejriwal said.

KISWOK to invest `145 cr oncapacity expansion

Tamajit Pain & Sanjukta Ganguly

Raj Kejriwal, MD, KISWOKMayank Kejriwal, Director,

KISWOK


CORPORATE UPDATE

Public sector steel behemoth Steel Authority of India Limited (SAIL), is in the process of implementing a massive modernisation and expansion programme to

enhance its annual hot metal production capacity from the present 13.8 million tons (mt) to about 24 mt by the year 2012-13. The leading steelmaker has already set the ball rolling for the company’s “Vision for 2020”, when it aims to achieve 60 mt production. This would be approximately 30 percent of the market share as far as the Indian steel industry is concerned, the company said in a statement.

SAIL has carried out an assessment of the ultimate potential of the company’s plants at the existing locations, the statement said. Orders for over `52,000 crore have already been placed under this modernisation and expansion plan.

The cumulative production of steel at these locations would range between 47-48 mt whereas the remaining 12-13 mt would be in the form of greenfield investments in the new locations, a part of which will be outside India.

Scaling up production of steel to such a high level will open a number of opportunities for business diversification, the statement added.

In fact, SAIL is contemplating to diversify into areas where synergy exists or which are related to the core strength of the company. This diversified portfolio will have an added

advantage of de-risking the business from the fluctuations in steel business cycle, besides optimising opportunities in related business areas.

For the first time, the company has undertaken a modernisation and expansion plan at this scale simultaneously at all the plants or units. The growth plan, besides targeting higher production, also addresses the need for eliminating technological obsolescence, achieving higher energy savings, enriching product-mix, reducing pollution, developing mines and collieries, introducing customer-centric processes and developing matching infrastructure facilities.

In order to achieve the company’s “Vision for 2020”, SAIL has already implemented a number of strategic moves and also a few more are in the pipeline. Maharashtra Elektrosmelt Ltd (MEL), the 99.12 percent subsidiary of SAIL has been merged with the parent company which has culminated with the receipt of the final order from the Ministry of Corporate Affairs in June last year. It has been renamed as ‘Chandrapur Ferro-Alloys Plant’, SAIL said in a statement.

Secondly, the Salem Refractory Unit of Burn Standard Company Limited (BSCL) has been transferred to the newly formed subsidiary of SAIL, namely SAIL Refractory Company Limited (SRCL) in December last year. This process of transfer was initiated on June 10, 2010, when the Cabinet Committee

on Economic Affairs (CCEA) approved the financial restructuring of BSCL, and also authorised the Department of Heavy Industries and Ministry of Steel to work out operational steps for the transfer.

SAIL has formally acquired 50 percent of the shares of Steel Complex Limited (SCL) in Kozhikode held by the Government of Kerala (GoK) and taken over the operations of SCL. SAIL-SCL Limited, the joint venture company resulting from the acquisition, is working towards the revival of SCL. This joint venture is in line with the government’s policy of bringing together synergies of PSUs and strengthening them to become more and more competitive in the market.

To bring about an alignment between vision and strategies and to meet future challenges, SAIL is

SAIL takes giant strides towards“Vision for 2020”

Sanjukta Ganguly


CORPORATE UPDATE

working on a long-term strategic plan 'Strategy 2020', which will steer the company towards meeting its strategic objectives of achieving profitability through growth and customer satisfaction, said a company source.

Scaling up production of steel to a high level will open a number of opportunities for business diversification. Therefore, the company is contemplating to diversify into areas where synergy exists or which are related to core strength of the company. This diversified portfolio will have an added advantage of de-risking the business from the fluctuations in steel business cycle, besides optimizing opportunities in related business areas.

Raw material securityIn order to ensure uninterrupted production, continual efforts are being made by the company for ensuring raw material security and forging alliances with global entities for tapping new markets.

SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, has won the status of 'Preferred Bidder' for blocks B, C and D of the mines with an estimated reserve of 1.28 billion tons of high-grade magnetite iron ore (with 62-64 percent Fe content). The consortium will now have the opportunity to enter into a Hajigak Project Contract with the Ministry of Mines of the Islamic Republic of Afghanistan after formal negotiations, and to receive a license to further explore, develop and exploit the Hajigak iron ore deposits.

For facilitating acquisition of coking coal assets and companies in the mineral-rich countries, International Coal Ventures Private Limited (ICVL) is in the process of identification of coking coal assets and mines which could become a sustainable source of coking coal for the promoter companies as well.

Technological alliancesNew strategic initiatives have been taken to augment technological interventions, among which is the newly-launched R&D 'master plan' of SAIL aimed at facilitating "acquisition and development of appropriate technologies for sustainable growth", the company said in a statement recently. The other initiatives, related to SAIL's MoUs with global players such as Kobe Steel of Japan and Posco of Korea are under progress.

SAIL has signed a term sheet for a joint venture agreement with Kobe Steel Limited (KSL), a leading Japanese steel maker, for setting up a JV company for preparation of DPR for setting up a 0.5-mtpa ITmK3 technology (Iron Making Technology Mark Three) based plant at Durgapur for producing premium grade iron nuggets using iron ore fines and non-coking coal.

SAIL, in fact, has also signed an MoU with Mishra Dhatu Nigam Limited (MIDHANI) for exploring synergetic business opportunities in production of value-added products,

enhanced research and development activities, exchange of technical knowledge and joint investment between the two companies.

A joint task force team (TFT) has been constituted to identify special steel products which can be jointly developed by utilising the R&D facilities of both companies based on assessment of market demand and subject to techno-economic viability and commercial prudence.

SAIL and Burn Standard Company Limited (BSCL), a PSU under the Ministry of Railways, entered into an MOU, for setting up a Wagon Components Manufacturing Facility (WCMF) as a 50:50 joint venture (JV) for the manufacture of cast steel bogies, Couplers and related products for use on the wagons running on Indian Railways. The project is planned to be set up on leasehold land under the possession of BSCL at Jellingham, West Bengal.

The steel manufacturer has also signed a term sheet with Hindustan Prefab Limited (HPL), a PSU under the Ministry of Housing & Urban Poverty Alleviation, to engage in the business of prefab structures in steel and cement projects in India. Both the companies intend to produce Prefab steel products (PEB) and Prefab concrete products (hollow core slabs), subject to finalisation of the location and layout of the project.

Captive power production SAIL is planning to expand the captive power generating capacity at Bhilai and Rourkela steel plants through its joint venture with NTPC by installing 2x250 MW Units at BSP and 1x250 MW unit at RSP. In fact, NSPCL is conducting feasibility studies for these power projects and has applied for various statutory clearances like Environment Clearance and allocation of coal and water.

In line with the policy framework provided by Electricity Act, 2003 and National Electricity Policy, Electricity regulatory Commissions of various states which mandate all users of captive power generation to either purchase or generate a specified minimum percentage of captive power generated from renewable energy sources (Solar, Bio Mass, Wind, Small Hydro etc), a long term strategy to meet renewable energy purchase obligation has been worked out and options are being evaluated for installing captive power generation based on renewable energy sources.

Partnership with Anglo AmericanThe chairman of Steel Authority of India Ltd (SAIL), C.S. Verma, who is also the chairman of International Coal Ventures Ltd (ICVL), is exploring possibilities of entering into strategic partnership with Anglo American UK, a global leader in the mining industry.

“The strategic partnership opportunity is being explored as part of our strategy to chart global routes for future raw material security,” Verma said.


CORPORATE UPDATE

Verma had a meeting with the CEO of Anglo American Cynthia Carroll on January 12 to identify areas of mutual cooperation in the mining sector, particularly in coking coal, a release by SAIL said. Verma, during the meeting, highlighted the benefits of mutual cooperation between ICVL and Anglo American, and expressed keenness to further their association.

Both the top officials have agreed to set up a joint task force of senior ICVL and Anglo American officials to chart out a definite course of action for implementation.

Continuing with efforts for ensuring raw material security and forging alliances with global entities for tapping new markets, Verma, met a high-level delegation from the United States of America headed by Robert F. McDonnell, Governor of the Commonwealth of Virginia, USA, at Ispat Bhavan in November 2011. The Governor was accompanied by Virginia's Secretary of Commerce & Trade James S. Cheng and State Treasurer Manju S. Ganeriwala. Verma held discussions with the Governor for facilitating acquisition of coking coal assets and companies in the mineral-rich state of Virginia which could become a sustainable source of coking coal for the promoter companies of International Coal Ventures Private Limited (ICVL).

McDonnell assured his support in providing ICVL with requisite geological information and in identification of coking coal assets and mines. He also discussed the possibility of facilitating business between ICVL and small and medium mining companies in Virginia by forming joint ventures,

besides exploring opportunities for greenfield locations. The Governor emphasised upon Virginia's state-of-the-art rail and port infrastructure required to maintain and build a sustainable working relation with ICVL. In order to facilitate Indian investment in Virginia, an office has been opened by the state in Mumbai.

The consortium, which includes Coal India Limited (CIL), NMDC and Rashtriya Ispat Nigam Limited (RINL), is also in talks with the Indonesian government to look at more mines, going beyond the scope of the earlier agreement.

“In Indonesia, we have applied for government-to-government allocation for some other mines, details of which can’t be revealed at this moment due to non-disclosure agreement. As per our existing agreement with that country, we have appointed a consultant to identify mines there and I am sure that within 4-5 months, identification of the mines would be complete,” Verma said.

“On the pattern of Indonesia, we are already in the process of signing agreements with some other governments of Asia, while we are also looking at Australia,” he added.

“It must be understood that ICVL would restrict itself to only three to four coking coal mines. In the past two years, we had participated in at least seven to eight international bids for mines and even emerged front-runners in two deals but as it is with any other global competitive bids, these involve Herculean efforts,” Verma further added.

Prime Minister Manmohan Singh on January 31 presented the MoU Excellence Award in the Mining & Metals category

to Steel Authority of India Limited.The award was received by SAIL chairman

C.S. Verma in the presence of Minister for Heavy Industries & Public Enterprises Praful Patel at a function held at Vigyan Bhawan, organised jointly by Department of Public Enterprises and Standing Conference of Public Enterprises (SCOPE).

On receiving the award, Verma said, “The fact that SAIL has been winning this award year after year stands testimony to our internal strength and our deep-rooted values. The award is an acknowledgement of our efforts, and we shall strive ceaselessly to keep improving and bettering ourselves”.

Starting from 2002-03, it is for the eighth consecutive year that SAIL has won the MoU Excellence Award.

MoU Excellence Award for SAIL


CORPORATE UPDATE

The Rashtriya Ispat Nigam Ltd (RINL), a leading steel manufacturer of India, reported an impressive performance during the third quarter (October-

December) of 2011-12.“The production of hot metal and liquid steel during

the quarter grew by 11 percent and 9 percent respectively, while finished steel and saleable steel production grew at 7 percent each,” RINL said in a release without giving the actual figures.

“The sales turnover during the month of December stood at over `1,500 crore, the best for any December since inception,” the release said, adding, RINL had been registering sales turnover in excess of `1,000 crore consistently since June this year.

It said value added steel constituted 79 percent of the total saleable steel produced in 2011, during which the

turnover grew by 26 percent to `13,675 crore from 2010 levels, the release added. Significant improvement was also achieved in technical parameters such as BF Productivity, Fuel Rate and Specific Energy Consumption, during 2011, it said.

About the progress of their expansion plans, the release said several units of 6.3 million tons per annum (mtpa) expansion have been commissioned and production is set to commence in the next few months. “For the next phase of expansion to 11 mtpa, consultant has been appointed and feasibility report is under finalisation,” it added.

To take the expansion plans a step forward, RINL has signed a memorandum of understanding (MoU) with the Andhra Pradesh government to invest about $8.2 billion for several new projects at its Vizag Steel Plant in the state, according to company sources.

Chief among these is RINL’s proposal to invest $4.85 billion to lift the steelmaking capacity to 11.5 million tons per annum (mtpa), subject to the government allotting captive iron ore supplies. The steelmaker is presently completing expansion to 6.3 mtpa capacity from 3 mtpa previously. Work on subsequent expansion to 11.5 mtpa is envisaged to start next fiscal beginning April.A P Choudhary, CMD, RINL

RINL reports impressive performance in Q3Steel Insights Bureau


CORPORATE UPDATE

Meanwhile, in calendar year 2012, RINL plans to begin installing a converter and a continuous caster, which in addition to modernisation and upgrades to existing units, would lift casting capacity to 7.3 mtpa.

Under the MoU, RINL has also proposed to pursue other projects such as building a steel processing unit, steel service centres, a wire-drawing plant and a transmission tower manufacturing unit.

Accordingly, the board of RINL has given its nod for setting up of a seamless tube mill at an estimated cost of `2,300 crore and installation of a new coke oven battery-5 at an estimated cost of `2,620 crore in its location at Visakhapatnam.

RINL’s integrated commissioning of its current expansion to 6.3 million tons per annum (mtpa) at a cost of `12,300 crore, is in full swing and nearing completion, according to information available with Steel Insights.

As a major initiative of expanding its product mix capacity, RINL is going to set up a Seamless Tube Mill (SLTM) of 400,000 tons per annum capacity. For this, it will adopt the latest tube making technology with state-of-the art automation.

RINL is going to produce seamless tubes of 5.5” to 18” with a provision to produce even less than 5.5” tubes in the existing layout of the plant.

The unique feature of the proposed SLTM is that it has the option to produce above 18” tubes by creating additional facilities in future.

Currently, only up to 14” tubes are being produced in the private sector. Once RINL completes its plan to produce 18” and above seamless tubes, it will become the only steel plant in the country in both public and private sectors to produce such high dia tubes, CMD of RINL, A.P. Choudhary, said in the statement.

The new mill will be completed in 30 months from the date of order placement. The proposed seamless tube mill will cater to the needs of oil exploration & refining, gas,

petrochemicals, power sector, fertilizers as well as engineering industries.

RINL will have the advantage of being shore based to export the seamless tubes to Malaysia, Singapore, Korea etc. The setting up of the tube mill will be either through joint venture with suitable partner or on standalone basis in case the joint venture does not materialise.

RINL will also build a new Coke Oven Battery-5 (COB 5) along with By-Product Plant and its associated facilities to meet its metallurgical coke needs. M N Dastur & Co has already made the detailed project report. The new battery will be 7 metres tall and fully environmental friendly.

