steel insights - may 2013

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Steel Insights, May 2013 3

Dear readers, The customary monetary policy is over. RBI Governor D. Subbarao spooked business sentiment with just a small reduction in key interest rates citing upside risks of inflation in the near term.

For consumers and steel mills in India there is nothing much to cheer about. The widely anticipated rate cut does not hold out prospects of an immediate lowering of borrowing costs, given that banks are not likely to cut lending rates anytime soon. It is not likely to provide a fillip to India’s flagging economy either, because the slump in growth is more due to the absence of fresh investment and governance issues rather than the cost of funds.

RBI also projected growth in gross domestic product at 5.7 percent, lower than the government’s forecast of 6.1-6.7 per cent in the current fiscal.

India’s consumption data of 2012-13 pointed in same direction as steel use grew at the slowest rate in four years. A faltering economy and lack of spending on cars and infrastructure projects have eroded demand. Steel use in 2012-13 is estimated to have risen 3.3 percent to 73.3 million tons (mt) from a year earlier, according to initial data of the steel ministry. Production rose 2.5 percent to 77.6 mt. Steel demand growth was less than half of the Indian government’s 8 percent estimate as home and car buyers delayed purchases.

Unable to spur demand, governments are seen wearing the protectionist’s hat to save industry from foreign competition. India is reportedly considering emergency tariffs on some iron and steel pipes, tubes and profiles to protect its domestic industry from imports, primarily from China and Italy. The move follows lobbying by Jindal Saw Ltd and Indian Seamless Metal Tubes Ltd, which account for more than half of India’s production of seamless pipes and tubes. These companies were hit hard in profit owing to a surge in imports.

In a related development, Thailand has imposed provisional safeguard duty on import of rolled flat steel products of a certain specification, a major export from India. The 33.11 percent duty, which has been imposed by Thailand’s Department of Foreign Trade, would continue to be in effect till the first week of August. The duty imposed by Thailand would be in effect against imports from other nations too.

Coming back to the current edition, we at Steel Insights have tried to evaluate Posco’s Indian foray and the status of its dream project in Odisha. The edition also delves into current position of iron ore industry post Supreme Court verdict and why cost competitiveness is essential to sustain operations in this volatile market.

Warm regards,

(Rakesh Dubey)

EDITORIAL

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

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4 Steel Insights, May 2013

COnTEnTs

33 | FEAtuREWSA forecasts 2.9% rise in steel use in 2013India steel demand expected to grow 5.9 percent to 75.8 mt in 2013.

26 | IntERvIEW3M betting on Indian safety equipment marketR. Balachandran shares insights on need for occupational safety measures.

19 | SPECIAL FEAtuRE Low cost is key as prices unlikely to recover soonSteel mills need to evaluate cost competitiveness measures on uncertainty in consumption growth.

15 | SPECIAL FEAtuREthe days of cheap iron ore are overThe landmark SC judgment on unlikely to ease supply shortage in the near term.

6 | CovER StoRyMarket, raw material make Posco stay put in IndiaPlans 8 mt mill in first phase, accepts elimination of ore swapping clause.

28 Steel consuming sector remains under pressure

30 Coking coal prices plummet in April 31 Capacity utilization putting pressure on

ferro alloy prices 32 Rohit Ferro Tech set to commission

pellet plant 34 Industry not enthused by RBI rate cut 35 Technological upgrade of slab casting

plants 40 SAIL records 4% growth in value added

steel production in FY13 41 SAIL’s performance set to improve with

addition of coke ovens 43 Tata Steel posts 27% rise in saleable

steel production in India 44 JSW Steel Q4 crude steel production

up 2% y-o-y 45 RINL to invest `1000 crore to develop

iron ore mines 46 Sesa Goa’s iron ore operations

impacted; pig iron, met coke output up 47 Traffic handling by major ports down

2.5% in Apr-Mar 48 Railways coal handling up 17.9% in

March 49 Macroeconomic indicators of India 50 Global crude steel production up 1%

m-o-m in March 51 Domestic long & flat markets 52 Domestic raw materials 53 Price data 54 Production data 56 Ferro alloy data 58 Iron ore data

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Market, raw material make Posco stay put in India

Steel Insights Bureau


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Nearly eight years have passed since South Korea’s Posco planned to set up a $12-billion steel plant in

Odisha’s Paradip. The Indian foray that was billed as the single largest foreign direct investment (FDI) in the country, struggled to take off due to issues related to land acquisition and environment clearance.

According to industry insiders, in 2004, Posco came to India on the invitation of Tata Steel to set up a steel plant in a joint venture. But the talks failed as Tata Steel was not willing to concede majority stake. Later on, Posco started negotiating with the Odisha government for setting up an integrated steel plant on its own.

The South Korean company, of course, had come on a recce earlier in the 1990s. But it could not take a call on setting up business mainly because of lukewarm market conditions. Land acquisition, however, would have been much easier those days.

A long wait

After it decided to go on its own, Posco signed a memorandum of understanding (MoU) with the Odisha government in June 2005, while intending to start work the next year. However, as of 2013, the company is yet to start off. The state government and the Industrial Infrastructure Development Corporation of Odisha, which have been carrying out land acquisition haltingly due to stiff resistance from locals, claimed to have acquired 2,100 acres to date and have assured to take hold of the rest 600 acres to help the company start work on the first phase in another couple of months.

However, land is not the only obstacle in its way. Posco has to overcome the hurdles in getting captive mining rights and the final environmental nod from the Green Tribunal. It also has to resolve issues related to sourcing of water.

As of today, the Posco story stands at its most critical stage. In the past few years, the project has faced stiff opposition. There have been large-scale protests and police firing resulting in hundreds of injuries. The project has become symptomatic of all the major fault lines of an investment-hungry India: a flawed mining policy, land acquisition woes, and the question of ownership of natural resources. It also typifies the debate over public versus private goods, fundamental rights and fair compensation, and growth versus equity.

The MoU

The MoU signed between the Odisha government and Posco on June 22, 2005, had come out with a definite timeline for the project.

The MoU specified that the company will require approximately 4,004 acres (1,620 ha) of land for the purpose of setting up the project and associated facilities, including the port facilities and a storage yard for coking coal.

In addition, the company will require approximately 2,000 acres (809 ha) of land for township development, recreational activities and all related social infrastructure development. Out of this, approximately 1,500 acres would be identified adjacent or near to the steel project and another 500 acres (approximately) near the mining project.

The Government of Odisha agreed to acquire and transfer all the land required for the project, free from all encumbrances through Odisha Industrial Infrastructure Development Corporation (IDCO) on payment of the cost of land.

Displacement of people

The land acquisition process required huge displacement of people. According to rough estimates, around 22,000 people would be displaced because of the project. People in Dhinkia Panchayat have been demanding relocation of the project, alleging that it will deprive them of their major source of income from the betel vines spread across nearly 3,000 acres of forest land. Also, there were people engaged in cashew cultivation. These locals claim to be leading a moderate but decent livelihood by selling betel leafs and cashew.

There are also allegations that the average farmer in the project-affected area earns more than what Posco is offering the displaced a one-time cash compensation. There were allegations that the current compensation package on offer was less than 1 percent of their cumulative earning potential.

Additionally, the project is estimated to leave another 20,000 fishermen with no access to the waters. There will also be felling of trees and ultimately this would impact the wildlife habitation, the locals fear.

Why so much land?

Over the past few years, land acquisition has become a major hurdle for industrialisation in almost all the Indian states. The Indian



www.somiconveyor.com


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Initial proposed timeline of Posco project in Odisha

Project Phase No. Capacity in mtpa Project details Project cost in

`crore (approx.) Time schedule Finished products

Steel Plant with FINEX / BF, along with other facilities like Lime Calcining Plant, Oxygen Plant, Captive Power Plant, Steel Melt Shop with Converters, Casters, Rolling Mills etc. (collectively, the “Steel Project”) & Minor Port

Phase I6

(in two modules of 3 MT each)

1st ModuleCrude Steel - 3 MTPAFinished Steel -2.82MTPA

10,100

To be commissioned by July 2010 or 36 months from the date of(i) taking title to and possession of land.(ii) registration of the executed prospecting licence, whichever is later

Slabs – 3MT

2nd ModuleCrude steel – 3MTPAFinished Steel -2.82MTPA

11,800To be commissioned by July 2012 or 24 months from Commissioning of Phase I, Module I, whichever is later

Hot rolled coil – 4.5MTPlate – 1.5MT

Phase II6

(in two modules of 3 MT each)

1st ModuleCrude Steel -3MTPAFinished Steel -2.82MTPA

9,500To be commissioned by July 2014 or 24 months from commissioning of Phase I, Module 2, whichever is later

Slabs – 3MT

2nd ModuleCrude steel – 3MTPAFinished Steel -2.82MTPA

12,000To be commissioned by July 2016 or 24 months from commissioning of Phase II, Module 1.

Hot rolled coil – 4.5MTPlate, Cold rolled coil – 1.5MT

Source: POSCO Initial MoU document

government is trying hard to put in place a proper land policy to ease industrialisation as there is immense opposition from farmers and fragmented land owners to part with their fertile land for the sake of manufacturing facilities.

Currently, both the central and state governments in India are walking tightrope as they explore a fine balance between developmental initiatives and local interests. Industrialisation requires huge swathes of land, and in return potentially offers significant employment opportunities, but this process may alienate the farming community, a major vote bank for the Asia’s leading democracy.

Amid such an imbroglio, questions are being raised if the industry really needs such huge tracts of lands for setting up new

facilities. While the land requirement varies from industry to industry, in this particular case, if one examines how much land does Posco use in its Korean plants, we may see a startling fact.

Built on 899-hectare land, Pohang Works specialises in small-lot production of a broad range of products, including hot rolled coil and cold rolled sheet, plate, wire rod, electrical steel, and stainless steel. In 2008, crude steel output in the plant was 13.6 million tons (mt).

Also, Gwangyang Steel Works (constructed in four phases) came up on Korea's southeast coast, almost entirely on land reclaimed from the sea to the tune of 1,441-hectare. This plant focuses on mass-production of a limited number of high-demand products such as hot and cold rolled sheet.

In view of the above facts, a question is being raised as to whether the Odisha plant could have been built in a more compact way?

When approached by Steel Insights, Posco said the CMD of Indian operations, Yong Won Yoon, was fully occupied during this period and would not be available for comments in near future.

Raw materials

On the raw material front, the state government agreed to recommend to the Government of India for allotment of suitable coal blocks for captive coal mining for the project either directly or through a

PSU. Furthermore, the state government said it will assist the company to get the allocation of coal linkage of suitable grade in the desired quantity to meet its requirement until it is ready for mining its coal block.

The 2005 MoU said Posco will need the equivalent of 600 mt of iron ore of an average Fe content of 62 percent, to meet the requirements of the proposed project every year. The company may swap certain quantities (not exceeding 30 percent of the total requirement for the Paradip plant annually) of such iron ore which have high alumina content with equal quantity of low alumina content iron ore of equivalent or better Fe content imported for blending, in order to produce better quality steel in the project and conserve energy . Any export of iron ore by way of swap will be allowed only after an equivalent quantity of ore has been imported for the plant. The extent of the above quantity of iron ore by way of replacement for equal quantity of import of higher grade iron ore will be within the framework of the Export-Import Policy of the Government of India applicable from time to time.

It is clarified that no export of iron ore will be allowed from the captive mine except by way of full replacement through import of equal quantity of high grade ore and within the limits mentioned above.

The Government of Odisha agreed to grant prospecting licenses and captive mining leases for 600 mt of iron ore to the company after following prescribed procedures and


www.steelplantech.co.jp


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completion of required milestones including approvals of Government of India. For this purpose, the Government of Odisha had to recommend to the Central Government and use its best efforts to obtain the Central Government’s approval within the minimum possible time for the grant of prospecting licenses and the captive mining leases for the iron ore mines.

Natural resource at right price?

However, there were several arguments against the arrangement laid down under the MoU. There was an argument that extraction of iron ore alone would fetch Posco huge sums of money for the next 30 years and the company would recover its initial investment of `52,000 crore after eight years. From then on, it will be pure profit.

World over, companies pay fair-market rates for the iron ore reserves they mine. India is one of the rare exceptions that offer mining leases on a royalty basis. The royalty stands at 10 percent of the pre-shipping price.

It is alleged that in June 2005, bypassing nearly 200 companies (including PSUs) which had applied for access to the mines, the Odisha government signed an MoU with Posco. The MoU allowed Posco 600 mt of the highest-grade iron ore available in India, an integrated 12 mt plant, a hydel plant, a railway line, a township, a pipeline that will supply water from Cuttack’s drinking water source, and most significantly, its own port.

Added to this, the old MoU also allowed

access to another 400 mt of iron ore that Posco can export for use in its South Korean plants. Of the 600 mt designated for the production of steel, the old MoU allowed Posco to swap 30 percent of Odisha’s high-grade iron ore with a lower-grade quality from Brazil.

Environment clearance

Adding to the woes of the company, recently the statutory environment panel has revoked the clearance given to Posco’s steel and port project in Jagatsinghpur in Odisha, raising fears that the venture may get further delayed.

Posco will now have to go through the process of environmental clearance, at least for some part of it, all over again.

The expert appraisal committee on industry, which is the apex environmental clearance body for industrial projects, has asked the company to furnish detailed information on a variety of aspects, including iron ore linkage, layout plan for the project, waste management plan before it can consider fresh clearance.

The decision by the environment panel comes following the recommendations made by the National Green Tribunal-mandated K Roy Paul Committee.

In March 2012, the Green Tribunal suspended the final clearance granted in January 2011 and asked the ministry to institute a fresh expert committee to look into the project. The K Roy Paul Committee submitted its report in October.

At its meeting on March 6, the expert appraisal committee noted, "Keeping in view the observations/recommendations made by the said Expert Committee [K Roy Paul committee], the previous recommendation of the Expert Appraisal Committee (Industry -1) for extension of validity period of environment clearance accorded to M/s Posco India Private Limited has become infructuous."

The panel, which considered the expert report, also heard submissions from Posco and Odisha Industrial Infrastructure Development Corporation, and asked the developers to submit a revised plan for 2,700 acres of land, and mark out the initial plant size of 4 million tons per annum (mtpa) and the proposed expansion to a capacity of 12 mt over an area of 4,004 acres.

