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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 Statistial Institute (ISI)Dr Amit Chatterjee, Consultant and former Advisor to MD, Tata Steel LtdJayant Acharya, Director (Commercial & Marketing), JSW Steel LtdK Ranganath, CMD, KIOCLVikram Amin, Executive Director (Strategy and Business Development), Essar Steel Ltd

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Dear Readers,

The Assembly elections in India are over and it’s time for speculations as it needs to be seen what will be the impact of the poor performance of Congress in the elections. There are apprehensions that the Congress-led UPA may not be able to push through the economic agenda in view of the poor showing of the party in the polls. The BSE Sensex dropped by 190 points as the results trickled in on these concerns.

There, however, is a contrarian view. Many think there would not be a major change and the government needs to have a more investment and growth oriented Budget to show that poll results will not reflect in their governance at the Centre.

In the Assembly elections of five states, the Congress has done well only in Manipur. While the Samajwadi Party will form the government in Uttar Pradesh, the Shiromani Akali Dal-BJP alliance has retained power in Punjab with a clear majority. BJP is all set to form the government in Goa and Congress and BJP are almost equally matched in Uttarakhand.

Analysts feel that the results are a reflection of the government’s poor pursuance of key economic reforms in sectors like insurance, pension, banking and opening of retail and aviation to foreign investment because of political reasons.

Coming back to the steel sector, steel demand in the second half of the current financial year is better than the first half. The overall demand growth in India in the first 10 months of this financial year is over 5 percent.

As for the worldwide steel demand-supply dynamics, the January numbers are showing a huge amount of moderation in overall steel production in the world. In January, the world production has come down by 7 percent that is 117 million tons, relative to January 2011. It is driven mainly by China – the production was down in China by 13 percent in January 2012.

So there is a moderation which is happening across the continents. In Europe production was down. Japan production was falling too. India is facing a huge amount of moderation in line with the subdued demand across the world. That is why we are not seeing a big correction from the current levels in the steel prices.

In this scenario, we at Steel Insights examine the cost structure of steel companies in India to see how they are coping with the challenges of low demand and rising input costs. The issue also delves into steel technology and ways by which technology can be leveraged for growth. We also have a special corporate update on JSPL.

Happy reading. Warm regards,

Rakesh DubeyChief Editor

STEEL INSIGHTS 4 MarcH 2012

COnTEnTs

48 | FEATUREAuto sector revival trend continuesSIAM forecasts full-scale revival in 2012-13

30 | CoRpoRATE UpDATENMDC eyes overseas acquisition of more mineral assetsRaw material security uppermost in NMDC’s priority

23 | CoRpoRATE UpDATE SAIL to set up 1.2-mt rail mill at BhilaiHeavy rails to be produced for the first time in India

21 | CoRpoRATE UpDATEJSPL Odisha coal gasification unit by JulyThe project marks a new beginning in India’s pursuit for CTL

6 | CovER SToRyManaging cost: Steelmakers take up tough challengeThe steel industry is coping with the challenges of low demand and rising input cost

27 Tata Steel seeks to raise borrowing limit 28 JSWQ3netprofitdips56% 29 ArcelorMittal makes some headway in Karnataka

project 31 SesaSterlite to generate $7-8 bn annual surplus 32 ECL receives MoEF nod for iron ore mine 33 Steel makers should focus on heat loss utilisation,

waste management 34 Supply constraints lift iron ore prices 36 Scrap prices show mixed trend 37 Spotcokingcoalpricesslipover2%inFeb 38 India’scokingcoal,cokedeficittodoubleby2015 41 Jhariacoalfieldsmustbeevacuatedtoaugment

coking coal production 43 Steel ministry may favour raising of import duty on

steel 44 Ferro alloys show mixed movement in Feb 46 SpongeironQ3productiondown21%y-o-y 50 Steel industry seeks input duty cut in Budget 51 April-Janironoretrafficdown25%y-o-y 52 Indian Railways Apr-Jan commodity freight

revenueup9.7% 54 Macroeconomic indicators of India 56 Global crude steel output down marginally 58 Internationalflatproductmarkets:Mixedtrend

amid uncertainties 60 International long product markets: China, Japan

firmup;USremainssoft 61 Domesticflat&longproducts:Mixedtrendin

prices as year draws to a close 63 Domestic raw materials: Low output keeps pig

iron stable 64 Ferro alloys and metals price trend 65 Iron ore export data for February 66 Market price data for February


Managing cost:Steelmakers take up tough challenge

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India occupies an important position on the global steel map, with the establishment of new state-of-the-art steel mills, acquisition of global scale capacities by players,

continuous modernisation and upgradation of older plants, improving energy efficiency and backward integration into global raw material sources.

However, the sector is faced with a unique situation – the twin challenges of inflation and slow demand growth. As the monetary authorities are left with little choice but to squeeze liquidity out of the system through multiple doses of interest rate hike, the steel sector is faced with no alternative but to squeeze costs to stay afloat.

Leading steel giants are finding it difficult to maintain both its topline and bottomline growth in this complex situation. Things are even more complex as the sharpest minds in the global steel sector need to balance both the short term and long term goals. And amidst the current volatility and uncertainty, at times it is getting difficult even to decide on a feasible long term goal.

Luckily, the environment is relatively better because of the fact that India is less affected by the recent financial hit as compared to other countries, primarily the developed countries like the US and Japan.

But even then the Indian steel makers are competing with its global peers in several areas including raw material cost, energy efficiency and high end technology to produce superior grade steel.

With China occupying centrestage, the world of steel raw materials, including iron ore and coking coal, has witnessed some of the sharpest volatilities with an upward bias. This has hit India hard due to its large dependence imports for coking coal.

According to industry stalwarts, in the period of 1995 and 2005, i.e., in a period of 10 years, raw materials used to cost 35 percent and the rest was value addition. Today the situation is completely different. Today, raw materials comprise 70 percent of the cost and what value is added, account for the remaining 30 percent. The steel mills are gradually getting into a stage where what is being controlled is becoming lesser. So obviously the margins of the steel industry are under pressure. It is also forcing the steel industry to go in for more and more assured and steady supply of raw materials.

This is forcing steel players to go an extra mile in order to work out an optimal strategy balancing short term and long term growth even in today’s environment of extreme uncertainty.

Leading Indian steel players are moving ahead quite aggressively leveraging its existing advantages on account of access to iron ore, relatively cheap labour and a relatively robust domestic market. Major players are taking numerous steps to

Managing cost:Steelmakers take up tough challengeTamajit Pain


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improve its efficiencies even in areas which do not occupy the top slots in the entire production. Some of the initiatives have started showing results and are expected to significantly add to the bottomline of steel giants of the country. At the same time, they are on with their effort to secure supply of crucial raw materials from overseas assets. And above all, nearly all steel players are focusing immensely to increase their energy efficiency whose benefits are far reaching.

Times are difficult, but it is undoubtedly an opportunity wherein India can make up for time gone by where it has not been able to strategically grow as its global peers. Once again, it is a matter of time before we find out how Indian steel makers manage the test of time.

SAILWhen low cost steel production is top priority, the prime state owned steel producer in the country Steel Authority of India (SAIL), is banking big on its massive modernisation and expansion plan.

It has 100 percent security in the iron ore segment and is the only steel producer to have its own coking coal arrangements. However, India being not so rich in the coking coal segment, the steel major has to depend on imports for 70 percent of its requirement. Consequently, owing to the highly volatile coking coal market, the company’s margins get affected.

SAIL has been constantly emphasising on cost reduction and productivity improvement through systematic application of new technology and strong awareness to control cost at all levels of operation.

Several strategic actions to achieve cost control savings include optimisation of coal blend, higher yield, reduction in specific energy consumption and coke rate, higher BF productivity, higher CC production, low power consumption and improvement in other techno-economic parameters.

Fostering technology leadership is one of the prime focus areas of the company in keeping with the requirement of low cost production. Thus, to augment technology an MoU has been signed with Posco, Korea and a detailed feasibility study is being conducted to explore exploration of upstream and

downstream opportunities based on FINEX technology which would use iron ore fines for steel making. As a result, it will help reduce dependence on high-grade metallurgical coal, as it will use ordinary coal with iron ore fines, thus insulating the company from cost push on the coking coal front.

In another similar initiative, an MoU has been signed with Kobe Steel Limited of Japan for exploring the technical and economic feasibility of ITmK3 technology for producing premium grade iron in the form of nuggets. The company is in talks with other leading steel producers on technology intervention in steel and related areas. Under the company’s ongoing expansion plan, SAIL intends to achieve saleable steel production of 21.4 million tons (mt) by 2012-13 from 13.8 mt now, at a cost of `61,870 crore approximately. Thus, post the implementation of the project, the production will be through twin-hearth furnace route to be replaced by BOF–LD Converter route. This upgradation is aimed at increasing automation, higher cost saving, reduction in use of energy and better product quality matching market requirements. In a similar initiative, production through ingot teeming route will be switched to continuous cast production route. Further, enhancement of production capacity by addition of new 4060 m³ blast furnaces would help in cost control.

At the Bhilai Steel Plant, which is India’s sole producer of rails and heavy steel plates and major producer of structural, the Steel Melting Shop-2 has been upgraded and provided with a second ladle heating furnace, which has augmented its productivity.

The plant is the sole supplier of the country’s longest rail tracks of 260 metres. With an annual production capacity of 3.153 mt of saleable steel, the plant also specializes in other products such as wire rods and merchant products. Hot metal desulphurisation facility and torpedo ladle system are also to be added to the shop, along with several other provisions to increase its capacity.

The plant’s Coke Oven Battery-5 has already been rebuilt with higher productivity and zero emission technology. Batteries-1 &2 are also being upgraded similarly.

The blast furnace-2 of the plant has been rebuilt with volume enhancement from 2000 cubic metres to 2365 cubic metres and productivity augmentation to 2T/M3/day. In Furnace-3 Stoves (Hoogovens) and some other facilities have been upgraded and furnace-5 is also being upgraded.

Besides furnaces-2 and 3 have also been provided with coal dust injection facility. Furnaces-1, 2 & 3 will see installation of cast house slag granulation facility to help slag management in a gainful and efficient manner. The ore handling facilities too have been upgraded, as are some support facilities and utilities.

In phase II, the plant plans to upgrade and add newer facilities for significant capacity addition in all areas. Plan includes two 7-metre tall coke oven batteries, along with rebuilding of some existing batteries. For iron making, two new blast furnaces of 4060 cubic metres are to be set up. Besides two new Steel Melting Shops (SMS-III: 4.3 mtpa, SMS-IV: 2.42 mtpa) will be installed, with conventional and thin slab casting facilities.


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BSp product-Mix Tons/AnnumSemis 5,33,000Rail & Heavy Structural 7,50,000Merchant Products (Angles, Channels, Round & TMT bars) 5,00,000Wire Rods (TMT, Plain & Ribbed) 4,20,000Plates (up to 3600 mm wide) 9,50,000Total Saleable steel 31,53,000

Source: SAIL The Bokaro Steel plant, which has a capacity of around 4.5

mt of liquid steel, will see the addition of a new 7 meter tall coke oven battery no 11, additional sinter machine in existing sinter plant No. 3 of 360 sq.m, new blast furnace No.8 (4060 cu. metre) of 8000 tons per day (tpd) capacity, new steel melting shop No. 3 of 4 mt capacity complete with all secondary refining and casting facilities. The plant has also taken up a project for rebuilding of the existing coke oven battery No 6.

The new coke oven battery, along with coke dry cooling plant, by product plant and new coal handling plant, will enhance coke capacity by 0.88 mtpa. Besides, the technology ensures better pollution control, improvement in yield, better coke quality, extended oven life, recovery of waste heat and power generation. Two other batteries are being rebuilt, of which Battery#5 is ready for commissioning and Battery#6 rebuilding is under progress.

In the area of iron making, BSP will have a new and bigger 8000-tpd blast furnace (BF 8) designed to produce more than 2.8 mtpa of hot metal using modern technology and TRT system for power generation using waste gases.

BSP will set up the new sinter machine of 360 sq.m. grate area along with associated facilities in the existing SP-3 complex to produce 3.706 mtpa of gross sinter to meet the additional sinter requirement in blast furnaces.

Currently, Bokaro is producing top quality hot rolled products that are well accepted in the global market. Bokaro is designed to produce flat products like Hot Rolled Coils, Hot Rolled Plates, Hot Rolled Sheets, Cold Rolled Coils, Cold Rolled Sheets, Tin Mill Black Plates (TMBP) and Galvanised Plain and Corrugated (GP/GC) Sheets. Bokaro has provided a strong raw material base for a variety of modern engineering industries including automobile, pipe and tube, LPG cylinder, barrel and drum producing industries.

Meanwhile, Durgapur Steel plant, which has a capacity of 2.088 mt of hot metal,1.8 mt of crude steel and 1.586 mt of saleable steel, has decided to keep some of the older units by rebuilding it, coupled with addition of some new units.

Along with this, there will be significant upgradation of technology. Moving strategically, DSP intends to

increase its finished steel component, through efficient caster route from 84 percent rated capacity to nearly 100 percent, de-bottlenecking of existing facilities to sustain and marginally enhance production and have appropriate infrastructure and services facilities.

In line with this strategy, DSP has slated revamping of certain major facilities which include the rebuilding of a 4.45-metre tall coke oven battery under jet furnace recovery type. There will not be much investment in the three existing blast furnaces of DSP. Post the de-bottlenecking process, the blast furnaces will be able to produce 2.4 mt of hot metal per annum.

Rourkela Steel plant, which is the first plant in India to incorporate LD technology of steel making and also the first steel plant in SAIL and the only one presently where 100 percent of slabs are produced through the cost-effective and quality-centeric continuous casting route, will be adding a new coke oven battery, sinter plant and blast furnace of 4060 cubic metres, among others during the modernization plan.

Some of the other downstream facilities include a third BOF with a capacity of 150 tons with LH and Ruhrstahl-Haraeus Oxygen-Blowing (RH-OB). RSP will also set up a new third single strand slab caster with balancing facilities for operation and increased production in SMS-II. RH-OB and LHF for quality improvement of steel and several other logistic and support facilities will be installed during the first phase of expansion.

Currently, RSP has the capacity to produce 2 mt of hot metal, 1.9 mt of crude steel and 1.67 mt of saleable steel. It is SAIL’s only plant that produces silicon steels for the power sector, high quality pipes for the oil and gas sector and tin plates for the packaging industry. Its wide and sophisticated product range includes various flat, tubular and coated products.

The IISCO Steel Plant (ISP), has the capacity to produce 426,000 tons of saleable steel and 254,000 tons of pig iron annually. It has planned installation of certain major facilities which include the setting up of a new blast furnace having a useful volume of 4060 cubic metres.

Besides this, the plant will also set up one 7 metre tall coke oven battery in addition to its existing 4.5 metre tall coke oven battery. Setting up of a sinter plant with two machines of

DSp product-Mix Tons/AnnumMerchant Products 2,80,000 Structural 2,07,000Skelp 1,80,000Wheels & Axles 58,000Semis 8,61,000Total Saleable steel 15,86,000

Source: SAIL


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capacity of 204 metre grate area each, is also included in the new installation list. In addition to this, ISP is also coming up with three new basic oxygen furnaces with capacity of 150 tons each.

ISP produces a large number of steel structurals and

special sections as well as pig iron. the plant pioneered the production of centre –sill Z-section used in the fabrication of wagon and Z-type sheet piling section used in construction of barrages, bridge foundations and other projects and colliery arch section used for roof support in collieries. The plant has also developed ‘slit rolling’ for small diameter rounds (10 mm and 12 TMT), which are in high demand in the domestic market.

The plant through its modernisation-cum-capacity expansion would take its hot metal production capacity to 2.5 mt by 2011-12. In the specialty steel segment, Alloy Steel plant’s capacity has been revised to 246,000 tons of liquid steel and 178,000 tons of saleable steel. ASP has the capacity to produce slabs, blooms, bars, plates and forged items of over 400 grades in a wide range of sizes.

It also produces value added items like Cold Rolling Mill rolls, Concast rollers, crane wheels, springs, hammers, grate bars, hot saw blade, shear blade, bright bar, stainless steel liner plate, etc. ASP is also supplying import substitution item components to many customers through established conversion agents. The plant is entailing augmentation of stainless steel making facilities through installation of new EAF#8 and AOD Convertors. As part of a long-term plan, ASP, which will enable itself as a standalone producer, has envisaged a new UHP (40MVA transformer rating) EAF replacing two of the existing old EAFs, round-cum-billet caster, investments in blooming and billet mill, forge shop, balancing facilities and utilities. The plant has also set up a second ladle furnace right in AOD-CCS bay. The rationale behind this was to address the constraint and enhance its stainless steel production, as the existing ladle furnace is shared by both production routes and this has given rise to certain logistics issues. In addition, ASP has also taken up several plant-level capital schemes in a phase-wise manner for purpose of de-bottlenecking in operations, maintenance and services functions.

Meanwhile, for Salem Steel plant, the ̀ 1900-crore expansion programme saw the setting up of a steel melting shop with production facilities which included a 55-ton capacity electric arc furnace, 60-ton capacity AOD Refining Convertor, a 60-ton capacity ladle furnace, a single strand slab caster, slab grinder and associated facilities. Alongside, the CRM is also being strengthened with additional facilities like a third annealing and pickling line, second slitting line, tension levelling line, second skin pass mill, roll grinders and other auxiliary facilities.

Raw materialsAlthough SAIL is one of the most secured steel producers in India, its production cost gets affected owing to the dependence on imports for coking coal. SAIL is developing new technologies to make the indigenous coal suitable for use in the steel mills and thereby reduce the dependence on imported coking coal. One of the initiativesalong this line is the implementation of the Finex technology.

The current import component in the coking coal requirement is 70 percent of the total requirement. The company imports over 90 percent from Australia. However, the remaining 30 percent is sourced from the indigenous player Coal India Ltd. Currently SAIL has a captive coking coal mine which produces around 0.5 mtpa.

However, with the augmentation of capacity to match the coking coal demand, SAIL intends to go for long term or quarterly contracts to cover 95 percent of its import requirements. This has been in effect from the last fiscal. In addition to this, SAIL is also developing the Tasra coal block to produce 4 mtpa of ROM (2 mtpa washed coal). The Sitanala coal block in the same region is also being developed for production of 0.75 mtpa of ROM (0.4 mtpa of washed coal). In addition to this, new opportunities for alliances, linkages and acquisitions are being explored.

SAIL has the largest captive iron ore operations in India, which takes care of its entire requirement. With plans in place to expand the mining operations, the company will continue to be self sufficient in iron ore after completion of the on-going phase of expansion.

Post-modernisation and expansion, the iron ore requirement is estimated to go up to about 43 mt. To meet this challenge, besides augmenting production from the existing mines, the company is vigorously pursuing with the state government of Jharkhand for development of Chiria and Gua Mines.

In tune with the corporate plan 2012 of SAIL, various capacity expansion projects have been taken up at the raw material division (RMD) mines in order to cope with the enhanced requirement of iron ore and limestone of desired quality. The major projects cover the Expansion of capacity of Bolani Ore Mines, Development of Central Block at Meghahatuburu Iron Ore Mine, Development of South Block at Kiriburu Iron Ore Mine, Mechanisation and development of Chiria Mines, Development of Taldih Block, and Opening a new mine at Thakurani. RMD also has a centralized workshop at Bolani for repair/overhauling of engines & transmission of heavy earthmoving machinery operating at the mines. Besides the above, RMD has three customer service offices (CSO) at Rourkela, Durgapur andBokaro and three liaison offices at New Delhi, Bhubaneswar and Ranchi for liaison and better coordination with various government agencies as well as different statutory agencies.