The COB-5 is coming up as a standalone battery, comprising the by product plant, coke dry quenching, coal and coke handling plant and phenolic effluent treatment plant.


CORPORATE UPDATE

JSW Steel Limited, part of the energy-to-steel JSW Group, reported a 56 percent drop in its fiscal third quarter net profit from a year earlier, hurt by a significant foreign

exchange loss because of a sharp depreciation in the rupee against the dollar.

Net profit for the October-December period fell to `168.24 crore from ̀ 382.30 crore in the year-earlier period, the company said in an exchange filing. Net sales for the quarter rose 36 percent to `7,589.62 crore from `5,771.42 crore a year earlier. The earnings were below market expectations. Analysts had tipped net profit at `348.5 crore on net sales of `9,258.7 crore.The company reported a foreign exchange loss of `500.11 crore for the quarter, during which the local currency lost 7.7 percent against the dollar.

According to sources, the company is currently operating its main 10-million-ton (mt) Vijayanagar plant in Karnataka at 90 percent capacity and has tied up iron ore supplies for the plant till May. JSW Steel cut its production and sales forecast for the current fiscal year by 14 percent and 13 percent, respectively, late last year, due to shortage of iron ore.

Bengal project Although many new hopes started building up based on JSW Steel’s Bengal project, iron ore linkages have cast a shadow over the company’s proposed 10 million ton (mt) steel plant at Salboni in West Medinipur, according to industry sources.

“The company is facing ore linkage problems. They will have to sort it out with the Centre,” West Bengal commerce and industry minister, Partha Chatterjee, said.

JSW Steel, which has delayed the steel project by more than three years, is now seeking Chief Minister Mamata Banerjee’s intervention. While JSW Steel has been allotted coking and non-coking coal mines in West Bengal, the state has no iron ore

mines. The company had planned to enter into contract with private miners for iron ore fines, but the Odisha government has come down heavily on miners. Moreover, the clampdown in Karnataka has put the Bellary iron ore out of bounds as well.

“We have already invested about `600 crore in West Bengal. We are waiting for some change in policies,” JSW Steel vice chairman and managing director, Sajjan Jindal, who was in the city to attend Bengal Leads, said.

JSW Steel’s Salboni project had run into hurdles in the last six months. The new state government has vested the land directly purchased by JSW Steel with it, since it believed that the company had violated rules under the Land Reforms Act, for not seeking prior exemption under Section 14Y. The Land Reforms Act of 1955 places a ceiling of 25 acres on land acquisition while Section 14Y exempts the ceiling in four cases: mill, factory, workshop and tea gardens.

JSW Steel, which entered into a development agreement with the West Bengal government in 2007, did not have a lease deed till recently. The company got permissible possession of the land from the erstwhile government. However, the company has lately signed a lease agreement for 3,800 acres, which was under the land reforms department. But the agreement with the West Bengal Industrial Development Corporation (WBIDC) for 189 acres, which was scattered across the land, was yet to be signed.

JSW Q3 profit dips 56% Steel Insights Bureau

Rate cut essential: JSW

JSW Steel Limited feels that it is essential to cut policy rates to boost sentiments and revive the investment cycle. “When there is tight liquidity

conditions forcing the banks to borrow `150,000 crore under LAF window, the cut in CRR by 0.5 percent is, however, very timely to provide liquidity in the banking system,” Seshagiri Rao, Jt MD & Group CFO, JSW Steel, said in a statement to Steel Insights.

The Reserve Bank of India (RBI) left interest rates on hold but cut the cash reserve ratio for banks by 50 basis points on January 24, a move that eases tight liquidity in the banking system and underscores a policy shift from fighting inflation to reviving growth.

Jindal Steel profits up over 6%

Jindal Steel & Power Ltd reported a 6.6 percent increase in third-quarter group profit aided by a one-time gain and higher demand for electricity. Net profit rose to `997 crore in the three months ended

December 31 from `935 crore a year earlier, the company said in a statement. Total expenses, including raw material costs, for the quarter jumped 58 percent to `295 crore, the company said. Jindal Steel made an exceptional gain of `25.94 crore in the period, it said. Jindal Steel plans to build a 5-million-ton steel plant and two power plants in Jharkhand. The company, scouting for coal assets overseas to meet requirements for its blast furnace and power plants, will start output at its mine in Mozambique this year.

Production for quarter ended Dec 31, 2011

product Qtr III Growth

(percent)2011-12 2010-11Metallics (DRI & Pig Iron) 7,70,958 7,70,162 0.10Steel Products * 7,56,662 5,81,567 30Pellets 9,38,280 8,01,865 17Power (million KWh) 1,182 916 29

* only slab/round/bloom/beam blank


CORPORATE UPDATE

Essar Steel India Ltd (ESIL), a part of the Essar group, has doubled its steel making capacity to 10 million tons per annum (mtpa) at its plant located in Hazira, Gujarat

making it the largest single location flat steel producer in India and the fourth largest single location flat steel producer globally, ESIL’s Chief Financial Officer Amit Agarwal said.

“In fact, with this expansion, the complex will be able to offer the entire range of flat products from thin strips and thick plates to pipes, cold rolled and coated products,” he said.

This steel plant will play a major role in making Gujarat a global industrial hub catering to the needs of capital and consumable goods, shipbuilding and automobile sector. Being a port-based plant, its strategic location has made it an ideal gateway for meeting the global demand for steel, Agarwal added.

Agarwal said the complex will provide world-class steel to meet the diverse needs of various industries in India, while also making it a national hub for Essar Steel to provide a range of steel products to the rest of the country.

The CFO said Essar has become India’s largest and world’s fourth largest single location flat steel producer next only to Baosteel (18.6 mtpa), Posco (18.1 mtpa) and Riva Group (12.9 mtpa).

“We are not only fourth largest single location flat steel maker, but also the world’s largest hot briquetted iron (HBI)/Director Reduced Iron (DRI) producer with a total production capacity of 7 mtpa,” Agarwal said.

Among Indian steel producers, JSW has a flat steel production capacity of 8.5 mtpa, Tata Steel has 6.1 mtpa, SAIL’s Bhilai Plant has capacity of 5.6 mtpa, while SAIL’s Bokaro plant has flat steel production capacity of 4.6 mtpa, he said.

Global Flat Steel producers: Indian Steel producers

S No. Company (Site)

Capacity (million tons) S No Company

(Site)Capacity

(million tons)

1 Baosteel (Baoshan) 18.6 1 Essar Steel

(Hazira) 10

2 Posco (Gyangyang) 18.1 2 JSW

Vijaynagar) 8.5

3 Riva Group (Taranto) 12.9 3 Tata Steel 6.1

4 Essar Steel (Hazira) 10 4 SAIL (Bhilai) 5.6

5 Nippon Steel (Oita) 9.3 5 SAIL (Bokaro) 4.6

6 NLMK (Lipetsk) 9

7 ArcelorMittal (Tubarao) 7.8

8 US Steel (Gary) 7.7

9 Metinvest (Mariupol) 7.6

10 Usiminas (Cubatao) 7.5

Source: Metal Bulletin and Website

Increased capacity at lower costAgarwal said the company has invested a total of `37,500 crore ($7.5 billion) for putting up 10 mtpa capacity, which comes to only around $750 per ton as against industry average of around $1000 per ton.

Essar Steel now India’s largest flat steel producer at 10 mtpa

Rakesh Dubey

Amit Agarwal, Chief Financial Officer, ESIL


CORPORATE UPDATE

“We have constructed the plant at a total cost of `37,500 crore, including beneficiation and pellet plant, which is much lower than the industry average cost of $1000 per ton of steel making capacity,” Agarwal said.

“Today people talk about construction cost of steel plant at about $1000 for a ton of steel making capacity, but we have been able to achieve this right from beneficiation to pelletisation to iron making to steelmaking to caster to downstream facility like plate mills and pre-coated steel by spending around $700 to $750 per ton,” Agarwal said.

“If you take $1000 per ton steel making plant and put other facilities on top of it, the total cost would come to around $1400 per ton and compare to this what we have spent is around $700 to $750 a ton. We have been able to keep the investment cost at almost 50 percent lower than the prevailing market benchmark,” he added.

He explained that the company achieved the feat as three to four factors went in its favour. Essar Project Ltd was responsible for setting up the plant and it helped to cut down the cost. Also important was the fact that the entire project was completed within the scheduled time frame, he said.

“The main thing that jacks up the cost of a project is time overrun and we have been able to scale it down considerably,” he added. Also, Essar had bought the equipment from all the

major players such as Siemens, Demag etc., but then did some bottlenecking and some right changes in order to increase or enhance the capacity without incurring additional cost, Agarwal said.

The third important thing was that it was able to buy certain numbers of equipment at very attractive prices. For example, it bought an entire set of Corex plant from Daewoo steel at scrap prices and saved a considerable amount of investment.

“These put us in a very competitive situation and ensured that vertically integrated project was completed at a considerably low cost,” Agarwal said.

Lowest labour cost producerAgarwal said not only did it set up production capacity at a much lower investment cost, ESIL is also the world’s second lowest labour cost producer of steel.

“Our labour cost comes to around $8.20 per ton of steel making, which is next only to $5.71 per ton of Baosteel (Baoshan),” Agarwal said, quoting data from CRU and its own analysis of data from select companies.

According to the analysis, Rourkela Steel Plant of Steel Authority of India Ltd (SAIL) has labour cost of $49.31 per ton while Tata Steel (Scunthorpe plant) has labour cost of $44.64 per ton.

“After the expansion of Odisha project of pellet plant of 12 mtpa and once our coke oven project is complete, both in 2012-13, we will be the lowest cost producer of steel. We will be among the lowest 25 percent of steel producers in terms of cost and this will be achieved through raw material securitiation,” he said. “Operational efficiencies, throughput enhancement and asset optimisation will move us further down the cost curve,” he said.

World Steel Producers' Labor Costs*S No Company (Site) Us$ cost per ton

1 Baosteel Baoshan) 5.712 Essar Steel (Hazira) 8.23 POSCO (Gwangyang) 9.224 JSW (Vijaynagar) 11.645 Wuhan Steel (Qingshan) 12.296 MMK (Magnitogorsk) 12.757 China Steel (Kaohsiung) 13.988 ArcelorMittal (Tubaro) 18.79 POSCO (Pohang) 18.7410 Nippon Steel (Kimitsu) 21.85

Tata Steel (Scunthorpe) 44.64SAIL (Rourkela) 49.31

Source: CRU, Internal Company Data, *Select companies analyzed

ConsolidationAfter having successfully operationalised the expanded capacity, Agarwal expressed confidence that they will be able to attain full capacity utilisation during the next 18 months by focusing on consolidation of all the facilities. The Hazira


CORPORATE UPDATE

facility of Essar has 6.8 mtpa DRI modules (6 modules), 1.7 mtpa Blast Furnace, 0.87 x 2 Corex Module 1 and 2.

“We have invested `37,500 crore till now to set up a total steel making capacity of 10 mtpa and now we will have to ramp up all the facilities to ensure that we reach the 10 mtpa capacity, by producing cost effectively, and by making sure that the quality is up to global standards. We also have to ensure that we focus on getting the returns from the investments that we have already made,” Agarwal said. “We have to reach the 10 mtpa production in another one and half years,” he said.

While doing that, it is important to take steps to produce the right quantity and quality for the right market, Agarwal added. He said only time will tell whether this kind of production capacity will far exceed the demand. As of now, the company will focus on consolidation an ensuring its returns on investment.

Asked what prompted Essar Steel to procure blast furnace from Chinese company instead of going ahead with established suppliers, Agarwal said, “We had to look at the overall cost. With an European manufacturer, maybe the ramping up would have been faster, but I must say the Chinese blast furnace is working quite well. It has reached a productivity of 2.5 and is improving.”

Pellet plantThe CFO said ESIL expects to commence commercial production of the first phase of 6 mtpa of its 12-mtpa iron ore beneficiation unit at Dabuna in Odisha and the same capacity

pellet plant at Paradip in Odisha within the next two months.The second phase of the pellet plant is expected to commence in 2012-13, he said.

“We have completed work on around 253 km pipeline from Dabuna to Paradip and both the beneficiation and pellet plants would be operational this month,” Agarwal said.

He said the iron ore will be beneficiated at Dabuna and transported through pipelines to Paradip for pelletisation, which in turn will be taken to their steel plant at Hazira by sea route.

The project has been planned in such a way that it will use low grade iron ore fines from 54 percent to 60 percent Fe content that are unused and not easily consumable, he said.

The company had taken up beneficiation facility at Dabuna, with the intention that we will be able to use low Fe content


material at phenomenally cheaper price of around $10 per ton.With the completion of this new facility, Essar will become India’s largest producer of pellet with combined capacity of 20 mtpa. The company already has a 8 mtpa pellet plant in Vizag for which it gets low grade iron ore from NMDC through long term agreements.

Besides setting up the pellet plants in Odisha and Andhra Pradesh, the company has been allotted a 150 million tons iron ore reserve in Chhattisgarh region and a coal block with estimated reserve of 60 mt in partnership with Hindalco in Madhya Pradesh.

High-end steelAgarwal said ESIL has an agreement with Kobe Steel of Japan for producing high-end auto grade steel in India and they are now looking at entering into a joint venture with Kobe Steel.

“We are working with Kobe Steel as per an agreement, but as far as new projects are concerned like putting up a new facility, we have not yet decided as to when we will launch it,” he said, adding that the key focus is on auto and AHFS grade steel. The CFO said Essar has recently experimented with supply of steel to Nano car of Tata Motors. “The experiments have been successful and we are going for the first commercial test soon for skin panel,” he added.

Asked if they have any plan to produce CRM, Agarwal said that is also a part of the total CRM sanctioned project that they are envisaging together with technical support from Kobe Steel.

“Our focus is to become a preferred automotive grade steel supplier. We have created the access and now we want to run these facilities successfully so that we are ready for the next move,” Agarwal said. “Our larger focus is on consolidation after expanding the steelmaking capacity to 10 mtpa,” he added.

Overseas projectsCommenting on Essar Steel’s overseas projects, Agarwal said Algoma Steel in Canada is an integrated steel plant having BF technology. Algoma has a plate mill as well as beneficiation facility. It is also on the bank of a river, which helps in the navigation of material to and from the plant.