It also asked for plans for the 33 percent green belt, documents outlining the iron ore linkage for the plant, and commitment for gas linkage for the captive power plant, among other things.

Current status

Meanwhile, faced with immense hurdles, Posco has sought at least 2,700 acres (1,093 ha) to start about 8 mt plant in the first phase.

The company’s original plan of constructing 12 mtpa Integrated Steel Plant (ISP) on 4,004 acres of land still exists. However, considering the significant delay in land acquisition, it has decided to change the construction schedule. Accordingly, the company requires 2,700 acres of land (only government land) to construct 8 mtpa steel plant. [1st Stage: 2 Phases x 4 mtpa each; 2nd Stage: 1 Phase x 4 mtpa]. Later on, when the remaining land is cleared and handed over by the government of Odisha, the ultimate capacity of 12 mtpa will be achieved.

The Odisha government has submitted a status report on the Posco steel project at a meeting of an inter-departmental ministerial committee of the Union government in New Delhi even as land acquisition drive continued at the project site.

The Odisha government said it has acquired 2,100 acres of land for the proposed mega steel project by Posco-India in Jagatsinghpur district.

"State-owned Industrial Infrastructure Development Corporation (IDCO) has acquired 2,100 acres of land of which 546 An anti-Posco demonstration in Odisha


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acre had been handed over to Posco. Rest 1,554 acres is ready to be handed over to Posco," the status paper prepared by the state government said.

Another 600 acres of land for the purpose was expected to be acquired within four months.

Sources in knowledge of the development said, recently IDCO asked Posco to take the possession of 1,700 acres encroachment free government land. Accordingly, the physical possession of 1,700 acres was handed over to Posco in March 2013. When rest of the required land (only government land excluding all the private land) to construct 8 mtpa steel plant is made encroachment free and handed over to Posco, the preparatory work for construction will start.

The status paper was prepared for the purpose of the second joint committee meeting at ministerial level in Seoul, South Korea on April 23, 2013.

Posco-India's MoU with the state government for setting up its 12-mtpa greenfield steel facility near Paradip at an investment of `51,000 crore, has meanwhile lapsed.

Posco had submitted the draft MoU around one year ago and the various departments of the government of Odisha are in the process of examining the draft. All clauses were mutually agreed and the MoU has been revised accordingly. Posco has not yet received any date for renewal and the Law department is said to be reviewing it. It is said that Posco has accepted all the clauses suggested by the government of Odisha, including the elimination of swapping clause, the insertion of additional employment clause, etc. and the revised version of MoU has been mutually agreed and modified accordingly.

The Odisha government status report said since the project could not come up due to various factors it has decided to extend the validity of the MoU for another six years. "An instrument of tripartite agreement will be signed between Posco, Posco-India and the state government," the report said.

Admitting that law and order problem at the project site was one of the reasons for the delay in implementation of the project, the state government said obtaining approval of forest diversion from the Ministry of Environment and Forest (MoEF) also consumed a lot of time.

The state government has also said that the MoEF while according approval for forest diversion of 2,959 acres of forest land, did not appreciate the swapping clause in the initial MoU. Therefore, discussion was held with the project authority to make certain changes, it said.

Total iron ore requirement for the 12 mtpa Integrated Steel Plant (ISP) would be approximately 600 mt. As per government of Odisha’s proposal and original plan, the ore is to be sourced from the Khandadhar Mines.

On the mineral concession issue, the status paper said that as the state government's recommendation in favour of the South Korean steel major had been quashed by the Odisha High Court, the state filed a special leave petition (SLP) in the Supreme Court challenging the High Court order.

Besides, Posco-India and Geomin Minerals and Marketing Private Limited

have also filed SLPs in the Apex Court. "These SLPs are now sub-judice in the Supreme Court of India," the status report mentioned.

Market and raw materials

Despite all the hurdles, Posco in the meantime is determined to make its presence felt in India. Industry insiders feel it was the “market and raw material” that made Posco stay put in Odisha despite all odds.

On its part, the company has moved its chairman & managing director's office from Bhubaneswar to New Delhi for better monitoring of its projects in other states.

According to media reports, over the last several years, it has announced investments worth $1.4 billion in downstream steel projects, underscoring the importance that India occupies in its business plans. The company has its hands full with a spate

Odisha chief minister Naveen Patnaik with POSCO CMD Yong Won Yoon


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of small investments in downstream steel projects.

Posco India Pune Processing Centre (IPPC) is a service center created by Posco in 2006 for providing value added service to its Indian customers, especially in the western region of the country. The plant is located at Talegaon, Pune and has an annual processing capability of 250,000 tons from its two plants. It caters to the need of all major industries in India and its clientele includes top Indian automotive, home appliances, generator, etc. companies.

Apart from Pune, the company has processing centres at three other locations in India .i.e. Delhi, Hyderabad and Chennai. The plants receive steel of various categories such as Cold Rolled Non Grain Oriented (CRNGO), Cold Rolled Grain Oriented (CRGO), HR Sheets, Automotive steel, Stainless steel, Colour Coated steel sheets, Electrical steel, etc. from Posco Korea and customise the products as per customer specifications before delivering the products to the customers in India.

According to reports in the media, the continuous galvanised line (CGL) and cold rolling mill (CRM) (under construction) at Mangaon in Maharashtra are designed to cater to the demand for high-quality steel, ranging from coated steel to cold-rolled products which are required by a variety of industries such as construction, home appliances and automotive. The CGL plant, built at an investment of $240 million, was completed in May 2012, while the CRM plant is expected to go on stream in June 2014, reports said.

Besides, Posco's first electrical steel plant in India, Posco Electrical Steel India, being built in the Raigad district of Maharashtra, is scheduled for completion in October 2013. The plant, with an annual capacity of 300,000 tons, will provide cold-rolled and non-grain-oriented electrical steel (CRNGO) for use in home appliances, automobiles and so on.

According to recent media reports, Posco's business turnover so far in the country has reached approximately $630 million.

Posco's other projects in India include an integrated steel plant in Karnataka and a joint venture with Steel Authority of India (SAIL) in Jharkhand. However, the project is at a stalemate with both the partners wanting to own a majority stake. The Karnataka plant is on hold too “because of

the political uncertainty in the state,” Posco India Chairman-cum-Managing Director Yong Won Yoon said recently. Media reports said the company had paid about ̀ 60 crore to the Karnataka government in 2010 as initial payment for land acquisition for the 6-mt plant.

Meanwhile, Posco has signed an agreement with Jindal Stainless (JSL) for selling stainless products to the South Korean maker but the alliance does not extend to its proposed $12 billion venture in Odisha. The company said that the pact would also entail joint cooperation in its Odisha project and not Posco’s $12 billion proposed mill in the state. It further said, the pact would be for three years with a provision to further extend it and would focus on “long term based supply of 200 series stainless steel products of the company to Posco or its subsidiaries.” Both the companies would also review “joint establishment and exploration for a nickel smelter process in Indonesia” besides “joint cooperation in the JSL’s Odisha project.”

The MoU would also review “overseas joint projects including but not limited to the establishment of service centres and cold rolling mills,” the company said.

Meanwhile, Posco has received feelers from Uttam Galva Steel to jointly set up an integrated steel plant with an annual capacity of 2 mt at Satarda in Maharashtra. Uttam

Galva has clear possession of the land and the site is close to port facilities and iron ore

mines in Goa. They have offered about 1,700 acres, which can accommodate a steel plant of 3-mt capacity.

However, a recent media report said Posco has scrapped talks with Uttam Galva to set up an integrated steel plant in Maharashtra, choosing instead to wait for its project in Odisha to come up.

“There are so many things we have to consider in terms of economic viability, global recession… somehow it is not easy to consider all the integrated steel plant projects in India,” I G Lee, general manager, corporate relations, Posco India was quoted as saying in the report. “We are focusing on Odisha. It is not easy to allocate our resources elsewhere.”

The South Korean major does not want to lose sight of its Odisha project in the flurry of investment plans for India.

According to industry experts, most of the downstream projects set up in the country have been done keeping an eye on the Odisha plant. Posco is now bringing steel from Korea to feed these processing and specialised steel units. When the Odisha plant comes up, they will source steel from there.

The South Korean ambassador to India, Kim Joong- Keoun, during a recent visit to Odisha sounded optimistic when he said, “We are hopeful of starting work on the Posco project this year”. He, however, was quick to add, “It has been much delayed by Korean standards. The Koreans are very quick".

15Steel Insights, May 2013

sPECIAL fEATuRE

The days of cheap iron ore are over

Tamajit Pain

In the last two editions we tried to gain insights into how the days of cheap iron ore and unbridled profiteering in iron ore

mining are over. In this edition we try to analyse how

the latest developments in the sector point towards what we were claiming in the last two editions.

The most important development that hogged the limelight and is likely to cast a deep impact on the iron ore landscape in India was the Supreme Court verdict which allowed resumption of mining in Karnataka.

The Supreme Court had imposed a complete ban on mining in Bellary in July 2011 which it extended to Tumkur and Chitraguda in August 2011. The ban was imposed due to reports of large-scale irregularities and violation of environmental laws. The ban resulted in the underutilisation of capacity by steelmakers based out of the state. A significant number of sponge iron makers in the state closed their plants due to the inadequate availability of iron ore.

On April 18, the Supreme Court

allowed Sesa Goa and eight other iron ore companies to restart operations in Karnataka, 21 months after it slapped the mining ban in the state for environmental breaches.

The apex court, however, ordered the closure of 49 mines, but lifted the embargo imposed by it on the grant of fresh mining leases in the state.

Last September, the Supreme Court had allowed 18 mines that were classified in category ‘A’ (the ones with the least number of irregularities) to start operations.

A three-judge bench headed by Justice Aftab Alam allowed 63 of the 72 mines that were classified by the central empowered committee (CEC) in category ‘B’ — ones with marginal illegalities — to resume operations.

Operations in seven other mining concessions in this category, which are located on the border between Andhra Pradesh and Karnataka, will remain suspended till the two states resolve a boundary dispute under the supervision of the Geological Survey of India.

Two other mining leases — granted to S.B. Minerals and Shanthalakshmi Jayaram — will remain suspended because the Court did not accept their classification in category ‘B’ when they clearly were above the threshold for violations.

The CEC justified this on the grounds that there were “complexities” in finalising survey sketches with respect to these two mining leases.

Rejecting the CEC’s argument, the court said the two leases should be classified in category ‘C’ for flagrant environmental violations.

The Court accepted the CEC’s recommendation that the mining leases classified as category ‘C’ should be cancelled. These will be re-allocated after a transparent bidding auction process.

Following Supreme Court verdict, 81 out of the 166 mines in Karnataka are now allowed to resume operations.

The resumption of iron ore mining in the state will also benefit JSW Steel. JSW’s biggest plant is located at Vijaynagar in Karnataka.

The order will revive the fortunes of Anil Agarwal-led Sesa Goa. The firm’s mining business was badly bruised when a ban was slapped on its operations in Goa.

The steel industry welcomed the decision to lift the ban on mining in Karnataka.

Seshagiri Rao, joint managing director and group CFO, JSW Steel, said the judgment would not only provide a breather to the steel industry in the region, but also help to provide direct and indirect

employment in this sector.“As the Indian

economy is expected to get back to the growth mode, the opening up

This is the third of a series of analytical articles on the iron ore sector which began with the March edition of Steel Insights. The readers are welcome to send in their feedback. Steel Insights may, at its discretion, publish the discussions for the benefit of a larger audience.


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of mining will enable raw material linkages for further investments in the steel sector in Karnataka,” he said.

Supply shortage to continue for some time now

Bhavesh Chauhan, senior research analyst at Angel Broking, said it would take at least six months to achieve meaningful production of iron ore in Karnataka.

R.K. Sharma, secretary-general of the Federation of Indian Mineral Industries, said the judgment with respect to category ‘A’ and ‘B’ mines were welcome. But the decision to cancel the leases of category ‘C’ mines was disappointing.

Sharma said that only about 50 to 60 mines will come into operations. He indicated that production from the rest of the mines was held up because of various issues.

Analysts and industry insiders believe that the Supreme Court verdict on lifting mining ban on Karnataka’s category ‘B’ (with moderate irregularities) iron ore mines will not result in instant gains for regional steelmakers and miners. However, the judgement augurs well for the steelmaking and mining industry in the state in the long-term.

Karnataka constituted about 18 percent of total iron ore production in the country in 2009-10 which fell to 8 percent in 2011-12 due to the ban on mining. The lifting of the ban is a major step towards alleviating the iron ore shortage in Karnataka. However, it is believed that the positive impact will not been seen until the miners obtain statutory approvals which might take anywhere between 12-18 months or more. Some of the mining leases have expired while others will have to take various statutory approvals before they could start production.

The category ‘A’ and ‘B’ mines are estimated to produce about 22-25 million tons (mt) of iron ore which, although inadequate for total estimated requirement of 35 mt, will provide some relief to those steelmakers and miners whose margins have shrunk in the past 12 months. The impact of removing the ban might be reflected fully in 2014-15 post the receipt of necessary approvals. JSW Steel Limited’s and Kalyani Steel Limited’s utilisation levels are likely to increase steadily in the medium term.

India Ratings, a Fitch group company, said Sesa Goa Limited, a group company of

Sterlite Industries India Limited, will also benefit positively as its mine falls in category ‘B’ and should see an improvement in profitability in 2014-15. Sesa Goa produced 3 mt (below 10 percent of its total production in 2010-11) of iron ore from Karnataka before the ban was imposed. The regional steel players are operating below historic capacity levels due to the inadequate quality and quantity of iron ores together with higher dependence on imported iron ores. JSW Steel’s plant is operating at 80 percent of its total capacity and Kalyani Steel is operating at 50-60 percent capacity.

Production & exports in 2012-13

Although the Indian Bureau of Mines (IBM) is yet to come out with the official iron ore production figures for 2012-13, Insights Research conducted a survey of industry experts to arrive at an estimate for domestic production and consumption during the period.