In the power segment SAIL’s captive power plants take care of about 70 percent of its total power need. Power constitutes a major and critical input in maintaining the cost

RSp product-Mix Tons/AnnumPlate Mill Plates 2,99,000HR Plates 92,500HR Coils 3,98,000ERW Pipes 75,000SW Pipes 55,000CR Sheets & Coils 4,33,000Galvanized Sheets (GP& GC) 1,60,000Electrolytic Tin-Plates 85,000Silicon Steel Sheets 73,500Total Saleable Steel 16,71,000

Source: SAIL


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competitiveness of a steel plant. The power requirement of SAIL is expected to grow to around 1900 MW by 2012 -13 from the current level of about 1180 MW. By 2020 the average load of steel plants including the power requirement of mines is likely to grow to about 4600 MW. SAIL plans to meet this power demand by setting up additional incremental power generation capacity of 1725 MW in the first stage and the balance in the second stage.

Further, a large manpower base results in higher manpower cost as a proportion of turnover for the company. SAIL has been successful in reducing this significantly through natural and other separations. Nevertheless, a part of the operations in the company continues to be from energy inefficient processes for example open hearth and ingot route of production. This will be eliminated once the current expansion programme is completed.

Tata SteelTata Steel continues to be one of the most profitable steel operations in the world. As the entire group, as others in the world of steel, are taking bold steps to create value in the long term, the group is taking several initiatives in several areas of operation, strategic growth, R&D, etc. As it is going ahead with its multi-pronged strategy to have a control on escalating cost and rising volatility, primarily on ground of raw materials, the group has undertaken several technological initiatives to increase production efficiency which will ultimately boil down to an improved bottomline.

It has several continuous improvement initiatives in place. Cumulative cost savings of `1,061 crore was achieved during 2010-11 with areas such as slag rate reduction, raw material optimisation and shared services being addressed. ‘Kar Vijay Har Shikhar‘ (‘conquer every peak’) is a new initiative launched during the year, which focused on Tata Steel’s aspiration to improve its EBITDA. It is a multi-unit, multi-

location, cross functional improvement programme that aims to excel across the entire steel value chain all the way from raw materials mining to marketing and sales of finished steel. ‘Kar Vijay Har Shikhar’ Operations, the operational improvement programme, is being rolled out in three phases, with phase-1 covering blast furnaces, Haldia Met coke and FAMD, phase-2 covering the coke plant, West Bokaro and the sinter plant and phase-3 looking at the coal and coke value chain, cold rolling, hot metal and scrap, the Jharia clean coal throughput unit and hot metal logistics.

‘Kar Vijay Har Shikhar’ marketing and sales is pursuing value creation in the small and medium enterprise market space and has been launched in flat products, long products, the wires and tubes divisions. This marketing and sales initiative aims to provide Tata Steel with an additional growth lever, improve the group’s product offering and ability to achieve premium prices and enhance the service capability of the marketing and sales organisation in India.

Tata Steel India is implementing an expansion project at Jamshedpur works to increase its crude steel capacity from 6.8 mtpa to 10 mtpa. The facilities under this project are scheduled to be completed in FY 2011-12. Simultaneously, the company is implementing a few other major capital schemes at Jamshedpur which include coke plant battery (No. 11), coke dry quenching at coke ovens batteries (No 5, 6 & 7) and a new mill for producing full hard cold rolled (FHCR) coils. This is expected to bringing down cost in a significant manner.

As true for any steel maker across the world today, the group is also continuing to implement its long-term strategy to secure ownership of assets that will increase its raw materials security and share of value-added products. During the financial year 2010-11, the company’s primary focus was on expediting implementation of its existing ventures.

The Tata-Riversdale Joint Venture in Mozambique that conducted a formal ‘ground breaking ceremony’ at the Benga Coal Project, is entailing an initial production of 5.3 million ROM tons per year to produce approximately 1.7 mtpa of high quality hard coking coal and 0.3 mtpa of thermal coal by the second half of 2011. Tata Steel has 35 percent stake in the joint venture with 40 percent off -take right to the coking coal

SAIL’s raw material resourcesSl. No Mines State year of

CommissioningRated Capacity

(in Mt) Iron ore1. KIRIBURU JHARKHAND 1964 4.252. MEGHAHATUBURU JHARKHAND 1985 4.303. BOLANI ORISSA 1960 4.204. BARSUA ORISSA 1960 2.015. KALTA ORISSA 1966 1.106. GUA JHARKHAND 1919 2.40

7. MANOHARPUR(Chiria) JHARKHAND 1907 0.70

Flux

6. Kuteshwar (Limestone)

MADHYA PRADESH 1974 1.10

7. Bhawanathpur (Limestone) JHARKHAND 1979 0.80

8. Tulsidamar (Dolomite) JHARKHAND 1970 0.34

Source: SAIL


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produced from these mines. The group plans to supply the hard coking coal from this project to its facilities in Europe in the initial phase of the project development and also for the requirements of the Indian operations in future.

The Direct Shipping Ore (DSO) Project in Canada (New Millennium Capital Corporation) will also bring in a lot of value for the Tata Steel group. According to sources, the feasibility study estimates proven and probable mineral reserves of 64.1 mt and the project is expected to produce 4 million dry tons per year of iron ore products commencing in the second half of 2012. The iron ore from this project will be supplied to Tata Steel Group’s facilities located in Europe, solving a major area of concern of the group’s European operations.

According to H.M. Nerurkar, managing director of Tata Steel Ltd, In India, currently the company has 100 percent captive iron ore and 45 percent coking coal. As the company grows the company has been promised iron ore leases to match the output, both in Jharkhand and Odisha. The coking coal situation is, however, chaotic. As far as the European operations are concerned, the company will be about 25 percent self sufficient in iron ore in about two years’ time. For coal of course the company has the Mozambique investments and the company expects 1.75 mt of total coal buy coming from it.

“As far as coal is concerned, security wise we have some share in CDJV in Australia where we have a 5 percent investment and 20 percent offtake. And we are depending a lot on the Mozambique property also which will again come into stream sometime end of next year which should give us something around 1.7 mt of hard coking coal,” according to Nerurkar. The group has also laid huge emphasis on energy conservation which along with environment implication also has a major financial implication for the group.

Some of the initiatives include waste heat recovery from pressure reducing and de-superheating (PRDS) at power house (No 5) resulted in additional 3 MW power generations, use of regenerative burners for lean gas (i.e. BF gas) at 3rd reheating furnace of hot strip mill, modification in LD gas export system, which has resulted in higher LD gas recovery, efficient use of by-product gases for power generation amongst others.

InitiativesTata Steel initiated several projects to bring down the cost and enhance efficiency in production process that will bring in substantial gain to the company’s bottomline.

It undertook several performance improvement team (PIT) projects that were implemented in various operational units across the Tata Steel Group. One such project aimed to reduce the cost of iron-making and steel-making by optimal recycling of iron-bearing waste. This had to be done without affecting the performance of the BF, the sinter plants and the steel plant. The efforts paid off with savings of 500 kilo tons per annum and estimated savings exceeding $100 million per annum at current ore prices.

Another project was to reduce chimney emissions to less than 50mg/Nm3. The team studied the problem thoroughly and came up with measures such as the replacement of carbon monoxide outlets, controlling draft and optimisation of gas flows, among others. This resulted into steady reduction of suspended particulate matter (SPM) level which was brought down to the desired level resulting into a cost savings of $16 million up to February 2011. It is expected that there will be additional savings of $40 million by March 2012 through the production of 120,417 tons of additional coke.

Continuous casting machine (CCM) productivity plays a key role in steel manufacturing, not only helping a plant meet desired volumes, but also controlling overall costs. Caster break-out at the SISCO plant had been increasing over the last two years and there was a need to reduce the frequency of this occurrence. The project team, after doing in-depth study, arrived at corrective actions, such as designing a new slag fishing rod for better pick-up, restoring and maintaining the CCM in prime condition with regular inspections on the CCM status. As a result, break-out rates fell from 0.15 percent to less than 0.12 percent, while casting heats per tundish increased from 11.86 to 12.80. The group has been significantly investing in research and development with a major focus on cost savings amongst others.

For example, a novel process has been developed for production of sponge chrome and chrome nuggets. According to the developed process, sponge chrome will be used for production of ferrochrome in existing Submerged Arc Furnace (SAF) process. It will reduce the power and coke consumption by about 20 percent and increase the productivity of SAF. The chrome nuggets will be directly used as alloying element in the stainless steel and alloy steel-making process.

In FY 2010-11, the techno-economic feasibility of sponge chrome production process was undertaken by a cross functional team consisting of members from R&D, ferro alloy operations, marketing and business performance enhancement group. As a result, the sponge chrome production idea having `370 million EBITDA benefit potential (100 ktpa plant) was selected as one of the key ‘Shikhar’ project for Ferro Alloys and Minerals Division (FAMD).


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The project will be under taken in two phases. In the first phase of the project, a 10 ktpa sponge chrome production pilot plant will be built and integrated with existing ferrochrome production process at FAP, Bamnipal which will be up-scaled to full scale operation of 100 ktpa plant in second phase of the project. The pilot plant will help to generate data for up-scaling the process to full scale plant operation. For the 10 ktpa pilot plant, the team has already completed the site selection and prefeasibility activities with the help of Engineering Project Consultant.

R&D has innovatively developed new agglomerates “cold bonded chromite pellets” for submerged arc furnace to produce ferrochrome which will reduce 70 percent energy in chromite pelletizing. These pellets exhibit superior reduction characteristics as compared to sintered chromite pellets but consume only 30 percent of the energy. The objective of the investigation was to reduce energy consumption and carbondioxide emissions during chromite pelletizing and ferrochrome production.

Cold bonded chromite pellets, as compared to conventional heat hardened pellets, are estimated to decrease specific energy consumption of chromite pelletizing by 70 percent and mitigate carbondioxide emissions by around 10,000 tons per annum. Chromium recovery is expected to increase by 5-8 percent during ferrochrome production bringing in a lot of recovery for the company.

Tata Steel’s consolidated group EBITDA in the nine months ended FY 2012 was `13,242 crore ($2.5 billion) compared to `12,399 crore ($2.34 billion) in the nine months ended FY2011.

JSW SteelLeading steel makers have been trying to undertake strategic measures to hedge itself from plausible risks in the longer term while maintaining a high growth momentum.

Moving aggressively with its multi-pronged approach including ‘strategic collaboration’, leading private steel maker JSW Steel is all set to create sustainable wealth for its stakeholder through sophisticated and optimally hedged production plan. The year 2010-11 marked an important milestone in JSW’s journey. The year was packed with events like acquisition of coking coal assets in USA, technology collaboration agreement with equity participation by Japanese steelmaker JFE and acquisition of Ispat Industries.

In its effort in bringing down its cost significantly, the company has decided to invest significantly in technology. It has commissioned a beneficiation plant at Vijayanagar works to utilise the low grade iron ore fines. The company also has a new sinter plant (sinter plant 3 with capacity 5.75 mtpa commissioned in February 2011) to enhance the sinter percent share in the feed which will further increase the productivity of its blast furnace (BF) and reduce its fuel consumption.

In order to further increase energy efficiency of steel plant, JSW is implementing various projects like coke dry quenching, coal briquetting, waste heat recovery boilers, micro pelletization amongst others. As a part of the massive expansion plan that the company has undertaken, the first phase of the 20-mtpa beneficiation plant was commissioned in phases in April 2011. The second phase of the beneficiation plant is scheduled to be completed by November 2011. At the same time, the company is expected to complete its pellet plant 2 (with capacity of 4.2 mtpa) shortly.

Coming specifically to raw materials, the single most crucial area around which the entire steel story is revolving at the moment, the company has acquired coking coal mines in West Virginia, USA where it is expected to begin operations and ramp up to 3 mtpa in a period of three years. The current year’s production could be ramped up to 0.5 mt subject to receipt of requisite permits. This will significantly contribute to the costing and sustainable supply for coking coal for the steel makers operation contributing significantly to its cost structure.

Conservation of energy is also high in the priority list. The company has already undertaken several initiatives to conserve energy across all its operational locations during the year. For example, it has installed CLIMS, an intelligent, real-time load management system which balances generation with consumption.

Consolidated financial results summary (under Indian GAAP) for the nine months ending Dec ’11

All figures in US$ million, unless specified

9MFy’ 12

9MFy’ 11 Highlights Q3

Fy’ 12Q3

Fy’ 11Q2

Fy’ 12

18.01 17.86 Steel Deliveries (Mn tons) 5.84 5.9 6.12

18,639 16,006 Turnover 6,239 5,482 6,181

2,496 2,337 EBITDA 366 636 555

13.4 14.6 EBITDAMargin(%) 5.9 11.6 9.0

645 612 Depreciation 219 212 209

407 378 Net Finance Charges 133 140 135

1,403 1,334 ProfitbeforeTaxes(afterExceptional Items (3) 296 197

7.5 8.3 PBTMargin(%) (0.05) 5.4 3.2

934 906ProfitafterTaxes,MinorityInterest and Share of Associates

(114) 189 40

5.0 5.7 PATMargin(%) (1.8) 3.4 0.6

For the purposes of converting all financial numbers into US$ for all comparable periods, a US$ exchange rate of 53.06 has been used throughout this document.

Source: Tata Steel

Financial ratios – standaloneparticulars 3QFy12 3QFy11

EBITDA Margin 15.9% 17.4%PAT Margin 2.1% 6.6%

Diluted EPS (`) 7.18* 16.97*

ROCE 8.8% 9.2%* Not Annualized Source: JSW


In 2010-11, JSW Steel increased injection of coal dust resulting in reduction of coke rate, generated approximately 11 MW of power by replacing the bypass electrical actuator with hydraulic high capacity actuator, facilitating 94 percent of BF gas to pass through to the turbine installed at the top of BF3, amongst others. Each of these individually contributed to cost savings and enhanced efficiency, thereby strengthening the bottomline of the company.

Going ahead, the company will be commissioning the second phase of beneficiation plant II to process low grade of fines to reduce cost. Along with that the company will also undertake modernisation of beneficiation plant I in line with the technology of beneficiation plant II, enabling it to upgrade iron ore quality.

In the iron making zone, the company has already undertaken several initiatives to enhance productivity and optimise cost. Some of the initiatives include replacing calibrated ore with sinter in the furnace feed in BF 1 and BF 2 thereby saving cost, reusing blow water from BF gear box, secondary cooling circuit of BF 3 in GCP, saving 500 m3 per day of make-up water, altered the nut coke screen in BF 3 enhancing net nut coke consumption and lowering the cost of screening fines amongst many. Going ahead, the company plans to convert the burden distribution technology in BF 2, expected to improve productivity.

JSW has also undertaken several initiatives at its other plants including Salem which has helped to increase efficiency, bringing in cost savings. Amongst several such steps some include improvement in stamp charging technique thereby increasing the BF coke percent chargeable to the BF from 90 percent in 2009-10 to 91.5 percent in 2010-11, increasing the proportion of sinter in the BF input from an average 57 percent in 2009-10 to an average 62 percent in 2010-11 reducing the use of coke and calibrated ore in the BF which optimised production cost, increased the injection of coal fines and dusts to optimise costs, amongst several other.

Going ahead, the company has already planned some more initiatives at the Salem unit that will help the company to optimise costs further.

JSPLJindal Steel & Power Ltd (JSPL), with 3 mtpa steel making capacity, 1.5 mtpa hot briquetted iron making capacity and 5 mtpa pellet making capacity, is riding on 15 mtpa iron ore and coal mining and 2164 MW power generation capacity. The company is relying on its huge resource pool to drive growth in the near future.

New projectsproject Coke oven plant pellet plant CRM Mill

Capacity 1 MTPA 4 MTPA 0.8 MTPAProject Cost `975 Crores `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%returnoninvestment

• 25%return on investment

• Larger share of value-added downstream market

Source: JSW

Projects – Under implementation

Location project Investment Investment till 31 Dec 2011

Angul, Orissa 1.6 MTPA steel plant810 MW captive power USD3.1Bn USD2.0Bn

Patratu, Jharkand 3 MTPA Steel Plant USD2.9Bn USD0.3Bn

Orissa 80,000 BPD Coal to Liquid USD8.0Bn USD0.02Bn

Chhattisgarh 2, 400 MW Thermal Power USD2.9Bn USD0.51Bn

Jharkand 1, 980 MW Thermal Power USD2.4Bn USD0.01Bn

Arunachal Pradesh 6,100 MW Hydro Power USD8.1Bn USD0.12Bn

Projects – Under planningLocation project

Angul, Orissa 2.8 MTPA Steel PlantAngul/Barbil 7 MTPA Merchant Pellet PlantPatratu, Jharkand 1,320 MW Power PlantRaigarh, Chhatisgarh 3 MTPA Steel PlantBolivia 5 MTPA Pellet Plant, 4 MTPA DRI , 1.7 MTPA Steel PlantJharkand 2, 640 MW Thermal PowerOrissa 1, 320 MW Thermal Power

Source: JSPL

Resource pool to fuel JSPL’s growth

Mine State Geological Reserve (Mn MT) purpose

DOMESTIC IRON ORETensa Orissa 20 SteelJiraldaburu Jharkand 80 SteelBailadila Chhattisgarh 100 Steel

Total 200OVERSEAS IRON ORE

El Mutun Bolivia 20 billion MT SteelDOMESTIC COAL

Gare IV / 1 & IV/6 Chhattisgarh 300 Steel & PowerGare IV / 2 & 3 (JPL) Chhattisgarh 270 PowerJitpur & Amarkonda Jharkand 305 PowerUtkalB1 Orissa 224 Steel & PowerUrtanNorth M.P. 55 Steel & PowerRamchandi (CTL) Orissa 1500 Coal to Liquid & Power

Total 2634OVERSEAS COAL

South Africa 50Mozambique 1200Indonesia 250

Total 1,500Source: JSPL

COvER sTORy


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Jindal Steel & Power Ltd (JSPL), the flagship company of the $10-billion OP Jindal Group, is all set to commence operations at its coal gasification plant at Angul in Odisha

by July 2012, a top company official told Steel Insights.“We expect the Angul project to come on stream by June-

July. The plant will have a capacity of 80,000 barrels per day (bpd) equivalent of key oil products (such as gasoline),” V.R. Sharma, deputy managing director and CEO of JSPL, said.

Coal gasification is the process that converts coal to synthesis gas by partial oxidation using oxygen and superheated steam as the reactants. The synthesis gas mainly consists of carbon monoxide, hydrogen and methane which will be used as a reducing agent for the iron oxide to produce DRI in the shaft furnace.

The company was earlier expected to commence operation last year, but the work was delayed due to various reasons, including gas pricing issues. Sharma noted that India has been a rather slow-starter to this field of energy, but gradually “coal gassification is becoming viable in this country.”

JSPL Odisha coal gasificationunit by July

Steel Insights Bureau

V R Sharma, Deputy MD and CEO, JSPL


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While being confident of the commercial success of the Angul project, he said the company has planned to come up with similar plants in future. Already, an amount of `50,000 crore has been earmarked for coal to liquid (CTL) projects and the projects would come up by 2017, he added.

Investments In order to expand its presence in steel, power and related sectors, JSPL has earmarked more than `100,000 crore investment in steel, power and coal to liquids projects, company sources said. This investment would come in phases in the next eight years, they said.

A total amount of `45,000 crore has been earmarked for expansion in the steel sector, the sources said, adding that about `15,000 crore has been already invested till date. An amount of `50,000 crore has been earmarked for coal to liquid projects and the projects would come up by 2017, he said. The company has also earmarked `35,000 crore for power sector. Of this `10,000 crore has already been invested.

Apart from this the company is planning to come up with a 4,000-MW hydro power plant in Arunachal Pradesh subject to government support. The total investment for the hydro power project is `24,000 crore.

“We are working closely with the state government. The MoU has been signed and the rehabilitation work has started. We intend to start the project work in near future,” the official said. However, the company is still waiting for the final go ahead from the central government and its assurance regarding security matters.

Commenting on the project, a power industry source said, “There is huge hydro power potential in the northeastern state, estimated at around 50,000 MW. A number of private sector companies, including JSPL and Reliance, have evinced interest in this sector. However, these projects will need active

support of the governments. There are security issues and only government can dispel such concerns.”