“We had acquired the Algoma facilities in 2007 from a group of shareholders. It was a 2.3-mtpa plant which through debottlenecking as well as revival of idle BF was increased to 4 mtpa. The facility has the capacity to produce coils and there is a separate plate mill as well. We have SMS version as well as Danielli version of what we call is traditional hot strip mill as well as plate mill,” he said.

With that 4 mtpa facility, the company is able to feed the market, which is primarily between Canada and Europe. At one point of time, the Canadian market used to be a major market for automotive grade steel, but

now with big buildings coming up it is again becoming a great consuming centre. Not only this, the proximity of the facility to Detroit and Chicago gives Essar Group the additional opportunity to serve this big market, he said.

“In keeping with Essar Group’s philosophy of complete integration, we acquired Algoma and then we went for acquisition of Minnesota, where we have an iron ore reserve of around 2 billion tons. At the pit itself we are putting up beneficiation and pelletisation facility, which will be completed over a period of two years,” Agarwal said.

In addition, Essar Steel is putting together a 7 million tons steel plant and a coke plant of 5.5 to 5.6 mtpa, he said. He added that as far as the requirement of pellet is concerned, it would be primarily met by Minnesota and the extra pellets will be sold in the local market. Essar Steel Minnesota LLC (ESML), a private resources company engaged in the development and mining of iron ore and part of the Essar Group, has reserves of 1.77 billion tons, with a grading of 31.78 percent total iron.

CORPORATE UPDATE


CORPORATE UPDATE

Essar Projects India Limited (EPIL) on January 18 announced the handing over of the 5 million tons per annum (mtpa) steel plant to Essar Steel Limited.

In a ceremony held at Hazira, A.V. Amarnath, CEO, Minerals & Metals SBU, Essar Projects, handed over the completed project by presenting a symbolic key to Rajiv Bhatnagar, COO, Essar Steel and P. Alagurajan, Chief Projects, Essar Steel. With the completion of this expansion project, Essar Projects has become a leading EPC contractor for the steel industry. It has now an established track record in setting up large integarated steel plants from raw material processing to setting up downstream steel processing facilities like plate mill and pipe mill.

Commenting on the completion of the project, Alwyn Bowden, CEO, Essar Projects said, “This project has reinforced the competence of Essar Projects as the premier EPC contactor with great project management skills backed

with necessary resources and construction capabilities that gives us further confidence to take up mega projects anywhere in the world.’ In order to support the steel plant, Essar Projects has also built associated facilities in Hazira that include a 30-mtpa all-weather port, two power plants with an annual capacity of 1,015 MW, oxygen and lime plants, a fabrication facility and a self-contained township.

This steel plant will play a major role in making Gujarat a global industrial hub catering to the needs of capital and consumable goods, shipbuilding and automobile sector.

Being a port-based plant, its strategic location makes it an ideal gateway for meeting the global demand for steel. Domestically, the complex will provide world-class steel to meet the diverse needs of various industries. The Hazira Steel Complex will also turn into a national hub for Essar Steel to provide a range of steel products to the rest of the country.

Essar Projects completes world’s 4th largeststeel plant in single location

Steel Insights Bureau

Inferred mineral reserves and resources are estimated at 201 million tons (mt), making it a leading iron ore resource party in the North American Basin. "The measured, indicated and inferred resources of nearly 2 billion tons at Essar Steel Minnesota’s iron ore project exceeded our expectations,” he said.

“We are also pleased to learn that 95 percent of the total measured and indicated resources are made up of mineral reserves. We believe that our project contains sufficient reserves and resources not only to increase the planned production of iron ore pellets from 4.1 mt in 2012-13 to 7 mt annually by 2013-14, but also will enable us to evaluate options to further utilize our increased mineral resources ,” Agarwal said

ESML’s project is a taconite iron ore project located at Nashwauk, Minnesota in the western part of the Mesabi Range benefiting from proximity to ports, rail and road connectivity.

All permits for the construction and production of 4.1 mt of iron ore pellets annually have been received. Applications have been filed for a second phase expansion to add an additional 2.9 mt of iron ore pellets production annually, bringing the annual capacity to 7 mt by 2013-14.

Phase one construction of the iron ore mine, crushing facilities, concentrator and pellet plant has already commenced in October 2010. The reserves are sufficient to provide long term raw material security for the company.

“We will become the third largest producer of pellet in the world after completion of existing work in Minnesota and Odisha that will take us to 31 mt and Vale will have 49 mt, 32 mt of Cliffs, and 22 mt of LKAB. Vale has a lot of facility, but a large part of it is shared by ArcelorMittal as they have an equity ownership and as

a result a part of the pellet goes to them. Agarwal said in 2010-11, Essar Group acquired Trinity Coal, USA, which has a reserve of around 150 mt and around 50 percent of the reserves are met coal and the balance 50 percent is non-coking coal.

2010 Volumes and Resources

Capacities Essar Steel posco Tata Steel Severstal Evraz Arcelor

MittalSteelmaking 14 mtpa 35.4 mtpa 23.2 mtpa 18.2 mtpa 15.3 mtpa 98 mtpa

Iron Ore 2 billion tons - 2.0 billion

tons1.6 billion

tons2.9 billion

tons15.5

billion tons

Coal 210 mt720

million tons

480 million

tons

269 million

tons

1291 million

tons

Service centresThe company has set up service centres across the world, including six in India, one each in UAE (350 ktpa) and UK (500 ktpa) and plans to set up service centres in Vietnam and Indonesia (400 ktpa). The primary objective of setting up service centres in India and abroad is to come nearer to consumers. For example, most of the service centres in India are located around main consuming centres which have been divided into seven zones.

India’s steel intensity is very low because consumers do not have the facility to buy even if they have the need and so these services centres are likely to be of immense benefit to the company, Agarwal said. “We will be the second largest in terms of service centre with a capacity of 5 mt next only to Kockner which has a capacity of around 5.3 million tons,” he added.


CORPORATE UPDATE

Vedanta group firm Sesa Goa Limited reported a 35 percent fall in October-December net profit to `692 crore compared to `1,065 crore in the same period last

year, due to higher taxes and losses from currency fluctuations. Revenue in the same period rose to `2,617 crore from `2,250 crore.

The company's net sales increased by 16.3 percent y-o-y mainly due to increased iron ore sales volumes to 5 million tons (+5.4 percent y-o-y) as well as higher realization to $94 (+10.0 percent y-o-y), according to analyst reports.

"Net sales were higher than our estimate of `1,775 crore due to higher-than-expected sales volumes. However, EBITDA declined by 11.8 percent y-o-y to `1,085 crore on account of increased export duty," according to a report by Angel Broking.

The company reported exceptional item of `178 crore related to forex loss during the quarter.

Sesa Goa, along with other mining firms, was impacted after the Supreme Court in July last, ordered a suspension of mining in Karnataka following reports of rampant illegal mining in the state. Most analysts were expecting a drop in volume growth followed by a mining ban in Karnataka.

“The result was below expectation. Going forward, the firm’s performance would depend on clearance of iron ore mining in Karnataka by the Supreme Court,” an analyst at a broking firm told Steel Insights.

“The mining ban in Karnataka and foreign exchange loss impacted our profit for the quarter. Higher export duty on export of iron ore is also impacting profit. Further transportation cost of ore has escalated as mining activities have reduced and truck drivers have increased transportation costs significantly so that their livelihood is not impacted,” P.K. Mukherjee, managing director of Sesa Goa, said.

According to reports, Vedanta group firm Sesa Goa aims to produce about 20 million tons (mt) of iron ore next financial year as the firm is hopeful of the mining ban in Karnataka being lifted soon.

The Supreme Court-appointed committee investigating illegal iron ore mining in Karnataka is tying up loose ends in Bellary district and will be submitting its final report early next month. The court's forest bench is to hear the case again on February 3.

Sesa Goa is expanding its pig iron manufacturing capacity to 625 kilo tons per annum (KTPA) and metallurgical coke capacity to 560 KTPA in Karnataka.

"The decline is mainly on account of the ban on mining operations in Karnataka and planned reduction in inventories.

The ban was imposed by the Supreme Court India on August 26, 2011 and continues to be in force," the Sesa Goa statement said.

In the Q3 of 2011-12 (October-December), the company's iron ore sales stood at 5.04 mt vis-a-vis 4.78 mt of the same quarter of 2010-11. This excludes 4.36 mt of iron ore sales reported by the company from Odisha in Q3 of FY11, as it has exited from mining in the state.

Out of this, Sesa Goa sold 0.64 mt from Karnataka from its existing inventories as there has been a ban on iron ore production from the state, imposed by the Supreme Court on August 26, 2011.

Sesa Goa, along with its subsidiary Sesa Resources has increased its stake in Cairn India to 20 percent. It would pay an interim dividend of `2 per share of `1 each, a company source said.

Iron ore sales volumes of the Vedanta group firm increased 5.4 percent from a year ago to 5.04 mt during October-December 2011.

The company’s iron ore production fell 29 percent from a year ago to 3.33 mt, it said. As on December 31, the company reported total debt of `4,381 crore with cash and cash equivalents of `451 crore, according to industry sources.

Sesa Goa net falls 35% in Q3Steel Insights Bureau

P K Mukherjee, MD, Sesa Goa


CORPORATE UPDATE

ACL gets statutory clearances for Purulia projectSteel Insights Bureau

Adhunik Corporation Ltd (ACL), a part of the Adhunik Group of Industries, has

obtained the necessary statutory clearances for its `7,200-crore integrated steel, power and cement project coming up at Purulia in West Bengal, company sources said.

The project, to be set up near village Dhanara at Raghunathpur Block II, includes a 1.1 million tons per annum (mtpa) integrated steel plant, 1,125 MW power plant and 1 mtpa cement plant, among others. Also, the company has planned to come up with

a 2-mtpa coal washery at the proposed site.

“The project has obtained clearances for environment, water from Panchet reservoir of Damodar, rail traffic clearance and allotment of coal block,” the sources said. Permissive possession for 505.72 acres of land has also been received from West Bengal Industrial Development Corporation (WBIDC), they added.

NMDC Ltd has signed a contract for By Product Plant (BPP) Package for the upcoming 3-million-tons-per-annum (mtpa) integrated steel plant at Nagarnar,

with the consortium lead by M/s. Shriram EPC Ltd (SEPC). The total cost of the package is `509 crore, NMDC said

in a statement. The BPP unit is an important installation in integrated steel making, which processes valuable raw Coke Oven gas from coke ovens to yield by products like TAR, Naphthalene and Sulphur besides clean coke oven gas used in the fuel gas network of the Integrated Steel Plant.

In fact, the company has incorporated a Special Purpose Vehicle (SPV) company by the name of NMDC Power Ltd on December 12, 2011 for the purpose of setting up a power plant for captive power supply to the 3-mtpa integrated steel plant being constructed at Nagarnar.

The company is presently a wholly owned subsidiary of NMDC and by virtue of Section 617 of the Companies Act, 1956; it is also a Government Company, NMDC said in a statement. The Certificate of Commencement of Business was issued on December 29, 2011, the statement added.

Meanwhile, the company fresh from acquisition of controlling stake in Legacy iron ore in Australia, NMDC Ltd, the country’s major miner, is all set to use the huge cash pile of Rs 18,000 crore it is currently sitting on for overseas buys of iron ore and coking coal assets.

The public sector undertaking has firmed up plans for a capital expenditure of about Rs 30,000 crore during the XI Plan period, which would include developing existing mines, taking up new ones and for establishing steel and other value-added product plants.

NMDC signs contract for steel plantSteel Insights Bureau


FEATURE

Spot iron ore prices firmed up in January despite a slow steel market in China spurring caution among buyers of the raw material. Australian Pilbara iron ore fines were

offered in China at $141-143 per ton cfr and Newman fines quoted at $144-146 per ton, according to sources.

There have been inquiries, but the deals have been few as prices are a bit high. Therefore some mills are choosing to wait before buying, sources said. A weak outlook for steel demand in top consumer China has trimmed appetite for iron ore, which has gained a modest 3 percent in the first month of 2012 after falling 19 percent in 2011.

Offers for Indian iron ore fines with 62 percent iron content were around $143 per ton, while that for 63.5 percent Fe content stood at $147-149 per ton cfr. According to sources, the Chinese steel market is still slow, despite some tentative price increases for some products, and mills say they are reluctant to pay current levels for spot ore.

Still, miners are confident that China’s long-term demand for iron ore will remain robust as the country will continue to invest heavily in infrastructure and housing, with the big producers continuing to invest to boost shipments to China.

BHP Billiton, the world’s third-biggest iron ore miner, recently said it will spend a further $779 million to expand its Australian iron ore business by constructing a new outer harbor port and shipping facilities on the Indian Ocean.

BHP Billiton said the expansion will increase its annual shipments from Australia’s Port Hedland by 100 mt. Brazil’s Vale also said its plan to expand the world’s fleet of very large ore carriers nearly five-fold has not changed since China banned the mega vessels in local waters to protect its shipping industry. China’s Trade Ministry recently banned Vale’s giant vessels from its ports in a bid to protect its own shipping industry.

Freight ratesMeanwhile, freight rates hit a record low in January on weak demand for iron ore, poor weather conditions in mining regions and a glut of shipping capacity.

But unlike three years ago, this slump reflects more

than a sluggish global economy. A conflation of seasonal, environmental and demand-side factors has accelerated the index’s decline in recent months and could tip it further into the red. The index has plunged 59 percent this year alone and is down 94 percent from the peak hit just before the crisis hit.

Analysts and industry players expect the glut in shipping capacity to last for several years given that vessels often operate for around 25 years. But increased scrapping and the possibility that unprofitable shipping firms could be forced out of business should eventually lend some stability to prices, they say.

Other, more recent factors, have aggravated the situation. Unusually heavy rains in Brazil prompted mining giant Vale, which produces around 25 percent of the world’s iron ore, to invoke a clause known as “force majeure” on January 11 in some contracts to free itself from penalties on delayed shipments of ore, which is primarily used to make steel. That was lifted on January 23, and mining and transportation resumed.

In addition, demand for iron ore in China, which consumes more than half of the world’s iron-ore output, has been waning in recent months; inventories at Chinese ports are near record levels. China’s crude-steel output grew 8.9 percent in 2011 to 695.5 million tons, but growth should slow to 5 percent this year as Beijing’s efforts to cool the economy continue to bite, according to market estimates.