Following are the indicative production, consumption and export figures in the likely and most optimistic conditions:

FY11 FY12 FY13 likely

FY13 optimistic

Iron Ore Production

Odisha 76 67 50 55

Goa 37 34 10 14

Chhattisgarh 29 30 30 31

Jharkhand 23 20 18 20

Karnataka 38 13 13 14

Others 5 4 4 5

Total 208 170 125 139

Domestic Consumption *

111 116 120 125

Export * 98 62 22 28

All figures in million ton* includes dispatch from stocks

Source: Insights Research

This shows that production and exports will drop drastically in 2012-13 owing to illegal mining ban in the states of India.

But domestic consumption being on the rising side will result in supply side constraints in the near term with prices remaining stable to firm.

Thus this establishes our observations in earlier editions that the days of cheap iron ore are over.

NMDC rolls over prices in May

This was further corroborated after state-run miner NMDC decided to keep the prices of iron ore unchanged for May after slashing the price of higher grade iron ore (lumps) six times since last October, ignoring the softening trend in global prices.

NMDC had lowered the price of lumps by about seven percent last month and 2.5 percent in February. It did not tweak the prices of fines (having iron content of less than 60 percent) for some time.

The company currently sells iron ore lumps in the range between ` 4,600 and `4,700 per ton, while fines are being sold at `2,610 per ton.

NMDC has a total production capacity of 32 mt per annum at its mines in Chhattisgarh and Karnataka.

Analysts say subdued demand from steel mills due to the overall slump in the industry has resulted in creating a balance between lower demand and supply shortages due to lower production.

As demand for steel products has also been weak in home markets, it has impacted iron ore rates, say analysts. “Due to the slowdown in the various steel consuming sectors such as construction, automobiles and capital goods, there has been a slowing in domestic demand. So, in spite of the mining ban which has led to a scarcity of the resource, unless there is a revival in the steel industry in the near term, which appears unlikely, iron ore prices are not likely to see any significant upside,” said a Mumbai based analyst. “However, short-term triggers such as adverse weather conditions might lead to a temporary rally in global and local iron ore prices, which happened during the start of this year.”

In global markets, iron ore of 62-grade has shed 14 percent in the past two months to trade at $136 a ton.

Heavy scrap import puts pressure on iron ore prices

There is also an argument about the ore prices remaining stable for some time despite the supply shortages. This runs in the line that apart from low demand, steel makers were preferring imported scrap instead of sponge iron as raw material.

“Iron ore lumps have poor demand these days. Sponge iron makers have curbed orders


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because steel makers are preferring imported scrap instead of sponge iron as raw material,” said a mining company official.

Due to huge availability of steel scrap from African and West Asian countries, amid falling prices, Indian steel makers have opted for this. According to an estimate by Metal Recycling Association of India, the country’s import of steel scrap in 2012-13 would be 7.5 mt, up 25 per cent over a year. Scrap prices are down eight percent to $390-400 a ton in the past four months, despite the better demand.

Imported scrap is hovering at around `22,000 a ton at western Indian ports. Prices of sponge iron, produced mainly in eastern India, are at `19,000-20,000 a ton. Since procuring sponge iron from eastern India attracts additional transport costs, making it costlier by comparison, many southern and western Indian steel plants prefer using scrap.

Analysts say this may put some pressure on domestic iron ore prices till June.

This is the reason why NMDC has cut ore lump rates by seven per cent in April. Odisha Mining Corporation has reduced rates of high-grade iron ore lumps by 5.6 percent to `5,050 a ton for this quarter. A couple of private mining companies in this state have also cut rates for high-grade ores.

Hike in royalty rates for iron ore

Meanwhile, the Mines ministry has proposed a 5 percent increase in royalty rate for iron ore.

Currently, the royalty is charged at the rate of 10 percent of sale price on ad-valorem basis from the iron ore miners. The Mines Ministry is considering a proposal to increase it to 15 percent and a study group on revision of rates of royalty has been constituted by the ministry.

The last increase in royalty rate of iron ore was made in August, 2009 and according to the provisions of the Mines and Mineral (Development and Regulation) Act, 1957, the rates can get revised after three years, if necessary.

The study group has suggested royalty for iron ore at 15 percent of sale price against 20 percent demanded earlier by the state government of Odisha. Similarly, for all grades of manganese ore, the study group has recommended royalty at five percent of sale price, lower than the state’s demand of 12 percent. For manganese ore concentrates, the group has suggested that the existing rates may continue.

Odisha says 5 percent rise in royalty not enough

Odisha, the biggest iron ore producing state in the country, is sore over the Centre’s proposal to raise royalty rate on iron ore to 15 percent of sale price on ad-valorem basis, up from 10 percent presently.

“The Government of India has notionally agreed to raise royalty rate on iron ore from 10 percent to 15 percent. But this hike is not acceptable to us. We believe that the

royalty rate of 15 percent is not enough. The Centre should fix the royalty rate after proper examination of profits made by miners. Earlier, we had brought to the notice of the Central government regarding the super normal profits earned from mining activities,” Odisha mines department officials said.

GMOEA opposes royalty hike

The proposal of royalty hike by the Centre will make substantial portion of mining the ore in the country unviable, Goa Mineral Ore Exporters’ Association (GMOEA) said.

In a representation to the Union Mines Ministry, the industry body said that any hike in royalty rate for iron ore would “deter the mining of lower grade ore which is detrimental to the conservation of mineral.”

According to it, the new mining bill has already proposed payment of an amount equivalent to the royalty paid by the miners to the District Mineral Foundation. Besides, the royalty payable on iron ore in the country, at 10 percent currently, is much higher than other mineral-rich nations, it added.

“This would made substantial portion of mining in the country unviable,” the GMOEA said.

As per the industry body from Goa, Australia charges between 5 and 7.5 percent, while Indonesian rate is at 3 percent. Besides, China’s rate is at 2 percent, while in Brazil, it is less than 3 percent. Other iron ore producing countries like Canada, South Africa and Chile do not levy any royalty.

Noting that mining is a cyclical industry, GMOEA said that outlook for the sector is negative currently and the prices of iron ore are forecasted to decline due to reduction in demand from China.

Amid the scenario, increasing the royalty rate would spell doom for the industry, particularly for the producers of lower grade iron ore, it said.

The Goan iron ore’s quality ranges between 46 percent and 59 percent of Fe. Most of the ore from the state is exported as it can be beneficiated to a limited extent and there are limited buyers of the mineral in the country.

Allocation cumbersome process

Meanwhile, the efforts to increase supply by allocating the category ‘C’ mines to end users cannot be done immediately. Allocation of mining leases in India is a cumbersome


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process which results in undue and protracted delays. The applicant has to obtain various approvals such as forest and environment clearances. Land acquisition, rehabilitation and resettlement issues also add to delays. The application for grant of mining lease travels through multiple desks in state and central governments which results in delays in operationalisation of mines.

JSW plans to bid for iron ore mines in Karnataka

Despite all this, JSW Steel Ltd plans to bid for iron ore mining blocks in Karnataka that could go up for auction after the Supreme Court order as the country’s third-largest steel producer looks to cut its dependence on costly imports.

JSW and rivals such as Essar Steel have been forced to import iron ore due to a ban on mining in two states of India, once the world’s third-largest iron ore exporter that is expected to be a net importer this year.

“We will surely bid,” Seshagiri Rao, joint managing director of JSW Steel, said. “How many we will bid for depends on the details of the auction process.”

He said the company might have to keep importing iron ore until domestic production ramps up.

The 49 iron ore mines whose leases have been cancelled in Karnataka for mining illegally would likely come up for auction. The Supreme Court said they may be assigned to the highest bidder among end-users.

JSW already has an iron ore joint venture in Karnataka with a production capacity of 2.5 mt per year. The company has the capacity to produce more than 14 mt of steel products per year, mainly for the domestic market.

RINL gets mine allotment in AP

In the midst of this, there is good news for RINL and this can impact iron ore supply side issues going forward. Andhra Pradesh government has decided to allot iron ore mines to Rashtriya Ispat Nigam Ltd (RINL). This will help it secure the crucial raw material for its capacity expansion at the Vizag unit.

As part of its expansion drive, RINL proposes to increase the capacity of its Vizag unit to 20 mtpa in the future from the 3.8

mt achieved last fiscal, which will make it the largest steel unit in a single location in the country.

Presently, the company procures iron ore from state run mining firm NMDC under a long-term supply arrangement.

Sources say the company can manage iron ore supply from outside agencies till 10 mt of capacity. Beyond that, they need our own iron ore supply for managing the cost of production.

Recently, Andhra Pradesh government allotted three mines located at Khammam, Warangal and Karimnagar districts to RINL, in which the company will start prospecting work after getting the nod from the Mines Ministry. This is crucial for the state-run steel firm as to date it operates without a captive iron ore mine.

The company, which had a crude steel production of 3.8 mt in the last fiscal, aims to complete its capacity expansion plan of 6.3 mt by the end of this year.

SAIL to reopen Jharkhand mine

The Maharatna company had applied for forest clearance for the Gua iron ore mines in Jharkhand for an area of 635.986 hectares. Recently the Cabinet Committee on Investment (CCI), headed by the Prime Minister, has issued instructions for clearance to the Environment Ministry. Now, CCI has directed that “after obtaining the requisite information from the State Government, the clearances be issued by the Ministry of Environment and Forests within one month.”

According to a statement from the Prime Minister’s Office, the clearance will enable SAIL to raise iron ore production from these mines from 2.4 mtpa to 10 mtpa through an investment of `3,000 crore along with installation of beneficiation plant and a pellet plant.

KIOCL to get iron ore asset

KIOCL Ltd is poised to get an iron ore asset in Andhra Pradesh.

Malay Chatterjee, CMD of KIOCL said an MoU for a mining joint venture with Andhra Pradesh Mineral Development Corporation (APMDC) for an iron-ore bearing asset in Anantapur district of Andhra Pradesh was formalised.

He said the central public sector unit would have 49 percent stake in the mining

joint venture, while APMDC will have a 51 percent holding.

“A 2.4-million-ton-a-year ore beneficiation plant and a pellet plant at a cost of ̀ 1,000 crore will be set up by KIOCL independently in Anantapur utilising the ore produced by the joint venture,” Chatterjee added.

The formal approval from the Andhra Pradesh Government for the initial agreement made way for the mining as well as the value-added projects.

“We will now work for the final agreement and initiate the process for project-related nods and clearances,” said the KIOCL CMD.

KIOCL had closed its 22.5-million-ton Kudremukh mine on January 1, 2006 after the Supreme Court ordered miners to shut shop in the environmentally sensitive Karnataka’s Western Ghats region. Since then it did not have a mine, the company ran its 3.5-million-ton pellet plant in Mangalore using iron-ore fines from NMDC’s mine in Chhattisgarh.

Since July 2012, when Malay Chatterjee took over as the CMD of KIOCL, he had been pursuing the company’s pending applications for 28 mine leases and eight prospecting licences.

Conclusion

Thus an insight into the iron ore sector shows that the Supreme Court verdict is definitely a landmark development which will help the steel sector in the long run but it does not hold an instant solution to the supply crisis in the near term. Therefore, prices are likely to remain firm in the short term.

With the steel industry taking up ambitious capacity expansion projects and the country targeting 113 mt of steel production by 2016-17, domestic demand is set to rise continuously putting pressure on the supply side.

Some analysts say speedier allocation of non-operational mines may be of help but a proper regulation is a must to ensure that rampant illegal mining and consequent environmental degradation does not repeat after the thorough investigation by the central empowered committee.

Last but not the least, all eyes are set on what the Mines Ministry decides on the royalty issue and its resultant impact on the miners, both captive and merchant.


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Production rose 2.5 percent to 77.6 mt. Steel demand growth was less than half of the Indian government’s 8 percent estimate as home and car buyers delayed purchases. The economy grew 5 percent in the year ended March, the slowest pace since 2003. Car sales fell for the first time in a decade, prompting producers to cut costs.

“This is a negative surprise -- way below what we expected,” said a Mumbai based analyst.

There was an expectation that consumption would grow by about 5 percent to 5.5 percent.

“Subdued car sales, lack of government spending on steel-intensive infrastructure projects could have triggered the worse-than-expected drop in demand,” he said.

Prime mills optimistic

The country’s largest steel maker SAIL has said it expects the domestic demand to grow by 7-8 percent in 2013, although prices may hover at the current level.

“If you see the demand for the first four months of the current calendar year, year-on-year basis globally, even in China, even in India, it is better than the corresponding period of 2012,” SAIL Chairman CS Verma said.

“In India, demand has to be definitely more than 6 percent, because our GDP growth is projected to be 6.2 percent. So, the growth in steel demand has to be 7-8 percent,” he added. Demand for steel in any economy generally grows by 1.1-1.2 times of the GDP. However, this was not the case for India in last fiscal.

During 2012-13, although the economy expanded by an estimated 5 percent, India’s steel demand grew by just 3.3 percent due to a host of factors including a stubborn inflation and Reserve Bank of India’s (RBI) tight monetary stances.

According to World Steel Association (WSA), the leading global industry body, the rate of growth in demand for the last calendar year was just 2.5 percent. The 3.3 percent growth in consumption was the slowest in last three years, according to figures revealed by Joint Plant Committee, a body under the Steel Ministry. It grew by 5.5 percent in 2011-12 and 9.9 percent in 2010-11.

WSA has forecast that India’s steel demand will grow by 5.9 percent to 75.8 mt

Low cost is key as prices unlikely to recover soon

Tamajit Pain

The global financial crisis and resultant uncertainty has put the world steel industry in a difficult spot. A fall in

demand across the globe and particularly in Europe, volatility in prices through the steel value chain and oversupply resulting from excess capacity have dented industry profits. This resulted in ArcelorMittal, the world’s biggest steel maker, to end 2012 with a net loss of $3.7 billion.

The scene was also dismal in China, which grew crude steel production 3.1 percent in 2012 to 716.54 million tons (mt). This happened to be the lowest rate of growth for the country since 2007. China Iron & Steel Association reported that profits of its 70 member mills took a massive hit of 98 percent and declined from 80 billion yuan to 1.6 billion yuan.

In such a scenario, India could not be an exception to the global industry climate.

Steel profits here too have been pared and the exact numbers will soon be available as companies release their fourth quarter results. But investors seemed deeply concerned over the poor state of the Indian steel industry caused by demand fall. Stock market prices of once bluechip firms like Steel Authority of India Limited (SAIL) and Tata Steel have reached rock bottom levels as investors pulled the selling trigger to get out of this “risky” portfolio.