Net profit Meanwhile, JSPL is expecting to achieve 30 percent growth in net profit in 2011-12 at `3,000 crore, Sharma said.

Asked about the revenue growth, he said the company expects to clock revenues of around `15,000 crore during the current year. The topline growth was around 25 percent in the nine month period ended December 2011.

Earlier, on January 19, the company had reported a 6.6 percent increase in third-quarter group profit aided by a one-time gain and higher demand. Net profit rose to `997 crore in the three months ended December 31 from `935 crore a year earlier.

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.

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 December 31, 2011

Product Qtr III

Growth(%)2011-12 2010-11

Metallics (DRI & Pig Iron) 770,958 770,162Steel Products * 756,662 581,567 30Pellets 938,280 801,865 17Power (million KWh) 1,182 916 29

* only slab/round/bloom/beam blank

JSPL’s integrated steel plant


State-owned Steel Authority of India Limited (SAIL) is setting up a `1,600-crore universal rail mill with 1.2 million tons (mt) capacity at its Bhilai facility in

Chhattisgarh to produce heavy rails for the first time in India.The mill is likely to be operational by next year, company

sources said."SAIL is investing `1,600 crore in a new universal rail

mill to produce single 130-metre rails. The mill has been designed to produce heavier rail sections up to 75 kg/m and head-hardened rails for the first time in India," it said in a statement.

Railways Minister Dinesh Trivedi visited Bhilai Steel Plant of SAIL on February 8, accompanied by Minister of State for Railways K.H. Muniyappa.

“SAIL plants like in Bhilai occupy pride of place in India’s industrial firmament and SAIL and Indian Railways together are strengthening the foundations of the country,” Trivedi said while appreciating the success of the long business relationship between the Indian Railways and SAIL and acknowledged that it was being strengthened further through the continuous initiatives being taken by SAIL and Indian Railways to meet the growing requirements of the Railways, both technically and volume-wise.

SAIL chairman C.S. Verma said that the company contributed about 7 percent percent of the total freight business of the Indian Railways in India in both volume and monetary terms.

“SAIL is already the sole supplier of rails to the Indian Railways, including long rails of 260 metres,” he said.

Till date, SAIL has supplied over 16 million tons (mt) of rails to the Railways with a total rail length of around 4 lakh km, enough to encircle the earth 9.5 times, a company statement said.

It added that the bond has been further strengthened with collaborative efforts with Railways including a pact with RITES to set up a wagon manufacturing unit at Kulti in West Bengal to annually manufacture 1,200 wagons and undertake rehabilitation of 300 wagons.

SAIL, which is currently in the process of modernising and expanding its production units, raw material resources and other facilities to maintain its dominant position in the Indian steel market, aims to achieve a production capacity of 26.2 million tons per annum (mtpa) of the hot metal by 2013 from the base level production of 14.6 mtpa (2006-07 – Actual).

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SAIL to set up 1.2-mt rail mill at Bhilai Sanjukta Ganguly


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Other projectsThe commissioning of the new plate mill of Rourkela Steel Plant (RSP) of SAIL is likely to be delayed "slightly" due to delay in civil construction work, a company source told Steel Insights.

"The new plate mill with expanded capacity to process 4 meter wide plates has been slightly delayed because of civil construction work. The construction work got delayed as foundation work took more than expected because of rocks below the surface. The mill has currently a capacity to process plates of up to 2 metres," the source said.

The wider plates are in good demand in the market, but transportation is a challenge. It is used in ship building and infrastructure and the main buyers are defense industry, structural and railways (for wagon making) among others.

Besides the plate mill, RSP is working on making some more grades of special steel, the source said.

"We are already making silicon steel at SMS1, but with the installion of RHOV at SMS2 not only will our capacity increase, but we will be able to make clean and good steel such as extra deep drawing (EDD) steel," the source said, adding, "EDD has been delayed a bit and will now be commissioned in March 2013."

Another major project of BSP is that the plant has rolled out a fresh order of 54 tons of Ultra High Strength Special Steel Plates of 9.2 mm thickness that will be used for the main

body of India's indigenous space launch vehicles such as Polar Satellite Launch Vehicle (PSLV) and Geosynchronous Satellite Launch Vehicle (GSLV) that are manufactured by India Space Research Organisation (ISRO).

The plates were rolled in Plate Mill from slabs supplied by

Work at Bolani mines stop, to resume soon


The state of Odisha has asked the Steel Authority of India (SAIL) to stop operations at its Bolani iron ore mine after forest clearance expired on

February 11, according to sources. The mine, which is spread over 1,321.45 hectares,

produces 10 million tons (mt) of iron ore annually and supplies to several plants of SAIL.

However, sources said mining was likely to resume soon as the company hopes to obtain necessary clearances soon.

SAIL is expected to boost its iron ore requirements by 68 percentpercent to 39 mt in 2013 from 23.25 mt in 2010 to meet expansion needs.

Coke oven battery operation


Mishra Dhatu Nigam Ltd (MIDHANI), the company said in a release.

Steel is widely used in construction of space shuttles along with metals like aluminium, titanium and other high grade materials. Such special grades of steel are made out of special alloys and are capable of withstanding metal fatigue which occurs due to tremendous changes in heart and atmospheric pressure on the spacecraft when it returns to orbit.

Special care was taken in Bhilai’s Plate Mill for proper heating and soaking this grade as the steel requires eight hours of retention time inside the furnace. BSP had earlier rolled this special grade of plates for space application in 2009. The officials witnessing the production in plate mill have expressed confidence in Bhilai’s capabilities for rolling out more such grade of plates for space applications in future.

Bhilai's plate mill that has been rolling the required grades for use in defence and space sector, has become a kind of one-stop shop for wide and thicker customised and special grade plates for meeting a variety of end usages in the power and energy sector, super-construction projects, ship building and manufacture of boiler and pressure vessels, heavy engineering machinery and equipment, pipelines for water, crude and gas transportation etc.

The product range of Bhilai’s plate mill is wide and

includes plates of 8 to 120 mm thickness, 1500 to 3200mm wide and in lengths up to 15 meters. Close to 50 percent of the total production from the plate mill is of the special steel variety. The mill has advanced facilities for ensuring high product quality i.e., Hydraulic Automatic Gauge Control, Plan View Rolling, On-line Ultra-Sonic Testing Machine, Normalizing Furnaces. Among such new and advanced facilities recently added are Heavy Duty Shear and an Edge marking with bar coding and decoding facility that is under commissioning.

Bhilai has collaborated with the Indian Navy to develop and supply DMR-249A (ABA) grade steel plates meant for use in constructing hull of the aircraft carrier warships of frigates. The collaboration with the Navy is expanding and BSP is also making steel (DMR 249B) for manufacture of submarines. These grades are specially toughened, warship-grade steel from Bhilai for use in constructing hull of the aircraft carrier warships or frigates and submarines.

Several projects of national importance are sourcing their requirement of special steel plates with the right properties and strength from Bhilai's Plate Mill. To meet the requirement

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SAIL reports 43 percent dip in Q3 profitSteel Insights Bureau

State-run Steel Authority of India Ltd on February 13 reported a 43 percent dip in net profit for the third quarter ended December 31, 2011 at `632

crore compared to `1,107 crore in the corresponding period last year on costlier raw material and forex loss.

The total income of the company declined to `10,729 crore against `11,280 crore a year earlier. Its raw material consumption grew to `5,991 crore during the quarter against `5,262 crore in the third quarter of last fiscal.

SAIL largely meets its iron ore requirement from captive sources, but it had to rely heavily on imported coking coal to fire the blast furnaces in the reporting quarter.

The weaker rupee also negatively impacted the steel makers’ bottom line to the tune of ̀ 466 crore during the reporting quarter.

SAIL attributed the forex loss to “unusual and steep depreciation in the value of the rupee against US dollar and euro”.


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of BHEL, Bhilai produced for the first time 120 mm thick normalized ASTM A36 grade plates with ultrasonic testing for supply to M/s BHEL, Ranipet for construction of auxiliary structure of high capacity boilers. Another grade developed for BHEL, Haridwar is the thicker gauge Boiler Quality plates in IS 2002 Gr.II in 120mm thickness for use in the Turbine pedestal of 500MW Thermal Power Plant.

Suzlon's windmills are being made with the required grade of plates from Bhilai. Indian Railways that gets all its rails in lengths of 13 metre, 26 metre and 130 and 260 metre from Bhilai also sources plates in SAILMA 300 HI grade of thickness up to 80 mm for its Diesel Locomotive Workshop from Bhilai. Big industrial houses like Thermax sources boiler quality plates for providing sustainable energy solutions. The Bangalore Water Supply Board has sourced huge quantities of plates from Bhilai for its 69 km pipeline to get Cauvery's water to the city.

It is worth mentioning that most of the new grades of special steel successfully developed and rolled by Bhilai in the last several years as part of its ‘one new grade every month’ product development programme have been plates. Out of the 12 new grades of special steel successfully d e v e l o p e d

and rolled by Bhilai steel plant in 2010-11, as many as nine were new grades of special steel plates rolled in the Plant’s Plate Mill.

Among the new grades developed recently is one special grade for M/s BEML that is manufacturing coaches for the Delhi Metro. M/s IOTL is sourcing pressure vessel plates with superior impact toughness for horton spheres of ethylene storage vessel for a petrochemical project in Assam. In the current fiscal year, Bhilai has successfully developed and rolled out several new special grades of steel.

These include corrosion-resistant grade of plate to be used in the manufacture of bogey frames for rail coaches, a new ASTM grade of plate for use in the manufacture of pressure vessel for a petrochemical project. M/s Siemens Transport Systems too is getting special steel plates with low temperature impact toughness to be used for manufacturing railway passenger bogies from Bhilai.

Several other special steel grades of plates are in advanced stages of development. These include a dual-grade Boiler Quality plate for M/s GR Engineering for intermediate and low temperature application by boiler and pressure vessel manufacturers.

While Bhilai has 22.2 percent percent share in the market for plates in the country, the plant also exports boiler quality, ship building grades, thicker plates as well as mild steel grades and low carbon plates for earthmoving equipment to several European countries. The plant has supplied dual certification plates for export to Thyssen, Germany for use in different shipyards. An export grade plate has been developed and supplied for Titagarh Wagon Ltd for manufacturing of high-speed light oil tank wagons for the French National Railways as well.


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Tata Steel, the world’s seventh largest steel manufacturer, has sought permission from its shareholders to raise its borrowing limit by about 25 percent to `50,000 crore

to part-finance the various expansion initiatives which the company has already undertaken, according to information available with Steel Insights.

“Taking into consideration the requirements to meet the cost of the company’s greenfield projects in India, and investments in raw materials projects globally, it is expected that the limit of `40,000 crore sanctioned by the shareholders

will not be adequate,” Tata Steel said in a notice to the shareholders, according to media reports.

Tata Steel has a net debt of `50,528 crore, which includes a part of the loan taken by the company to acquire UK-based steel-maker Corus in 2007 as on December 31, 2011. Moreover, last year, the company had raised about `4,977 crore through a follow on public offer and bond issue.

According to information available with Steel Insights, the company has kept a capex of $2.5 billion (about `12,500 crore) for 2012-13, out of which $800 million (about `4,000 crore) will be spent on the company’s plant at Kalinganagar in Odisha.

Apart from setting up of a 6 million tons per annum (mtpa) steel plant at Kalinganagar, Tata Steel also has other expansion plans. This includes adding 2.9 million tons (mt) new capacity by March at its Jamshedpur plant, taking the total production capacity of the company to 10 mtpa. Apart from these domestic investments, the company will also spend $600 million on its European operations and about $400-500 million on its Jamshedpur plant, according to sources.

Expansion workIn tandem with chalking out investment plans, expansion work is also in full progress. In fact, the installation of two roller hearth furnaces at Tata Steel’s thin slab casting and rolling plant at its integrated works in Jamshedpur is set to be completed by the end of the first quarter of 2012, according to company sources. The installation of a second roller furnace is at an advanced stage, according to industry sources. The second furnace could be completed before the end of the first quarter of 2012.

Both the furnaces have a reheating capacity of up to 280 tons per hour of slab. The slabs produced are later re-rolled into coils at the Jamshedpur plant.

Apart from this, Tata Steel has ordered three walking beam furnaces from Tenova to be installed in phases at its new 6 million tons per year mill in Odisha, according to industry sources. The beam furnaces are due to be installed in two phases for an undisclosed fee. The first two furnaces have a commissioning date of October 2013, while installation of the third - which will signal full production utilisation at the mill – is due in October 2014.

The re-heaters at the works’ 5.5-mtpa hot strip mill will convert semis into finished products, which will be sold both in the Indian and export markets. Work at the Odisha site began in 2010. This latest investment follows a chain of Tata orders placed in Tenova technology, which included the provision of a ferrochrome furnace at Tata Steel South Africa’s Johannesburg site in 2008.

With such initiatives already in progress, Tata Steel looks well set on its way to achieving its production target for the coming fiscal.

Tata Steel seeks to raise borrowing limitSteel Insights Bureau

Tata Steel posts Q3 loss

Tata Steel posted a quarterly loss in the third quarter of the current fiscal, its first in more than two years, as higher raw material costs and weak demand in

Europe hurt margins. Tata Steel reported a net loss of ̀ 687 crore for the quarter ended December 2011, compared with a net profit of `949 crore a year earlier. Net sales rose 15 percent percent to `32,964 crore. After minority interest and share of associates, it reported a net loss of `603 crore.

Tata Steel said consolidated margins for the quarter slumped to 5.9 percent from 11.6 percent a year earlier. Sales at its Indian operations, which account for a quarter of its global capacity, rose 16 percent to `24,450 crore. It posted a 1.1 percent drop in volume because of slowing economic activity and weak demand from the construction and automobile sectors. Its steel deliveries eased to 5.84 million tons (mt) from 5.9 mt in the previous year. The company, which operates two-thirds of its global capacity of about 28 mt in Europe, warned it did not expect a significant revival in demand in its core markets in 2012.

“The December quarter marked the height of the cyclical cost-price squeeze. We are accelerating cash conservation in expectation of muted but stable demand in our core markets in 2012,” said Karl-Ulrich Kohler, head of its European operations.

“We expect steel demand to improve on expectations of the Reserve Bank of India relaxing monetary policy to aid growth and investment,” Tata Steel managing director Hemant Nerurkar said.

The company is expected to complete a planned expansion of its Indian capacity to 9.7 mt by March, from 6.7 mt now. Tata Steel also operates units in Thailand and Singapore. Earlier this month, ArcelorMittal, the world’s largest steelmaker, posted an unexpected quarterly net loss, while Korea’s Posco, the world No. 3, reported a smaller-than-expected profit rise.


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JSW Steel Ltd, 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 sharp a 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 suppliesfor 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 acute shortage of iron ore after India's top court put an interim ban on mining in Karnataka.

Crude steel productionJSW Steel Limited, a leading steel maker of the country and a part of the O.P. Jindal group, has produced 610,000 tons of crude steel in February 2012, showing a growth of 13 percent over corresponding month of previous year, the company said in a statement. The cumulative crude steel production for 11 months of the financial year stood at 6.77 million tons

(mt) with a growth of 15 percent over previous period, the statement added.

“The crude steel production during February 2012 was severely impacted due to usage of inferior grades of iron ore. As the stockpile of 25 mt is getting exhausted, the quality of iron ore being offered in e-auction is deteriorating substantially. Further certain iron ore in e-auctions contained high alumina, silica, manganese and Low Fe, which led to poor Sinter quality, high slag formation and low productivity in the blast furnaces,” said Seshagiri Rao, Joint Managing Director and Group CFO.

The quantity of iron ore sold in the e-auctions during the entire month of February 2012 was only 1.17 mt as against the industry requirement of 3 mt per month. Even after paying higher prices in e-auctions, the availability of quality iron ore remained the biggest challenge, threatening the continuation of steel production efficiently, company sources said.

Steel industry in Karnataka region, therefore, is not only facing shortage of iron ore but poor quality of iron ore is impacting the equipment, productivity and efficiency. Moreover, since Central Empowered Committee (CEC) recommended opening up of clean mines (Category A), the company expects that the Supreme Court will permit mining at least in Category A mines, as per the company statement.

The break-up of production during February 2012 and February 2011 is as below:

productproduction ( in Lakh tons)

Feb’12 Feb’11 GrowthCrude Steel 6.10 5.41 13%Rolled Products : Flat 4.47 4.42 1%Rolled Products : Long 1.52 0.75 103%

Seshagiri Rao, Joint MD & Group CFO, JSW

JSW Q3 net profit dips 56%Steel Insights Bureau

JSW Ispat controls net loss

JSW Ispat Steel, formerly known as Ispat Industries, recorded `308.57 crore loss in the October-December quarter of the current fiscal due to a rise in raw material,

power and fuel costs and steep decline in the value of rupee. The JSW group subsidiary had recorded a net loss of `409.31 crore in the corresponding quarter of the 2010-11.

“The financial results for the quarter have been adversely impacted due to steep decline in the value of Indian rupee against US dollar/Japanese yen,” the company said in a filing to the Bombay Stock Exchange. The company’s raw material cost increased about three-fold to `1,784 crore during quarter under review from `635 crore in October-December quarter of the last fiscal.

Also, its power and fuel cost doubled to `450 crore from `224 crore in the corresponding period of 2010-11. Net sales, however, rose to `2,666 crore during the quarter as compared to `961 crore during the same quarter of 2010-11.


CORpORATE upDATE

The world's largest steel producer ArcelorMittal has made some headway in India by getting possession of about 1,827 acres for the proposed 6-million-ton (mt)

plant in Karnataka. The company said in its annual report for 2011 that it has

completed all necessary steps to acquire the land in Karnataka and is expecting to get the remaining 972 acres by May for the `30,000-crore ($ 6.5 billion) project.

"A draft feasibility report for the contemplated steel plant is currently being prepared, and hydrological and environmental impact assessment studies have been initiated," it added. Alongside the steel mill in Karnataka, ArcelorMittal has also proposed to build a 750-MW captive power plant.

Company chief L.N. Mittal had said earlier this month that ArcelorMittal is not counting on India in its business plans for the next few years largely due to regulatory issues.

The company's plans to build two mega steel mills of 12 mt each in Jharkhand and Odisha are yet to take off. These projects including the steel plant in Karnataka, would require an investment of about `1,30,000 crore, according to company sources.

However, for the Jharkhand project, where it now intends to set up a 3 million tons per annum (mtpa) capacity plant in the first phase, the company has sought "adequate land" under the State Government Consent Award Scheme under which, the state government will facilitate the legal transfer of land for a project after an investor has secured the landowner's consent to the sale of the land, the source added.

H1 of 2012 ArcelorMittal feels that continued progress on management gains and asset optimisation plans would help the company report a better EBITDA in the first half of 2012 compared with the second half of 2011.

It, however, feels that the first half of 2012 is likely to be lower than the comparable period of 2011 even though overall steel shipment volumes are expected to be at a similar levels as in first half of 2011, the company said in its outlook after announcing fourth quarter of 2011 and full year results.

Mining production volumes are expected to be higher in first half of 2012 in line with plans to increase iron ore and coal production by about 10 percent percent in 2012, the company said in a release.

The company expects a capital expenditure of $4-4.5 billion in 2012 and a further reduction in net debt anticipated with a focus on working capital management and non-core asset divestments.

The company reported a net loss of $1.0 billion for the fourth quarter off 2011 due in part to $1.3 billion of non-cash charges (reduction in deferred tax asses of $0.9 billion) together with asset impairments ($0.2 billion) and restructuring charges associated with asset optimization ($0.2 billion).

The company's steel shipments during the quarter stood at 20.6 million tons down 2.5 percent over third quarter driven mainly by destocking in Europe.

It managed to reduce its debt by $2.4 billion during the fourth quarter to $22.5 billion driven by improved cash flow from operations of $2.9 billion, inflow of $0.8 billion from MacArthur coal divestment and foreign exchange gains.