Chambers oppose canalisation Meanwhile, in India, even as the mining industry and chambers of commerce have opposed the Union commerce ministry’s proposal to partially canalise iron ore exports, the move is likely to come before the Cabinet for discussion next month. According to reports, the ministry is waiting for elections to conclude in five states, including Goa, which contributes a large chunk of India’s low-grade iron ore exports.

The Cabinet is likely to discuss the issue of canalisation of high-grade iron ore (above 55 percent ferrous content) before the budget session, reports said.

In December, the commerce ministry floated a Cabinet

Iron ore prices firm up in JanuarySteel Insights Bureau


FEATURE

note favoring canalisation of high-grade ore through state-owned Minerals and Metals Trading Ltd (MMTC). It left ore below 55-Fe grade under Open General Licence, with the aim of curbing illegal mining. The move comes after the M B Shah commission of inquiry recommended a total ban on export of iron ore.

The Cabinet note says export of ore with over 55 percent ferrous content be canalised through MMTC, which is to get one percent of the value as commission. The ministry’s proposal has been severely criticised by various sections of the iron and steel industry. While mining companies and non-government organisations have termed the step retrograde and disastrous, steel companies have opposed only partial canalisation. “Leaving out low-grade iron ore from canalisation would give an undue advantage to miners from Goa, who mainly export low grade iron ore,” steel industry sources said.

India currently exports about 100 million tons (mt) of iron ore annually. Of this, Goa contributes a little over half. In 2010-11, Goa exported 54 mt, of which 40 mt were of 55 percent Fe grade and less. “Partial canalisation is retrograde and will not curb illegal mining. In fact, it will indirectly further aggravate corruption, as there are high chances of under-invoicing and diluted declaration to avoid canalisation,” industry sources said.

The Federation of Indian Mineral Industries (Fimi), apex body of the mining industry, has strongly opposed the move. They say the time and money they’ve put into cultivating the export market would go waste. In a representation, it said, “In the international trade, even MMTC will have to sell its iron ore through other trading houses to steel mills in China, as they do in the case of Japanese steel mills. MMTC sometimes also sell to its own trading houses based in Singapore, the rationale for which is not well understood. Indian mine owners have over time developed the skill to extract the maximum price and also export through these. Recanalisation of iron ore in this manner will not give the country mileage.”

Fimi says mining companies which have cultivated the export market with a lot of expenditure of time and money should be allowed to continue directly.

Steel industry officials said at a time when the Indian steel industry is rapidly expanding capacity, there is need to preserve ore for domestic mills and avoid export of raw material.

“In future, we may have to import steel in big quantities. Instead of canalising export of high-grade iron ore and importing finished steel products, it would be better for the country to totally stop export of ore and export finished steel products,” said industry executives.

Export duty hike Effective December 30, 2011, the ministry of commerce had raised the export duty on iron ore fines and lumps to 30 percent from the existing 20 percent. With 20 percent duty, export had declined 28 percent in the first eight months of the current financial year.

However, this move to discourage export would help the domestic steel industry, which was finding difficult to get the ore it required due to the mining ban in Karnataka’s Bellary district, analysts feel.

India exported around 40 mt of iron ore in April-November of 2011-12. Overall exports are expected to decline 50 percent this year from the 97.6 mt of last year. Total iron ore production was 212.6 mt in 2010-11 and India exported around 97.6 mt during the financial year.

The proportion of lumps in iron ore produced has come down from 43 percent in 1995-96 to 39 percent in 2010-11, whereas the proportion of fines has increased from 47 to 61 percent (including concentrates) in the same period. Deeper mining means higher generation of fines. It is 70-75 percent in India. Unless fines are evacuated from the mines, the production of lumps cannot be maintained or increased to feed the domestic steel industry, according to iron ore exporters. The reduction/stoppage of export of fines by increasing the export duty would, therefore, also affect the availability of lumps to the domestic market, hitting the domestic steel industry, according to some people.

According to top officials at steel companies, the increase in export duty is expected to boost supply of iron ore to the domestic steel industry, (perhaps) at lower prices.

MAJOR FACTS ABOuT IRON ORE

PRODuCTION ♦ India produced 212.6 mt of iron ore in 2010-11 ♦ India exported 97.6 mt in 2010-11 ♦ There are about 500 mines in the country, half of

which are operational ♦ These are held by about 80 companies ♦ High-grade ore with 62-65 percent iron is

produced mainly in the east and south ♦ Low-grade ore with 50-60 percent iron is

produced in the west and south ♦ The largest mining firm is state-run NMDC,

which produces about 29 mt annually

EXPORTS (box) ♦ India is the world’s third-largest exporter after

Australia and Brazil ♦ Goa is India’s biggest exporter ♦ China is India’s biggest buyer ♦ India sells the bulk of its iron ore via the spot

market ♦ The largest exporting company is Sesa Goa ♦ Other large producer/exporters are Essel

Mining, Rungta Mines, V.M. Salgaocar, MSPL and Chowgule

♦ Miners in Goa have lower costs as mines are located near the port, and so avoid road and rail charges

Source: FIMI, industry members and Ministry of Mines


FEATURE

The recent hike in ferrous scrap prices showed a softening trend in major international markets during the month of January. The slowdown followed a steady increase

in prices since late November. Import prices in India showed a mixed trend, governed by currency movements and global economic uncertainties.

Going forward, scrap price movements in India would depend largely on finished steel demand and overseas cues, market sources said.

After a steep rise in December and early January, scrap import prices in India eased by around $10 per ton cfr Nhava Sheva late last month.

HMS 1&2 (80:20) prices were quoted at around $445-460 per ton cfr as of January 31, compared to $455-465 per ton cfr a month ago. Shredded scrap prices too showed marginal drop after a sharp increase in the previous month.

However, domestic ferrous scrap prices remained largely firm as buyers held their purchases in anticipation of correction in prices. HMS (80:20) in Mandi Gobindgarh hovered around `26,000-27,000 per ton.

Suppliers kept their prices unchanged despite a correction in ingot prices. In contrast, uncertainties in the Indian steel market and weak Rupee against Dollar kept some Indian scrap importers away from the market.

Elsewhere, scrap import prices dipped in Turkey during the month. Turkish steel mills had already restocked their yards and availability of cheaper material from the US East Coast led to an easing in offer prices.

Besides, the weakness in semi finished steel market affected sentiment. Import prices for HMS 1&2 (80:20) were quoted at around $435-445 per ton cfr main Turkish port, compared to $455-470 per ton a month ago. Earlier, scrap import prices moved up by around $15-20 per ton cfr during December.

Scrap prices also showed a softening trend in southern European markets. Prices were down in Spain, UK and Italy, among others.

According to market reports, scrap prices in domestic markets in Europe may slide further in February. However, export prices for HMS 1&2 (80:20) from Rotterdam showed an increase to around $415-425 per ton in January from $395-410 per ton in December.

The market sentiment was down in some east Asian markets. Prices dropped slightly in Taiwan on weak rebar demand. Japanese export prices to Korea dropped by around $10 per ton during the second half of January.

Despite the slowdown in price movements late January, market sources expected the overall market sentiment to remain buoyant in February.

Scrap import prices soften in JanSteel Insights Bureau


FEATURE

Premium hard coking coal prices remained flat in January, but that of mid vol firmed up even as prices of low vol., PCI coal and semi soft varieties slipped further on lower

offers from both India and China, industry sources told Steel Insights. Thin liquidity marked the global trade. Premium Low Vol prices was quoted at around $218 per ton as on January 26 as compared to quoted price of $220 a ton on December 30, 2011. HCC 64 Mid Vol, however, rose by $6 per ton to $200 per ton FOB from $194 per ton on December 30.

As for Indian demand, although there was clearly some interest, not many transactions actually took place. Traders described the marginal increase in Indian interest as a “blip,” and predicted that attractive US offers may fill some of that appetite. US mid-to-high-vol blends well with 27-29 percent VM Australian coal.

US coking coal with below 1 percent sulfur, 9-10 percent ash were heard offered to India at around $215 per ton CFR.

The low demand from India was attributed to a scarcity of iron ore facing the steel sector. The Indian steel plants are still reeling under a shortage of iron ore and have reduced its coal consumption substantially.

The depreciation of rupee against the US dollar by almost 20 percent between October and December 2011 had also pushed up import prices resulting in lesser imports of the steel making raw material. Big steel companies were hurt the most as a large part of their coking coal requirement is met through imports. In 2010-11, domestic steelmakers imported close to 28 mt of the raw material.

However, following some appreciation of the Indian currency since the beginning of 2012, imports may look up in near future. The Indian currency, which slid to over `53 per US dollar, was trading at `49.75 per US dollar on January 31.

The depreciation of the rupee had offset advantage

companies may have gained due to softening of coking coal prices in the third quarter (October-December), industry experts said. Adding to this, the lower demand for finished steel products had forced steel mills to roll over prevailing prices. This in turn has forced them to curtail capacity utilisation levels to let ends meet, resulting in lesser demand for coking coal.

However, Indian steel makers have managed to hike prices in January following slightly better demand to offset the impact of higher raw material cost and it is expected that demand would continue to remain up that would lead to higher capacity utilisation and consequent higher demand for coking coal. Despite expectation of a revival in Indian steel demand, market experts believe that coking coal prices may not firm up due to comparatively lower demand from Chinese steel makers.

Traders felt that Indian market has stabilised, but buyers of coking are unlikely to consider buying spot cargos above the January-March quarter benchmark price of $235 per ton for top-quality material. Meanwhile, met coke import prices rose in January owing to some rebound in demand from steel mills.

However, till now the mills in India are faced with iron ore shortage owing to the mining ban in three districts of Karnataka and operating at lower capacity, sources said.

According to information available with Steel Insights, import of met coke through three major ports (Kolkata, Paradip and Mormugao) of India fell to around 40,225 tons in December compared with 103,462 tons (Kolkata, Paradip and Vizag) in November 2011 and the trend remained almost unchanged in January 2012 as well.

The prices of imported met coke were hovering around $385 per ton as on January 27, as compared to $363 per ton at the beginning of January. The domestic prices of coke hovered around `19,000 per ton. India’s met coke demand, which is currently estimated at 33 million tons per annum (mtpa) domestically, is expected to shoot up to 58 mtpa in the next five years, as steel makers increase capacity, according to industry estimates.

Spot coking coal prices flat in January Steel Insights Bureau

AuSTRALIAN COKING COAL PRICES

Coking Coal Price Trends (in $/ton)

Date

HCC peak

Down fob Australia ($/Ton)

premium hard coking coal prices (premium

low vol) fob Australia ($/

ton)

HCC 64 Mid vol fob

Australia ($/Ton)

Low vol pCI fob

Australia ($/Ton)

Semi soft coking

coal rates fob Australia

($/ton)

Met coke price cfr India (($/

ton)

3-Jan 221 219 195 153 150 3635-Jan 221 219 196 153 150 3626-Jan 221 219 196 153 150 3629-Jan 222 220 198 153 149 36210-Jan 222 220 198 154 148 37512-Jan 222 220 198 154 148 37513-Jan 221 220 198 154 148 37318-Jan 222 220 201 150 144 38520-Jan 220 219 200 150 142 38526-Jan 220 218 200 150 142 386


FEATURE

The ferro alloys market showed sluggish movement in prices in January due to lukewarm demand from steel mills. Except for ferro-chrome, all other segments

showed either stable or negative movement, much in line with the trend witnessed in November. The lack of demand for steel products, both in domestic and international markets, and the iron ore shortage continued to plague ferro alloys procurement by the domestic steel industry.

The ferro-chrome segment showed some upward movement over the first half of the month due to power price increase and slightly tight supply in the spot market. Market sources said that the demand for high carbon ferrochrome seems to be much better than before and most suppliers are increasing their offers. The price has gone up slightly due to production costs increase, but it seems that most foreign buyers regret the high offers.

In the domestic market, ferro-chrome (high carbon 60% min) moved up to `67.5/kg (basic) in the third week, up by `66.5/kg from the first week of the month. According to experts, the higher input costs, primarily of thermal coal, continued to put pressure. Going forward, the ferro chrome prices are expected rise in the short to medium-term as the Euro zone economies are likely to move toward stability, while economic activity in other countries is likely to improve.

The ferro-molybdenum market across the country remained stable with a positive bias over the first half of the month. The ferro-molybdenum (60% min) is steady at `1,105/kg (basic) since January 6, after a slight increase from `1,095/kg (basic) on January 5. Some semblance of stability in the Rupee against the US Dollar brought in stability in the market. Some suppliers are upbeat, as there is not much material in the spot market.

Meanwhile, some Asian steelmakers are looking at switching to term contracts of between three months on growing tightness in the spot market. Spot supply in Asia

has fallen as some Chinese traders are focusing more on the domestic market. However, the future of the long-term contracts is still uncertain as buyers are interested in buying at competitive prices.

The domestic market for ferro-manganese witnessed a fall over the first fortnight of the month. Demand for the material remained subdued and the prices dropped by `1/kg in the first week to prevail at `47/kg (basic). However, with the turn of the second half of the month, there have been some positive movements in the domestic ferro-manganese market with a slight rebound in demand. Currently, the price for high carbon ferro-manganese is hovering around `48-50/kg ex works.

The market for ferro-silicon has remained quiet across the country over the last one month with prices remaining sticky. Ferro-silicon (60/14) prices hovered around `61/kg (basic). The domestic ferro-silicon market remained slow as most producers offer was stable while the sales were not good. The transaction levels were thus sluggish. Although Chinese ferro-silicon market is on a slightly upward trend, the market feels that at the domestic front a downward trend is likely for some more time due to the slow market and high stocks level.

Domestic silico-manganese also started off on a sluggish note in the month of January. The prices showed a downward movement on the back of slow demand scenario. The silico-manganese (60/14) across the country dropped in the opening week by around `1/kg to `47/kg (basic). Owing to the global economic conditions, the market is sluggish at present.

Further, the market is unlikely to see much change before the Spring Festival; thus the transaction activities were sluggish. However, the supply of silico-manganese of Indian origin has tightened in the past two weeks due to output cuts in the second half of last year. Most Indian producers have sold out January cargoes and some of them have sold out February cargoes as well. The spot silico-manganese prices are likely to rise in the coming weeks on tightening Indian supply.

Ferro alloys show sluggish movement Steel Insights Bureau


FEATURE

The sponge iron sector in India, which had been struggling to survive since the last few months, continues to face the adversities with raw materials getting dearer

and their availability becoming even tougher. With survival threats becoming stronger, the industry is resorting to slashing production.