Steel consumption slows

Steel consumption in India, the world’s third-largest user, grew at the slowest rate in four years as a faltering economy and lack of spending on cars and infrastructure projects eroded demand.

Steel use in the year ended March 31 is estimated to have risen 3.3 percent to 73.3 million tons (mt) from a year earlier, according to initial data published on the steel ministry’s joint plant committee website.


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in 2013. “In India, steel demand is expected to pick up and will grow by 5.9 percent to 75.8 mt in 2013 following 2.5 percent growth in 2012 as monetary easing is expected to support investment activities,” it said in a recent report.

In 2014, growth in steel demand is expected to further accelerate to 7 percent, thanks to reform measures aimed at narrowing the fiscal deficit, coupled with measures to improve the foreign direct investment climate, WSA added.

Private sector major Tata Steel’s Managing Director HM Nerurkar has said, “We expect this year, it (demand) should be somewhere between 6 and 8 percent. This is because the economy is expected to grow at 6 percent, so the steel demand would grow by at least 6-8 percent.”

Not bullish about prices

The SAIL Chairman, however, is not that bullish on steel prices. He expects that it will remain at the present level for the current year. “Steel price will hover at the same level at what they are prevailing now. I don t expect decline in the prices. I don t expect massive increase in the prices. They will remain range-bound,” Verma said.

According to Nerurkar, the price of steel in the country will not swing much, and mostly remain stable in the current year. “Price will remain similar. It is not going to be jumping here and there. I think, it is going to be fairly stable,” he said.

Bank of America Merrill Lynch in a recent report said steel prices in India would remain “under pressure” following January-March quarter. “We expect domestic steel prices and margins to be under pressure post March quarter as demand seasonally slows post the fourth quarter. Also, discount to import parity has narrowed after the recent correction in global prices. We remain cautious on the domestic steel sector and maintain our underperform ratings on SAIL, Tata, JSW and JSPL,” it said in the report.

Uncertainty on rise in demand

Although the prime steel mills like SAIL remained steadfast in the belief that at some point coinciding with major infrastructure projects taking off and urbanisation getting a major push, metal use growth will return to 1.2 times the GDP growth rate, there is

always a tinge of uncertainty looking at the current pace of growth.

The Bank of America Merrill Lynch Research said demand trends have remained surprisingly weak in March quarter as auto-related demand (22 percent of flat steel demand) has been sluggish, demand from existing projects is tapering off and there is limited demand from new projects. A meaningful recovery in demand appears unlikely near term as lead indicators are stagnant, recovery in investment cycle is likely to be delayed and destocking across end user segments (including autos) should continue. Also, construction and infra activity slows ahead of monsoon which should affect longs demand.

Many prime steel mills are banking heavily on pro-activeness of the Cabinet Committee on Investment (CCI) in clearing major projects stalled over a long time. In fact, the realisation, however late it may be, that stalled projects will invariably come to CCI should be impelling the concerned ministries to ensure major investment proposals do not remain stuck in their court. Any projects flagged off by it will result in incremental demand for steel, feels steel makers.

However, as SAIL will be commissioning new capacity of 1.8 mt this year (as part of its `72,000 crore investment in expansion and modernisation), and Tata Steel is ready with an extra 2.9 mt crude steel capacity to make Jamshedpur a 9.7-mt mill, the challenge of commissioning new capacity will be to market the extra steel at remunerative rates.

Differentiated sales approach

In the prevailing economic slowdown and sluggish steel market, RINL’s Visakhapatnam Steel Plant has acquitted itself well by adopting a differentiated sales approach, according to industry insiders.

RINL has been facing a tough market situation where the steel prices have come down by around `5,400 per ton and the competition has made companies to offer incentives, discounts, and credits. This has forced RINL to slash its prices sharply by ` 5,000 to `7,000 per ton, apart from offering market incentives.

In the country, long products consumption registered a negative growth of 1.3 percent and bars and rods consumption was further down with a negative growth of

1.8 percent till December, 2012, compared to the previous year. The situation in Andhra Pradesh was more critical due to continuing power crisis as well as problems relating to supply of sand in the beginning of 2012-13.

RINL is one of the main bar and rod producers in the country and its main market is in Andhra Pradesh and other southern states. Lower consumption of long products and sluggish market affected sales of RINL during the past eight to 10 months.

In order to maintain steady sales, the company has been using these market tools after proper examination by the duly constituted committees to enable sales and prevent accumulation of inventory.

Despite this, prices of RINL prevailing in the market are either same or above those of competitors and, because of a little higher price, RINL has been losing orders from the big customers/industries.

However, RINL could still achieve sales of `13,650 crore during 2012-13. With concerted effort, the inventory has been brought down to 12 days stock. RINL does not have captive iron ore and coal mines and is paying over 65 percent of production cost towards raw material.

In spite of the handicap, profitability is better than several steel companies having captive raw material sources.

Low cost prime requisite in tough market

RINL Chairman and Managing Director A.P. Choudhary stresses on the need for the steel industry to produce steel at the lowest cost possible, as it is the prime requisite for not only sustainable growth but also for generation of adequate margins to fund the investments for future capacity additions.

He said improvement in techno-economic parameters, such as specific energy consumption, raw material consumption, productivity and yields, waste recycling, waste-heat recovery and other relevant areas would largely contribute to reducing the cost of production.

Choudhary said the next major challenge was on the raw material front.

“Cost is the main driver for competitiveness and more than 60 percent of the steel production cost is on account of raw materials. The plants which were set up 5-6 decades ago were able to secure


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raw material deposits in the form of mining leases. However, new generation plants are not able to have the same advantage and have to source the raw material at very high prices from the market,” said Choudhary.

“Adequate support is, therefore, required for such plants to ensure availability of the key raw materials at a reasonable cost to ensure competitiveness in the industry,” he said, adding that in today’s competitive market scenario value creation has become very important.

Time for transformation

The time has come where the steel companies have to transform themselves to ‘niche’ or ‘multi niche’ operators.

This transformation is possible only through innovation and it calls for an effective strategy for focused innovative efforts through R&D.

Synergies within the country and international co-operation for technology exchange need to be developed,” Choudhary said.

He said that requirement for ‘clean steel’ was also of great importance today. Every ton of steel requires approximately 12 tons of inputs (6 tons of air; 3 tons of water; and 3 tons of raw materials).

Experts were of the opinion that “Indian steel production is likely to outstrip the rise in steel demand in the next decade, resulting in a wave of low cost exports from the country to the world market.”

How to increase cost competitiveness

The apparent question that comes in the mind now is how to increase cost competitiveness and become a low cost producer that will help in the long run.

Industry experts say the differences between high and low cost producers of steel have increased since 2002, as strong increases in steelmaking costs have had a varying impact on steel mills in different parts of the world.

The winners are the mills in the developing markets of Russia, Brazil and India.

The global supply and demand balance for raw materials has tightened, and will remain so in the short to medium term future.

In the longer term, however, prices for raw materials and freight tariffs will decrease from current exceptional levels and the competitive advantage of mills with access to local raw materials will regress.

To retain their current cost

competitiveness, steel producers in developing countries will also have to improve labour and energy cost efficiency.

Low wages will remain a competitive advantage for mills in low wage countries for decades, though this advantage is often under-utilised because of low labour productivity.

The large-scale capacity expansions planned in China and India in the next few years present an excellent opportunity for mills in these countries to increase productivity while minimising social consequences.

Energy will become an increasingly important cost differentiator for the steel industry, though, like low wages, its advantage is often not fully used by mills with cheap supply.

However, cost is not the only important competitive differentiator.

Mills in developing countries will also have to further increase investments in R&D, product quality, customer support and delivery performance.

These criteria are particularly important in view of the continuing consolidation and globalisation of the steel industry and the increasing involvement of leading steel mills in every corner of the world.


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Raw material costs

Raw materials are the main cost differentiator in the steel industry, today more than ever.

It’s a known fact that the days of cheap iron ore are over. The illegal mining ban in recent years, regulatory interventions and curbs on undue profiteering by some miners have severely impact iron ore supplies. This has resulted in lower capacity utilisation by both prime and secondary steel mills and firm prices.

Similarly, annual contract prices of coking coal and spot coking coal prices in the international markets have risen several times in the past few years.

Raw materials costs have surged not only because of higher market prices, but also because of surging freight costs. Not only have seaborne freight tariffs increased on average, but they have also become much more volatile, raising risk and uncertainty for the steel industry.

The rising costs of raw materials and freight have had two effects on the cost competitiveness of steel producers: First, they have increased the cost differentials between mills with captive supply of raw materials, mills with domestic access to raw materials and mills importing raw materials from overseas. Second, as they have gained even more in weight, they have reduced the relative importance of differentials in other steelmaking cost components.

Labour costs

Although labour costs account for a much smaller share of steelmaking costs than raw materials, the price of labour varies much more by region than prices for iron ore, coal and scrap. Of all countries with a significant steel industry, India, Ukraine, China and Russia have the lowest wages.

As the economies of China, India

and Russia are expanding rapidly, the key question is how soon will wages catch up with those in mature markets? Indeed, forecasts by industry leaders suggest that labour costs in these three countries will double in the next five years.

However, the comforting factor is that it takes decades for labour costs in developing economies to catch up with those in developed markets.

Two of the world’s main steelmaking countries, China and India, have the additional advantage of holding huge untapped reserves of manpower in their agricultural sectors. As urbanisation in both countries continues, new job seekers from the countryside will provide labour markets with additional supply for many years, which will have a dampening impact on wage inflation.

There is a downside, however. Most mills in countries with low wages also have much lower labour productivity than mills in high wage countries, as they have less incentive to increase labour efficiency. This explains why the differences in labour costs per ton of steel between high and low wage economies are much lower than the differences in wage levels.

To retain their competitiveness, steel mills in low wage countries need to ensure that productivity keeps up with rising costs of employment. Moreover, mills in low wage countries have an opportunity to enhance their international competitiveness by improving productivity faster than rising $ costs of employment.

Industry insiders said although labour productivity in India is still very low, Indian steel mills have made considerable improvements in recent years and employee productivity has almost doubled since 1998. However, so have hourly labour costs, which have offset much of the productivity gains.

Energy costs

Compared to raw materials and labour, energy has a relatively modest impact on the competitiveness of integrated mills.

However, the days of cheap energy are over. Except for the energy released by coal and coke, the steel industry’s energy consumption mainly consists of natural gas and electricity. Unlike iron ore and coal, reserves of natural gas are rapidly depleting. Over 1980-2005, global reserves have decreased by 26 percent, industry experts say.

Meanwhile, consumption of gas continues to increase at an ever accelerating pace, especially in China and India. Three of the four regions that consume the most gas, North America, Europe and Asia, have low reserves themselves.

Moreover, price of imported gas will remain considerably more expensive than domestic gas.

Thus steel producers located in energy rich countries will have an increasing advantage over their competitors in other countries. While the advantage may be relatively limited for integrated mills, it will be much more significant for DRI and EAF producers as energy that is locked inside coal and is released through coke oven and BF gas will become increasingly valuable. Also the BF/BOF route will become increasingly attractive versus the (gas based) DRI/EAF route in countries without cheap gas and electricity.

To maintain their competitiveness, steel manufacturers should seek to further reduce dependency on external energy by maximising energy efficiency and recycling.

Mills in countries with cheap energy should also seek to improve the energy efficiency of their processes, experts feel.

In addition to reducing their dependence on external energy, mills in countries with expensive energy should also seek to manage their exposure to energy markets. An innovative way of doing so is to establish joint purchasing with companies in other energy-intensive industries, such as aluminium and chemicals, to increase bargaining power over energy suppliers.

Technology

It is now being increasingly appreciated that competitiveness of the Indian steel Industry cannot be sustained in the long run purely on the basis of low labour costs and cheaper

Estimated steel raw material requirement in 12th Plan

Input Materials Unit Estimated Consumption 2011-12

Estimated Consumption 2016-17

Additional Requirement by 2016-17

Coking Coal Million tons 43.2 90.2 47.0

Non-coking Coal Million tons 35.3 28.4 -

Iron Ore Million tons 115.0 206.2 91.2

Natural Gas MMSCMD 7.2 13.541 6.341

Ferro Alloys in ‘000 tons 2152 3673 1521

Refractories Million tons 1.29 1.97 0.69

Source: Working group on steel for 12th plan


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raw materials. Technological excellence, innovation and adoption environment friendly techniques in all stages of production from extraction of minerals to treatment of wastes - are the key to cost competiveness and sustained growth in this sector.

National Mission for Enhanced Energy Efficiency (NMEEE) aims at reducing the emission intensity of India‘s GDP by 20-25 percent by 2020 from the 2005 level. The potential of the initiatives devised by NMEEE should be fully exploited by steel companies, especially the small and medium enterprises, if they are to survive in a stricter regulatory environment aimed at compliance with the stated goals.

The steel companies needs to frame specific strategies towards reduction of pollution level (PM) below 0.5 kg per ton of crude steel, zero effluent (water) discharge and drastically reduce water consumption.

Absence of a common methodology in reporting environment performance with respect to the status on resource consumption, emissions, effluent and waste recycling makes comparison of relative performance of the steel plants difficult. This calls for development of an internet based tool, which adopts a common and verifiable procedure for reporting of environment data by the steel plants.

Steel plants should try to achieve goals of zero waste generation through 100 percent recycling of wastes generated. The government is thinking of a nation-wide policy in line with fly ash utilisation shall be formulated to make use of LD/EAF slag.

Efforts should be made to promote Smelting Reduction (SR) technologies which can use low grade iron ore/slimes and indigenously available non-coking coal. R&D intervention and speedy implementation of these technologies compatible with India’s indigenous resource base needs to be encouraged.

Research and development

Currently, expenditure on Research & Development is quite low, varying in the range of 0.15 to 0.3 percent of turnover. The extremely low level of expenditure on R&D in the steel sector poses a grave challenge to the prospects of long term growth of this industry. The strategies proposed to promote R&D in the steel sector are: 1) Leverage the Government grants

for R&D through Public-Private Partnerships to achieve the strategic goal of R&D expenditure at 1.5 - 2 percent of turnover.

2) A few dedicated Centres of Excellence could be set up, preferably with involvement of the private sector in industrial sites to address relevant issues relating to: a) Research and technology development, and product development; b) Human Resource Development through pursuing M.Tech, Ph.D and Post Doctoral programmes for creating a talent pool for research activities.