Despite a loss in fourth quarter, its 2011 net income stood at $2.3 billion and EBITDA at $10.1 billion, up 18.7 percent y-o-y.

ArcelorMittal makes some headway in Karnataka project


L N Mittal, Chairman, ArcelorMittal


After acquiring 50 percent equity in Legacy Iron Ore Limited and also inducting three Directors in the Legacy board with N.K. Nanda being appointed as chairman,

NMDC Limited has now set its eyes on acquiring more mineral assets overseas, according to information available with Steel Insights. In fact, the company has recently said in a statement that Legacy will serve as a platform to propel acquisition and development of mineral assets in Australia.

NMDC Limited, a government of India enterprise, is actively pursuing the acquisition of overseas strategic mineral assets with the objective of meeting its own requirements and also to ensure uninterrupted supply of raw material for the country’s steel and fertiliser industries.

After successful acquisition of Legacy iron ore mines, NMDC has set its mind on further acquisitions in Brazil, Mozambique, Russia, USA and South Africa.

The company has identified an iron ore asset in Brazil very close to the port with reserves of more than 1 billion tons of the material. In Russia and in Mozambique, it has identified coking coal mines with reserves of more than 50 million tons and 150 million tons respectively, whereas in Australia, the company is planning to use Legacy as their arm for further acquisition, a company source informed.

Steel production As part of its forward integration and value addition programme, NMDC is setting up its 3 million tons per annum (mtpa) steel plant at Nagarnar in Chhattisgarh. The land acquisition for the project was completed in August 2010 in

a record time of 10 months and five major packages of the steel plant have already been awarded to i n t e r n a t i o n a l l y acclaimed companies at a cost of around `6,500 crore, according to a company statement.

The company is also aggressively considering the proposal of the steel plant in Karnataka with the largest steelmaker of Russia, Severstal.

Within the country, NMDC is in active discussion with Tata Steel to set up a steel plant in Chhattisgarh where they have adequate land and raw material mines.

Net profit percentNMDC has recorded a sharp increase of 22.45 percent in net profits during the quarter ended December 31, 2011 as compared to the corresponding period last year.

Net profit during Q3FY12 stood at `1,858.81 crore as against `1,518.03 crore recorded during corresponding period last year.

Sales turnover of the company during Q3FY12 stood at `2,821.95 crore while it stood at `2,621.22 during the quarter ended December 31, 2010. Total income of the company during this quarter stood at `3,347.34 as against `2,915.94 earned during the corresponding period of previous year.

The largest domestic iron ore producing company also made its first overseas acquisition during the quarter, purchasing a 50 percent stake in Australia’s Legacy Iron Ore for about `92 crore, the company said in a statement.

Currently, the company is also doing due diligence to acquire two other Australian properties – the Ridley iron ore deposit of Atlas Mining and the Wonarah phosphate reserve of Minemakers Ltd. The process is expected to be completed soon.

On the domestic front, construction of the company’s first steel plant of 3-mtpa capacity in Chhattisgarh’s Nagarnar district is in full swing, as most of the packages have been awarded for the project. The plant is expected to be commissioned in 2014.

During the quarter, the company also signed an agreement with Russia’s Severstal to set up a steel plant in Karnataka, which will have an initial production capacity of 3 mtpa. NMDC will supply iron ore to the plant, while coking coal will be sourced from the Russian firm’s mines, the statement added. N K Nanda, CMD, NMDC

CORpORATE upDATE


CORpORATE upDATE

Businesses of Sesa Sterlite, the new entity announced by Vedanta Resources for its India operations, will generate an annual surplus of $7-8 billion, Anil Agarwal, Group

Chairman has said.Sesa Sterlite, which will be created out of the merger of

metals producer Sterlite Industries and iron ore miner Sesa Goa, will have the capability to repay the debt within the next three years, if it chooses to do so, media reports said.

“We (Sesa-Sterlite) have a debt of $7 billion whereas the assets are amazing. The new entity with five businesses will generate profits of $7-8 billion every year,” Agarwal said.

Sterlite Industries (India) Ltd, Sesa Goa Ltd and Vedanta Resources Plc announced on February 25 a recommended merger of Sesa Goa and Sterlite and the proposed consolidation and simplification of the Group structure.

The proposed new name is “Sesa Sterlite”. The merger of Sterlite into Sesa Goa will be carried out with three Sesa Goa shares to be issued for every five existing Sterlite shares. Vedanta Aluminium Ltd and The Madras Aluminium Company Ltd will be 100 percent consolidated into Sesa Sterlite.

Vedanta’s direct holding of 38.8 percent in Cairn India Limited will be transferred to Sesa Goa, together with the

associated debt of $5.9 billion, at cost. Post the transfer, Sesa Sterlite will have a 58.9 percent shareholding in Cairn India.

This transaction will make Sesa Sterlite India’s natural resources champion and the company is expected to be seventh largest global diversified natural resources major by EBITDA. Also, Sesa Sterlite will be listed in India, with American Depositary Shares listed on the New York Stock Exchange.

Post consolidation Vedanta will own a 58.3 percent shareholding in Sesa Sterlite. The Group’s 79.4 percent shareholding in Konkola Copper Mines Plc will continue to be directly held by Vedanta. The new company will have resources such as zinc-lead-silver, copper, aluminium, commercial power, iron ore, oil and gas.

On concerns that the debt of the London-listed Vedanta Resources will be transferred to the new Indian entity, he said the top management has held a series of meetings with minority and institutional investors to take them on board. “We are constantly in touch with our shareholders. They fully understand the developments (behind the restructuring) and appreciate. They are getting aligned with us,” said Agarwal.

The debts are long-term and Sesa Sterlite would be able to generate substantial cash flow to repay all its debts, he further added.

The group currently has several expansion projects going on, including increasing the aluminium production facility to three million tons (mt) by 2015. Besides, the copper production is also targeted to double and iron ore to 40 mt by then.

In fact, significant synergies are expected from the move, resulting in cost savings of `1,000 crore per annum.

According to company sources, Sesa Sterlite is going to be one of the largest global diversified natural resources majors whose transaction will be a natural evolution, leading to simplification of the Gorup's structure. Sesa Sterlite will be the principal operating company and the vehicle for future mergers and acquisitions in the group.

Sterlite profit Sterlite Industries (India) Ltd has posted a net profit of `284.32 crore for the quarter ended December 31, 2011 as compared to `316.38 million for the quarter ended December 31, 2010.

Net sales of the company for the quarter stood at `4582.20 crore while the figure stood at `4,378.41 crore during the corresponding period of previous year.

Total expenditure of the company stood at `4,301.46 crore while it stood at `4,285.42 crore during the corresponding period of last year.

Sesa Sterlite to generate $7-8 bnannual surplus


Anil Agarwal, Group Chairman, Sesa Sterlite


CORpORATE upDATE

Electrosteel Castings (ECL) has received forest stage-I clearance for its iron ore mines located at Kodolibad, West Singhbhum, Jharkhand, from the Ministry of

Forests and Environment (MoEF), according to information available with Steel Insights.

The company expects to receive stage-II clearance in the coming two to three months and then sign mining lease with the state government. After signing the mining lease, ECL can develop the mine and resume full-fledged production.

The mine has reserves of 91 million tons (mt) of iron ore with 64% Fe content. ECL expects to commence production from this mine in FY2013.

“For developing the Parbatpur coking coal mine and Kodalibag iron ore mine and also to finance some other projects, we are raising around $200 million through overseas borrowings,” Ashutosh Agarwal of the Electrosteel group said earlier in conversation with Steel Insights.

With upcoming production from coking coal and iron ore, ECL will turn into a fully integrated steelmaker in the coming days.

Although there is lack of clarity on the timelines for commencement of meaningful production from its coking coal and iron ore mines, ECL’s margins are expected to be significantly higher than its peers once it reaches optimum production capacity at its mines, according to analyst reports.

Moreover, ECL’s associate, Electrosteel Steels (34.8% stake) with 2.2 million tons of steel capacity is expected to benefit the most, as ECL will supply coking coal and iron ore from its

mines to Electrosteel Steels at subsidized rates (cost + 20%).

Other plans

Electrosteel Castings Limited’s Director M.K. Jalan said, “We are now looking at the possibility of setting up DI pipe plants in the Gulf region. We are looking at two destinations – Qatar and Kuwait – and are currently evaluating as to which of the two would be a better option.

Also, the final selection would depend on where we can find a local partner,” Jalan added.

Raw material securityThe company which aims to achieve an exponential growth in the next 10 years, is no doubt, at an advantageous position from its competitors when it comes to securing its supply of raw materials especially at a time when most of the companies are fighting for raw material security, according to H.K. Modi, Executive Director, Electrosteel Castings Limited.

Having coal blocks and iron ore mines at their disposal for captive use, this leading ductile iron pipe maker is already enjoying an edge over its competitors as far as supply of adequate quantity of raw materials is concerned.

ECL receives MoEF nod for iron ore mineSanjukta Ganguly

ECL posts `10.78 crore loss in Q3FY’12


Electrosteel Castings Limited, has posted a loss of `10.78 crore in the quarter ended December 31, 2011 while the figure stood at `47.44

crore during the corresponding period of last year, according to information available with Steel Insights.

Net sales of the company during the quarter stood at `443.78 crore while in Q3 of FY’11 the net sales figure was at `424.95 crore, according to company sources.

Total expenditure of the company during the quarter stood at `487.12 crore while during Q3 of FY’11 the expenditure stood at `363.81 crore.

M K Jalan, Director, ECL


India is presently producing crude steel about 70 million tons per annum (mtpa). In view of the fairly large reserves of iron ore and the current low per capita consumption of

steel in the country, it has been predicted by many experts in the field that production of crude steel will be around 120 mtpa by 2015. The pessimists are indicating a figure of 140 mtpa by 2020.

The expansion will be carried out by both large steel plants as well as smaller units using DRI and Induction Furnace (IF) routes. Large steel plants having capacity 3 mtpa and above normally chooses BF-BOF (blast furnace-basic oxygen furnace) route. In the case of medium sized plants, DR (direct reduced)-liquid hot metal and EAF (electric arc furnace) route is getting popular in India. The plants having annual capacity of lower than 1 mtpa are following DRI-IF (direct reduced iron-induction furnace) route.

India has large reserves of rich iron ore. However during mining, more than 60% of fines are generated. There is hardly deposit of good quality coking coal. But the reserves of non-coking coal are large although these contain high percentage of ash (30-40%). There is no significant oil or gas deposit.

Thus in order to produce steel at sustainable production cost, it is necessary to use the indigenous ore and non-coking coal. For coal, some of the producers are setting up washing facilities to bring down the ash percentage. The lower ash coal is used for DRI production and higher ash fraction goes to captive power plants. Another new trend is the coal gasification route whereby non-coking coal is gasified and synthetic gas is used for DRI production getting most of the advantages of gas-based DRI in respect of plant capacity and better quality of DRI.

In the case of iron ore fines, these are beneficiated and pelletised or sintered depending on the size of fines and then used in DRI or Corex/ blast furnace.

Thus the various routes being developed in India or being considered for installing are as follows:

♦ Use of fines to make pellets and using these as feed material for rotary kiln to make sponge iron. Coal is also used in the kiln as fuel.

♦ Use of lump ore and non coking coal for coal-based DRI and generate power from the hot gas coming out of the kiln.

♦ Use coal gasification to make gas-based DRI which can be coupled with EAF for making large sized steel plants.

♦ Use alternate iron making process such as Finex (ore fines and non coking coal), Corex (ore lump or pellets and use of imported coal as indigenous coal is not of good quality). Production of iron nugget through ITmk3 process using

ore fines and non-coking coal is also being considered. HIsmelt process can also be used for making good quality liquid iron using ore fines and non coking coal.

♦ Use BF-BOF route using blend of imported coal and indigenous soft coal and use stamp charging for making good quality coke which will be cheaper than imported coke.

♦ In case the iron is in liquid form, BOF is the suitable option. For charge comprising various proportion of solid, liquid, etc, EAF or Conarc process are popular. For smaller units, IF is used and steel produced in IF has constraints of high sulphur and phos. One more refining operation is needed to produce steel as per specification in case of IF route. However in case of EAF or BOF there is no such problem.

Continuous casting should be done in the size closer to the final size. Thus thin slab caster or near shape casting have come into practice in case of flat and non-flat products respectively. There should be hot charging of concast material and continuous endless rolling should be the aim to achieve the final product for better yield and lower overall length of the mill.

Since the present iron and steelmaking operations consist of repeated heating and cooling right from sponge iron or sinter/coke making up to hot rolling, it is necessary to utilise the heat losses at various stages for various applications. There is also generation of enormous amount of solid, liquid and gaseous wastes at various stages and technologies are available to minimise the generation and utilise the products. Recovery and recycling of waste materials are of paramount importance for making the steel production sustainable.

spECIAL fOCus

Steel makers should focus on heat loss utilisation, waste management

B.P. Sarkar

B P Sarkar is the advisor to mjunction services ltd and publisher of Steel Tech


Iron ore, the world’s second-biggest commodity cargo after crude oil, is extending a bull market after rallying 22 percent from the lows in October as the slowest expansion

in exports restricted supplies.New mines and expansions of existing ones are being

postponed by rising costs and licensing delays. Morgan Stanley cut its forecast for export supply by 9.6 percent since October and expects a 99-million-ton (mt) deficit in the seaborne market this year, at least the ninth consecutive annual shortage.

Several analysts also said additional iron-ore supply that

investors had been afraid of is going to be late and the market still remains tight. Ore with 62 percent metal content delivered to the Chinese port of Tianjin was at $143 a ton at the end of February.

Delayed projects include Minas Rio in Brazil, which Anglo American originally expected to open in 2009, and Simandou in Guinea, which Rio Tinto Group anticipates will start in 2015 rather than next year, as previously forecast. Vale also said that it had delayed the start of an $8-billion expansion at the Carajas Sierra Sul mine in Brazil by two years to 2016.

Ironore mining costs rose at least 20 percent in Australia and Brazil in 2010, according to reports.

Supply constraints lift iron ore pricesSteel Insights Bureau

fEATuRE

Rio Tinto, the world’s second largest iron ore supplier, may lower iron ore contract prices for

the second quarter of 2012 by 9 percent for customers in northeast Asia who use the “quarterly lag” pricing system.

Rio’s iron ore fines could fall to $2.1023/dry metric ton unit FOB Australia in April-June from $2.3161/dmtu in the current quarter. The price marks the fourth quarterly decline. It is also a 24 percent drop from the $2.7638/dmtu it charged in the same quarter a year earlier.

Consequently, the price of the company’s flagship product – Pilbara Blend fines – would be set at $128.24/dmt FOB Australia in Q2 compared with $141.28/dmt in the current quarter, based on an iron content of 61 percent.

Rio Tinto’s pricing mechanism considers the average of spot prices in December-February to determine Q2 prices. This reference period had been used since April 2010, but for steelmakers in China, has changed since Q4 last year, after a sharp decline in spot prices in October and tight credit reduced contract performance.

Chinese customers of the miner have said they have

shifted to buy ore based on current-quarter or current-month index values, or on a spot basis. Steelmakers in northeast Asia excluding China have generally preferred a quarterly lag system.

Rio Tinto may cut contract priceSteel Insights Bureau


fEATuRE

JSW Steel Ltd has enough stock of iron ore to run its main Karnataka plant for two months, as it continues to struggle to ensure adequate supplies of the critical

raw material following a mining ban in the southern Indian state.

According to Chief Financial Officer Seshagiri Rao, JSW has 6 mt of iron ore to meet the production requirement of its 10-mtpa steel plant and that it expects to get another 3 mt soon.

The company has been hit hard by a Supreme Court ruling last year that banned iron ore mining in three districts of Karnataka. Before the mining ban, JSW used to get iron ore through contracts with miners in the state.

However, since August, JSW, which does not own an iron ore mine, has been relying on court-mandated auctions of the raw material to run its factory in Vijaynagar town.

Rao said the company is running the plant at 85 percent-90 percent of its total capacity.

The steel output of unit JSW Ispat Steel Ltd., which it acquired in 2010, has been hit by a shortage of natural gas supply to run its blast furnace.

The government has mandated power and fertilizer companies as the primary customers for natural gas, hurting those cement and steel companies which rely on gas to run their plants. JSW Ispat has a total production capacity of 3.3 million tons a year.

Iron ore crisis dogs JSW Steel

Reports said Standard Chartered expects a 145-mt shortage this year as deliveries from India drop 35 percent because of curbs on mines that do not have permits to operate and after the government raised export duties. Exports from Brazil, the second-biggest shipper behind Australia, will grow 7 percent, the slowest pace since 2008, according to predictions.

Global supply needed to grow by at least 100-mt a year in the next eight years to meet demand and replace mines that close, Rio said in a presentation.

China’s government plans to build 36 million affordable houses by 2015. Each uses about 3.3 tons of steel, industry consultant MEPS estimated. Construction accounts for 55 percent of steel demand in China, MEPS said. China may also have to seek additional ore supply from Australia and Brazil.

In a recent interaction, India’s mining secretary V. Trivedi also said India’s iron ore exports will recover from this year’s depressed levels but will not rise above 100 mt as a crackdown on illegal sales pays off.

Traders have already slashed forecasts for 2011-12 exports from India to around 50 million tons, about half of last year’s figure, dropping it below South Africa in the export rankings.

The fall came after the Supreme Court banned mining in some areas and the government hiked export taxes to crush illegal sales.

In 2010-11, India exported 97 mt of iron ore and has exported about 100 mt a year for several years, mainly to China.

Illegal mining in India is widespread and usually entails removing resources outside permitted zones. An ongoing

case in Karnataka state, which used to account for about 25 percent of India’s exports, found a nexus between politicians and miners behind an alleged $3.6-billion export scandal.

The government has proposed a Mining Bill that will create an independent regulator and impose profit and royalty sharing arrangements with villagers as well as opening up the sector to foreign investment.

While the government has shown an inclination to conserve resources, it says it does not support a blanket ban on exports and wants just to bring in transparency in the sector.

In addition, Indian steelmakers lack the technology currently to use the ore fines which the country mostly produces and exports to China.


fEATuRE

Scrap prices show mixed trend Steel Insights Bureau

Ferrous scrap prices showed a mixed trend in the international market during the month of February 2012 with some major markets showing increased buying

while others witnessing a slow down. Going forward, the market would largely be driven by demand from Turkey and India, market participants said.

Scrap import prices in India rose by an average of $10 per ton cfr Nhava Sheva during February as compared to a month ago. As of end February, prices of HMS 1&2 (80:20) stood at around $455-465 per ton cfr, compared to $445-460 per ton reported in the previous month. Shredded scrap import prices also showed a similar increase during the month under review.

The February increase followed a softening in the second half of January. The Indian import prices, according to sources, were impacted by the uptrend in the Turkish market.

In the domestic market, prices showed a similar trend in February. Local ferrous scrap prices remained firm in places like Mandi Gobindgarh, Jalna, Alang and Kandla. Supply also remained critical in major places like Ghaziabad, Muzaffarnagar, Kanpur Durgapur and Kolkata. Sources said ferrous scrap prices are likely to correct in line with UP elections getting over and availability of cheaper imported cargoes in the domestic market. However it may rebound by the end of the March.

In Turkey, scrap import prices firmed up in late February after a drop since January. Overall, the prices of HMS 1&2 (80:20) hovered around $440-445 per ton cfr main Turkish port in the last week of the month. Earlier, scrap import prices had dipped by around $15-20 per ton cfr in January after a similar rise in December. According to reports, the increased buying

by steel mills indicated the inventory might be low and that the buying may continue in coming weeks. However, the increased prices may limit the volume of restocking at this stage.

In Europe, prices showed a mixed trend. In line with expectations, export prices for HMS 1&2 (80:20) from Rotterdam showed a drop to around $405-410 per ton fob in February from $415-425 per ton fob in January. Export of shredded scrap from Rotterdam stood at $410-415 per ton fob during the month.

After softening in recent months, domestic prices in UK showed an uptrend in early March. Shredded scrap prices also firmed up in the domestic markets in north Europe. This resulted from improved demand in the domestic market.