Things seem to be getting worse despite a number of meetings in recent times over the issues, an industry source informed. Coal, one of the essential raw materials, is becoming increasingly difficult to obtain as Coal India Ltd (CIL) has been supplying far below the required amount. Availability issues, coupled with price hikes, have toughened the situation.

At a juncture when higher prices of imported coal has almost pushed it beyond the reach of medium to small sized sponge iron makers, domestic coal price hike has worsened the situation further. CIL’s recent decision to roll back the prices has, however, eased the situation to a certain extent although the other problems remain unresolved, the source said. Apart from coal, iron ore availability is also an issue as low availability has caused prices to shoot up, he added.

“We mainly procure iron ore from the Odisha region. But at present, only nine mines in the Keonjhar area of Odisha are operating while no mining is being done in the other mines,” a West Bengal based sponge iron maker complained.

“However, recently the cabinet is taking a few decisions to ease the availability of iron ore by opening up more mines which might solve the problem to some an extent. But, this might come into effect only after April,” he added.

Sinking demand Infrastructural development has taken a backseat although the monsoons are over, and that has proved to be another dampener for the industry as it has failed to push up demand unlike other years. Any major change in demand conditions is also dim in the near future, industry experts told Steel Insights.

Raw materials and inadequate demand are also sounding the death knell of the sponge iron industry in West Bengal, S. Bhattacharjee, Secretary of West Bengal Sponge Iron Manufacturers’ Association (WBSIMA), told Steel Insights. In the state, the industry is operating at only 30-35 percent of the total installed capacity of 13,400 tons per day, he said.

“Availability of raw materials is worsening with iron ore availability becoming poorer with each passing day,” he added. Echoing his views, a senior official of Jai Balaji group, one of the leading direct reduced iron (DRI) manufacturers of the country said, that the current sponge iron market in India is absolutely dull with demand showing hardly any growth over the last few months. A Raipur based sponge iron manufacturer also felt the same.

Dearth of new projects alongside skyrocketing input costs are dampening the sponge iron industry. With CIL deciding on a price rollback and certain policy decisions on the cards to improve iron ore supplies to the sector, the sponge iron makers are keeping their fingers crossed. However, right now, the struggle for existence continues.

Sponge iron sector slashing productionto combat adversities

Sanjukta Ganguly


FEATURE

In a bid to increase steel consumption in rural India, the Institute for Steel Development and Growth

(INSDAG) has launched an initiative to help local entrepreneurs set up small and micro fabrication units in rural areas.

At the launch of the project in Kolkata on February 2, INSDAG director general Sushim Banerjee signed agreements with 12 potential entrepreneurs who have planned to set up units in various districts of West Bengal. The project would be taken up in other states subsequently.

“Initially, we have set an annual target of 50 new units per year. However, the future investments will depend on the success of the projects being taken up currently,” Banerjee said.

The initiative will be assisted by the Market Development Fund of the Centre, which would offer 25 percent subsidy on capital cost. While the investment requirement for a full-fledged micro unit is around `25 lakh, the first 12 units coming up in the state have earmarked an average capital outlay of `7-8 lakh, Banerjee informed. “They will grow in size and investments as the demand and operations grow,” he said.

INSDAG has planned to start with West Bengal and Bihar before taking the initiative to other states such as Gujarat and south Indian states.

“Each of these units is expected to consume at least 15-20 tons of steel per month or around 240 tons of steel every year. If the project tastes success, steel consumption in rural areas would rise manifold,” he said.

‘Steel Village’ in Bengal?In a similar initiative, INSDAG is looking forward to setting up a ‘Steel Village’ in West Bengal. The project, which may be modelled after the ‘Steel Village’ in Vizag in Andhra Pradesh, would comprise prefabricated houses designed by INSDAG.

“The Vizag project has been a grand success. We would like to replicate it in West Bengal. However, for this we will need some companies to come forward as sponsors of the project,” Banerjee said.

He said, INSDAG would like to join hands with steel companies like SAIL and Tata Steel to take up such a project in the state.

“The initial cost for a steel house is slightly higher as compared to traditional constructions, but the former has major advantages in terms of faster installation and almost zero maintenance,” he noted.

Meanwhile, INSDAG is talking with other steel majors such as Essar and Jindal to take up its entrepreneurial development initiative in western and southern Indian states, respectively.

“Essar has its plants in Gujarat and wants us to do something there. Jindal, on the other hand, has presence in south and could help us by providing steel to the potential entrepreneurs in that region,” Banerjee added.

Steel consumptionIndia’s steel consumption, INSDAG estimates, is likely to grow by around 6 percent in 2011-12. This is a marginal improvement over 4-5 percent growth forecast earlier. However, the 6 percent growth rate will still fall below the targeted rate of 8-10 percent.

According to steel ministry data, steel consumption grew by 4.2 percent to 45.20 million tons (mt) during April-November 2011.

Commenting on the domestic steel market scenario, Banerjee said the demand growth is expected to improve significantly in the next five years and may reach double digit depending on the economic performance of the country.

Referring to INSDAG’s new initiatives to promote steel consumption in rural areas, Banerjee said, “If steel fabrication activity picks up due to this campaign, we can look forward to even 20 percent growth in consumption a few years from now.”

Overall, India has a per capita steel consumption of 30 kg, much lower than the world average of 140 kg. “As a result, there is ample scope for growth and the long term prospects remain bright,” he added.

INSDAG launches drive to set up fabrication units in rural India

Arindam Bandyopadhyay


FEATURE

After a dismal performance in recent months, the Indian automobile sector looks all set to return to the high growth path in 2012-

13. The industry has reported back-to-back sales growth in the three months to January 2012 after a decline in four consecutive months. Apex industry body Society of Indian Automobile Manufacturers (SIAM), which has forecasted a near-zero growth for the current fiscal year, now offers a double-digit growth for FY13.

This is in line with analysts’ views that forecast a reversal of the slowing trend in the new year. According to a recent report by consulting and research firm Deloitte, car sales in India are likely to bounce back in 2012.

The major factors behind the renewed growth would be the moderation of inflation and expected decline in interest rates as well as an overall improvement in domestic economic conditions, the analysts said. The high fuel prices, however, continue to remain a concern.

A contrarian view is being expressed by some industry players, who have forecast a not so bright picture. The recent spurt in sales during November-January, they said, could be shortlived. If the global economic woes persist, the performance of the Indian auto sector may remain subdued in near future.

Dec-Jan sales upMeanwhile, domestic car sales accelerated for the third straight month in January. The revival was led by the big four carmakers – Maruti Suzuki, Hyundai, Tata Motors and Mahindra & Mahindra – which together constitute 80 percent of the passenger car sales in the country.

Maruti Suzuki, India’s largest carmaker, has posted its first rise in eight months. Hyundai, Tata Motors and Toyota, too have posted good figures indicating that sales in the next fiscal year could be robust.

SIAM was yet to release figures for January, but data showed that car sales were up 8.5 percent in December, the second consecutive monthly rise. Indian automakers sold 159,325 cars in December. Total sales for the calendar year rose an annual 4.2 percent to 1.95 million vehicles, SIAM said. Sales of trucks and buses, a key pointer to the country's economic activity, rose 14.5 percent in December from a year previous to 72,192 vehicles, it said.

Earlier, demand for cars in India shrank in July for the first time in nearly three years. Sales continued to fall for four consecutive months due to high interest rates and rising costs.

Indian auto sector may returnto growth path in FY13



FEATURE

Maruti sales Maruti Suzuki India Limited has sold a total of 115,433 vehicles (including 14,386 units for export) in January 2012, recording a rise of 5.2 percent in sales from 109,743 vehicles sold during the corresponding month of the previous year, the company said in a statement.

However, Maruti Suzuki India’s export surged by 54.3 percent percent in January 2012 to 14,386 units from 9,321 units in the year-ago period, the company statement said.

On a year-on-year basis, during the first ten months (April-January) of the current financial year, the company’s total auto sales dropped by 14.3 percent and stood at 888,794 as compared to 1,037,408 vehicles sold during the corresponding period of 2010-11.

Tata Motors Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles in January 2012 stood at 80,382 vehicles, up by 16 percent over the number of vehicles sold in January 2011.

The company's sales of commercial vehicles in January

2012 in the domestic market were 45,713 recording a growth of 14 percent as compared to 40,263 vehicles sold in January last year.

However, cumulative sales of commercial vehicles in the domestic market for the fiscal are 420,045, a growth of 18 percent over last year.

The company's sales from exports stood at 7,083 vehicles in January 2012, up by 43 percent as compared to 4,948 vehicles in January 2011.

The cumulative sales from exports for the fiscal stood at 52,296, higher by 10 percent over 47,608 in the same period last year.

M&M Jan sales Mahindra & Mahindra Limited (M&M Ltd), a part of the Mahindra Group, recorded a 22 percent increase in auto sales during the month of January 2012, which stood at 44,717 against 36,718 units sold during January 2011, the company said in a statement.

The company’s domestic sales stood at 41,369 units during December 2011, up 20 percent as against 34,601 units sold during December 2010.

Exports have grown by an impressive 95 percent at 3,348 units while the 4-wheeler commercial segment which includes the passenger and load categories has registered a growth of 35 percent at 13,725 units, the statement said.

“We are happy to achieve all time high sales of 44,717 units and a strong growth of 22 percent. Thanks to the good performance of all our brands. The XUV500 continues to create excitement in the market and the second round of bookings has evoked an overwhelming response,” said Arun Malhotra, Senior VP, Sales & Customer Care, Automotive Division, Mahindra & Mahindra Ltd.


In line with the changing industry scenario, a new National Steel Policy will be unveiled by the end of fiscal year ending 2011-12 (FY12) replacing the existing framework

announced in November, 2005, steel ministry officials said. The updated National Steel Policy has been necessitated by the changed dynamics of the sector, they added.

The Policy of 2005 had projected country's steel consumption to grow at 7 percent based on a 7-7.5 percent GDP growth rate and production of 110 million tons (mt) by 2019-20.

However, these estimates are likely to be largely exceeded by the said timeline. In fact, the ministry is now estimating that crude steel production capacity in the country will be nearly 110 mt in next two to three years.

In order to expedite the process, the government has set up a committee headed by the Steel Secretary for monitoring the progress on formulation of the new National Steel Policy. Four task forces have been constituted to study, analyse, consult and formulate draft policy documents on different aspects of the policy.

An official statement issued recently said these task forces were currently engaged in consultations with various industry stakeholders and experts to identify relevant issues and come up with appropriate policy prescriptions.

“A final view on the new National Steel Policy will be taken on receipt of reports of these task forces and after discussions with the various stakeholders in the matter,” the statement said.

Earlier, Steel Secretary P.K. Mishra said last year that the

government will come out with a New Steel Policy by the year-end and that the new national policy and vision document on the steel sector will project a medium term horizon of 10 years and also a long-term vision of 25 years.

Industry sources said the formulation of a new policy would help address the new challenges facing the sector and should throw light on crucial issues like raw material security and expansion hurdles.

Import duty Industry body Assocham has called for raising import duty on steel products from the prevailing 5 percent to a minimum of 10 percent, so that domestic manufacturers can withstand growing imports from China and CIS countries.

The challenging global environment is bringing fierce competitive pressures on performance and price reduction. “The oversupply in international markets is forcing China and the Commonwealth of Independent States (CIS) to dump their steel products like hot rolled coils, cold rolled coils and other coated products into growing markets like India,” said secretary general D.S. Rawat.

As a result, the Indian steel industry has reduced production and is running at lower capacity utilisation, he said. After China, US and Europe, the country ranks as the fourth largest steel producer with annual production capacity of 68 mt. By 2020, the figure is likely to go up to 200 mt.

China and CIS countries posses huge coking coal and iron ore resources which give them cost competitiveness while India depends on imports for its requirements. In the past one year, coking coal prices have increased by more than 100 percent and put additional burden on steel manufacturers.

Nearly 50 percent of the steel manufacturing cost is on account of coking coal and 20 percent on iron ore.

“Most importing nations protect their domestic producers by imposition of a marginally higher import duty while encouraging exports by offering various incentives,” said Rawat. “China, for example, provides export incentives of nine percent on steel products,” he said.

Raising import duty to a minimum of 10 percent will encourage the growth of domestic steel industry and ensure that the Indian growth story is kept intact, he said in a pre-Budget memorandum to the ministries of finance and steel.

In the next two years, steel making capacity is set to expand by 15 to 20 mt for meeting growth in demand of high-end consumer products like cars, refrigerators and washing machines, he added.

FEATURE

New steel policy likely by fiscal endSteel Insights Bureau

Beni Prasad Verma, Steel Minister, GoI


FEATURE

India maintained its position as the world’s fourth largest steel producer in 2011, despite a moderate 5.7 percent

output growth as against the world average of 6.8 percent, the World Steel Association (WSA) said in its latest report on the global steel sector. WSA is the world's largest steel industry association and its members produce around 85 percent of the global output.

According to the report, global steel production hit a record 1,527 million tons (mt) in 2011, recording an increase of 6.8 percent over 2010. India produced 72.2 mt steel in 2011 against 68.3 mt a year ago.

China reigns supremeAs in the previous years, China contributed the highest to the global steel production at 695.5 mt in 2011 over 638.7 mt in 2010. China's supremacy in the sector is unlikely to go in foreseeable future as the world's second largest maker, Japan, produced 107.6 mt in 2011, it said. Production in Japan, the second largest producer, has come down from 109.6 mt in 2010.

Third in the order was the US, with output going up by 7.1 percent to 86.2 mt in 2011 over 80.5 mt in the previous year, the WSA data showed.

Russia, ranked fifth, produced 68.7 mt steel in 2011 against 66.9 mt in 2010, recording 2.7 percent production growth year-on-year.

South Korea was a close sixth at 68.5 mt of production in 2011. However, the growth in steel output in the country was the highest among the top-10 producing nations at 16.2 percent. South Korea produced 58.9 mt steel in 2010.

Turkey registered the highest growth rate in 2011 at 17 percent to produce 34.1 mt steel against 29.1 mt in the previous year. The country ranked tenth in terms of total production in 2011. The seventh, eighth and ninth positions were held by Germany, Ukraine and Brazil, respectively, it added.