3) Efforts should be made to improve linkages between laboratory - based R&D and actual industrial application.

This needs to be done through extensive market driven translational research customised to the needs of the industry.

4) Priority areas to be considered for incentivising the industry as well as for public funding of research projects shall be: a) Environment management; b) Energy efficiency and reduction in GHG emissions; c) Optimum utilisation of indigenously available natural resources – beneficiation, agglomeration and adoption of SR technologies; d) Product development for strategic areas such as Defence, Space Research and Nuclear Energy; e) Optimum utilisation of land, especially in green - field steel plants by vertical space management, irrespective of process routes; d) In the absence of good design, engineering and manufacturing facilities in the country, the steel producers have to depend on import of modern plants and facilities at phenomenal cost. It is desirable that a beginning is made in this area to avoid long term dependence on imports of equipment.

Some of the viable policy options are to overcome resource constraints for creating manufacturing facilities, pooling of resources by steel companies through a MOU may be undertaken with government providing necessary incentives and subsidy, steel companies may associate themselves with known equipment suppliers individually or as a group to promote new process development activities.

Some recent cost initiatives taken by Indian companies

Essar Steel

Private steel maker Essar Steel Ltd planned to refinance its entire domestic debt of around `20,000 crore into dollar terms by September with a view to reduce interest costs, which in turn will help it to improve the margins.

“The focus today is to reduce our interest costs for which we are actively looking at dollarising our debt... Latest by August-September, we would like to dollarize all our debt,” Essar’s managing director and chief executive Dilip Oommen said.

He said this would have a significant impact on its cost of funds. “That is going to have a tremendous impact (on our profitability). Present interest cost of 12.25-

Demand and supply of natural gas

Sl No Name of plant Process gas

requirementGLC gas supply

RLNG supply

RIL KG D6 allocation

Total supplies Shortfall

1 Essar Steel 5.50 0.70 1.60 0.32 2.62 2.88

2JSW Ispat Industries

1.34 0.75 0.06 0.81 0.53

3 Vikram Ispat 0.80 0.40 0.04 0.44 0.36

Total 7.64 1.85 1.60 0.42 3.87 3.77



Additional gas demand by consumers in the steel sector

Sl. No. Name of Company Quantity

(MMSCMD)

1 Welspun Maxsteel 0.25

2 Remi Metals Gujarat 0.04

3 Welspun Gujarat Stahl Rohern 0.66

4 Essar Steel Vizag 0.8

5 Essar Steel Paradeep 1.5

7Essar Steel Vizag – Integrated Steel Plant

1.7

6 SAIL 5.5

7 JSW Ispat Industries Ltd. 3.091

Total 13.541


sPECIAL fEATuRE

13 percent will come down to 6-7 percent,” Oommen said, adding this will have positive impact on its margins.

The company, which had around ̀ 22,000 crore in rupee debt, had received approval from the Reserve Bank of India to raise $430 million (around `2,400 crore) last fiscal.

The company, which had reported losses in FY12, also said the profitability is improving. “We have produced 4.3 mt steel (out of the 10-mt capacity) at our Hazira unit, which is the critical mass to take production up further. Already, our profitability is showing big improvement. We have put up a 400-kv transmission line, wherein we will be able to draw independent power from the grid. This itself will give us `50 crore profit (by way of savings),” Oommen said.

On completion of the 12-mt pellet plant at Paradip in Odisha, he said it’s likely to be over by end of the year. The first phase of the plant with 6 mt pellet capacity is already up and running.

He also expressed the hope that commissioning of the second phase will improve the bottom line.

“This will boost profitability as the impact of this on finished product is `2,000 per ton,” Oommen said.

Jindal Steel & Power

Jindal Steel and Power’s (JSPL) consolidated net profit fell by nearly 35 percent to `760.27 crore for the quarter ended March, hit hard by rising interest burden and lower sales realisations. The Naveen Jindal-headed company had reported a net profit of `1,167 crore in the same quarter last year.

Net sales during the fourth quarter of FY13 reported a meagre growth of 2.16 percent at `5,583.33 crore against `5,465.26 crore in the March quarter of 2011-12.

The company is looking to increase its steel-making capacity to 7 mtpa by adding 2 mt capacity at Odisha’s Angul and another 2 mt capacity in Oman by September-October this year, managing director Ravi Uppal said.

JSPL is also planning to commission all four units of its upcoming 2,400 MW power plant in Chhattisgarh by the end of current fiscal year and after that, the firm’s power production capacity will go up to 4,969 MW.

Its realisations from power business came down to `3.17 per unit during the just concluded quarter as against `4 per unit of Q4 of FY’12. Average realisation from steel was `35,000 per ton in the period.

The company’s interest burden during Q4 rose by over 85 percent to `238.73 crore and affected profitability. JSPL’s consolidated borrowings now stand at over `23,000 crore.

Noting that Indian economy is going through challenging times, JSPL’s deputy managing director Sushil Maroo said that the company is hopeful of much better results in the coming months when the new capacities - both in steel and power businesses - will be commissioned.

In terms of production, the company reported a 4 percent increase in both steel and power at 0.79 MT and 1,477 million kWh respectively.

For the year ended March 31, 2013, JSPL reported a 26.60 percent decline in its consolidated net profit at `2,910.11 crore. Its net sales, during the year, grew by 8.08

percent at `19,553.98 crore. Production of Jindal Power, a subsidiary of JSPL, has also improved and the plants are currently running at 99 percent plant load factor.

Moreover, transmission issues, which had hurt the company during the third quarter of last fiscal, have also been resolved to an extent and the company is looking at improved performance of its power plants.

According to JSPL, it has started full scale production of both coking and thermal coal at its mine in Mozambique and is expecting to receive the first shipment of 50,000 tons during the current quarter. The firm is looking at producing 0.5 mt coal from the Mozambique mine in the first year.

Tata Steel

Tata Steel is pinning hope on the upcoming factory at Kalinganagar in Odisha to turn around the fortunes of the 106-year-old Tata Steel, which reported a `764 crore loss for the quarter ending December 31. The company is building a six-million ton unit at a cost of about $7 billion (`38,500 crore), to primarily cater to increasing demand for its flat products from the automobile industry and tap new customers from other sectors.

Tata Steel’s December quarter loss was the biggest in three years. The company has two-thirds of its production in Europe, where there’s an economic crisis. In the quarter, Tata Steel Europe reported an operating loss of `429 crore, with a production of 3.3 million tons. In the same period, Tata Steel India (TSI) recorded an operating profit of `2,524 crore, with production of 2.1 mt.

The company does not provide net profit or loss for its different units on a quarterly basis. The consolidated net loss for the company after paying interest and taxes and accounting for depreciation and amortisation was reported to be $139 million (`764 crore).

The higher loss is also because of high interest and depreciation costs. The burden of the former has increased substantially, as the consolidated debt on the books at the end 2011-12 was `59,796 crore, up from `3,377 crore prior to the acquisition of Corus (in Europe) in March 2006. The high debt also reflects the company’s effort to raise capacity at the over 100-year-old plant at Jamshedpur. The capacity here has reached 10 mt, from four mt at the time of acquiring Corus.

Strategic goals

Parameter/Area Unit Existing Level Strategic Goal/Projection by 2025-26

1. Specific Energy Consumption G. Cal 6.3 4.5

2. CO2 emissions T/T of C Steel 2.5 2.0

3. Material Efficiency % 93.5 98.0

4. Specific Make up Water Consumption (Works excluding power plant)

T/T of C Steel 3.3 2.0

5. Utilization of BOF slag % 30 100

6. Share of continuous cast production % 70.0 95.0

7. BF Productivity T/M3/Day 1.9 2.8

8. BOF productivityNo. of Heats/Converter/year

7800 12000

9. R&D expenditure/turnover % 0.2 1.5

Source: Draft National Steel Policy


sPECIAL fEATuRE

Besides, debt for the Kalinganagar unit has started coming on the books. The first phase of this plant, with a three mt capacity, is expected to be operational by the end of 2014.

This clearly reflects the importance of the Indian operation in the scheme of things. Delivery from the European unit came down to 14 mt in 2011-12 from 23 mt in 2007-08. With the second unit of Kalinganagar coming into operation in 2016, the company will have a 16 mt production capacity in India, of which 13 mt will be flat steel, for which demand for the automobile industry is seeing a rise.

“We believe the faster it comes to operation, the more it will be beneficial from a structural point as far as Tata Steel Group is concerned,” said Koushik Chatterjee, chief financial officer (CFO) of the company, in an analyst call in February, on Kalinganagar.

Tata Steel is currently not fully been able to meet the demand of its customers who use the company’s flat products in the automobile industry. Besides, the plant will help the company produce steel that is wider and thicker, with higher tensile strength. This would help the company get into new sectors such as oil and gas, while supplying more to the auto industry.

The company is also aggressively targeting small and medium enterprises. It has launched Tata Astrum under a branding initiative for hot rolled (HR) sheets and coils. It is confident of reaching the higher sales target in successive quarters by leveraging its retail network. The company has also found new export markets for HR sheet and coils in neighbouring countries.

JSW Steel

JSW Steel has put on hold plans to expand capacity at its Vijayanagar plant and also at West Bengal as it has not been able to secure long-term iron ore supplies.

In Karnataka, the company runs a 10 mt steel plant but it neither has any captive mine nor any long term iron ore supply agreement and the company has to source the ore from open market.

For more than one and half years now, JSW has been running the Karnataka plant at a reduced capacity of 80 percent due to iron ore crunch in the state.

Currently, all ore in the state gets auctioned due to a Supreme Court direction,

thereby increasing the raw material cost for the company.

According to original plan, JSW’s West Bengal project was envisaged to have a 10 mt steel plant along with a 1,600 MW captive power plant at a total cost of `35,000 crore that requires about 4,300 acres of land. In the first phase, the company had plans to set up a 3 mt steel plant and a 300 MW captive power plant with an investment of `20,000 crore. The first phase was proposed to be financed at a debt-equity ratio of 65:35.

Deallocation of Gourangdih ABC coal block last year by the Coal Ministry is also an issue JSW is facing. The block, allocated to JSW and Himachal EMTA jointly in July 2009 would have provided coal for the captive power plant of the Bengal plant. JSW has challenged the deallocation of the coal block in court and the matter is currently sub-judice.

Steel Ministry asks PSU mills to improve profitability

Anticipating a fall in net profit of SAIL and RINL in 2012-13, the Steel Ministry has asked the two PSUs to focus on improving profitability.

Though financial results of the two steel PSUs for the January-March quarter are yet to come out, their performance till the December quarter of FY13 showed that a turnaround would be required in the last quarter to match the bottom-lines of earlier years.

SAIL’s net profit is declining since 2009-10. The company had clocked `6,754.37 crore net profit in FY10, `4,904.74 crore in FY11 and `3,542.72 crore in FY12. It was `1,723.82 crore till the December quarter of 2012-13.

Vizag-based RINL’s net profit for FY13 is also likely to fall. It posted `796.67 crore net profit in 2009-10, `658.49 crore in 2010-11 and `751.46 crore in 2011-12 and could manage to clock only `250.78 crore till end of December quarter of 2012-13.

“The profits of SAIL and RINL have declined mainly due to adverse impact of higher usage of external inputs like BF coke, pellets and furnace oil, lower sales volume, lower interest income on deposits, increase in power cost, increase in railway freight and higher salaries and decline in sales realisation,” sources said.

Tie-up with established players

NMDC had invited Expression of Interests (EoI) in February from global steel biggies to become a joint venture partner for its 3 mtpa project. SAIL and RINL have evinced interest to be NMDC’s joint venture partner in the `15,525 crore proposed steel project at Nagarnar in Chhattisgarh. However, NMDC is likely to invite soon a fresh round of EoI, dangling the carrot of more stake or even management control.

The final call on the partnership issue would be taken by the company board. NMDC had offered to give 49 percent equity in the project to its prospective partner, not management control. Industry officials said NMDC should have learnt from previous experiences of the proposed ventures of SAIL-Posco and NMDC-Severstal, where even 50 percent equity offer did not break the ice.

The Rs 15,525-crore project cost was envisaged to be financed in 1:4 debt-equity ratio. NMDC’s maiden venture into steel is scheduled to be commissioned by September, 2015. NMDC hoped the partner would bring in necessary technologies capable of producing high-end steel products like CRGO, CRNO and auto-grade steels.

Conclusion

Thus it can be seen that instead of hallucinating of magical turn of fortune, it is time for the steel mills in India to take some financially prudent decisions with long term strategies to provide stable demand regardless of economic scenario. Prudence rather than providence should be the guiding principle to stage a comeback. Instead of pegging chances of revival on demand resurgence in a major way the Indian mills would do better by taking following measures: 1. Raw material security by acquiring,

developing and operating overseas raw material assets has become a strategic imperative to cut cost in down cycle.

2. Focus on project management as a core capability integral to its growth objectives and optimising scarce resources

3. Enhanced customer centricity to give cutting edge service by building differentiated supply- chain and adopt made-to-order and make-to-stock production strategy.

4. Securing human capital especially technically trained manpower at production facilities.


InTERvIEw

Tamajit Pain

3M India Limited is the Indian arm of 3M Corporation, which has $30 billion in sales from

operations in more than 70 countries. 3M is an active partner in

raising the general awareness of safety issues and standards within India. The company brings out innovations in the area of safety with a commitment to working with other stakeholders to raise awareness and compliance level through knowledge sharing.

3M India Limited has been in the country for the last 25 years, having been established in 1988. The company markets over 8,000 products in India with leading positions in a wide variety of market segments. 3M’s technology solutions hold leading positions in a variety of markets like Construction, Transportation, Hospitals, General Industry, Aerospace, Railways, Highways, Defense, Security, Mining, Health, Oil & Gas, Telecom, Marine and Homes. In India, 3M has manufacturing facilities at

Ahmedabad, Bangalore, Pondicherry, Pimpri (Pune) and Ranjangaon (Pune), and has R&D Centers in Bangalore and Delhi. The Indian unit reported a turnover of `1,410.36 crore for the year ended March 31, 2012, with a profit of `63.7 crore.