However, the US domestic scrap market remained subdued as increased imports of pig iron from South America restricted the scrap price movements during the month. Lately, the export prices for shredded scrap from East Coast showed a downward trend and decreased by around $5 per ton fob early March, market sources said.

In East Asia, markets remained largely quiet during the month. The rebar demand in Taiwan continued to remain weak. There however was improved sentiment in south China, but rebar prices remained weak in north China. In Japan, some rebar producers have lifted price for March. Shredded scrap prices were up in February.

In March, the scrap prices are likely to show a similar mixed trend in the international market. While prices may stay firm in India, in Europe and the US, there could be a flat demand during the month. Overall, scrap prices are not likely to show any major movement in the coming weeks, the sources said.


fEATuRE

Spot prices of hard coking coal slipped over 2 percent in February on weaker buying interest. Prices of premium low-vol coking coal were lower at $212 per ton fob

Australia, down $5 since the beginning of February. Prices of hard coking coal peak downs were lower at $214 per ton fob Australia, down $5 since the beginning of February. The mid-vol HCC assessment, however, remained marginally down to $187 per ton fob.

News of initial HCC contract price settlements reached on February 27 causing the sentiment to become more cautious, as many took time to wait for news of subsequent conclusions with other miners.

Indian buying interest for a March-delivery cargo is around $240-245 per ton cfr, but only around $220 per ton cfr for an April-delivery cargo, based on differences in the Q1 and Q2 contract prices, sources said. However, Indian demand for coking coal imports was currently strong. In 2010-11, Indian steelmakers imported close to 27 mt of the raw material.

China buyers were also talking lower prices and bidding at around $220 per ton cfr for Australian low-vol premium.

The lower Q2 contract price caused at least one trader in northern China to withhold taking any positions at above $200/mt CFR China for second-tier HCCs with about 60 percent CSR.

Sources said the current prices are not unattractive, but there are expectations for seaborne HCC prices to drop further.

News of Posco’s settlement of Q2 contract prices with Teck, which came in at $206 per ton, down $29 per ton below those in the previous quarter, led some to believe spot prices had room to fall.

Q1 contract price Price negotiation for coking coal has reached an agreement with regard to hard coking coal and LV PCI coal for blast furnace for first quarter (April to June) of 2012-2013, industry sources said.

Out of the above, the first quarter contract price of high-grade hard coking coal of Queensland, Australian and Canadian origins is around $205-210 fob, nearly 11 percent less from the previous term (January to March), they said.

On the other hand, the first quarter contract price of LV PCI coal of Queensland and Canadian origins is around $153.30 per ton fob, 10.4 percent less from the previous term.

As a result of these, the prices of both hard coking coal and LV PCI coal have been reduced in four consecutive quarters since the second quarter (July to September) of 2011-12.

Incidentally, the contract prices of high-grade hard coking coal and LV PCI coal for the first quarter of 2011-12 were $330 per ton fob and $275 per ton fob respectively. The prices have been reduced because of the worldwide dwindling demand on the steel products attributed to the economic crisis in the European Union. The contract price for the fourth quarter of 2011-12 (January to March in 2012) was $230-235 per ton fob Australia.

The contract for the third quarter (October-December) was signed at around $285 per ton, but since then the spot prices had dipped sharply on low demand from European, US and Chinese steel makers. The contract for second quarter (July-September) was signed at $315 a ton.

Coking coal prices, which were earlier fixed on an annual basis, were around $97 per ton fob during 2007-08. The prices touched a higher of $300 per ton in 2008-09 before dropping to $129 per ton in 2009-10. However, prices started rising again from 2010-11 as the miners started quarterly contract from Q1 of 2010-11 and touched a high of $225 per ton for the fourth quarter of the year.

Prices peaked to $330 per ton in the first quarter of 2011-12 owing to floods in the Queensland region of Australia, but gradually fell to current levels as supply became normal over time.

Met coke import prices The prices of imported metallurgical coke moved both ways during the month of February on swinging demand scenario, but domestic prices firmed up a bit as some of the captive coke plants went for maintenance, industry sources said.

The price of imported met coke fell to around $366 per ton during the middle of February from $383 per ton at the beginning of the month, but recovered to settle at around $372 per ton cfr India on some rebound in enquiries.

Earlier in January, prices had risen by close to $20 per ton, from $362 per ton cfr to $386 per ton cfr tracking the appreciation of the Indian Rupee against the US dollar.

Sources said east Indian met coke prices had risen on ongoing maintenance at several of SAIL’s coke ovens at Bhilai and Bokaro plants which will create additional demand. Incidentally, SAIL had floated tenders to procure met coke through forward e-auction for its Bhilai, Bokaro and Rourkela plants.

Prices of met coke, as on February 29, in east India were up to `20,000-21,000 per ton ex-works for 62 percent CSR, 12.5 percent ash material, up from `19,000 per ton towards end of January.

Spot coking coal prices slipover 2% in Feb



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India’s supply deficit of coking coal and met coke is set to double in the next four to five years, posing availability issues for the steelmaking sector and leading to doubling

of imports of these vital inputs, industry sources told Steel Insights. As for coking coal, the supply deficit is likely to jump from the current 30 million tons (mt) to around 65 mt by 2015. This will be driven by the continued growth in steel production and installation of new capacities.

“India currently imports around 30 mt of coking coal, of which 85 percent comes from Australia. Another 10 percent is procured from US and the remaining part from CIS and other parts of the world. We expect the volume of imports to reach 65 mt by 2015,” an industry source said.

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

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

Nevertheless, almost all the major Indian steelmakers have embarked on very aggressive expansion plans to increase installed capacity. SAIL has aimed to increase its annual hot metal production capacity from the current 13.8 mt to 24 mt by FY13. Accordingly, the company’s coking coal import could increase from current 13 to 14 mt to 21 mt by the next few years. Similarly, the annual coal consumption of JSW, the country’s largest private sector steelmaker, will reportedly

India’s coking coal, coke deficitto double by 2015

Arindam Bandyopadhyay

Jharia coalfields of BCCL


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double from current 7.4 mt to 14 mt by next two years.

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

As a result, such prolific expansion in India’s steel making capacity cannot but be achieved without a huge surge in coking coal imports. As estimated by Mark Pervan, Head of commodity research at the Australia and New Zealand Banking Group (ANZ), India may triple coking coal imports as early as 2015. He estimates that India’s coking coal imports will go up from current 30 mt to 90 mt by 2015 surpassing Chinese coking coal imports. By comparison, China’s coking coal imports may be at most 70 mt by 2015.

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

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

Going forward, there will be two factors that may compel the Indian steelmakers to look for changes in their procurement strategies. Firstly, the availability may become a concern, and secondly, the pricing issue may crop up with increased global demand – the second factor essentially being an upshot of the former.

Met coke deficitThe expected tightening in coking coal market would also affect another intermediary segment of the Indian steelmaking vertical, namely the Indian coke makers. Currently, coke plants in India have installed capacity close to 30 mt. Integrated steel plants have their coke making capacities,

estimated at 19 mt. Secondary steel producers have captive installed capacity of 4 mt, while merchant cokeries have the remaining installed capacity of 7.2 mt.

As for merchant cookeries, the average capacity is around 30,000 tons per annum or below. Of the total capacity of 7.2 mt, around 5.2 mt comes through small/tiny coke plants. The majority of Indian coke plants are spread in clusters around Orissa, Dhanbad and Gujarat.

The coke making segment faces numerous challenges. Although current installed capacities are 7.2 mt, output from these plants is always around 2-2.5 mt, said Ganesan Natarajan, Whole Time Director and President, Ennore Coke Ltd.

“Coking coal is the key challenge because of the size and inventory,” he said. Any spike in coking coal price invariably leads to an upward momentum in coke prices. For instance, during August 2008, when coking coal prices touched $460 per ton cif, coke prices had shot up to $750 per ton from $350 per ton a year ago. In line with the increase in coking coal prices from $180 per ton cif India to $255 per ton cif India over the

INTEGRATED STEEL PLANTS WITH CAPTIVECOKE MAKING PLANT (MLNT)

“The Indian steel industry is currently facing huge challenge to meet their coke requirements. Most of the integrated steel plants are already increasing the coke making capacities, but not equivalent to the steel capacity increase. Additionally, Chinese export of coke is not happening from 2009.”


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last 10 years (2011 to January, 2012), coke prices have jumped to from $ 300 per ton $440 per ton.

Along with price increases, the availability is also becoming a concern. Deficit of met coke is expected to rise to 28 mt in 2015 from 12 mt in 2009-10, Natarajan said.

“The Indian steel industry is currently facing huge challenge to meet their coke requirements. Most of the integrated steel plants are already increasing the coke making capacities, but not equivalent to the steel capacity increase. Additionally, Chinese export of coke is not happening from 2009,” he said. Also, the logistics constraints pose a major concern for the segment. Needless to mention, the challenges would become only steeper if corrective measures are not taken at the earliest.

BCCL productionIn the face of huge demand, BCCL, the country’s only major coking coal producer, is striving to increase its production and the share of washed coal for the steelmaking sector. The company, a subsidiary of Coal India Ltd (CIL), has its headquarters in Dhanbad and is operating coking coal mines in Jharia and Raniganj Coalfields.

Asked about the coking coal production scenario, T.K. Lahiry, CMD of BCCL, said the company is targeting a production of 30.2 mt in 2011-12. “We think it is achievable. We have already produced 23.23 mt till January 2012. The balance target, although difficult, is achievable.”

Noting that there has always been a demand-supply gap in coking coal in India, Lahiry said, with the finalisation of tenders for construction of new coking coal washeries at BCCL, the raw coking coal production can further be enhanced. Raw coking coal production will increase manifold on execution of Master Plan in the next 10 years.

With the commissioning of new washeries, washed coking coal production will also increase manifold, thereby reducing the demand-supply gap. “We hope that dependence on import of coking coal by the Indian steel sector will reduce making them more viable.”

The future coking coal projects of BCCL, he said, will mainly be from the implementation

projects of Master Plan and new MDO concept based underground (UG) projects like Madhuband, Moonidih, Kapuria, among others.

Besides enhancing production, the company is also trying to increase the supply of washed coking coal. Out of 20 washeries to be set up in Coal India Ltd (CIL), BCCL has been entrusted to set up 6 washeries of 18.6 mtpa capacity. Out of these six, tenders for two, namely Madhuband and Patherdih, has been finalised. EMP clearance has been obtained. The construction is expected to be completed within one-and-a-half years. The tender for the third one, Dugdha, is in the final stage, Lahiry said.

“With the addition of new washeries, around 20 mt of raw coking coal will be required as an input and the expected washed coking coal will be around 10 mt. With the existing capacity of 2 mtpa, BCCL will be in a position to supply 12 mtpa to the steel plants. Additionally, BCCL has tied up with different ISPs for raw coking coal supply on year to year MoU basis. This will further enhance the availability of washed coking coal and reduce the uncertainty of steel sector as far

as import of coking coal is concerned,” he added.

Along with undertaking new projects for raw and washed coal, BCCL is taking initiatives to improve the logistics for faster despatch. BCCL has planned to introduce Rapid Loading System (RLS) to speed up despatches. It has also issued the work order for 5 mtpa RLS at Mahespur. “As per work order, the job is to be completed in three years, but we are trying to finish it within two years,” Lahiry added.

COKE VS COKING COAL

“With the addition of new washeries, around 20 mt of raw coking coal will be required as an input and the expected washed coking coal will be around 10 mt. With the existing capacity of 2 mtpa, BCCL will be in a position to supply 12 mtpa to the steel plants.”


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Coking coal is one of the most critical steel making raw materials and domestic availability is limited. Steel makers thus have no option but to import coking coal.

Total coking coal reserves in the country is 34 billion tons, approximately 12 percent of the total reserves of 285 billion tons. Occurrence is also limited to mostly Jharkhand and the Jharia coal basin is the biggest coking coal reserve of this country.

If the country has to augment its own coking coal production and reduce dependence on imports, it does not have any alternative but to go for evacuating the Jharia Coalfields. Apart from reducing dependence, the import bill may also become very high as global coking coal price is moving up daily and may touch as much as $500 per ton in the near future.

Therefore if we conduct a cost benefit analysis of importing 100 million tons (mt) of coal at $500 per ton at the port plus transportation charges to the steel plant and cost of infrastructure to handle to handle 100 mt of coking coal and compare it with the cost of evacuation of townships, building of new townships and the mining cost of working at a very high coal:overburden ratio, we will find the latter option will be far more economical.

Problems of Jharia coalfieldsThe Jharia coalfield is one of the oldest coalfields of India which started mining in the mid 18th century and is also one of the biggest problematic areas from the mining point of view. It has been exploited for more than 150 years leaving behind a landscape riddled with fire, subsidence etc. There are 65 surface and underground fires in the coalfield and billion tons of coal locked up due to fire.

Depillaring of pillars cannot be done in the area due to problem of blocked reserves under townships, underground and surface fire, waterlogged workings etc. There are townships like Jharia , Kirkend, Katras etc, under which huge coking coal reserves are blocked.

Unfortunately, nearly 60 percent of the prime coking coal has been lost due to poor extraction technology. The whole of Jharia coalfields has on the surface a habitation of nearly 12 lakh people who need to be evacuated. In any case they are in the danger zone because of the fire underneath and have to be evacuated in course of time. A Jharia Action Plan is in operation for the evacuation of endangered persons.

Planning for Jharia coal basinImmediately after nationalisation of coking coal in the year 1971, Polish mining engineers planned for an integrated development of the whole coal basin. They had planned to divide it into 10 to 11 opencast blocks and five to six underground blocks.

Somehow the management was so shortsighted at that point of time that it did not approve such a balanced integrated approach. The result is that we are facing acute shortage of coking coal at an exorbitant cost to the nation. However, I believe it is not too late even now.

I believe the shortage of coking coal in the country can be met by subdividing the Jharia coal basin into mega opencast projects.

This assumes a lot of importance at a stage when the coking coal import may touch 100 million tons per annum (mtpa) by 2020 at an astronomical cost of nearly $50,000 million. Even if a fraction of this amount is utilised, then Jharia and its neighbouring townships can be evacuated. A cost benefit analysis, as I mentioned earlier, will show that evacuation of the townships will be a cheaper alternative.

The upper seams of Jharia coalfield are prime coking coal, i.e seams XVIII to IX seam and semi coking are VIII to V seam and the rest are non coking.

Mega washeries may be set up for washing the run of mine. The washed coal is used by steel plants. The Damodar river and a few rivulets are passing through the Jharia coalfields and a lot of coal is blocked under the river and the rivulets. As I already mentioned, a lot of prime coking coal which has been lost due to poor extraction rate of the upper coking coal seams can be taken out once the surface is freed from townships.

Once the fire is dug out, huge quantities of prime coking coal will be released for extraction. Also, the Damodar and the rivulets should be diverted if necessary for releasing the coal underneath.

Fire and subsidence is threatening a large population of the Jharia Basin. Even the townships of Jharia, Kirkend and Katras are threatened. An approved project, the Jharia master plan of approximately `10,000 crore envisages that 79,159 houses will be rehabilitated. Since the Directorate General of Mining Safety (DGMS) has already mentioned that most of the areas are unsafe for living, it will be prudent for the government to act before any disaster happens.

The master plan can be extended further to evacuate the

Jharia coalfields must be evacuated to augment coking coal production

J.P. Panda


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Jharia, Kirkend and Katras townships in a phased manner and make the whole area free from habitation. After that, the entire BCCL operations can be converted into a few mega projects of 40 to 50 mtpa capacity mines.

Mega project planning should include infrastructure planning of the whole coalfield/coal basin or the mega coal mine, involving the Planning Commission, ministry of coal, ministry of railways, ministry of power and ministry of environment.

All coal mega projects should be treated at par with UMPPs of the power sector. A single window clearance should be aimed for all the mega projects. Comprehensive mine planning including Rehabilitation & Resettlement (R&R) package and mine closure plan can be sanctioned at one go. New and modern townships can be built to settle the Project Affected People (PAPs). Furthermore, employment opportunities for the local populace can be created by building skill development centres.

Some advantages of mega opencast projects are: ♦ All the coal lost due to underground mining can be

recovered; ♦ All fires can be dug out and environ can be made very

clean; ♦ The time taken for all clearances, like environment and

forests, is the same as that of small project. Indeed it is always advisable to go for environment clearance for the whole Jharia coal basin;

♦ The infrastructure such as rail, road etc. can be planned much in advance;

♦ Large coal washeries can be built in the peripheries for beneficiation of coal;

♦ The mechanisation level can be very high and manpower requirement will be much less;

♦ The environment management can be managed by a highly skilled team and indeed zero pollution level can be easily achieved and maintained;

♦ The backfilling and post mining restoration of ecology or the mine closure plan can be done in a much better way;

♦ The CSR (corporate social responsibility) and other needs of local population can be met due to higher profit;

♦ Very high capacity HEMM (heavy Earth Moving Machinery) like Draglines of 122 m3 bucket capacity with 128 m boom length, rope shovels of up to 63 m3 capacity, hydraulic shovels with 50 m3 bucket capacity and dumpers with 360 to 400 t payload and dozers up to 860 HP are the maximum sizes presently available in the market. Coal India has already procured and inducted 42 Cum shovel and 240 ton dumpers at Gevra OCP producing currently 35 mt that is likely to go up to 50 mt. The necessary expertise is available with Coal India, which can be of huge advantage in mining mega projects.

(The author is managing director of Priya Mining Consultancy and Services Ltd, which provides consultancy on both underground and opencast coal mines, including EMP-EIA, forest clearance etc. The company has also produced CDs on a wide variety of subjects including all DGMS circulars from 1957 till December 2010, a history of disasters in coal mines for the last 100 years and safety and productivity improvement in both opencast and underground mining. The author can be contacted at [email protected].)


With domestic steel producers raising the issue of cheaper steel imports impacting their sales, the steel ministry may decide to recommend 5 percent

duty on imported steel. If the finance ministry accepts the recommendation, the total import duty on steel would be 10 percent. In the two-hour-long meeting with top steel ministry officials, steel producers said that they would have to resort to cutting down on production as cheaper imports would lead to rising inventories.

They told the meeting chaired by steel secretary PK Misra that imports of flat products have surged by 150 percent to 200 percent during the November-January period as has been found by the ministry’s Joint Plant Committee.

It has been found that steel producing countries like Brazil

and China have imposed import duties while incentivising exports from their territorial boundaries.

They also said that demand in the CIS countries and the Middle East has nose dived leaving India as the sole fertile ground for consumption.

Meanwhile, domestic steel consumption in the first 10 months of the current fiscal grew by 5.5 percent to 57.24 million tons (mt), primarily on account of growing demand from the construction sector. Domestic consumption was 54.24 mt in the April-January period in the last fiscal.

The construction sector generally consumes 70 percent of the volume. The growth in production was higher than demand growth at 58.35 mt during the April-January period against 54.51 mt over the same period last year.

The global steel production in January, however, was 117 mt, down 7.8 percent over the same month last year. India's import of steel during the April-January period recorded 0.6 percent drop to 5.59 mt compared to 5.62 mt a year ago.

Although some feel that the drop in imports during the period might prompt the government not to tweak the existing duty levied on steel imports.

However, a section of the industry is of the view that government needs to double the rate to 10 percent in order to protect the domestic steel industry to check growth in imports.India's steel exports, however, increased to 3.45 mt against 2.76 mt a year ago.

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Steel ministry may favour raising ofimport duty on steel


Coal ministry notices likely for block holders

The coal ministry is likely to issue show cause notices within a month to about 50 block holders, asking them to either start production or face

de-allocation. According to reports, the development comes close on the heels of a direction from the Prime Minister’s Office to the coal ministry to ensure adequate supplies of coal to power producers.

The decision to issue show cause notices to those sitting idle on captive coal blocks was taken by a panel looking into the development of reserves. The notices are likely to be issued within a month.