Region-wise break-upThe region-wise break-up shows the annual production for Asia was 988.2 mt in 2011, an increase of 7.9 percent compared to 2010. The region’s share of world steel production increased slightly from 64.0 percent in 2010 to 64.7 percent in 2011. The

EU recorded an increase of 2.8 percent compared to 2010, producing 177.4 mt of crude steel in 2011.

In 2011, crude steel production in North America was 118.9 mt, an increase of 6.8 percent on 2010. The CIS showed an increase of 4.0 percent in 2011, producing 112.6 mt of crude steel. Annual crude steel production for South America was 48.4 mt in 2011, an increase of 10.2 percent on 2010.

Top 10 steel-producing countries

Rank Country 2011 2010 %2011/2010

1 China 695.5 638.7 8.9

2 Japan 107.6 109.6 -1.8

3 United States 86.2 80.5 7.1

4 India 72.2 68.3 5.7

5 Russia 68.7 66.9 2.7

6 South Korea 68.5 58.9 16.2

7 Germany 44.3 43.8 1.0

8 Ukraine 35.3 33.4 5.7

9 Brazil 35.2 32.9 6.8

10 Turkey 34.1 29.1 17.0

Source: WSA

India 4th largest steel producerin 2011: WSA


Source: WSA

World steel capacity utilisation ratio


sOCIAL bUzz

The Indian steel industry, and particularly the non-integrated steel companies, may witness a massive change from the prevailing depressed scenario from

February-March onwards, leading steel makers and experts said.

In a recent discussion mooted by India Steel Market Watch (ISMW) on LinkedIn, industry sources said the increase in export duty on iron ore, reversal in rising interest rate regime, and an expected industry friendly budget would help jack up steel demand in the country.

“It was just a matter of time that the government started listening to the woes of the steel makers after it was completely pushed to the wall following higher interest, higher price of iron ore due to mining ban in Karnataka and restriction in supplies from Orissa, and lack of growth in steel demand as government spending on infrastructure projects came to a standstill,” an official of a Kolkata-based company said.

“There had been a spate of events that had severely impacted medium and small sized steel manufacturers during the past six to seven months, prompting a number of them to close down or reduce their operation levels substantially, especially after restriction on movement of iron ore from Orissa,” said an official of another steel maker.

The prices of iron ore had shot up significantly making a number of small units unviable and had also significantly reduced profit margins of bigger players.

According to them, the overall steel market scenario is expected to improve gradually starting with expected increased availability of iron ore from February-March at reasonable price following 50 percent hike in export duty on iron ore from 20 percent to 30 percent recently.

Post increase in duty, the government is expected to solve the issue of mining ban in Karnataka, he said. Till now, mines were being closed one after another. But things may look up after the next Supreme Court hearing in February-March. If one mine opens in Karnataka, things may start falling in place.

After February, the reliefs will start coming in and once that happens, India will have enough availability of iron ore also. The export of ore is likely to come down significantly due

to low demand from China as Indian prices will no longer be competitive. If exports are not viable, the availability of iron ore in the local market will also increase significantly, they said.

“The only negative that is envisaged as of now, is that there will be an increase in Railway freight in the next budget,” said one of the officials.

Asked why he thinks that the next Union budget will be industry friendly, the official said that over the past few years, the government was on the defensive following corruption cases and scams like the Commonwealth and 2G spectrum allocation.

“The government has also shown the intention immediately after successfully addressing the Lokpal issue by increasing customs duty on iron ore and increasing the prices of coal by switching to GCV based system from UHV based pricing mechanism,” he added.

“Moreover, from the next budget till another two years, the government will be in election mode and would like to offset the negatives that had happened during the past two-three years and will focus on clearing the projects, industrial as well as infrastructure projects and that will provide a tremendous boost to overall sentiment,” the official added.

The third thing that will start for the industry is the end of the higher interest rate regime. The rates had been rising continuously quarter on quarter for the last 10 to 12 quarters, but with inflation under control and RBI having almost cleared that there would be no further hike in rates, the rates would start falling again in the same line in which it had risen, they added.

There, however, were contrarian views being expressed by some. An industry source, taking part in the discussion, said, “There would be a gradual increase in power cuts and in electricity rates from February. Let this government provide the required power to run our industry 24x7. There is power crisis in almost all southern states of India facing power cuts for almost 10-12 days in a month. Then let them talk about growth.”

Indian steel industry may witness changed scenario post Feb-Mar


Steel Insights has recently 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

The 12 major Indian ports have handled 418.184 million tons (mt) of traffic during the April-December

period of the current financial year, 0.38 percent higher than 416.581 mt recorded during the corresponding period last year. According to data released by the Indian Ports Association (IPA), the movement of thermal coal through the major ports was up 14.69 percent to 36.588 mt during April-December 2011, compared to 31.903 mt achieved during the same period last year.

Movement of iron ore through the major ports showed a significant drop of 19.44 percent during the period under review. The major ports together handled 47.818 mt of iron ore during the April-December period compared to 59.355 mt in the corresponding period last year.

Mormugao port handled the highest volume of 21.540 mt of iron ore during the April-December period of the current fiscal. This volume, however, was about 4.09 mt less than the iron ore traffic moved during the same period last fiscal. The port has shown a negative growth of 12.62 percent during the period.

The volume of coking coal grew marginally by 0.02 percent to 21.710 mt during the same period, the data showed. Visakhapatnam port shipped the highest quantity of 5.476 mt of coking coal during the period. Movement of coking coal through Paradip, Kolkata, Chennai and Kandla ports declined during the period when compared to the corresponding period last year.

Movement of container traffic both in terms of tonnage and TEUs showed an increase during the April-December period. The major ports handled 89.877 mt, besides 5.842 million TEUs during the period under review compared to 83.462 mt of tonnage and 5.616 mt of TEUs respectively.

Six major ports showed positive growth in traffic handling during the April-December period of the current fiscal, while the remaining six showed negative growth on a year-on-year basis. In terms of growth, Ennore port topped the list with a record 42.69 percent increase in cargo throughput. New Mangalore port’s growth was lowest at about 2.73 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of over 60.910 mt recorded for the period. The Mormugao port registered the highest decline of 12.62 percent in traffic handling during the period.

Port traffic up 0.3% y-o-y in April-DecSteel Insights Bureau

TRAFFIC HANDLED AT MAJOR PORTS(DuRING APRIL TO DECEMBER, 2011* VIS-A-VIS

APRIL TO DECEMBER, 2010)(*) Tentative (In ' 000 Tones)

poRTS

ApRIL To DECEMBER % vARIATIoN

TRAFFIC AGAINST pREv.

2011* 2010 YEAR TRAFFIC

1 2 3 4KOLKATAKolkata Dock System 9392 9524 -1.39Haldia Dock Complex 24427 25544 -4.37TOTAL: KOLKATA 33819 35068 -3.56PARADIP 40500 41008 -1.24VISAKHAPATNAM 52639 49779 5.75ENNORE 10392 7283 42.69CHENNAI 41940 45760 -8.35TUTICORIN 20852 18257 14.21COCHIN 14869 13242 12.29NEW MANGALORE 24233 23589 2.73MORMUGAO 28337 32430 -12.62MUMBAI 40217 40664 -1.10JNPT 49476 48053 2.96KANDLA 60910 61448 -0.88TOTAL: 418184 416581 0.38


LOgIsTICs

Commodity-wise freight traffic of the Indian Railways moved up 4.68 percent to 704.81 million tons (mt) during the first nine months (April-December) of 2011-

12 as compared to 673.31 mt carried during the corresponding period last year, according to the latest data released by the Railways.

The Railways earnings from commodity freight increased by 4.59 percent to ̀ 49,209.21 crore during the first nine months (April-December) of 2011-12 over `4,789.41 crore during the corresponding period of 2010-11, the data showed.

The Net Tonne Kilo Metres (NTKM) went up from 444,515 million during April-December 2010 to 466,968 million during April-December 2011, showing an increase of 4.68 percent year-on-year.

In the month of December 2011, total earnings from

commodity-wise freight traffic was `6,102.45 crore, of which `2,548.54 crore came from transportation of 41.01 mt of coal. This was followed by ̀ 543.64 crore earned from transportation of 8.94 mt of iron ore for exports, steel plants and for other domestic users.

An amount of `562.73 crore was generated from transportation of 9.37 mt of cement, `403.71 crore from 3.94 mt of foodgrains, `328.89 crore from 3.52 mt of petroleum oil & lubricant (POL), and `369.32 crore from 3.10 mt of pig iron & finished steel from steel plants and other points.

The data further showed that `484.77 crore was earned from transportation of 5.61 mt of fertilizers, `100.41 crore from 1.12 mt of raw material for steel plants except iron ore, `303.64 crore from 3.46 mt of container service and `456.80 crore from 6.74 mt of other goods.

Railways Apr-Dec commodity freight up 4.6%Steel Insights Bureau

Volume of freight and earnings by the Railways in December

CommodityQuantity (in mt) Earning (`in crore)

Dec’10 Dec’11 Dec’10 Dec’11Coal i) for steel plants 3.92 3.98 152.93 169.15ii) for washeries 0.1 0.12 0.93 1.12iii) for thermal power houses 25.28 27.15 1,471.94 1,766.91iv)for public use 7.59 9.76 435.57 611.36v) Total 36.89 41.01 2,061.37 2,548.54Raw material for steel plants except iron ore 1.12 1.12 86.05 100.41Pig iron and finished steel - i) from steel plants 2.1 2.39 244.17 306.4ii) from other points 0.68 0.71 55.63 62.92iii) Total 2.78 3.1 299.8 369.32Iron ore - i) for export 2.09 0.38 413.87 107.13ii) for steel plants 4.02 5.18 119.44 206.31iii) for other domestic users 4.51 3.38 254.51 230.2iv) Total 10.62 8.94 787.82 543.64Cement 7.97 9.37 448.73 562.73Foodgrains 3.6 3.94 359.69 403.71Fertilizers 4.72 5.61 381.91 484.77Mineral Oil (POL) 3.38 3.52 292.17 328.89Container Service - i) Domestic containers 0.8 0.79 81.02 78.68ii) EXIM containers 2.17 2.67 174.81 224.96iii) Total 2.97 3.46 255.83 303.64Balance other goods 5.83 6.74 363.86 456.8Total revenue earning traffic 79.88 86.81 5,337.23 6,102.45

Source: Indian Railways


MACRO OUTLOOk

105

125

145

165

185

205

Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11

Mining & Quarrying Manufacturing Electricity General Index

110

120

130

140

150

160

170

180

190

200

210

Jan-

11

Feb-

11

Mar

-11

Apr-1

1

May

-11

Jun-

11

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov-

11

Dec-

11

ALL COMMODITIES PRIMARY ARTICLES MANUFACTURED PRODUCTS

FUEL & POWER Basic Metals Alloys & Metal Products Steel

9.36%9.54%9.47%

9.68% 9.74%

9.56% 9.51%

9.78%

10.00%

9.73%

9.11%

7.47%

7.00%

7.50%

8.00%

8.50%

9.00%

9.50%

10.00%

10.50%

11.00%

11.50%

Decem

ber-10

January

-11

Febru

ary-11

March-11

April-11

May-11

June-1

1

July-

11

August-11

Septem

ber-11

October-

11

November-

11

Decem

ber-11

275,000

280,000

285,000

290,000

295,000

300,000

305,000

310,000

315,000

320,000

325,000

1-Ja

n-11

13-J

an-1

125

-Jan

-11

6-Fe

b-11

18-F

eb-1

12-

Mar

-11

14-M

ar-1

126

-Mar

-11

7-Ap

r-11

19-A

pr-1

11-

May

-11

13-M

ay-1

125

-May

-11

6-Ju

n-11

18-J

un-1

130

-Jun

-11

12-J

ul-1

124

-Jul

-11

5-Au

g-11

17-A

ug-1

129

-Aug

-11

10-S

ep-1

122

-Sep

-11

4-O

ct-1

116

-Oct

-11

28-O

ct-1

19-

Nov-

1121

-Nov

-11

3-De

c-11

15-D

ec-1

127

-Dec

-11

8-Ja

n-12

20-J

an-1

2

in m

illio

n $

1280000

1330000

1380000

1430000

1480000

1530000

1580000

1630000

in Rs crore

in Million $ in Rupees crore

Macroeconomic indicatorsof IndiaSteel Insights Bureau

Source: RBI

43

45

47

49

51

53

55

57

59

61

63

65

67

69

6-Ap

r-11

16-A

pr-1

126

-Apr

-11

6-Ma

y-11

16-M

ay-1

126

-May

-11

5-Ju

n-11

15-J

un-1

125

-Jun

-11

5-Ju

l-11

15-J

ul-1

125

-Jul

-11

4-Au

g-11

14-A

ug-1

124

-Aug

-11

3-Se

p-11

13-S

ep-1

123

-Sep

-11

3-Oc

t-11

13-O

ct-1

123

-Oct

-11

2-No

v-11

12-N

ov-1

122

-Nov

-11

2-De

c-11

12-D

ec-1

122

-Dec

-11

1-Ja

n-12

11-J

an-1

221

-Jan

-12

31-J

an-1

2

INR

vs U

SD, Y

en

69

71

73

75

77

79

81

83

85

INR vs GBP

USD YEN GBP

INR movement against select major currencies

TheINRloggeditsbestmonthlygainsinmorethan17yearsinJanuaryaidedbyareboundinforeignfundinflows,asinvestorsbetonamonetaryeasingthatwillaccelerategrowthinAsia’sthird-largesteconomy.TheINRgained7.45percentinJanuary2012against the USD ending the month at Rs49.68 per USD from hovering around Rs53 per USD recorded during the beginning of the month.RenewedcapitalinflowswereaidedbyapeakinIndianratecycleandeasinginflationallofwhichpushedtheINRhigher.Inthe currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 49.8, on total volume of $4.6 billion.

Source : Govt. of India, MoSPIThe index of industrial production (IIP) rose by almost 5.9 percent in November 2011 after witnessing a contraction in the previous monthby4.74percent.ThisdevelopmentinIIPledbyarecoveryinmanufacturingoutputmayreversethenegativesentimentamidan economic slowdown. However, industrial activity is slowing, as cost of production remains elevated which remains a cause of concern for industrial output in the country. Rebound in manufacturing and electricity sectors is seen more as a positive shock in demandratherthanariseinthecapacityutilizationandsignificantbouncebackindemandandpricingpower.November2010IIP grew by 6.4 percent.