Over the years 3M in India, drawing on its global expertise, has been engaging with government bodies, regulatory and enforcement authorities, as well as Industry Associations and organisations to enhance the level of safety awareness and education in the country. With active support from industry, 3M has trained thousands of workers across diverse sectors and geographies. Recently, in a unique initiative, the Department of Factories, Boilers, Industrial Safety & Health, Karnataka decided to step up and create a common platform for all these stakeholders, in association with the Personal Safety Division of 3M India. At 3M’s Innovation Centre in Electronic City, a day long training session was carried out for 18 Deputy Directors of Factories with live demonstration of correct techniques and equipment to carry out Noise Level Monitoring to tackle exposure to high noise environments in industries.

The company continues to invest heavily in such initiatives, and to find innovative ways to make the Indian workers safer, healthier and more productive at their workplaces.

In an interview with Steel Insights, Rajesh Balachandran, General Manager, Personal Safety Division, 3M India, shared insights on the need for stringent implementation of occupational safety measures in industries that often overlook these aspects either due to lack of awareness or non-consideration.

3M betting on Indian safety equipment market

Rajesh Balachandran, GM, Personal Safety Division,

3M India


InTERvIEw

Excerpts:

What safety equipment do you have for steel, mining (coal and ore) and steel consuming sectors?The Personal Safety Division at 3M India Limited provides safety solutions across a range of categories – head and face, hearing, eye, welding, respiratory and body protection, in addition to active communication solutions as well. Products include hard hats and face shields, ear plugs and passive ear muffs, welding shields and respirators, powered and supplied air line systems (which can be used in conjunction with welding shields), protective coveralls and active communication solutions. Within these sectors, we have seen popular demand for products across categories, especially with respirators and eyewear leading the charge, though the others aren’t far behind. These products have found widespread acceptance owing to their quality, which in turn is driven by 3M’s bringing together of diverse technology platforms to create world class solutions for customers.

Who are your customers in these sectors and what is the demand for these products in India?We engage and work continuously with industry leaders such as Tata Steel, JSPL, NALCO, SCCL and various others. The demand for safety products in India continues to rise as compliance norms strengthen and awareness increases. The country does however lag behind global benchmarks and average safety spends per worker are well below the developed economies.

Do you manufacture safety equipment for the steel and coal sectors in your plants in India or you source them from your plants overseas?

In keeping with 3M’s overall strategy of ‘In India, For India’, we’ve moved from being an importer of safety products to successfully manufacturing them locally. Disposable respirators, Eyewear and now Hard Hats – the way forward for us is to intensify our focus on local manufacturing while harnessing our global knowledge base, so that we can cut down delivery times and help increase customer comfort by ensuring optimum availability at competitive prices

Could you comment on the general safety awareness of workers in steel and coal mining sectors in India?

As is the case across sectors, awareness levels have started to pick up, though we see considerable scope for improvement. Gradually, corporations are starting to standardise equipment and benchmark globally, as can be seen from the demand for approvals such as ANSI and EN in line with BIS Indian approvals as well.

What is the scope of improvement in safety in the steel and coal mining sectors in India and how 3M can help in this endeavor?

The key area of concern is worker awareness and in liaison with our partners and customers, we actively work to organise awareness and training camps at user locations. These are a regular feature of our activities through the year. Besides being mere suppliers, we are active participants and are a position to influence the culture

within the country. Being in the business of saving lives and giving people the power to protect their world, we take out responsibilities in this regard with utmost seriousness and have a dedicated effort towards accomplishing the task of building safety awareness.

Are there any initiatives in the pipeline on reaching out to the steel sector to create awareness and to train workers?

3M partners with corporations and customers during key events and engages and provides material in regional languages such as safety handbooks, posters on what equipment needs to be worn in particular areas. Before recommending a product for usage, a walk through survey of the facility is conducted and a report is tabled with recommendations on appropriate PPE to be used for negate prevalent hazards. 3M representatives then train workers on the selection, usage and maintenance of this equipment in order to ensure optimum safety levels.

What are the focus areas for this business in India in the next 2 years?

PSD is optimistic about the prospects of the industry in India. As safety awareness levels continue to rise and once the business environment starts to stabilise and economic outlook is more positive, India’s consumption based economy will look up to its industries for increased capacity utilisation and production. Our focus remains to provide this segment and others with high quality best-in-class solutions to ensure optimum safety levels.

Call 9163348243 for more details


fEATuRE


In line with the world economy, the Indian economy has witnessed subdued growth in the first quarter (Q1) of 2013.

The Index of Industrial Production (IIP) grew at 0.6 percent in February 2013 as mining and electricity sectors performed in the negative (at -8.1 percent and -3.2 percent respectively). Manufacturing also grew at snail’s pace at 2.2 percent.

With further mining allowances reintroduced in Karnataka, IIP is set to see a slight growth from the mining component in the first quarter (April-June) of 2013-14, according to analysts.

The Purchasing Managers’ Index (PMI) reading for March 2013 was 52, down from the 54.2 in February 2013, signalling a further slowdown in the manufacturing element of the IIP. Analysts however feel manufacturing will get a mild boost as effects of interest rate cuts following the Reserve Bank of India’s (RBI) repo rate revision by 25 basis points come into play.

Meanwhile, the wholesale price index (WPI) moderated to 6 percent in March 2013, while consumer price index (CPI) grew by 10.4 percent in the month. According to economists, inflation will most likely fall or stay at similar levels in April and May 2013 as prices of manufacturing and primary articles remain stable, even as the likelihood of fuel and power prices to increase in the summer

season remains high. The industry expects bank credit to commercial sectors to increase slightly further in the coming months with investment sentiment improving post the rate cut implemented by RBI on May 3.

Falling gold and oil prices, leading to a reduction in current account deficit is expected to provide further impetus to the RBI to ease the monetary policy.

The trade deficit narrowed down in March 2013 to $10.3 billion from $14.9 billion in February 2013 due to gradual pick up of exports and lower oil imports. Trade deficit is expected to narrow down further as oil and gold prices fall globally.

This may result in the Indian rupee appreciating slightly in the near term as the trade deficit becomes narrower and capital flows remain consistent.

In this context, it can be seen that the

growth of the steel consuming sectors remained under pressure in February, March and April 2013. Capital goods however showed a surprising uptick, probably due to a low base effect.

However, analysts feel the steel consuming sectors’ growth is expected to get a reprieve in coming months as interest rates are cut

further and growth stimulating policies are introduced by the government.

Automobile sector

Auto sales continued to sputter in Asia’s second-largest car market with most firms starting the new fiscal year on a bleak note.

Sales are unlikely to pick up before the second half of the current fiscal year even if the economy improves and lending rates are pared, analysts said, as sentiment continues to be weak for discretionary purchases.

The Society of Indian Automobile Manufacturers, or Siam, the industry lobby, has forecast a 3-5% growth for the industry in 2013-14.

Passenger car sales fell 6.7 percent to 1.89 million units in the year ended March, the first decline in 12 years.

Car market leader Maruti Suzuki India Ltd sold 90,523 units in the domestic market in April, reporting a mere 0.3 percent rise in sales from over the same period last year.

A revival in demand for petrol cars reflected on Maruti’s mini car segment, which rose 27 percent in April from a year ago after months of decline. Maruti’s mini car segment has the Alto, Wagon R, and the A-star—all having only petrol engines.

Oil marketing companies pared petrol prices four times since March following the softening of crude prices globally; the latest cut was the `3 per litre drop in petrol prices.

General Motors India Pvt. Ltd, which sold 8,196 vehicles in April, up 2.4 percent over a year ago, also benefited from the revival in demand for petrol models.

Sales at Hyundai Motor India Ltd, India’s second-largest carmaker by sales, declined 7 percent from a year ago to 32,403 units in the domestic market.

Even sales of utility vehicles, which were buoyant last year despite the slowing in the rest of the auto industry, came under pressure after the government increased the excise duty by 3 percent from March.

Passenger vehicle sales at Mahindra and Mahindra Ltd, India’s largest maker of utility vehicles, rose by just 1 percent to 20,748 units in April.

Steel consuming sector remains under pressure

Automobile sector growth (%)

Construction sector growth (%)

Source: SIAM

Source: CMIE


Sales growth of utility vehicles will slow to 12 percent in 2013-14 from 20 percent last year, according to analysts.

Construction sector

The Cabinet Committee on Investments (CCI) has given clearance to projects worth `74,000 crore, in March 2013 which were held up for years due to lack of various clearances. Most of these projects are in the infrastructure and energy sectors.

The petroleum sector will benefit, where investments worth `70,000 crore for

exploration and production activities in 40 oil blocks were held up because of objections raised by the Defence Ministry. The objection has been overruled by CCI.

As announced by Minister of Road Transport and Highways, the Ministry will award projects for 73,000 km of national highways in 2013-14.

The soaring mercury is making its impact on the construction industry, especially following the government decision to restructure the working hours of labourers with nearly four hours of rest in between.

Many of them are yet to adjust to the new pattern.

Building contractors have also been forced to reorganize their work resulting in apprehension over timely completion of projects, said people associated with the field.

Meanwhile, the depressed demand has restricted the growth of cement industry to 5.5 percent from April 2012 to February 2013.

H o w e v e r , analysts feel that on the backdrop of government clearance and rapid execution of infrastructure projects, and a pickup in the affordable housing segment due to decrease in bank interest rates, cement demand is expected to grow in coming quarters.

Capital goods

Meanwhile, the capital goods sector has shown a growth of

9.5 percent in February 2013 over February 2012. This is despite the fact that 3 of the 5 steel consuming sectors have shown negative growth in 2012-13.

Capital goods sector has been a major underperformer in the past one year, largely on account of severe slowdown in investment cycle.

The stocks of capital goods companies have underperformed in the recent past with the BSE capital goods Index falling 12 percent in the past two months.

Analysts are also projecting muted growth in revenues and profits for the sector

in the fourth quarter of 2012-13 earnings season.

However, with the easing of interest rates and policy steps being taken by the government, the sector is showing some signs of recovery, analysts feel.

Consumer durables

The consumer durables sector contracted by 2.7 percent in February 2013 compared to February 2012. This is the third consecutive contraction in this sector, first such occurrence after February 2009, when it contracted for 4 consecutive months.

The contraction points to weak household demand. With gold prices crashing in April, the figures for the month are expected to improve due to jewellery sales picking up

Meanwhile, white good sales increased in February 2013, due to low base effect. Air conditioners and refrigerators are expected to continue to rise, while washing machines are expected to decline due to base effects.

High cost of white goods is making it difficult for customers to buy the goods. At the same time, the banks are not passing along the interest rate cuts to the masses.

fEATuRE

Capital goods sector growth (%)

Consumer durables sector growth (%)

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fEATuRE

Arindam Bandyopadhyay

Spot seaborne coking coal prices maintained their southward journey in April and dropped in the range of

$6-9/ton fob Australia. This coupled with the plunge in March results in a $15-20/ton fob decline in a couple of months.

The downward rally since January 2013 is attributed to increased availability of spot cargo amid low demand from steel makers.

The state of the steel sector in India as well as in much of the world market is pretty gloom. In China, the slowdown in GDP growth in Q1 has had a bearing on the steelmaking sector. Against this, the supply of coking coal has remained fairly sufficient from China’s domestic mining sector. According to market sources, the steel mills were negotiating for lower May prices with domestic miners, so buyers were sitting out of the import market. Trade sources said although talks were on, deals were very thin.

Coking coal prices plummet in April

During the month, prices of hard coking coal dropped around $6/ton fob Australia, while that of premium low-vol was down $7/ton fob and semi soft variety declined by $9/ton fob.

As of April 26, prices of these stood at $148.5/ton fob, $147/ton fob and $103/ton fob, respectively.

Given the current trend, the second quarterly contract prices look to be on the higher side, market sources said. Earlier, BHP Billiton-Mitsubishi Alliance (BMA) and Japan’s Nippon Steel & Sumitomo Metal Corporation agreed on coking coal prices for April-June at $172 per ton fob Australia, up $7 per ton from Q1 (January-March) level.

Steel mills have described the deal as “a little on the high side,” however, adding that it was perhaps not completely reflective of the market. Meanwhile, Indian steelmaker SAIL reached agreement with BHP Billiton on Q2 coking coal contract at about $169.50/ton.

In view of the current weakness in steel market, coking coal prices are likely to continue to see the subdued trend. In the absence of any supply tightening, prices are unlikely to see any significant recovery in May. The sources said that if the weakness in coking coal prices persists in coming months, the Q3 contract prices may be settled at a discount over the Q2 contract price.

Met coke prices plunge

Metallurgical coke prices witnessed a major decline in April. Prices dropped by around $20/ton cfr India for the material from Australia and stood at $274/ton cfr on April 26, compared to $294/ton cfr on March 28. In comparison to April, the decline in March (around $4/ton cfr) was rather insignificant.

The decline in met coke prices was in tow with the weakness in coking coal prices and the poor health of the Indian steel sector. Market sources said that poorer steel market fundamentals have resulted in the bearish trend in the prices.

In India, coke prices eased by around `400 per ton to `17,000 per ton (basic) on low demand conditions prevailing in the market. The prices are likely to be range bound in coming weeks, sources said.

Dates

Peaks Down (CSR 74%, VM-20.7%,

Ash-9.7%, S-0.6%, P-0.03%, TM-9.5%)

Prem Low Vol (CSR-71%, VM-21.5%,

Ash-9.3%, S-0.50%, P-0.045%, TM-9.7%)

HCC 64 Mid Vol (CSR-64%, VM-25.5%,

Ash-9.0%, S-0.6%, P-0.050%, TM-9.5%)

Semi Soft Met Coke

1 April 2013 154.5 154 112 294.00

2 April 2013 153 152 137.5 111 291.00

3 April 2013 152 151 137.5 110 291.00

4 April 2013 151.5 150.5 137.5 111 291.00

5 April 2013 151.5 150.5 137 111 290.00

8 April 2013 151.5 150.5 110 290.00

9 April 2013 151.5 150.5 136 109 288.00

10 April 2013 151.5 150.5 136 108.75 288.00

11 April 2013 152 151 135.5 108.5 288.00

12 April 2013 152.5 151.5 108.5 288.00

15 April 2013 152 151 16.5 108 288.00

16 April 2013 151.5 151 108 287.00

17 April 2013 151 150 107.5 287.00

18 April 2013 151 150 107.5 287.00

19 April 2013 151 150 107.5 287.00

22 April 2013 151 150 107.5 287.00

23 April 2013 151.5 150.5 107 286.00

24 April 2013 151.5 150.5 107 286.00

25 April 2013 149.5 148.5 133 104 280.00

26 April 2013 148.5 147 131 103 274.00

29 April 2013 149 147.5 131.5 103 272.00

30 April 2013 149 147.75 131.5 103 272.00

Source: Insights Research


fEATuRE


The prices of almost all types of ferro alloys in India continue to remain soft on higher production and

comparatively weak demand from domestic market as well as Europe, industry sources said. Steel industry in Europe is not doing well and there is low demand for ferro alloys for the past nearly one year. As a result of this, there is excess material available in the market which is putting pressure on prices, the sources said.