Concerned over the increasing demand supply gap, the coal ministry had in January reviewed the progress of mines allocated to companies, including Tata Steel, Coal India, SAIL and NTPC for captive use.

The progress of coal blocks allotted to firms, including Jindal Power, Jindal Steel & Power, BALCO and MMTC was also reviewed during the two-day meeting. Last year, the Coal Ministry had cancelled allotment of 14 coal blocks and one lignite block to six PSUs, including NTPC, and three private firms for failing to develop mines.

However, in January government gave back six coal blocks of the deallocated mines to firms, including Damodar Valley Corporation and Tenughat Vidyut Nigam Limited and NTPC.

P K. Misra, Steel Secretary


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The ferro alloys market showed a mixed movement in prices in February due to moderate demand from steel mills. While some of the ferro alloy segments showed

upward bias in movement, all other segments showed either stable or negative movement, much in line with the trend witnessed in January. 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.

In the domestic market, ferro silicon (silicon 70 percent min) remained flat at `72-73 per kg, while ferro vanadium (vanadium 50 percent min) is quoted at `730-750 kg with an upward bias.

The silico manganese prices also showed an upward bias from `50-51 per kg but high carbon ferro manganese (manganese 70 percent min) remained flat at around `49-50 per kg and low carbon ferro manganese showed a downward bias from `140-141 per kg.

Ferro-chrome (high carbon 60 percent min) moved up to `74/kg basic in February from `73/kg (basic) in January but low carbon ferro chrome (chrome 65 percent min) showed a downward bias from `165-170 per kg.

Ferro alloys show mixedmovement in Feb


The proposals for indirect Ttaxes on the ferro alloy industry

♦ To List Ferro Manganese Slag under Free Items Instead Of Restricted Items under Heading 2621 9000 It is necessary to allow free import of ferro manganese slag under Customs Tariff Heading 2621 9000 under Chapter 26 for production of Silico Manganese, to cater to the domestic steel industry, and continue to meet the export market. Therefore, it is suggested that Ferro Manganese Slag be listed under Customs Tariff Heading 2621 9000 under Policy as Free instead of Restricted items.

♦ Increase the Customs Duty on Ferro Alloys under Heading 7202 To 7.5 percent except Ferro Nickel (7202 6000)Since Ferro Alloys (7202) also come under the same Chapter 72 of Iron and Steel, it is suggested that the basic customs duty on ferro alloys be increased to 7.5 percent (except ferro nickel, which is 100 percent

imported). This will ease the working condition of the industry to a great extent.

♦ To waive Customs Duty on Raw Materials i.e., Ores under Chapter 26 and 28 for Production of Ferro Alloys. It is therefore requested that the government may consider to reduce the Customs Duty on Manganese Ore under Heading 2602 0010 to 2602 0090, Chrome Ore under Heading 2610 0010 to 2610 0090 and Roasted Molybdenum Ore and Concentrate under Heading 2613 1000 and 2613 9000 and Vanadium Oxides, Pentoxide and Hydroxides, Ammonium Metavanadate, Vanadium Compound, Vanadium Concentrate, Vanadium Sludge, under Heading 2825 30 and Other Salts of Oxometallic Acids under Heading 2841 9000, to Zero percent from the existing 2.5 percent, which will help the Industry to a great extent to produce the required Alloys to cater to the growing Steel Industry, and be competitive in the domestic and international market.

IFAPA wishlist for Ferro Alloys sector


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According to experts, the higher input costs, primarily of thermal coal, continued to put pressure. Ferro titanium and chrome ore (chrome 38 percent) remained flat at `140-145 per kg and `5.7-6 per kg respectively.

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.

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.

Meanwhile, the Indian Ferro Alloy Producers’ Association (IFAPA), the apex body representing manufacturers of bulk and noble ferro alloys in the country, expects the 2012-13 Budget to either maintain the WTO recommended level of duties on ferro alloys and its raw materials or increase to minimum 7.5 percent basic duty from the present level of 5 percent.

The association is also looking forward to a reduction in the duty on basic raw material to 0 percent from the present level of 2.5 percent-7.5 percent.

For Classified Advertisementscontact

Sumit Jalan, +91 91633 48243or [email protected]

Manganese ore reserves are depleting and no new deposit has been located or no new mine has been developed in recent times. The industry should first meet the requirement of domestic manganese alloy industry in full and on priority basis.

Considering the availability issues of manganese ore within the country, the basic customs duty on import of manganese ore needs to be reduced to 0 percent i.e., nil percentage from the existing duty of 2.5 percent. This will help the industry to blend the imported high grade ore with the domestically available low grade ore, and conserve the ore for a longer period.

For the development of the chrome ore industry in India, the IFAPA has observed that the availability of chrome ore is very limited in the country. The chrome ore industry therefore should first meet the requirement of the domestic ferro chrome industry in full and on priority basis.

The government needs to reduce the Basic customs duty on chrome ore to 0 percent i.e., Nil percentage from the existing 2.5 percentage of duty. This will help the industry to import lumpy high grade ore for blending with domestic low grade ores.

IFAPA wishlist for Manganese ore industry


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Production of sponge iron in India has declined by 21.36 percent in Q3 of 2011-12, as compared to the production during the corresponding period last year, according to

the data made available to Steel Insights by a member of the Sponge Iron Manufacturers’ Association of India (SIMA).

During Q3 of 2011-12, total production of sponge iron stood at 4,510,459 tons whereas in Q3 of 2010-11, the figure was at 5,735,347 tons, as per the available data.

Out of the total sponge iron production during October-December 2011, gas based production accounted for 977,754 tons (1,473,008 tons in October-December 2010) whereas the remaining coal based production of sponge iron stood at 3,532,705 tons (4,262,339 tons in Q3 of 2010-11).

Exports of sponge iron by three major sponge iron manufacturers – namely Welspun Maxsteel Limited, Tata Sponge Iron Limited and Monnet Ispat & Energy Limited – has dipped by 70.53 percent in the third quarter of 2011-12 as compared to the corresponding period of 2010-11, according to the data. In Q3 (October-December) of 2011-12, total exports of sponge iron by these companies stood at 13,583 tons whereas

the exports were 46,092 tons during the corresponding period of last year.

Export of sponge iron (in tons)

Company oct-Dec (2011-12) oct-Dec (2010-11)Tata Sponge Iron Limited 0 4,900Welspun Maxsteel Ltd 3,540 41,192Monnet Ispat & Energy Limited 10,043 NATotal 13,583 46,092

*Note: Sponge iron export figures of Monnet Ispat & Energy Limited for Q3 of 2010-11 is not available.

Source: SIMA

DRI Production in Q3 of 2011-12 (in tons) oct Nov Dec

TOTAL GAS BASED 341,718 311,031 325,005 TOTAL COAL BASED 1,168,241 1,150,631 1,213,833 GRAND TOTAL 1,509,959 1,461,662 1,538,838

Sponge iron Q3 production down 21% y-o-ySanjukta Ganguly

SPONGE IRON MANUFACTURERS ASSOCIATIONDRI Production 2011-2012

CpTyL/T ApR MAy JUNE JULy AUG SEpT oCT Nov DEC ToTAL

A. GAS BASEDESSAR STEEL LTD. 70.00 375834 329878 357746 404956 351275 267557 208613 181845 205147 2682851JSW ISPAT STEEL LIMITED 16.00 105682 104632 88570 99348 121087 102534 96970 77761 75328 871912WELSPUNMAXSTEELLTD. 10.00 80360 66930 67635 55297 53430 34550 36135 51425 44530 490292 TOTAL GAS BASED 96.00 561876 501440 513951 559601 525792 404641 341718 311031 325005 4045055B. CoAL BASEDAARTI SPONGE & POWER LTD. 0.60 4799 3049 2853 3786 2171 2651 3502 2907 1960 27678ACTION ISPAT & POWER LTD. 2.50 10456 11512 12836 9368 7592 7564 4980 5623 5707 75638ADHUNIKCORPORATIONLTD. 0.60 3926 3514 3669 3762 4062 2638 3109 2131 0 26811ADHUNIKMETALIKSLTD. 2.70 16537 14465 3669 14090 8277 22107 18248 5719 12286 115398AKSHARAINDUSTRIESLTD. 0.60 4763 5044 4133 4375 4162 3705 4371 4202 4483 39238AMBEY IRON PVT LTD. 0.45 0 0 0 0 0 0 0 0 0 0AMBEY METALLIC LTD 0.36 0 0 0 0 0 0 468 3198 2152 5818ARYAVRATA STEEL PVT LTD. 0.36 705 715 713 606 662 631 547 760 882 6221BALAJISWAMIPREMIUMLTD. 0.20 1081 951 1049 1087 1269 152 600 500 450 7139BALDEV ALLOYS PVT LTD. 0.30 2854 2323 2616 1873 1172 2072 2558 1852 3089 20409BELLARY ISPAT PVT LTD. 0.20 516 843 439 772 441 1294 650 540 600 6095BENAKA SPONGE IRON LTD. 0.60 1272 1757 1932 835 1045 452 760 750 800 9603BIHAR SPONGE IRON LTD. 1.86 5180 4638 11894 6821 10835 9504 5138 3917 4818 62745CRACKERS INDIA LTD. 0.60 3585 3227 3115 2564 1683 1702 1650 1500 1600 20626DHANALAKSHMI SPONGE IRON 0.60 3554 532 473 0 0 0 1303 2681 2499 11042DIVYAJYOTI STEELS LTD. 0.30 1115 1759 1048 0 0 0 0 0 0 3922DINABANDHUSTEELLTD. 0.60 0 0 0 0 602 2268 1898 370 1466 6604DROLLIA ELECTRO STEEL LTD. 0.66 5069 3559 3616 2762 3764 3357 3500 3400 3600 32627ELECTROTHERM INDIA LTD. 0.75 11759 15330 12042 10852 6789 5897 2901 3869 4093 73532SCAN STEELS LIMITED 0.60 3000 2600 2400 2200 2100 1900 1600 1800 1700 19300GALLANTT METAL LTD. 1.70 8687 8895 7165 5223 3876 7017 10370 9853 8858 69944


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GAYATRI METALS LTD. 0.30 595 0 562 203 209 0 0 0 0 1569GANESH SPONGE PVT LTD. 0.90 5220 4960 3965 3460 3690 1870 3135 2570 2505 31375GODAWARI POWER & ISPAT 4.95 26107 34656 29957 31985 31015 17759 29369 28098 19131 248077HI-TECH POWER & STEEL LTD. 0.60 3279 4304 3949 3221 2312 3227 3167 2837 3802 30098HOSPET ISPAT PVT LTD. 0.60 0 0 0 0 0 0 0 0 0 0HOTHURISPATLTD. 0.90 0 0 0 738 1443 1203 1200 1100 1250 6934HOWRAH GASES LTD. 0.60 2428 2714 2735 2291 1738 2593 2167 2710 1890 21266HARYANA STEEL & POWER 0.35 2000 1900 1800 1500 1300 1100 1200 1350 1250 13400HARE KRISHNA METALLICS 0.75 7210 5092 8044 4733 8988 9450 8056 9350 8453 69376JAI BALAJI SPONGE/HEG 3.45 18560 17299 15198 19365 14761 14578 14490 17592 17812 149655JANKI CORP. LTD. 1.80 7974 7377 7032 9862 11305 10940 18255 12060 12235 97040JINDAL STEEL & POWER LTD. 13.70 126834 128459 108360 117554 115595 106660 100030 100557 111577 1015626JAIDURGAIRONPVTLTD. 0.36 1281 1208 1365 1351 1207 768 627 1245 1335 10387JAYASWALSNECOINDUSTRIES 2.55 17344 16748 21130 19037 19529 14252 15667 4147 18055 145909JAY IRON & STEEL LTD. 0.60 768 448 712 631 489 345 116 534 518 4561KANISHKSTEELINDUS.LTD. 0.60 2363 2885 1220 2294 2753 1886 1332 1333 2185 18251MINERA STEEL & POWER PVT LTD. 1.20 6590 5942 5034 5588 8614 8018 7510 8018 8349 63663LLOYDS METAL & ENGG. LTD. 3.00 12604 13455 16743 17122 17064 13754 14885 7660 9349 122636MONNET ISPAT & ENERGY LTD. 8.00 58889 55842 51126 71262 71135 67705 76433 70316 73580 596288NALWA STEEL & POWER LTD. 1.98 14820 15264 13734 14857 15617 15173 13166 14955 14606 132192NOBLE DISTILLERIES LTD. 0.72 0 0 0 0 0 0 0 0 0 0OCL IRON AND STEEL LTD. 1.20 9201 9601 8272 8149 8007 7013 8333 9868 7670 76114ORISSA SPONGE & POWER 2.50 3946 4804 1938 0 0 3284 1446 4103 6189 25710PGM FERRO STEELS LTD. 0.60 3000 2750 2500 2000 1800 1700 1600 1500 1800 18650POPURISTEELSLTD. 0.45 672 1544 1295 1100 1100 1100 1200 1150 1250 10411RAYEN STEEL LTD. 0.60 2370 1132 1104 78 984 512 439 460 669 7748SARDA ENERGY LTD. 2.10 19395 20832 21687 21879 18820 16187 19462 21646 19130 179038RANGINENI STEEL LTD. 0.25 1057 787 1455 1130 956 335 0 0 0 5720RASHMI ISPAT LTD. 0.60 2288 1635 1489 1650 2115 1662 1235 1392 2921 16387RUNGTAMINESLTD.(Est.) 6.30 35000 35000 35000 35000 35000 35000 35000 35000 35000 315000SKS ISPAT LTD. 2.70 12922 10329 11212 11509 13613 11533 10231 12766 11600 105715NARBHERAM POWER 1.00 8193 5746 180 8969 2948 0 0 7973 4775 38784SCAN SPONGE IRON (Est.) 0.24 1200 1100 1000 1000 1000 1000 1200 1150 1000 9650SHRADDHA ISPAT LTD. 0.60 3372 3440 3049 2640 3092 3034 3200 2369 2584 26780SHRI BAJRANG & POWER 2.10 9305 10891 12385 7340 11645 9092 6726 7708 7637 82729SHYAM SEL LTD. 1.60 11914 12252 11504 10993 11903 9832 10811 9327 13055 101591SINGHAL ENTERPRISES LTD. 2.50 13875 13983 15064 11363 13959 9242 11250 12703 15542 116981SURANAINDUSTRIESLTD. 1.28 1242 619 2205 963 1952 2680 737 51 127 10576SURENDRAMININGINDS.LTD. 1.20 3514 2945 2983 3111 3514 1249 2914 2542 3147 25919SREE METALIKS LTD 1.74 13325 11239 8548 7771 5700 4668 4448 5923 4894 66516SUNFLAGIRON&STEELCO. 2.55 5034 13032 13699 7982 11992 14096 15316 15287 9327 105765SURAJPRODUCTSLTD 0.36 2655 3016 2714 2576 2529 2560 2467 2500 1776 22793SURYAASPONGEIRONLTD. 0.84 900 3036 2286 2665 1283 340 0 0 0 10510TATA SPONGE IRON LTD. 3.90 27364 23272 20469 22684 27802 23530 8876 13042 31455 198494TOPWORTH STEELS LTD. 1.65 12482 15605 14052 14081 11448 13981 11785 11496 16232 121162VANDANA GLOBAL LTD. 2.31 14368 11147 16300 15369 16435 10285 14894 13925 10441 123164VISA STEEL LTD. 3.00 10376 11734 13733 18301 15922 4490 3756 2861 24408 105581MPL Cement & Sponge Pvt Ltd. 0.09 240 200 192 248 216 216 194 775 258 2539WELSPUNSTEELLTD. 1.20 12000 11840 10179 10060 9037 7842 11763 10911 11996 95628YESHASHVI STEEL LTD. 0.30 306 12 287 1633 726 50 0 199 25 3238OTHERUNITS(Est.) 140.00 850000 850000 850000 800000 700000 650000 600000 600000 600000 6500000 TOTAL COAL BASED 250.60 1495240 1496789 1455109 1430274 1324764 1212705 1168241 1150631 1213833 11947586 GRAND TOTAL (A+B) 346.60 2057116 1998229 1969060 1989875 1850556 1617346 1509959 1461662 1538838 15992641EXpoRTS 2010-2011WELSPUNMAXSTEELLTD. 10.00 7754 15278 2591 3102 1852 1570 500 0 3040 35687TATA SPONGE IRON LTD. 3.90 0 2500 2500 2451 869 7500 0 0 0 15820MONNET ISPAT & ENERGY LTD. 8.00 2601 2576 2607 5252 7616 10275 10043 40970Total 10355 20354 7698 10805 10337 19345 500 0 13083 92477

CpTyL/T ApR MAy JUNE JULy AUG SEpT oCT Nov DEC ToTAL


fEATuRE

In line with the trend witnessed in January 2012, car sales in the Indian market continued to rally in February with major OEMs reporting healthy growth in numbers. This was the

fourth consecutive month of growth after a prolonged slowdown in the second half of 2011. The early trend in 2012 corroborates the forecast of a full-fledged revival in 2012-13 by industry body Society of Indian Automobile Manufacturers (SIAM).

Among the automobile giants, Maruti Suzuki, Mahindra & Mahindra (M&M), Tata Motors, Hyundai Motors and Hero MotoCorp have reported sales growth in February over sales achieved during the same month last year. A number of carmakers also registered the highest monthly production in FY12 during the month.

“The industry is showing signs of a revival. We expect the market to return to the high growth trajectory in coming months,” said an industry analyst. The easing of inflationary pressure and overall improvement in economic climate would be the major drivers of growth, going forward.

The February numbers also dispelled fears that the recent spurt in sales would be shortlived. However, the future trend could be affected by the budget declarations by the government on March 15.

Jan sales up 12%: SIAMWhile the major carmakers have declared continued growth in February, SIAM was yet to bring out the industry numbers for the month. However, the January figures released by the association showed encouraging results. The recent uptrend, the data showed, has helped ease the impact of a sharp decline in 2011.

Among the automobile majors, Maruti reported about

5.2 percent increase in sales in January, while M&M posted 22 percent jump. Tata Motors registered around 16 percent growth in sales during the month.

According to SIAM, the overall sales growth recorded for April-January 2012 was 12.51 percent. In January 2012, domestic sales registered growth at 12.18 percent as compared to January 2011.

SIAM data showed that passenger vehicles segment recovered marginally at 1.45 percent during April-January 2012 over the same period last year. Passenger cars recorded de-growth of (-) 1.19 percent, utility vehicles grew by 13.03 percent and vans grew by 8.40 percent in this period. In January 2012, passenger cars, vans and utility vehicles recorded growth at 7.20 percent, 14.15 percent and 15.72 percent respectively. Growth in overall passenger vehicles was at 8.86 percent in January 2012.

The overall commercial vehicles segment registered a growth of 18.63 percent during April-January 2012 as compared to the same period last year. While medium & heavy commercial vehicles (M&HCVs) registered growth of 9.70 percent, light commercial vehicles (LCVs) grew by 26.37 percent. However, in the month of January 2012 over January 2011, the growth in sales of the overall CV segment was 13.52 percent.

Three-wheeler sales recorded de-growth of (-) 0.44 percent in April-January 2012. While passenger carriers registered decline by (-) 2.92 percent during April-January 2012, goods carriers registered a growth of 10.36 percent.

Two-wheelers registered a growth of 15.06 percent during April-January 2012. Mopeds, motorcycles and scooters grew by 10.59 percent, 13.66 percent and 22.76 percent respectively.

Auto sector revival trend continuesSteel Insights Bureau


fEATuRE

If we compare January 2012 to January 2011, the growth figures for two-wheelers was at 13.63 percent. Three-wheelers registered de-growth at (-) 3.49 percent in the month of January 2012. Meanwhile, the cumulative production data for April-January 2012 shows overall production growth of 14.56 percent over the same period last year. Production in January 2012 registered growth of 11.25 percent as compared to January 2011.