Index of Industrial Production

Source : OEA, GoI, Ministry of Commerce & Industry

Wholesale Price Index (Selected Categories)

India’s wholesale price index (WPI) (Base 2004-05=100) remained static in December to 156.9 as compared to the month of November.AlsoWPI forOctoberwasrevised to157 thismonth.The index forprimaryarticlesgroup fellby1.59percent to197.9from201.1inthepreviousmonthlargelyduetofallinpricesoffoodarticles.Theindexformanufacturedproductsgrouphoweverroseby0.57percentto140.6from139.8inNovember.Fuelandpowerindexrose0.58percentto172.6whileindexfor basic metals and metal alloys rose by 0.89 percent to 159.5 on rising prices of the product globally. Steel index however remained unchanged.

Source : OEA, GoI, Ministry of Commerce & Industry

Inflation Rate in India

Headlineinflation,asmeasuredbytheWholesalePriceIndex,felltoatwoyearlowof7.47percentinDecember2011,from9.11percentinthepreviousmonthmainlyduetosignificantdeclineininflationforprimaryarticles,includingfoodinflation.Pricesoffooditemsroseatalowerrateof0.74percentinDecember,comparedto8.54percentexpansioninthepreviousmonth.ExpertssaidthatthemoderationininflationwillgivemoreleewaytoRBItoconsidercutsininterestratesinthenextfewmonths.Decliningrateofpriceriseindicatesimprovementininflationnumbersat6to7percentbyendofthisfiscalaspertheFinanceMinistryandthistrend is likely to continue for sometime now.

Source: RBI

Foreign Exchange Assets

Aftersixstraightweeksofdecline,India’sforexreserveshaverisenforthesecondweekby$673.4millionto$293.93billionfortheweekendedJanuary27.Foreigncurrencyassets,thebiggestcomponentoftheforexreserveskitty,roseby$614.1millionto$260.12billionduringtheweek.Theyhadincreasedby$731.8millionfortheweekendedJanuary20afterslumpingby$14.25billion in the previous six weeks. This rebound in forex reserves was mainly on account of a strong rally in the Indian equities marketsandreboundinthevalueofrupeeonthebackofhugeinflowoffundsfromoverseasinvestorsassincethebeginningofthe year, foreign institutional investors have pumped in over $2 billion.

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The global steel market, which was headed downwards for the past several months, seems to have shown some respite and there has been a rise in crude steel

production in most of the markets globally. World steel production is expected to remain stable in the next two months on slightly improved demand and falling raw material prices. World crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) stood at 117,058 tons in December 2011, up by 1.34 percent against 115,506 tons in November 2011. However, crude steel production for December was only 0.78 percent higher than December 2010.

Leading the rise, with regard to quantity, has been Taiwan which registered 10.34 percent month-on-month growth to 1.920 million tons (mt) in December as compared to the previous month. This was followed by Africa which registered a rise of 10.25 percent to 1.202 mt and Other Europe which recorded a 8.29 percent rise in crude steel production to 3.345 mt in December over a month ago. China and India also recorded a 4.57 and 2.50 percent growth in production to 52.164 mt and 6.15 mt respectively in December as compared to November.

Overall, the Asian markets, which have a production share of 64 percent, recorded 3.44 percent rise in production of crude steel as the region closed the month with a production of 74.581 mt. Russia recorded 5.49 percent m-o-m growth in December producing 5.886 mt, while Ukraine witnessed a m-o-m production fall of 4.07 percent to 2.804 mt.

In EU, Germany suffered a 12.43 percent drop to 3.025 mt while Italy’s crude steel production saw a sharp fall of 23.66 percent to 1.959 mt. France’s production also fell to 1.108 mt in December, 17.6 percent less than November. Poland’s production grew by 6.88 percent to 0.75 mt in December.

Turkey’s crude steel production was up by 9.23 percent to

3.112 mt, but Brazil’s production was 2.688 mt, 1.93 percent lower than November. The US recorded a 2.19 percent rise to 7.334 mt and Mexico 1.31 percent increase to 1.55 mt.

In 2011, world crude steel production touched 1,489.81 mt, an increase of 7 percent as compared to 1,395.30 mt produced in 2010. Asia produced 953.5 mt of crude steel, an increase of 8 percent compared to 2010, while EU produced 177.72 mt of crude steel in 2011, up by 3 percent over the previous year. North America’s crude steel production in 2011 was 119.389 mt, about 7 percent higher than 2010.

China, which was the single largest producer in 2011, produced 684.275 mt of crude steel, an increase of 9 percent as compared to 2010. The crude steel capacity utilisation ratio of the 64 countries in December 2011 declined slightly to 71.7 percent compared to 73.3 percent in November 2011. Compared to December 2010, the utilisation ratio in December 2011 is -2.1 percentage points lower.

MARkET REPORT

Steel production falls on weak global cuesSumit Kedia

-0.1

0

0.1

0.2

0.3

0.4

0.5

Jan1

0/09

Feb1

0/09

Mar1

0/09

Apr1

0/09

May1

0/09

June

10/09

July1

0/09

Aug1

0/09

Sep1

0/09

Oct10

/09

Nov1

0/09

Dec1

0/09

Jan1

1/10

Feb1

1/10

Mar1

1/10

Apr1

1/10

May1

1/10

June

11/10

July1

1/10

Aug1

1/10

Sep1

1/10

Oct11

/10

Nov1

1/10

China Rest of the world except China Total 64 countries

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

World crude steel production (in ‘000 tons)

Jul-11 Aug-11 Sep-11 oct-11 Nov-11 Dec-11Dec 11/

Dec 10 (% Change)

EuropeanUnion(27) 14,976 12,616 14,674 15,174 14,244 12,541 -3.18%Other Europe 3,068 3,035 3,213 3,324 3,089 3,345 8.25%C.I.S. (6) 9,280 9,452 9,060 9,495 9,140 9,318 -3.34%North America 10,321 10,218 9,839 9,853 9,885 10,134 6.51%South America 4,277 4,123 3,997 4,061 3,880 3,795 10.61%Africa 1,207 1,200 1,103 1,206 1,090 1,202 -22.77%Middle East 1,587 1,677 1,661 1,681 1,641 1,718 3.64%China 59,300 58,752 56,700 54,673 49,883 52,164 1.24%India 6,160 6,160 5,950 6,150 6,000 6,150 9.63%Japan 9,152 8,909 8,889 6,150 8,695 8,397 -8.46%South Korea 5,661 5,519 5,478 6,087 5,785 5,950 6.41%Taiwan, China 1,960 1,911 1,738 1,800 1,740 1,920 10.98%Asia 82,233 81,251 78,754 78,188 72,103 74,581 1.29%Oceania 561 668 626 473 434 424 -38.18%Rest of the world except China 68,210 65,488 66,226 68,782 65,623 64,894 0.40%

Total 64 countries 127,510 124,240 122,926 123,455 115,506 117,058 0.78%

Average daily production and m-o-m variationin ‘000 ton

october M-o-M variance November M-o-M

variance December M-o-M variance

EuropeanUnion(27) 15,174 500 14,244 -930 12,541 -1,703Other Europe 3,324 111 3,089 -235 3,345 256C.I.S. (6) 9,495 435 9,140 -355 9,318 178North America 9,853 14 9,885 32 10,134 249South America 4,061 64 3,880 -181 3,795 -85Africa 1,206 103 1,090 -116 1,202 112Middle East 1,681 20 1,641 -40 1,718 77China 54,673 -2,027 49,883 -4,790 52,164 2,281India 6,150 200 6,000 -150 6,150 150Japan 6,150 -2,739 8,695 2,545 8,397 -298South Korea 6,087 609 5,785 -302 5,950 165Taiwan, China 1,800 62 1,740 -60 1,920 180Asia 78,188 -566 72,103 -6,085 74,581 2,478Oceania 473 -153 434 -39 424 -10Total 64 countries 123,455 529 115,506 -7,949 117,058 1,552Rest of the world except China 68,782 2,556 65,623 -3,159 64,894 -729


MARkET REPORT

The global flat steel market witnessed mixed trends amid a phase of anxiety as the global economic environment remained shrouded in great uncertainty. There is genuine

concern about the economic health of several major economies and this is likely to impact the demand for steel products. The initial signs of such an impact are already apparent in the flat steel segment. The Chinese market showed some strength. But Turkey, Europe and the US remained quiet and flat.

Chinese mills increase pricesEastern Chinese steel producer Shagang released its February flat product list prices, increasing its hot rolled coil prices RMB 40 per ton and rolling over plate prices from January. After the adjustment, its Q235 5.5mm HRC price is tabled at RMB 4,300 per ton and its Q235 14-20mm commercial plate price remains unchanged at RMB 4,270 per ton. Both prices include 17 percent VAT. Although traders were hoping higher mill list prices could help drive up spot prices, sluggish buying continues to hinder any strong price rebound.

Offers of Q235 5.5mm HRC and Q235 14-20mm plate in Shanghai, the nearest major steel market to Shagang, are around RMB 4,250-4,270 per ton and RMB 4,250-4,280 per ton with VAT. These prices are about RMB 10-20 per ton higher than before the holidays but unchanged recently due to lack of buying interest. Traders expect that higher March list prices from major mills will serve as some encouragement for the spot market, but again may not be enough to ensure a strong increase. They are worried that demand from the manufacturing sector will remain poor at least for the first quarter. A recovery in the sector depends on more monetary loosening measures, which did not materialise as expected in January.

Most traders believe spot HRC and plate prices will stay firm in the near future because inventories are still low. However, they say that it is difficult to predict the market trend beyond that once people have replenished as nobody is sure when end user demand will return.

Meanwhile, Chinese steelmakers are likely to increase new hot rolled coil export offer prices for April shipments by $5-10 per ton over the previous month. Most mills have resumed work but new offers are limited. China’s Benxi Iron & Steel has quoted its export offers at $625-630 per ton fob for commodity grade HRC for April delivery, about $5 per ton higher than prices tabled before the Chinese New Year holiday.

While Chinese mills will try to lift export prices by $5-10 per ton for April/May shipments on strengthening domestic prices, it is doubtful if foreign buyers will accept higher prices. Demand in downstream steel industries is still sluggish.

Given the regional market was about to close for lunar new

year, Chinese mills quickly concluded their March shipment deals ahead of the holiday and contract prices were heard at around $630-640 per ton cfr Korea for commodity grade HRC. Turkey remains quietFlat rolled steel trading in Turkey remained quiet and is unlikely to pick up soon as buyers are unwilling to accept current prices. However, the current price levels are not likely to decrease in immediate future due to rising global prices.

Domestic producers are offering hot rolled coil at $660-670 per ton ex-works. Ukrainian import offers stand at $620-630 per ton cfr, while Russian product is pegged at $650-660 per ton cfr and Romanian coil at $650 per ton cfr. The 9 percent duty on HRC imports from non-EU sources make importing from these locations more costly than sourcing locally. Most buyers have already secured some bookings for February and March delivery and are therefore in no hurry to order. European market remains slowActivity in the northwest European coil market has slowed slightly. Most buyers have placed their first quarter orders and mills are believed to be nearly fully booked. The average base price for hot rolled coil is €525-530 per ton ex-works. Lead times from European mills are increasing and some suppliers are turning down requests for March rolling as they are fully booked. This could trigger new price increases for Q2 rollings.

Major European mills remained bullish on the outlook. Price increases for Q2 rollings have not been announced yet, but according to sources, some Q2 orders have been already received and the upward trend is set to continue further.

Stockholders in the Netherlands received some offers from Scandinavia, where it is believed March capacity is still available, but the price is some €10 per ton higher than the average offers from northwest European mills. Imports are not a threat to European mills at present, but the latest recovery of the euro against the US dollar may open some possibilities for traders and buyers in the coming weeks. The average northern European reference price for January was €512 per ton ex-works, up 5.5 percent month-on-month.

uS prices steadyAs previously expected steel plate price increases for March shipments in the US market have been dismissed as a decline in scrap costs and the continued threat of imports have led to a change of plans. There were several mills talking about a March increase but they are taking a wait-and-see approach now, according to sources. Overall solid plate demand is expected to offset the decline in scrap prices and lead to flat pricing. The current spot range for A36 material is $940-960 per short ton fob mill.

International Flat Product Markets

China firm in otherwise dull sceneSteel Insights Bureau


International long product markets

Prices remain soft on lack of demandSteel Insights Bureau

MARkET REPORT

The international long steel market remained dull in January in line with the uncertainties in the global economic front. Almost all the markets including

Turkey, China and Saudi Arabia displayed sluggish demand. Considerable low activity marked trade. Fall in scrap prices

stopped long producers from increasing offers significantly. Instead the long producers had to dole out discounts to clear inventories when the orders were large. However, the silver lining was that Northwest European sections producers have secured further price rise despite falling scrap prices. Similarly, US producers also secured marginal increases. But it is difficult to predict how long they will be able to hold on to the increases.

Low activity in TurkeyProducers of Turkish billet were heard offering at $590-595 per ton fob main ports for March production. Considerably less activity has been registered on the rebar market, where mills still had some February production to sell at $650 per ton fob. Bids from Egypt were heard at only $650 per ton cif Alexandria. To local markets such as Lebanon, a large Ukrainian rebar mill is believed to be offering at $660 per ton cfr Beirut, undercutting equivalent Turkish mill offers to the country.

Europe shows mixed trendSouthern European prices for rebar have fallen by €10-15 per ton to €510-520 per ton fob since mid January. Some European mills are currently not quoting at these prices, hoping to keep prices above the level of recent transactions. Prices have fallen on the international downturn in scrap prices.

Meanwhile, Northwest European sections producers have secured further price increases off the back of higher scrap prices. However, with scrap turning and demand weak, mills are unlikely to be able to push through further increases.

Several stockists and distributors have booked sections at €630-640 per ton delivered for category one material. Producers are now aiming for €650 per ton delivered for March rollings. Demand is said to be weak and booked volumes are small. Those who can promise sizeable orders can secure discounts, distributors say. Further price increases will therefore be difficult for mills to push through, especially as scrap prices are now falling.

Meanwhile, distributors are having some difficulty in passing on price increases to end-users. Small buyers are accepting higher prices of around €680-700 per ton, but larger customers are trying to keep prices at around €640-650 per ton.

Billet prices unchanged in North ChinaBillet prices in northern China remained unchanged after undergoing small fluctuations. Transactions saw little

improvement as finished steel prices softened. In Hebei province’s Tangshan city, ex-works prices for 150x150mm Q235 billet from major mills held firm at RMB 3,660 per ton, including 17 percent VAT on a cash-payment basis.