The current capacity utilisation by ferro alloys makers in India is about 65 percent and the prices are likely to remain depressed till the capacity utilisation is brought down further, but the probability of that looks bleak considering other issues involved.

“If you talk about India, the current capacity utilisation is about 65 percent, which is very high considering the current market situation. It has to be brought down further by 25 percent. The industry should operate at 40 percent capacity utilisation to match with the demand,” an official of a leading ferro alloys maker in eastern India said.

“If only the production is at par with the demand the price will increase; otherwise the depressed conditions will persist,” he said.

“The market is getting weak with the passage of each day. I don’t find anything positive for improvement in the current market scenario. Ferro alloy is likely to be under pressure because of lack of demand from steel makers, particularly in Europe,” the official said.

“While the production of steel has been reduced in Europe, the production of alloys in India has gone up. Basically, the demand has come down while the supplies have increased. There is a mismatch in demand and supply and that is why the price is under pressure,” he explained.

“Prices of ferro alloys, particularly for export, are unlikely to improve in entire 2013. I don’t find any reason or scope for

improvement. Ferro alloy makers are likely to face problems unless the demand goes up or the prices of raw material like manganese ore come down,” said an official of another ferro alloy maker.

Meanwhile, BHP has recently increased the prices of Manganese ore to $6 per DMT for May shipment. They are talking of a further increase for June shipments. April price was $5.75 and March price was $5.50, which means the prices had gone up every month from March.

Contrary to the depressed scenario in India, demand for manganese ore from China is relatively strong because ferro alloy makers in that country are supplying the material to their own steel mills. They are buying the raw materials at higher prices, producing ferro alloys, and selling to their own steel plants at higher prices.

“But India or Indian ferro alloy makers are losing on both sides. First, they are buying raw material at higher prices, because Chinese are buying at higher prices and as such suppliers will have to sell to others also at higher prices; and second, Indian manufacturers are being forced to sell at lower prices because of lack of domestic as well as export demand,” an expert said.

“The manufacturers in India are meeting regularly to derive strategies for survival. People are discussing ways to survive by increasing the prices, but that again is subject to acceptance of market. If the market doesn’t accept higher prices, the selling price cannot be increased,” said another company official which deals in ferro alloy.

An exporter-cum-trader said that in one of the recent meetings, it was decided that manufacturers will sell Silico Manganese (SiMn 65) at $1,090 or equivalent price in

Indian Rupee and SiMn 60-14 at $990. But, it is not happening because market is not accepting this price and also a number of manufacturers are willing to sell at lower prices.

However, some big manufacturers are holding their stocks in anticipation that once the stock of smaller traders is finished, they can increase prices and in anticipation of that they are trying to hold the material and not selling at current market prices.

Power crisis

“Not only there is problem in availability of power, but also the prices are high. The power rates in southern India, particularly in Andhra Pradesh, have gone up by 90 paise per unit to `4.60 per unit, plus fuel surcharge of around 30 paise, which is yet to be announced,” said an official of a company with ferro alloy plant in Andhra Pradesh.

Prices

Experts feel that currently there is no standard average price prevailing in the market. People are willing to sell at whatever price they get. But a few bigger players are trying to keep their prices firm and are not willing to sell below a particular level.

The price of SiMn (65) was quoted at around $1,050 per ton on April 20 and that of 60-14 at $950, which is almost the same price prevailing four months back in December 2012.

As on April 20, the price of Ferro Manganese (70) was around $975-980 per ton (FOB) and FeMn (75) was around $1050 per ton (FOB). The price of Ferro Chrome (60%) was around $1.00/pound and Ferro Silicon (70%) was $1300 (FOB) while that of FeSi (75%) was $1450 per ton fob.

Capacity utilisation putting pressure on ferro alloy prices


fEATuRE


SKP Group company Rohit Ferro Tech Ltd (RFTL), a leading Ferro Alloy manufacturer , is set to commence

operations at its newly set up pellet plant in May, a senior official of the company told Steel Insights.

“We are going to commission our 0.6 million tons per annum (mtpa) pellet plant in Odisha soon. It would be commissioned in May,” Rohit Ferro Tech’s Director Rakesh Agarwal said. The pellet plant is being set up by its group company Ankit Metal and Power Ltd (AMPL).

“With the commissioning of pellet plant our group company AMPL would be more viable because we have enough stock of fines which would be utilised for pellet making and thus our cost of production of steel will come down,” Agarwal said.

AMPL is currently producing around 200,000 tons of Billets and re-rolled products at Chhatna, Jorehira in West Bengal’s Bankura district.

Meanwhile, the company also plans to commission a 67 MW captive power plant at its Jajpur plant in Odisha within next few months, Agarwal said. “The construction work for the captive power plant is going on in full steam and (the plant) is expected to be commissioned soon,” he said.

The SKP Group is promoted by S K Patni, a well-known figure in Ferro Alloys and steel

industry. The group has achieved success in diverse aspects of business – manufacturing, trading, import and export. It is one of the largest merchant producers of High Carbon Ferro Chrome, Silico Manganese, Ferro Manganese & Ferro Silicon in India and exports 70% of Ferro Alloys manufactured to various countries across the world.

RFTL started its journey in 2003 with a meagre capacity of 24,000 mtpa from its 2 nos. of 9 MVA furnaces in Bishnupur, West Bengal. Then with its continuous expansion every year, the same plant now has 5 nos. of 9 MVA furnaces with a total capacity of 90,000 mtpa.

In 2006, RFTL expanded its footsteps into the state of Odisha by installing an 110,000 mtpa manufacturing unit with 4 nos. 16.5 MVA furnaces at Kalinganagar Industrial Complex in Jajpur to manufacture bulk ferro alloys.

Recently, the company added another feather to its cap by fully commissioning its Manganese alloys production facility of 100,000 mtpa with 6 nos. 9 MVA furnaces in Haldia, West Bengal. The unit has got the status of being a 100% export oriented unit (EOU).

Presently, with the total installed capacity of 300,000 mtpa, RFTL exports nearly 70% of its production.

Impex Ferro

Impex Ferro Tech Ltd is another group

company of SKP which was incorporated in 1995 with the intention to set up a plant for manufacturing Silico Manganese and Ferro Manganese.

In 1997-98, the company set up two submerged arc furnaces with capacities of 3.60 MVA & 5 MVA for manufacturing Silico Manganese and Ferro Manganese respectively at Kalyaneswary, West Bengal. This unit became fully operational in 1998-99.

The company further went for expansion in the year 2000-01, when the third furnace having a rating of 7.50 MVA was installed and the same commenced production in April 2002. Encouraged by the market response, acceptance of its products and the growing demand for ferro alloys from the consuming industry, both in the domestic and export market, the company went for further expansion by putting up a fourth submerged arc furnace of 8.25 MVA for manufacturing HC Silico Manganese. It was commissioned in the year 2004.

Buoyed further by the robust demand for the company’s products, the company went for another round of expansion in the year 2008-09, by commissioning its 5th submerged electric arc furnace of 7.5 MVA capacity for manufacturing Ferro Manganese.

At present, Impex Ferro possesses five sub merged furnaces with a cumulative Ferro Alloys production capacity of 59,025 TPA and manufactures Ferro Manganese and Silico-Manganese.

Impex Metal

Having established in 1991, Impex Metal & Ferro Alloys Ltd began its journey with trading of Ferro Silicon. Witnessing year-after-year growth, the company diversified into export of various bulk Ferro Alloys.

With unmatched proficiency in its trading activities, the company became the sole marketing agent in India for Bhutan Ferro Alloys Limited manufactured Ferro Silicon. The company boasts of a wide network of depots spread all over the country. Customer satisfaction being the motto of the company, Impex Metal is catering to steel plants, mini steel plants, foundries, government and semi-government institutions, etc.

The company has set up a 2x18 MVA manufacturing unit at Vizianagaram, Andhra Pradesh for manufacturing premium quality Ferro Silicon and other Ferro Alloys.

Rohit Ferro Tech set to commission pellet plant


fEATuRE

WSA forecasts 2.9% rise in steel use in 2013


The World Steel Association (worldsteel), in its Short Range Outlook (SRO) for 2013 and 2014,

has forecast that global apparent steel use will increase by 2.9 percent to 1,454 million tons (mt) in 2013, following growth of 1.2 percent in 2012. In 2014, it is forecast that world steel demand will grow further by 3.2 percent and will reach 1,500 mt.

Hans Jürgen Kerkhoff, Chairman of the worldsteel Economics Committee said, “2012 was a challenging year for the steel industry with apparent steel use increasing at the slowest rate since 2009 when demand declined by -6.5 percent. This was mainly due to the Eurozone crisis which persisted throughout 2012 and whose impact was felt further afield. On top of this, corrective macroeconomic measures in major emerging economies also contributed to a concerted slowdown globally.

“However, in the early part of 2013, the key risks to the global economy – the Eurozone crisis, a hard landing for the Chinese economy, and the US fiscal cliff issue – have all stabilised considerably and we now expect a recovery in global steel demand to kick in by the second half, led by the emerging economies. Yet, the situation on the financial markets remains fragile and the Eurozone crisis is far from being solved as the recent events in Cyprus have again shown. In 2014, we expect a further pickup in global steel demand with the developed economies increasingly contributing to growth,” he said.

Apparent steel use in China is expected to grow by 3.5 percent in 2013 to 668.8 mt following a 1.9 percent increase in 2012. In 2014, steel demand is expected to grow by 2.5 percent as the Chinese government’s measures to control investment in an effort to rebalance the economy will remain in place.

India demand

In India, steel demand is also expected to pick up and will grow by 5.9 percent to 75.8 mt in 2013 following 2.5 percent growth in 2012 as monetary easing is expected to support investment activities, the worlsteel said.

In 2014, growth in steel demand is expected to further accelerate to 7 percent thanks to the reform measures aimed at narrowing the fiscal deficit, coupled with measures to improve the foreign direct investment climate, the global steel industry body said.

Rest of Asia

Steel demand in Japan is expected to decline for the second consecutive year in 2013 by -2.2 percent to 62.6 mt due to contracting shipbuilding and automotive sectors despite a positive boost from the construction sector.

In 2014, it is expected to contract again by -0.6 percent. This is due to an end of fiscal stimulus and structural factors, for example, increasing relocation of production by Japanese manufacturers overseas, the outlook said.

Fiscal concerns to impact US growth

In 2013, in the US, after growth of 8.4 percent in 2012 due to the automotive and energy sectors and an increasingly resilient construction recovery, apparent steel use is forecast to grow by 2.7 percent to 99.3 mt due to continuing fiscal concerns.

In 2014, steel demand is expected to increase by 2.9 percent, thus exceeding 100 mt with the help of positive momentum from the construction sector. For NAFTA as a whole, apparent steel use will grow by 2.9 percent and 3 percent in 2013 and 2014 respectively.

In Central and South America, apparent steel use is projected to rebound by 6.2 percent in 2013 to 49.8 mt from 2.6 percent growth in 2012. The region’s steel demand

is forecast to grow by 4.3 percent to 52 mt in 2014.

In Brazil, a rebound in investment coupled with the end of the recent de-stocking process is expected to bring apparent steel use growth of 4.3 percent to 26.2 mt in 2013 and further growth of 3.8 percent to 27.2 mt in 2014.

EU to see further contraction

In EU27, the lingering uncertainties associated with the Euro crisis continued to weigh heavily on economic activities in the region, especially during the last quarter of 2012.

As a result, apparent steel use in 2012 fell by -9.3 percent with a widening gap seen at the country level. In particular, in Italy and Spain, apparent steel use contracted by over -18 percent in 2012. With signs of stabilisation in the economic situation, recovery is expected late 2013, but the economic prospects for the region remains weak. Steel demand in EU 27 is expected to contract further by -0.5 percent in 2013, but will return to growth of 3.3 percent in 2014 to reach 144.1 mt.

CIS growth to slow

Growth of apparent steel use in the CIS region is projected to slow to 2 percent reaching 57.6 mt in 2013 as the modest pickup in Russia is partially mitigated by declining demand in Ukraine and Kazakhstan. In 2014, steel demand in the region is expected to grow by 3.8 percent to 59.8 mt with the improving external environment. The resumption of energy projects and improving construction outlook is expected to support steel demand in Russia. It is forecast that steel demand in Russia will grow by 2.6 percent to 42.9 mt in 2013 and will grow further by 3.9 percent to 44.6 mt in 2014.

Steel demand in the MENA region is expected to grow by 3.2 percent to 65.2 mt in 2013 after 2.2 percent growth in 2012 aided by reconstruction activities in the Arab Spring countries and Iraq as political turmoil in the region phases out. In 2014, steel demand in the region will further accelerate to 7.1 percent growth to reach 70 mt supported by strong construction activities, the worldsteel outlook said.


fEATuRE


The Reserve Bank of India (RBI) has trimmed its key lending rate by a quarter of a percentage point and

sought to temper expectations of further rate cuts with a warning that the risk of a resurgence in inflation left “little space for further monetary easing”.

The central bank cut the repo rate, at which it lends money to commercial banks, to 7.25 percent from 7.5 percent while keeping the cash reserve ratio (CRR), the portion of deposits that banks need to keep with RBI, unchanged at 4 percent. It is the fourth time since April 2012 that the central bank has lowered the repo rate.

For consumers in Asia’s third largest economy, the widely anticipated rate cut doesn’t hold out prospects of an immediate lowering of borrowing costs, given that banks aren’t likely to cut lending rates very soon. It isn’t likely to provide a fillip to India’s flagging economy either, because the slump in growth is due more to the absence of fresh

investment and governance issues rather than the cost of funds, analysts said.