Exports In January 2012, compared to January 2011, overall automobile exports registered a growth of 22.93 percent. During April-January 2012, overall automobile exports registered a growth rate of 28.36 percent. Passenger vehicles registered growth at 20.64 percent in this period. Two-wheeler, commercial vehicles and three-wheeler segments recorded growth of 28.52 percent, 27.60 percent and 39.70 percent respectively during April-January 2012.

Maruti SuzukiMaruti Suzuki India Limited has sold a total of 118, 949 vehicles (including 11,296 units for export) in February 2012, recording a rise of 6.5 percent in sales from 111,645 vehicles sold during the corresponding month of the previous year, the company said in a statement.

However, Maruti Suzuki India’s export surged by 11.8 percent in February 2012 to 11,296 units from 10,102 units in the year-ago period, the company statement said.

On a year-on-year basis, during the first 11 months (April-February) of the current financial year, the company’s total auto sales dropped by 12.3 percent and stood at 1,007,743 as compared to 1,149,053 vehicles sold during the corresponding period of 2010-11.

Tata Motors Tata Motors' total sales (including exports) of Tata commercial

and passenger vehicles in February 2012 stood at 92,119 vehicles, up by 19 percent over the number of vehicles sold in February 2011.

The company's sales of commercial vehicles in February 2012 in the domestic market were 86,704 recording a growth of 19 percent as compared to 73,039 vehicles sold in February last year. However, cumulative sales of commercial vehicles in the domestic market for the fiscal stood at 471,917, a growth of 19 percent over last year.

The company's sales from exports stood at 5,415 vehicles in January 2012, up by 20 percent as compared to 4,504 vehicles in February 2011. The cumulative sales from exports for the fiscal stood at 57,711, up by 11 percent over 52,112 vehicles sold in the same period last year.

M&M Mahindra & Mahindra Limited (M&M Ltd), a part of the Mahindra Group, recorded a 29 percent increase in auto sales during the month of February 2012, which stood at 43,087 units against 33,378 units sold during February 2011, the company said in a statement. The company’s domestic sales stood at 40,461 units during February 2012, up 27 percent as against 31,967 units during February 2011.

Exports for the month have also grown by 86 percent and stood at 2626 units while the 4-wheeler commercial segment which includes the passenger and load categories has registered a growth of 36.54 percent at 13,522 units, the statement said.

“We are happy to maintain a healthy growth of 29 percent in February 2012, with all our brands doing well. While the XUV500 continues to create excitement in the market, the recently launched New Xylo has also evoked a very positive response from customers,” said Pravin Shah, chief executive, automotive division, Mahindra & Mahindra Ltd, while talking on the company’s performance during February.


As the country’s annual budget drew closer, the stakeholders of the Indian steel industry stirred up to seek redress to their demands. While the large industry

bodies were busy with the annual ritual of submitting budget proposals to the government, members of ISMW posted their wish list to a captive audience on LinkedIn. Here are some of the notable mentions:

♦ Private power companies seek abolition of import duty of 5 percent on coal

♦ Removal of both customs & excise duties on mining, power equipment imports

♦ Iron ore exporters want export duty to be cut to 15 percent-20 percent (current 30 percent)

♦ Iron ore exporters seek freight charges to be reduced on exports of iron ore

♦ Ferro alloys manufacturers want import duty on manganese ore & chrome ore to be waived off

The points mentioned could be summed up as duty cuts on inputs. A major concern is the government’s way of handling the iron ore issue. An anonymous view has been that the government’s moves are not serving the purpose of the domestic industry. Incidentally, the top honcho of a large steel manufacturer recently said, “Some of the government policies are affecting the industry very badly.” One only hopes the government appreciates the concerns of those for whom it is formulating its policies.

Global demand upWhile India is going for budget, the global steel market is looking in the face of a slowdown. Ashima Tyagi, consultant at Infraline Energy quoted a report by World Steel Association (WSA) to indicate that global steel demand would register a 5.4 per cent growth in 2012 to 1,500 million tons (mt). The growth should be lower than 2011 figures. However, in absolute terms, steel demand would be 103 mt higher than 1,397 mt consumed in 2011.

India’s steel consumption was around 68 mt in 2011. The third-highest steel consuming country in the world is expected to see a 4-5 percent growth in 2012. As for China, WSA said Chinese demand for steel is likely to be 6 percent, its lowest level over the last three years, and reach 682 mt.

Commenting on the forecast, Steven S, Marketing Director at Luoyang Xingqi (forged special steel bars, forgings & drill string), said at ISMW, “I do not think the number is reachable because the environment of steels and related fields face a ‘cool winter’ now.”

Logistics downAnother major issue that came up for discussion was the logistic lags facing the Indian steel sector. In a recent report, apex chamber Assocham has voiced concern over poor logistics infrastructure for supply of iron ore and coal for the steel industry, and said slurry pipelines should be given the status of infrastructure industry to address bulk transportation needs of the sector.

“Moving iron ore and coal by pipelines in slurry form has advantages like low operating costs, higher availability and environment friendly. Existing railway lines are almost reaching a saturation point,” said the chamber. “While augmenting railways infrastructure is important, slurry pipelines may eventually re-invent raw material transportation for the iron and steel industry,” it said in its recommendations for the National Steel Policy. The members at ISMW agreed to the proposals and called for the government’s attention.

Steel prices up & downThe majority of the forum had forecast a flat trend in steel prices in India in 2012. There however was a recent hike in prices in some pockets. Prices shot up by Rs 1,500-2,000/ton in a very short span, according to Sanjoy Chakraborty, senior analyst, mjunction services limited.

“Indian steel prices (are) on the acclivity at present but might cool off in mid March as per market experts,” he commented. “There is absolutely no buying in finish market. Buyers are unwilling to pay high. Prices will not sustain in near term as per a TMT dealer in Muzaffarnagar. Hence, though prices are high but volumes are extremely thin and it looks like prices might correct on weak demand and low trading volumes.” The observation followed a move by SAIL to cut its flat steel prices in select regions.

Steel industry seeks duty cut in Budget Steel Insights Bureau

sOCIAL buzz

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.


Movement of iron ore through the 12 major Indian ports dropped significantly by as much as 25 percent to 52.147 million tons (mt) in the April 2011 to

January 2012 period, against 69.525 mt in the corresponding period last year.

According to data released by the Indian Ports Association (IPA), Mormugao port handled the highest volume of 24.219 mt of iron ore during the April-January period of the current fiscal. This volume, however, was about 6.895 mt less than the iron ore traffic moved during the same period last fiscal. The

port has shown a negative growth of 17.53 percent during the period.

The movement of coking coal also fell marginally by 1.29 percent to 23.978 mt during the same period, the data showed. Movement of coking coal through Paradip, Kolkata, Chennai and Kandla ports declined during the period when compared to the corresponding period last year. Visakhapatnam port shipped the highest quantity of 5.836 mt of coking coal during the period.

As per the data, the 12 ports together handled 467.098 mt of total traffic during the April-January period of the current financial year, 0.24 percent lower than 468.199 mt recorded during the corresponding period last year.

As opposed to coking coal and iron ore, the volume of thermal coal through the major ports was up 14.42 percent to 41.178 mt during the period, compared to 35.988 mt achieved during the same period last year.

Among the major ports, Paradip port had the distinction of handling the highest quantum of thermal coal of around 13.283 mt during the period.

Movement of container traffic both in terms of tonnage and TEUs showed an increase during the April-January period. The major ports handled 100.597 mt, besides 6.530 million TEUs during the period under review compared to 93.128 mt of tonnage and 6.256 mt of TEUs respectively.

Six major ports showed positive growth in traffic handling during the April-January 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 43.94 percent increase in cargo throughput. New Mangalore port’s growth was lowest at about 3.44 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of over 68.563 mt recorded for the period. The Mormugao port registered the highest decline of 17.53 percent in traffic handling during the period.

April-Jan iron ore traffic down 25% y-o-y Steel Insights Bureau

Traffic handled at major ports (during Apr to Jan, 2012* vis-a-vis Apr to Jan, 2011)

(*) Tentative (in '000 tons)

portsApril to January % variation

Traffic Against prev. 2012* 2011 Year traffic

1 2 3 4KOLKATAKolkata Dock System 10230 10625 -3.72Haldia Dock Complex 26495 28923 -8.39TOTAL: KOLKATA 36725 39548 -7.14PARADIP 45540 46120 -1.26VISAKHAPATNAM 57943 55708 4.01ENNORE 12064 8381 43.94CHENNAI 47084 50865 -7.43TUTICORIN 22915 20140 13.78COCHIN 16711 14731 13.44NEW MANGALORE 26964 26068 3.44MORMUGAO 31994 38794 -17.53MUMBAI 45152 45586 -0.95JNPT 55443 53500 3.63KANDLA 68563 68758 -0.28TOTAL: 467098 468199 -0.24

LOgIsTICs


LOgIsTICs

Indian Railway’s revenue earnings from commodity wise freight traffic increased by 9.70 percent to `55,382.80 crore during the first 10 months (April-January) of 2011-12 from

`50,487.91 crore during the corresponding period of 2010-11, according to information available with Steel Insights.

The commodity-wise freight traffic volume during the period increased by 4.76 percent to 791.84 million tons (mt), compared to 755.86 mt during the corresponding period last year. The Net Tonne Kilo Metres (NTKM) went up from 498,014 million during April 2010 to January 2011 to 524,186 million during April 2011 to January 2012, showing an increase of 5.26 percent. The data revealed that the Railways’ revenue earnings in January 2012 was `6,173.57 crore while freight traffic volume stood at 87.03 mt and NTKM at 57218 million.

The Railways earned `2,583.54 crore from transportation of 41.35 mt of coal in January 2012, marginally higher than `2,548.54 crore earned from transportation of 41.01 mt coal in December 2011. However, earnings from transportation of iron ore for exports, steel plants and other domestic users fell to

`481.60 crore (8.25 mt) in January 2012 from `543.64 crore (8.94 mt) in December 2011. Earnings from transportation of cement increased to ̀ 615.32 crore (9.92 mt) in January 2012 from ̀ 562.73 crore (9.37 mt) in December 2011, while that from foodgrains was up to `434.18 crore (4.24 mt) from `403.71 crore (3.94 mt).

According to the data, earnings from transportation of petroleum oil and lubricant (POL) in January 2012 fell to ̀ 322.21 crore (3.46 mt) from `328.89 crore (3.52 mt) in December 2012. Earnings from transportation of pig iron and finished steel from steel plants and other points increased to `403.34 crore (3.23 mt) in January 2012 from `369.32 crore (3.10 mt).

Revenues earned from transportation of fertilizers fell to `462.01 crore (5.32 mt) in January 2012 from `484.77 crore (5.61 mt) in December, while earnings from transportation of raw material for steel plants, except iron ore, by container service increased to ̀ 312.78 crore (3.45 mt) from ̀ 100.41 crore (1.12 mt).

Earnings from other goods remained flat at `458.62 crore (6.60 mt) in January 2012, compared with `456.80 crore (6.74 mt) in December 2011.

Indian Railways Apr-Jan commodity freight revenue up 9.7 percent


Volume of freight and earnings by the Railways in January 2012 vs January 2011

Commodity Quantity (in mt) Earning (in `crore)Jan'11 Jan'12 Jan'11 Jan'12

Coal i) for steel plants 4.02 3.92 167.38 179.91ii) for washeries 0.17 0.12 2.4 0.96iii) for thermal power houses 25.44 28.11 1527.13 1809.14iv)for public use 8.38 9.2 498.09 593.53v) Total 38.01 41.35 2195 2583.54Raw material for steel plants except iron ore 1.31 1.21 100.87 99.97Pig iron and finished steel - i) from steel plants 2.38 2.49 284.61 342.66ii) from other points 0.67 0.74 61.21 60.68iii) Total 3.05 3.23 345.82 403.34Iron ore - i) for export 1.92 0.32 400.81 90.2ii) for steel plants 3.97 4.94 118.98 181.21iii) for other domestic users 4.21 2.99 234.3 210.19iv) Total 10.1 8.25 754.09 481.6Cement 8.77 9.92 529.82 615.32Foodgrains 4.03 4.24 400.5 434.18Fertilizers 4.21 5.32 343.33 462.01Mineral Oil (POL) 3.48 3.46 303.85 322.21Container Service - i) Domestic containers 0.9 0.8 85.09 80.91ii)EXIMcontainers 2.39 2.65 207.45 231.87iii) Total 3.29 3.45 292.54 312.78Balance other goods 6.3 6.6 432.54 458.62Totalrevenueearningtraffic. 82.55 87.03 5698.36 6173.57

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mACRO OuTLOOk

Macroeconomic indicatorsof IndiaSteel Insights Bureau

Source: RBI

69

71

73

75

77

79

81

83

85

4345474951535557596163656769

6-A

pr-1

1

21-A

pr-1

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6-M

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4-A

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19-A

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3-S

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18-S

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INR

vs GB

P

INR

vs

USD

, Yen

USD YEN GBP

INR movement against select major currencies

TheINRloggedmonthlylossesinFebruarytotheextentof4.15percentonforeignfundoutflows.TheINRlostFebruary2012againsttheUSDendingthemonthat`49.01perUSDfromhoveringaround`47.06perUSDrecorded during the end of January.

105

125

145

165

185

205

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

Mining & Quarrying Manufacturing Electricity General Index

Source : Govt. of India, MoSPIThe index of industrial production (IIP) rose by 1.8 percent in December 2011 as against 5.9 percent in November 2011 after witnessing a contraction in the previous month by 4.74 percent. The slow growth in IIP was because of negative growth in mining, manufacturing and electric segments.

Index of Industrial Production

110120130140150160170180190200210

ALL COMMODITIES PRIMARY ARTICLESMANUFACTURED PRODUCTS FUEL & POWERBasic Metals Alloys & Metal Products Steel

Source : OEA, GoI, Ministry of Commerce & Industry

Wholesale Price Index (Selected Categories)

India’s wholesale price index (WPI) (Base 2004-05=100) for the month of January 2012 rose by 0.5 percent to 157.7 (provisional) from 156.9 (provisional) in December. The index for non-food articles rose by 2.4 percent to 182.8 (provisional) from 178.6 (provisional) for the previous month.

9.47%

9.54%

9.68% 9.74%

9.56%

9.51%

9.36%

9.78%10.00%

9.73%

9.11%

7.47%

6.55%6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

Source : OEA, GoI, Ministry of Commerce & Industry

Inflation Rate in India

Inflation,asmeasuredby theWPI,eased toa26-month lowof6.55percent inJanuary. Itstayedabove9percent for 12 straight months until November, forcing the central bank to run a 20-month interest rate tightening cycle that ended in October.

1280000

1330000

1380000

1430000

1480000

1530000

1580000

1630000

275000280000285000290000295000300000305000310000315000320000325000

in Rs crore

in m

illio

n $

in Million $ in Rupees crore

Source: RBI

Foreign Exchange Assets

India’s forex reserve rose to $295.048 billion as of February 24 from $293.440 in the previous week. Foreign currency assets, the biggest component of the forex reserves kitty, rose by $1.567 billion to $261.102 billion during the week. This rebound in forex reserves was mainly on account of a strong rally in the Indian equities marketsandreboundinthevalueofrupeeonthebackofhugeinflowoffundsfromoverseasinvestorsassincethe beginning of the year.


mARkET REpORT

World crude steel production for the 59 countries reporting to the World Steel Association (worldsteel) was 116.7 million tons (mmt) in

January 2012, down .33 percent as compared to 117.1 mmt reported in December 2011.

It needs to be noted here that in December 2011, there were 64 countries reporting to Worldsteel and thus the figure pertains to 64 countries. However, January 2012 figures have only 59 countries. Three African countries – Algeria, Libya and Morocco – as well as two Middle East countries – Iran and Qatar – no longer report their monthly production statistics to Worldsteel.

As per the data, crude steel production for January 2012 was 8.89 percent lower than January 2011. China, the single largest producer, produced 52.1 mt of crude steel in January this year, a m-o-m drop of 0.18 percent and a y-o-y decline of 13.03 percent.

Elsewhere in Asia, Japan produced 8.6 mt of crude steel in January 2012, a decrease of 10.61 percent compared to the same month last year. India’s production for January 2012 stood at 6.1 mt, down 0.73 percent compared to January 2011. South Korea produced 5.1 mt during the same period, a 9.61 percent decrease on the same month 2011. Overall, Asian markets, in comparison to January 2011 recorded a 11.44 percent decrease in production of crude steel as the region closed the January 2012 month with crude steel production of 73.8 mt.

In the EU, Germany’s crude steel production for January 2012 was 3.4 mt, a decrease of 8.51 percent on January 2011. Italy produced 2.2 mt of crude steel in January 2012, 4.58 percent higher than January 2011. France’s production also rose to 1.4 mt of crude steel in January 2012, 11.20 percent up compared to the same month of 2011. EU’s total production in January this year stood at 13.9 mt, a decrease of 5.59 percent as compared to the corresponding period in 2011. However, compared to December 2011, production grew by 11 percent.

Russia recorded a y-o-y growth of 0.36 percent in January producing 5.9 mt, while Ukraine witnessed a y-o-y production fall of 1.61 percent to 2.9 mt of crude steel. Turkey’s crude steel production rose by 14.35 percent to 3.1 mt in January 2012 as compared to January last year while Brazilian crude steel production for the same period was 2.8 mt, up 0.58 percent to January 2011. The US crude steel production stood at 7.6 mt in January 2012, recording a rise of 5.68 percent over January 2011

The world crude steel capacity utilisation ratio of the 59 countries in January 2012 rebounded slightly to 71.3 percent, 0.5 percentages point higher than from December 2011. Compared to January 2011, the utilisation ratio in January 2012 decreased by -9.6 percentage points.

Global crude steel output down marginallySumit Kedia

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China Rest of the world except China World

Crude steel production growth rate (Y-o-Y) Steel capacity utilisation ratio

World crude steel production (in ‘000 tons)

Aug 2011

Sep 2011

oct 2011

Nov 2011

Dec 2011

Jan 2011

Jan 2012 / Jan 2011

(% change)EuropeanUnion(27) 12,616 14,674 15,174 14,244 12,541 13,920 -5.30%Other Europe 3,035 3,213 3,324 3,089 3,345 3,384 11.32%C.I.S. (6) 9,452 9,060 9,495 9,140 9,318 9,404 0.37%North America 10,218 9,839 9,853 9,885 10,134 10,340 5.04%South America 4,123 3,997 4,061 3,880 3,795 3,798 0.32%Africa 1,200 1,103 1,206 1,090 1,202 1,084 NAMiddle East 1,677 1,661 1,681 1,641 1,718 464 NAChina 58,752 56,700 54,673 49,883 52,164 52,072 -13.03%India 6,160 5,950 6,150 6,000 6,150 6,100 8.73%Japan 8,909 8,889 6,150 8,695 8,397 8,631 -10.61%South Korea 5,519 5,478 6,087 5,785 5,950 5,120 -8.76%Taiwan, China 1,911 1,738 1,800 1,740 1,920 1,900 8.57%Asia 81,251 78,754 78,188 72,103 74,581 73,823 -10.51%

Oceania 668 626 473 434 424 458 -37.49%

Rest of the world except China 65,488 66,226 68,782 65,623 64,894 64,603 -3.77%

Total 64 countries 124,240 122,926 123,455 115,506 117,058 116,675 -8.13%


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 significantly. The initial signs of such an impact are already apparent in the flat steel segment.

The Chinese, UAE and Turkish markets showed some strength. But the US remained quiet and flat following the uncertainties in the market dynamics.

Chinese prices increase Export prices of Chinese commercial plate have increased by $5-10 per ton in February. Producers have pushed prices higher mainly because order bookings have increased and because domestic plate prices have also trended upwards.

Offer prices of boron-added 14-20mm thick commercial plate from some eastern China producers have increased to $645-655 per ton fob, up $5 per ton from mid-February and by almost $15-20 per ton compared with offers in early February. Transaction prices are heard to be quite close to those offers.