Better performance on the futures market helped prevent a fall in billet prices. But a drop in prices of strips and sections also made it difficult for billet prices to firm up.

Marginal rise in uSUS long mills began announcing price increases for February deliveries a few weeks ago, but scrap prices have softened since then, calling the mill increases into question.

Many market players have acknowledged $30 per short ton price increases on structurals and wire rod and a $15 increase on rebar, but some are unsure that the price hikes will stick.

Saudi Arabian rebar prices unchangedSaudi Arabian rebar prices remain fixed at SAR 2,900 per ton despite healthy sentiment in the market. Demand for the product is strong owing to government-funded projects and fresh private sector construction activity.

According to traders, producers will try to increase prices, which have been fixed since April 2010, as global prices are moving. However, the government has to approve any changes in rebar prices before they take place. Turkey offered some rebar at $685-690 per ton cfr Saudi Arabia, while billet offers stand at $590-600 per ton cfr from CIS sources. According to market sources, re-rollers will be importing large tonnages of billet in the near future, as domestic billet output is insufficient, and consumption is likely to increase with new construction projects, such as railroads and infrastructure works, being launched.

Price hike in KoreaKorean steelmakers Hyundai Steel and Dongkuk Steel Mill have increased their domestic sales prices of H-beams and other sections effective from February 1.

Hyundai’s new sales price for SS400 grade junior-sized H-beams is KRW 990,000 per ton. Dongkuk’s new price for the same product is the same as its competitor, or perhaps KRW 10,000 per ton lower depending on each client’s conditions.

Despite the fact that Korea’s construction market is still struggling with depressed demand, the response from local buyers to the price hike for the moment seems favourable. The high season for the construction market is just about to begin and stock levels for construction steel are not high at present.

Sales prices of other sections such as angles and channel of SS400 grade from the two makers will also increase to KRW 930,000 per ton from this month.


MARkET REPORT

Domestic Flat & Long Markets

Prices move up despite weak demandAnondo Kumar Dutta & Sanjoy Chakraborty

In the domestic flat products market, the month of January started with SAIL, among other major steel producers, raising prices by `1,000-1,200 with effect from January 1.Domestic coil prices moved up even while the market

remained slack due to soft demand. Current prices of IS2062 3.0mm HRC are `40,500 per ton (VAT included). According to industry sources, raw materials are in short supply, thus steel mills raised their ex-works prices for January production.

Additionally, the continuous rupee depreciation is making the situation worse, which influences the steel market to a large extent. Coil prices were expected to go up sharply in the wake of the unremitting depreciation starting from last August, but that is not the case due to the weak demand from customers.

Due to the high price of raw material and the shortage of supply with recovering demand from the downstream market, the domestic long prices have increased by `1,500 per ton in the past few weeks. However, prices have stopped going up as buyers are unlikely to accept the high prices.

The current prices of 12mm TMT are at `44,000-44,500 per ton (VAT included). Market sources said that the demand for long steel products is recovering because the weather is proper for the operation of construction projects. The government is about to increase the capital investment into the infrastructure construction. However, buyers are unlikely to accept high prices as inventories stay limited.

Price trend as observed in the auction held at metaljunction for flat products:The following graphs show the price trend observed in the auction services of metaljunction for the months of December 2011 and January 2012 for different HR and CR products.

Percent change for hot rolled flat products(m-m, q-q, y-y basis):

ProductsDec’11 Price (Avg.)

Jan’12 Price (Avg.)

% change (M-M)

%change(Qtr-Qtr)

%change(Yr-Yr)

Cobble Plate 29958 31321 4.55 4.83 5.31

Def. Plate 28303 28797 1.74 3.08 12.67

Def. HR Plate 27382 29165 6.51 2.50 7.91

Semi Rolled Plate

28540 29115 2.02 0.38 6.87

SRP Coil Form 29256 30483 4.20 0.14 14.82

Def. HR Coil 28787 30774 6.90 -6.66 6.73

Def. HR Sheet 31940 30850 -3.41 -- 0.32

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



%change (M-M)

%change (Qtr-Qtr)

%change (Yr-Yr)

Def. CR Coil 33533 32957 -1.72 -4.02 12.72

Def. CRNO Sheet 31701 31497 -0.64 -10.65 -20.31

CR Coil End SPM-I

32587 33499 2.80 1.19 13.53

CR Coil End SPM-II

32050 34616 8.01 7.09 12.77

Def. CR Sheet -- 29800 -- -11.31 -9.28

CR Sheet Cutting 28458 29800 4.72 2.52 29.38

25000

27000

29000

31000

33000

35000

Dec'11 Week 1Dec'11 Week 2

Dec'11 Week 3Dec'11 Week 4

Jan'12 Week 1Jan'12 Week 2

Jan'12 Week 3Jan'12 Week 4

Wtd

.Avg

.prc

ie(R

s./M

T)

Defective HR Plate-Rourkela Semi Rolled Plate Defective PlateCobble Plate Defective HR Plate-Bokaro HR SheetDef. Chequered Plate

HR Products Price Trend

Price in `/t is basic

29000

31000

33000

35000

37000

Dec'11 Week 1 Dec'11 Week 2 Dec'11 Week 3 Dec'11 Week 4 Jan'12 Week 1 Jan'12 Week 2 Jan'12 Week 3 Jan'12 Week 4

Wtd

.Avg

.pric

e(Rs

./MT)

CR Coil End from SpM - I Defective CR CoilUACE from HDGL CR Coil end from SpM-IIDef CR Sheet Defective CRNo Sheet

CR Products Price Trend



MARkET REPORT

OutlookThe flat steel market has seen mixed trends as supplies remain short, but buyers are reluctant to buy at these high prices. Even as steel majors announce a roll-over in prices, players are confident that discounts are available at quoted prices. Prices which increased in the middle of the month saw them drop, even before the end of the month. In such conditions, the market is expected to remain stable but negotiations for discounted prices cannot be ruled out.

Price trend as observed in the auction held at metaljunction for long products:The following graph shows the price trend observed in the

auction services of metaljunction for the months of December 2011 and January 2012 for different long products.

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



% change (M-M)

% change (Qtr-Qtr)

% change (Yr-Yr)

Defective Billet

30295 31826 5.05 2.18 8.28

TMT Bar Cutting

-- 33600 -- 13.17 21.12

MM End Cutting

30708 31872 3.79 0.65 15.58

Rejected Bloom

27335 28516 4.32 -0.07 17.95

Plate Cutting 31018 32128 3.58 2.48 10.52

Outlook The long steel market has shown a steady increase in prices over the entire month. As the government resumes its infrastructure projects, there exists a positive vibe in the long steel market, especially since demand for construction grade material has increased. Prices have increased across all segments. This uptick is expected to continue for the coming few weeks, if not months. Producers are also making sure that the supply side does not face a crunch and are sailing with the current uptrend in prices for long steel products.

24000

26000

28000

30000

32000

34000

Nov'11 Week 2

Nov'11 Week 4

Nov'11 Week 5

Dec'11 Week 2

Dec'11 Week 3

Jan'12 Week 1

Jan'12 Week 2

Jan'12 Week 4

Wtd

. Avg

. pric

e(Rs

./MT)

Defective Billet TMT Bar Cutting MM end Cutting Rejected Bloomplate Cutting

Long Products Price Trend


The table gives the price trend in domestic flat & long steel sector on a quarterly basisBillet

100*100 mmBloom

150*150 mmWire Rod

6 mmTMT Bar 10 mm

Angle 50X50X6 mm

Joist 125*70 mm

Channel 75*40 mm

HR Coil 2.00 mm

CR Coil 0.63 mm

GP Sheet 0.63 mm

GC Sheet 0.40 mm

KolkataJan’11 34695 33105 36445 37385 38665 38555 38500 44155 46375 50720 51465Apr’11 37145 35405 44080 42195 40820 41085 41845 42440 46990 53705 55415July’11 36900 35020 43905 42750 41480 41480 42415 42390 46530 54015 55305Oct’11 38245 36450 44155 42885 41675 41245 42350 42400 48190 53960 55540Jan’12 39340 38195 44970 45990 44125 43990 44955 46085 51890 55520 56795DelhiJan’11 36220 34550 38510 39060 39705 40040 39830 45390 47940 51090 53280Apr’11 37360 35660 44540 43310 40890 41060 42280 43020 48280 51690 54650July’11 37860 36140 45150 43920 41240 41590 42455 43040 47840 51840 55190Oct’11 38200 36510 46025 44465 42150 42725 43330 43345 49280 52740 56540Jan’12 39235 38175 45715 46790 43780 44480 45395 47530 52360 53580 54040MumbaiJan’11 35920 32170 38130 38355 39525 39645 39495 43735 45440 49490 50790Apr’11 38180 36050 44845 43150 41420 41530 42205 42115 46880 53680 55620July’11 38260 36200 45090 43685 41885 42045 42705 42210 47240 54205 56160Oct’11 38260 36200 46020 44615 42685 42775 43450 42325 47590 54520 56520Jan’12 40365 38425 46340 47320 44850 44880 45855 47930 51885 55870 56515ChennaiJan’11 34920 31890 36805 37430 39375 39520 38835 42675 47115 53075 54055Apr’11 37475 34830 44905 43490 41740 41615 41985 41960 47110 57975 59645July’11 37295 34520 45200 43930 42125 42255 42745 42085 47095 59090 60915Oct’11 37330 34560 45595 43670 42700 42830 43310 42135 47500 59430 61570Jan’12 39655 37340 45540 46815 44845 45055 45820 47550 52280 59840 60850

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


PRICE TREnD

Ferro alloys & Metals price trendsSteel Insights Bureau

Ferro alloys & Metals January 12 December 11 November 11

HC Ferro Chrome (Cr - 60%)Ex-works Rs/ ton

73000 68000 65000

HCFerroManganese(Mn-70%)Ex-works Rs/ ton

49500 50000 51000

Silico Manganese (Mn - 60%, Si - 14%)Ex-works Rs/ ton

50500 47000 48000

MCFerroManganese(Mn-70%,C-1.5)Ex-works Rs/ ton

73500 74000 76500

LCFerroManganese(Mn-70%,C-0.1)Ex-works Rs/ ton

140500 149000 150000

Ferro VanadiumEx-works Rs/ kg

715 730 750

MolyOxide(Mo-57%min)CIF in US$/lb of moly

14.15 14 14.6

Ferro Titanium (Ti - 30%)Ex-works Rs/ ton

142500 146000 156000

CPC (FC - 98%, S - 1.2%, size 0-10mm)Ex-works Rs/ ton

30500 28000 28000


EXPORT DATA

Diclaimer: The data provided here which has been compiled from various sources, is correct to the best of our knowledge. The data, however, is not exhaustive, and errors may creep in during the process of data collection, or may even lie in the source itself. In case of any discrepancy, we urge our readers to use their discretion and check their facts. While we have taken adequate care to provide correct data, we accept no responsibility for any error that may have inadvertently crept in.

Iron ore export data for January 2012Steel Insights Bureau

Kolkata

1-Jan-12SHREEEX 4500SUDAMA 16000

9-Jan-12CONCORD FORTUNE 13500SK SARAWAGI 19000

12-Jan-12 NITHIN EXPORT 1400013-Jan-12 TAURIAN 2000014-Jan-12 AMBO EXPORT 1753016-Jan-12 PRESIDENCE 1650029-Jan-12 SALASAR / BGH 20000

Kolkata Total 141030

Paradip

7-Jan-12 M.OVERSEAS 31000

13-Jan-12ANURAG 14000BAGA 27351SAROJINI 14750

19-Jan-12KK RESOURCES 13200TAURIAN 24200

Paradip Total 124501

Vizag

4-Jan-12 5000010-Jan-12 RUNGTA 5200012-Jan-12

SHAPING DREAMS32700

13-Jan-12 64500Vizag Total 199200

Mormugao

2-Jan-12 FOMENTO 650003-Jan-12 CCL 530984-Jan-12 SESA 1420005-Jan-12 PRIME MINERALS 73000

7-Jan-12SESA 88000VMS 53098

9-Jan-12POKLE 73000VGM 55000

10-Jan-12CCL 55000SFI 70000

11-Jan-12SESA 75000VMS 51275

12-Jan-12 SESA 110000

13-Jan-12CCL 55510SESA 80000

Mormugao

14-Jan-12DBB/SBM 50000RNSB 53000

16-Jan-12SRL 90600VGM 55000

17-Jan-12CCL 55000FRPL 74200

19-Jan-12 SFI 7600024-Jan-12 MPL 49053

25-Jan-12CCL 82500PTI 72000SESA 70000

26-Jan-12 SRL 10000027-Jan-12 RNSB 4062628-Jan-12 SESA 16400029-Jan-12 SESA 7200031-Jan-12 CCL 75000

Mormugao Total 2277960

Panaji

6-Jan-12 KARISHMA EXP 30000

8-Jan-12ROTOMAX GLOBAL 54000SESA 175000

14-Jan-12 SESA 17600018-Jan-12 PANDURANGA TIMBLO 5500020-Jan-12 VMS 5500022-Jan-12 SESA 7000023-Jan-12 ALPHINE 5500025-Jan-12 VMS 7000028-Jan-12 SESA 7700029-Jan-12 PEC LTD 54000

Panaji Total 871000

Redi

2-Jan-12 SAMRUDHA 540005-Jan-12 SAMRUDHA 5500013-Jan-12 SAMRUDHA 5400026-Jan-12

SAMRUDHA56500

27-Jan-12 56000Redi Total 275500Grand Total 3889191

poRT DATE EXpoRTER QTY (in Tons) poRT DATE EXpoRTER QTY (in Tons)


PRICE DATA

Market price data January 2012Steel Insights Bureau

Market product Remarks 31-Jan-12 30-Dec-11 variation

Ghaziabad

Billet All Inclusive 35100 34000 3.24%

Ingot All Inclusive 34200 34150 0.15%

Gobindgarh



Pig Iron All Inclusive 30100 30000 0.33%

Sponge Iron All Inclusive 26500 25800 2.71%

TMT 12 mm All Inclusive 40000 41900 -4.53%

Kolkata


CRC All Inclusive 42200 45000 -6.22%

HRC All Inclusive 39500 39100 1.02%




Raipur





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