Meanwhile, transaction prices for similar materials from one northern China steelmaker are heard at around $630 per ton fob, up about $10 per ton from mid-February.

Plate export volumes are expected to rebound in March-April as a result of the improved orders. In January China exported 347,363 tons of plate, down by just 2 percent from December’s 354,489 ton, according to data supplied by the China Iron & Steel Association.

Currently, domestic prices of Q235 14-20mm plate are prevailing at RMB 4,320-4,400 per ton with 17 percent VAT or RMB 3,692-3,761 per ton non-VAT in the Shanghai dealer market, up RMB 40-50 per ton. Meanwhile, China’s exports of hot rolled coil and sheet rebounded by 28 percent month-on-month in January after falling for three consecutive months. Chinese exporters expect the HRC export volumes to continue growing in the coming months following improved orders in December-January for February-April shipment.

China exported 316,743 tons of HRC in January, up 69,677 tons or 28 percent from December, according to data supplied by China’s customs. Chinese HRC export prices have increased since early January on the back of improved orders. However, as HRC producers continued pushing export prices higher in February, transactions have slowed. Exporters believe some time will be needed to see whether buyers could accept the recent rapid price increases.

Currently, prevailing export offer prices for Chinese boron-added HRC 5.5mm thick and above have increased to around

$635-640 per ton fob for May shipment, up $5-10 per ton from early February and up $35-40 per ton from early January. Some deals have already been closed at around $635 per ton fob to South America, up $10 per ton from early February.

US prices trend downUS grain-oriented electrical steel (GOES) producers AK Steel and Allegheny Technologies Inc (ATI) have cut their monthly GOES surcharges for April deliveries. AK’s surcharge is slated to fall from $450/short ton to $395/s.t, and ATI’s surcharge is scheduled to fall from $469/s.t to $440/s.t. This is the first time AK has cut its monthly GOES surcharge this year, while ATI’s adjustment brings its surcharge to its lowest level yet this year.

AK and ATI’s surcharge mechanism differs, accounting for the discrepancy in levies, but base price adjustments make transactional pricing similar.

American coldrolled and hot-dip galvanized sheet mill lead times fell, while hotrolled coil lead times inched up slightly. The shorter lead times come as domestic spot pricing continued to trend downward. After starting the month of February in the range of $720-750/short ton, HRC is now selling for roughly $700-710/s.t, fob midwestern US mill.

UAE steel prices firm upUnited Arab Emirates-based flats producer Al Ghurair has increased its hot dip galvanized coil price by $15 per ton, while fellow local producer Asian Ispat is also planning a hike soon. Domestic demand is strengthening, while import offer prices are moving up.

Al Ghurair is selling 0.7mm thick, 180 grams/square meter zinc coated HDG at $865 per ton ex-works for May production. Asian Ispat’s price for 0.5mm thick, 120 grams/square meter zinc coated HDG is at $810-840 per tons ex-works, while skin pass coil is quoted at $880-920 per tons ex-works.

Hot rolled coil imports are offered to the UAE at $680-710 per ton cfr, up from level of $670-800 per ton cfr.

Turkey prices to increase soonCold rolled coil prices in Turkey are expected to increase soon, following recent upward movement in hot rolled coil prices; there is also a shortage of some gauges. Demand from end users is also strengthening because stock levels are low.

Turkish producers are offering CRC at $800-820 per ton ex-works, with levels expected to increase by $10-20 per ton soon. These prices were $760-780 per ton in early February. HRC prices increased to $720 per ton ex-works, $40/t up on early February.

International flat product markets

Mixed trend amid uncertaintiesSteel Insights Bureau


International long product markets

China, Japan firm up; US remains softSteel Insights Bureau

mARkET REpORT

The international long steel market witnessed mixed trends in February in line with the uncertainties in the global economic front. The Chinese and Japanese

markets showed some firming up. However, the US market remained lacklustre.

The market sentiment remained positive for now since the period between March and May is considered the peak season for steel consumption in China. Higher scrap prices have resulted in Japanese long product mills to lift their selling prices.

However, US wire rod market participants remained unsure about where prices are headed. They agreed that they will have to wait and see what happens with scrap prices. There were some imports coming in, but Turkish rebar is not going to be a big factor.

Chinese rebar prices reboundRebar prices in northern China have stabilised. The market sentiment remained positive for now since the period between March and May is considered the peak season for steel consumption in China.

In the Beijing market, 18-25mm diameter HRB400 rebar sourced from Hebei Iron & Steel, was fetching RMB 4,280-4,300 per ton, with 17 percentVAT. HRB335 rebar of the same size from the same source also held steady at RMB 4,220-4,230 per ton. While Hegang, the leading construction steel supplier in northern China, reduced its February contract price to what traders regard as a reasonable level, the list price for early March remained high.

Market prices have stayed at a low level through most of February; with February coming to an end, traders are eager to push up their prices to brace for the traditional peak steel consumption season in March. But after such a tremendous hike, there may be little room for further increases.

US prices softUS wire rod market participants remained unsure about where prices are headed. They agreed that they will have to wait and see what happens with scrap prices.

Turkish wire rods have become too expensive. Their numbers rose $20 per ton. And now they are basically out-priced and this is at the same time that domestic mills are quietly giving discounts based on the lower scrap numbers. Mesh quality rod from Turkey is priced at $715-720 per ton cfr US, or $648-653 per short ton.

The price of wide flange beams in the US seems to be firming, though customers are still benefiting from discounts.

One midwestern US service centre source said some buyers

are paying full fob mill list price for WF, which would be $840 per short ton for 8x8-inch sections, but discounts are available.

According to sources, the price could be more than $810 delivered from the mill. The sources said spot prices will remain flat or perhaps soften a little in March and the market will continue to be weak unless there are more government incentives to bring more beams to worksites.

Some sources said business conditions overall are good, and that they are having no problems in getting material. Meanwhile, the price of rebar is moving down largely because of lacklustre demand, and not higher import volumes.

The rebar price assessment moved down to $730-760/short ton, fob mill, from $760-780/s.t in mid-February, as more small to midsize service center buyers are quoting lower prices.

A northeastern stockist said there are some imports coming in, but he does not expect Turkish rebar to be a big factor until April. He says other service centres probably did some hedge buying in December while prices were lower, as he did.

In the eastern side the most recent spot price deal for No. 5 rebar, grade 60, was $725/s.t, fob mill. Some sources say that demand will be flat through the end of the year. They are waiting for his customers’ business to pick up before he restocks.

Japan prices move upHigher scrap prices are leading Japanese long product mills to lift their selling prices. Over the past few days Tokyo Steel Manufacturing has raised prices of its H-beams and rebars for project usage twice – on February 23 and 27– and each time by ¥1,000 per ton.

Consequently, its price for senior sized H-beams for projects is now ¥74,000 per ton and that for rebars for projects is ¥59,000 per ton for base-size bars. Tokyo Steel’s list prices for retail sales for March contacts are ¥71,000 per ton for beams and ¥53,000 per ton for bars.

Himeji-based Yamato Steel also lifted its H-beam prices for project usage from February 27 contracts by ¥3,000 per ton to take these to ¥68,000-70,000 per ton, depending on size.

Higher scrap costs are a factor and increase in project prices also reflects changes in market environment. Tokyo Steel’s most recent export contract for H-beams was around $780-790 per ton fob, some $20 per ton higher.

Also Kyoei Steel, Japan’s largest rebar producer, stopped accepting orders at its Yamaguchi works in western Japan while it monitors market movements.

Rebar demand in Kyushu – the key sales region for the Yamaguchi works – is slower than in other areas and as a countermeasure Kyoei is eyeing higher prices.


mARkET REpORT

Domestic Flat & Long Markets

Mixed trend in prices as year draws to a closeAnondo Kumar Dutta & Sanjoy Chakraborty

The month of February has been really slow for the flat steel market as opposed to the long steel segment. In fact, the negative sentiments are so high that producers

are even considering a rollover in prices for March. End-user demand for steel could rise as consumers rush to achieve their annual targets before the fiscal year ends, but interim buyers would want to keep inventories down, which would lead to slow buying. Transaction prices of 2062 grade A HRC, 3mm thick and above, presently average `35,000-36,000 per ton ex-works. Earlier, steelmakers had attempted to lift prices but faced resistance from buyers.

In the long steel segment, on the other hand, billet and other long manufacturers across India have raised their offers by `500-900 per ton on improved demand and high raw material costs like scrap and sponge iron. Demand is said to be overwhelming, especially from Ghaziabad and Muzzafarnagar as most induction furnaces in UP are not operating on unavailability of scrap. Billet prices in Raipur are hovering around `32,800-32,900 per ton, whereas, there are a few other markets who are quoting much higher than market prices. Traders are taking comfort from primary manufacturers to stick to these price hikes as scrap prices are still climbing.

Price trend as observed in the auction held at metaljunction for flat productsFollowing graphs show the price trend observed in the auction services of metaljunction for the months of January and February 2012 for different HR and CR products.

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

products Jan ’12 price (Avg.)

Feb’12 price (Avg.)

% change (M-M)

% change (Qtr-Qtr)

% change (yr-yr)

Cobble Plate 31321 30769 -1.76 3.51 8.04

Def. Plate 28797 29048 0.87 4.47 16.46

Def. HR Plate 29165 29179 0.05 0.74 12.99

Semi Rolled Plate 29115 30727 5.54 6.40 22.16

SRP Coil Form 30483 31005 1.71 4.93 21.73

Def. HR Coil 30774 30188 -1.90 -5.35 1.65

Def. HR Sheet 30850 31200 1.13 -4.78 –

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

products Jan’12 price (Avg.)


% change (M-M)

% change (Qtr-Qtr)

% change (yr-yr)

Def. CR Coil 32957 34678 5.22 1.66 5.37Def. CRNO Sheet 31497 31669 0.55 -4.45 -8.76

CR Coil End SPM-I 33499 34103 1.80 2.98 11.15

CR Coil End SPM-II 34616 34900 0.82 5.07 10.75

Def. CR Sheet 29800 30725 3.10 -6.33 -6.68

CR Sheet Cutting 29800 30155 1.19 2.35 15.24

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33000

35000

Wtd

. Avg

. Prc

ie (R

s./M

T)

Defective HR Plate-Rourkela Semi Rolled PlateDefective Plate Cobble PlateDefective HR Plate-Bokaro HR Sheet

HR Products Price Trend

Price in `/t is basic

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37000

Wtd

. Avg

. Pric

e (R

s./M

T)

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 price movement has been rather unpredictable in the secondary steel segment. Buyers bought only to satisfy immediate need and in an attempt to balance their books before the financial year ends. This has been reflected in both hotrolled and cold rolled products. Apart from a couple of products, for all major products, any rise in prices got corrected in the following week, only to rise again.

Price trend as observed in the auction held at metaljunction for long productsFollowing graph shows the price trend observed in the auction

services of Metal Junction for the months of December 2011, January & February 2012 for different long products.

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

products Jan’12 price (Avg.)


% change (M-M)

% change (Qtr-Qtr)

% change (yr-yr)

Defective Billet 31826 31548 -0.87 4.11 9.84

TMT Bar Cutting 33600 31896 -5.07 6.68 17.74

MM End Cutting 31872 30661 -3.80 2.18 14.53

Rejected Bloom 28516 27543 -3.41 -1.91 12.09

Plate Cutting 32128 31194 -2.91 -0.17 11.00

OutlookIn the long steel segment, price drops were witnessed in the last week of January but after producers increased prices which were buoyed by rise in demand for construction materials, traders bid in line with these sentiments. Prices grew steadily across major categories of construction materials. However, insiders predicted that these sentiments are temporary and prices are expected to slow down again as the financial year ends, and businesses attempt to close their books.

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. Avg

. Pric

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T)

Defective Billet TMT Bar Cutting MM end CuttingRejected Bloom Plate Cutting

Long Products Price Trend


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

KolkataFeb'11 36035 34385 39885 39810 40170 40230 40615 44460 47435 52375 53530May'11 36965 35220 43660 42505 41050 41110 41840 42440 47290 54245 55720Aug'11 37630 35910 44235 43015 41615 41780 42685 42395 47685 54060 55725Nov'11 38660 37535 44190 44940 43015 42795 44340 45915 51395 55560 56615Feb'12 39435 38275 44915 46175 44505 44585 44845 45935 51680 55120 56425DelhiFeb'11 37015 35330 41735 41070 41015 41260 41550 45820 49480 53355 56965May'11 37300 35540 44540 43310 40890 41060 42280 43020 48380 51540 54650Aug'11 38080 36370 45325 44115 41500 41850 42715 43140 48140 51990 55400Nov'11 38910 37840 45090 46065 43235 43935 45305 47565 51960 53730 56580Feb'12 39510 38460 45900 46790 44550 45080 45440 47610 51720 54210 55000MumbaiFeb'11 37160 34245 41225 40290 40665 41025 41170 44170 46640 51720 53460May'11 38100 36000 44890 43425 41630 41705 42375 42145 46720 53170 55080Aug'11 38260 36200 45615 43990 42210 42380 43085 42270 47505 54445 56250Nov'11 39600 38150 45695 45815 43835 43930 45275 47920 51710 55975 56405Feb'12 40690 38730 46805 47845 45250 45390 46040 47910 51710 55855 56420ChennaiFeb'11 35800 33435 40235 39205 39980 40765 40440 43015 47635 55290 56620May'11 37475 34760 45450 44000 42150 42125 42495 42010 47530 58915 60425Aug'11 37490 34615 45320 43865 42930 42830 43210 42035 47500 58480 60620Nov'11 38855 36840 45295 45375 43905 44145 45485 47600 52175 60780 61600Feb'12 39990 37570 45950 47055 45290 45585 45715 47575 52280 59840 60850

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


mARkET REpORT

Domestic pig iron prices have been stable mainly on low production. Market sentiments indicate that prices are unlikely to correct soon in the current

scenario. Most of the plants in crucial regions like Raipur,

Raigarh, Rourkela and Jharsuguda are closed on account of unavailability of iron ore and higher coal prices. However, rising steel and international scrap prices might put some pressure on the prices, but not in the near future. Steel grade pig iron prices in Raipur are currently trading at `27,500 per ton while prices in Raigarh are hovering around `26,800-26,900 per ton. At the end of the month, steel grade pig iron prices of NINL, Orissa was said to be prevailing at `25,300 per ton (basic), retail by road delivery.

Domestic raw materials market

Low output keeps pig iron stableAnondo Kumar Dutta & Sanjoy Chakraborty

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. Avg

. Pric

e (R

s./M

T)

CR Coil End Side-End Shearings CR Gas CutWRM Material Turning & Boring Coil End Cutting

Scrap Products Price Trend

Price in ` per ton is basic

Price trend in domestic metallic sector on a quarterly basispig Iron Melting Scrap H M S-I Melting Scrap H M S-II Sponge Iron (Coal Based)

KOLKATAFebruary 2011 30475 23125 23290 20220May 2011 31065 23985 23130 20355August 2011 32260 25470 24845 24095November 2011 32915 27375 26625 24500February 2012 33300 29500 28875 25625DELHIFebruary 2011 33750 28000 27450 24750May 2011 30900 26000 25500 22500August 2011 34600 26850 26100 24750November 2011 34500 27000 27500 27000February 2012 33750 29000 29500 27500MUMBAIFebruary 2011 28000 NA NA 18500May 2011 28500 NA NA 18000August 2011 29000 NA NA 18500November 2011 29000 NA NA 19000February 2012 32400 NA NA 26600CHENNAIFebruary 2011 28600 25220 19760 18200May 2011 27560 27200 22880 19500August 2011 27830 25725 24675 21000November 2011 28880 24680 23630 21530February 2012 32550 26515 25465 23100

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


pRICE TREnD

Ferro alloys & metals price trendsSteel Insights Bureau

Ferro alloys & Metals February 2012 January 2012 December 2011

HCFerroChrome(Cr-60%)Ex-works Rs/ ton

74000 73000 68000

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

49500 49500 50000

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

51500 50500 47000

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

73500 73500 74000

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

121000 140500 149000

Ferro VanadiumEx-works Rs/ kg

755 715 730

MolyOxide(Mo-57%min)CIFinUS$/lbofmoly

15.15 14.15 14

FerroTitanium(Ti-30%)Ex-works Rs/ ton

142500 142500 146000

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

30500 30500 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 February 2012Steel Insights Bureau

Kolkata

2-Feb-12 MAP MINES 150005-Feb-12 FORST/DURGESH 201007-Feb-12 JINDAL STEEL & POWER LTD. 189008-Feb-12 GNGEXPORT 205009-Feb-12 EXPANDABLE/CONDAI 2400010-Feb-12 JAGWANI PROJECTS 16000

12-Feb-12GOYAL ISPAT 11000SALASAR INT. 6000

19-Feb-12 NOBLERESOURCESLTD 1540025-Feb-12 FALGUNEXPORT 950026-Feb-12 R.PIYARELALL 8200

Kolkata Total 164600

Paradip

4-Feb-12KKRESOURCES 38000MODERN MIN 12000

11-Feb-12 JINDAL STEEL & POWER LTD. 36500

14-Feb-12BAGA 11000GRM 14000

25-Feb-12LG MINERALS 8000ORECAST 11498SINGHANIA 2900

Paradip Total 133898

Vizag

4-Feb-12 478468-Feb-12 2257011-Feb-12 3610021-Feb-12 2000022-Feb-12 28000

Vizag Total 154516

Mormugao

1-Feb-12 SESA 2530002-Feb-12 VMS 61800

4-Feb-12CCL 48900MAGNUMMIN 56000

5-Feb-12ALPINE MIN. METALS 70900PRIME MINERALS 70000PTI 73000

6-Feb-12SESA 85000SFI 41000

8-Feb-12 SESA 74000

Mormugao

9-Feb-12 CCL 55400

10-Feb-12PTI 140000SESA 92000

12-Feb-12 SESA 6500013-Feb-12 SRCL 6700014-Feb-12 CCL 5345017-Feb-12 SRL 8800018-Feb-12 SESA 165000

19-Feb-12

CCL 90000RBSM 55000SESA 77000VGM 53650

20-Feb-12 SFI 77000

21-Feb-12CCL 160000MPL 6500

23-Feb-12CCL 55000SESA 100000TIMBLO 30000

24-Feb-12 FRPL 7700025-Feb-12 SESA 9500028-Feb-12 SFI 77000

Mormugao Total 2512600

Panaji

2-Feb-12 MANIPAL GLOBAL 500005-Feb-12 PEC LTD 590006-Feb-12 BAGA 4500014-Feb-12 MG MINES & MIN 5100017-Feb-12 ROTOMAX 18000

Panaji Total 223000

Redi16-Feb-12 GOLD STAR 5800018-Feb-12 KARISHMA 5700025-Feb-12 RATA 52000

Redi Total 167000

Gangavaram13-Feb-12 3150016-Feb-12 40000

Gangavaram Total 71500GRAND TOTAL 3427114

port Date Exporter Qty (In Tons) port Date Exporter Qty (In Tons)


pRICE DATA

Market price data February 2012Steel Insights Bureau

Market product Remarks 27-Feb-12 31-Jan-12 variation

Gobindgarh

Billet All Inclusive 36200 35600 1.69%

Ingot All Inclusive 34700 34400 0.87%

Sponge Iron All Inclusive 26600 26500 0.38%

TMT 12 mm All Inclusive 39400 40000 -1.50%

Raipur

Billet All Inclusive 33600 32600 3.07%

Ingot All Inclusive 33600 32400 3.70%

Pig Iron All Inclusive 29000 27580 5.15%

Sponge Iron All Inclusive 24300 23100 5.19%

Durgapur

Billet All Inclusive 33600 37000 -9.19%

CRC All Inclusive 42450 42200 0.59%

HRC All Inclusive 38700 39500 -2.03%

Ingot All Inclusive 33000 36100 -8.59%

Pig Iron All Inclusive 28400 28700 -1.05%

Sponge Iron All Inclusive 24000 26200 -8.40%

steel insights - mar 2012

Documents

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bhilai steel plant

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ground floor