RBI governor D Subbarao has been under pressure from both the government and the industry to lower borrowing costs to spur economic growth, which is estimated to have slumped to 5 percent in the year ended March 31, the slowest pace in a decade.

After cutting the repo rate by half a percentage point in April last year, Subbarao paused monetary easing for nine months to allow inflation to cool. Later on, the apex bank lowered the repo rate by 25 basis points (bps) each in January and March 2013 as inflationary pressures eased. Since March last year, RBI has cut CRR by 75 bps in phases.

“Overall, the balance of risks stemming from the Reserve Bank’s assessment of the growth-inflation dynamic yields little space for further monetary easing,” Subbarao said in his monetary policy statement.

RBI expects wholesale inflation to be range-bound around 5.5 percent during the current fiscal year and has projected growth in gross domestic product at 5.7 percent,

Industry not enthused by RBI rate cut

lower than the government’s forecast of 6.1-6.7 percent.

In the policy statement, RBI implicitly criticised the Congress-led United Progressive Alliance (UPA) government for not extending adequate support to push economic growth.

“Recent monetary policy action, by itself, cannot revive growth,” RBI said.

“It needs to be supplemented by efforts towards easing the supply bottlenecks, improving governance and stepping up public investment, alongside continuing commitment to fiscal consolidation,” the central bank added.

Impact on industry and consumers

Meanwhile, the extent of the rate cut didn’t enthuse the government or industry too much.

“Let’s accept what has been done today and let us see what the future holds,” said finance Minister P Chidambaram. If inflation were to fall further, it would provide room for further monetary easing, he said.

“A 50 bps cut in policy rates would have provided a strong boost to the economy and made a significant impact on investor sentiment,” said Chadrajit Banerjee, director general of the Confederation of Indian Industry (CII).

Naina Lal Kidwai, president of the Federation of Indian Chambers of Commerce and Industry, hoped banks would lower lending rates in line with the RBI rate cut. But banks are reluctant to do so.

“There’s not much scope for a cut in lending rate. There is nothing to transmit. Even 1 basis point (cut) is much too high,” said Pratip Chaudhuri, chairman of State Bank of India.

Other leading bankers, including Aditya Puri, managing director of HDFC Bank, and K R Kamath, chairman and managing director of Punjab National Bank, said any immediate cut in lending rates is unlikely, as deposit rates remain high. Any reduction in deposit rates may not happen as banks’ deposit mobilisation is already low. In the past too, few banks have taken the cue from RBI rate cuts.

For fiscal 2014, RBI expects bank credit to grow 15 percent and deposits by 14 percent. Last fiscal, bank deposits grew 14.3 percent, lower than the projected 15 percent growth.


TECHnOLOGy

Technological upgrade of slab casting plants

Sanat Bhaumik

In recent years, developments in slab casting technology have introduced several significant improvements, both

in mechanical design and in the applicable process technology. These developments have allowed recently installed casters to operate with performances remarkably better than casters installed in the past.

In order to keep pace with global players in developing countries that benefit not only from reduced manpower costs but now also from the latest technologies installed in their newly commissioned plants, steelmakers using existing plants have little choice but to initiate comprehensive renovation plans for their casters. Even in times of budget restriction policies, such cost-effective actions can not only prolong the technical life of their plants but also put them back in line with the latest technological developments, and maintain their competitiveness.

Thanks to Danieli’s experience, dating back to the first slab casting installations in the 1950’s in the UK with the first commercial caster ever installed, Danieli Davy Distington (DDD) largely contributed to the development of the casting technologies and has developed a comprehensive experience in upgrading existing plants with tailor-made solutions, that range from limited budget

applications of technological packages to major caster revamping.

Background

Since the first applications in the late 1950s, continuous casting technology over the years shows a remarkable evolution both in plant design concepts and process features.

Technological evolution has created a significant, progressively increasing gap between the mechanical life of the equipment (fixed by the capacity to produce according to the original design specifications) and its technological life (corresponding to its capacity to produce in line with the modern day best available performances).

Considering their expected multi-decade mechanical life, slab casters that have been installed even on 10 years ago and still in conditions to produce, are becoming quite obsolete and very often significantly out of line with the recent developments of technology. In order to meet modern quality requirements, such machines often have to reduce production levels significantly to guarantee repeatable quality, and this, coupled with increased unreliability, which naturally occurs over time, results in an efficiency level well below the global competition. It is well known that in the past five years a large number of new, ‘state-of-the-art’ slab casters have been installed in developing counties (most notably in China).

As a consequence, steel producers with older-generation equipment, particularly those in industrially mature plants who were of pioneers of the Steel world, are now rapidly finding themselves surviving only due to the great experience developed by their production and maintenance teams.

As the new producers grow in experience and master their new technology the pioneers will be unable to overcome the limitations dictated not only by the technical obsolescence of their equipment, but mainly by the restrictions imposed by its original design concept.

Considering the global nature of the steel business, particularly in the flat-products sector where the arena is the world market, overall competitiveness on transformation costs and quality is of paramount importance.

In order to keep pace with global players in developing countries that can benefit not only from reduced man-power costs but now also from the latest technologies, long established steelmakers using existing plants have little choice but to implement comprehensive renovation plans for their casters that, even in times of budget restriction policies, can not only prolong the mechanical life of their plants but also put them back in line with the latest technological developments, and maintain their competitiveness.

Driving forces for caster revamping

A slab caster can be considered obsolete not only because it is mechanically “OLD” but also because it is either not capable of addressing the increased quality requirements dictated by the market; and/or, because the burden of its operating cost on the overall plant transformation cost is excessive, and not in line with overall competitiveness.


TECHnOLOGy

Quality

Today’s mills (both hot strip mills and plate mills) have dramatically increased the finished quality that may be expected from slabs.

New processes, such as the mill furnaces hot charging, which eliminates the possibility of intermediate slab inspection after casting as well as the production of new, high-performance grades such as X100 +, Ultra High Strength micro-alloyed steels, multiphase steels (dual, trip, twip), etc., call for slabs of consistently superior quality with improved surface and sub-surface characteristics, better internal soundness for consistent mechanical properties, and improved internal cleanliness.

Production

In addition to consistent quality production, to be competitive today’s casting plants must operate cost effectively by minimising maintenance downtime and caster manning requirements.

In order to reduce transformation costs, it is therefore of paramount importance that caster design provides technical solutions that ensure long production life for the components which are normally subject to wear (such as caster rolls), quick change of operational equipment (such as mould and segments), and easy equipment maintenance procedures.

Such high levels of reliability are the key to dramatically increasing casting yield, with many of Danieli’s plants having regular sequence lengths of 1,000 ladles and over. Of course levels of production that require casting for five weeks and producing 330,000 tons without stopping for rethread, require not only highly reliable equipment but also the very latest in stable reliable process technology in order to minimize breakout rate, allow flexible in-line slab width adjustment, and provide advanced diagnostic and quality data analysis. At the same time, an ever-increasing degree of plant automation is required, ideally culminating in the “no man casting practice” which not only reduces transformation costs but significantly improves the safety of the plant and, although no one likes to admit it, the quality of slab produced.

Danieli packages for slab caster performance improvement

In order to face these challenges the following solutions have been adopted in new casters recently installed by Danieli, and these solutions can also be implemented in existing plants as technological upgrade packages for key areas of the casting machine.

Mould & Oscillation ♦ Moulds require quick-change design,

integrated advanced breakout prevention systems, and in-line width adjustment capability, in order to reduce production downtimes due to maintenance, allow flexible on-line slab size changes, and reduce breakouts.

♦ Hydraulic oscillating systems should be utilized instead of electromechanical, with advanced guidance system for “zero tolerance” guidance during oscillation, such systems are able to improve slab surface and sub-surface quality and reduce the potential for breakout.

The Danieli tool that answers these requirements is the INMO mould, which has been successfully applied in all recent new casters supplied, but it can also be applied as a standalone package, as seen in Arcelor Mittal Bremen Stahlwerke in Germany and Chengde I&S and Sanming I&S slab casters in China.

Mould level stability ♦ Advanced mould level control system, in

order to improve meniscus stability.

The Danieli tool specifically developed for monitoring and control of mould level, coupled with both radioactive and electromagnetic sensor (according to the specific application) is the Danieli ‘i’ level, intelligent mould level control system. It


TECHnOLOGy

is widely known that unstable level control may contribute to a number of quality issues affecting both surface and internal quality. The Danieli ‘i’ level intelligent level control package combats many of the phenomena that can lead to level disturbances, including Dynamic bulging, flush-through control, and standing wave, in addition to the more usual aspects of speed change control and width control.

Correcting poor mould level can have a profound influence on final product quality and can allow casters to return to normal high production levels where they may have been reduced to avoid level disturbance. Recent applications, based on LQG data processing, show a meniscus level stability with fluctuations below 1.5 mm, even in the most extreme applications in ultra-high casting speed for thin slab casters (with casting speeds above 7 meters per minute).

Mould fluido dynamic control ♦ Application of innovative multimode

electromagnetic in mould technology, that can combine liquid steel flow acceleration, breaking and stirring functions. Thanks to the close cooperation with

our sister company, Danieli Rotelec, Danieli Davy Distington has applied on several casters (such as Arcelor Mittal Sidmar plant, Belgium) the new MM EMS technology,

with the goal of improving slab internal quality. The latest design incorporates the unique capability of changing position (up and down) in the mould according to casting conditions, in order to achieve the optimum steel flow in the mould.

Caster rolls ♦ Casting rolls of multiple span design, with

improved internal cooling and enhanced cladding, for optimum slab support, long service life and easy maintenance. Since 1986, Danieli Davy Distington has

adopted multiple split rolls in slab casting, in order to ensure in the meantime small pitch roll diagrams and ensure sufficient slab supporting across the slab width.

The Danieli CoolRoll concept has been developed, keeping in mind also maintenance issues, with modular design solutions that allow easy dismantling for maintenance even after a prolonged permanence in the caster. Superior multi-layer stainless steel cladding has been developed in order to guarantee the correct surface hardening that ensures both slab surface preservation and ultra-long roll life.

Internal roll cooling design is of paramount importance for maintaining roll containment properties after prolonged strand stoppage, which typically can create uneven roll temperature, which leads to thermal stress and subsequent roll failure. Danieli developed its original design of Peripherally Drilled Rolls (PDR), whose reliability provides extra-long roll life between dismantling, inspection and in some applications over 10 million tons of cast slabs have been cast between maintenance stoppages. The performance has been very remarkable, with extra-long casting sequences that exceed 1,000 ladles (more than one month of continuous casting operations without re-stranding).

These concepts are materialised in the latest generation of UHP (ultra-high performance) Danieli CoolRoll, with either center bore or PDR configuration, according to roll diameter.

Secondary cooling ♦ Dynamic secondary cooling, air-mist

type, in order to ensure the optimal metallurgical conditions for slab solidification and designed to minimize the mechanical bending/unbending stress

on the slab, while optimizing surface quality and controlling the sump position during the casting process. The Danieli Cool Control is a package

dedicated to enhancement of secondary cooling performances.

The dedicated mathematical model, continuously compares the thermal history of each slice of slab according to the real casting conditions and the optimal solidification thermal profile dictated by metallurgy. Then, the Danieli Cool control model dynamically adjusts the flows of secondary cooling media during both “cruising” casting conditions and any transitory conditions.

The Danieli Cool Control model is applicable to both air-mist and water-only secondary cooling systems, according to process specific applications, can be applied.

Extended experience has already been matured in developing caster secondary cooling systems that, according to the thermal profile requested, can perform “soft cooling,” “hard cooling,” and “dry cooling,” thanks to the application of new generation high-efficiency nozzles with extended wet “foot print” area that guarantee good efficiency in their spray performance over an enlarged regulation range.

Independent control zoning across the slab width allows the Danieli cool control system to adapt the cooling flow profile according to slab width, in order to avoid edge/corner overcooling phenomenon.

Segment design and soft reduction

Segments should be of suitable design, low maintenance, and proper robustness in order to apply Dynamic soft reduction process to improve internal quality and slab soundness. Danieli pioneered the application of Soft reduction process beginning in the late 1980s, both in conventional and thin slab casters: soon the advantages of Dynamic Soft Reduction process emerged. In close cooperation with the maintenance teams of its customers, Danieli developed the OPTIMUM segment, conceived to properly distribute the roll gap reduction with the necessary position and force accuracy along the casting strand, according to the real casting conditions.

Structural robustness of the mechanical equipment is the key to cope up with the not insignificant additional stress on segments generated by soft reduction, and


TECHnOLOGy

at the same time the OPTIMUM segment has been designed to guarantee an easy accessibility to rolls, couplings, nozzles and on-board instrumentation for maintenance purposes. Quick coupling design for the majority of utilities and electric connections ensure a short segment change time. With OPTIMUM segment design, it is possible to control roll gap along the caster for thermal tapering and dynamic soft reduction, but also to adjust final slab thickness according to the needs of the mill, without changing the mould, and hence to improve caster flexibility and productivity further.

Overall roll diagram concept

Machine type conversion curved to vertical curved

♦ A Vertical curved machine design provides significant benefits over the original curved design. Where internal cleanliness is paramount (such as IF grades) this is particularly important to achieve high casting speeds. To remain competitive casting speeds

are continually being increased on a curved mould machine, and this can lead to internal cleanliness difficulties. To overcome this mismatch between the need for high productivity while still maintaining

cleanliness quality levels, the complete roll diagrams are being revamped successfully by Danieli, to incorporate a vertical curved mould design while still respecting the existing casting floor levels as well as existing foundations. Of particular significance in this area is the move to the full conversion from curved to vertical curved, as in AM Sollac Fos sur Mer slab caster No.2 (France), where a complete revamping strategy was selected by the Customer.

This full bow revamping was selected following the unsatisfactory quality results experienced in their No.1 caster, which was revamped from curved to vertical by partial “top end only” revamping only just a few years before.

Machine type conversion vertical curved to curved

♦ On the contrary, where low strain is of greater importance than cleanness levels it should be emphasized that in some cases, such as in the Mechel plant in Russian Federation and in CARSID plant in Belgium, we have also successfully conceived the conversion of a vertical curved caster into curved, allowing the caster to produce a new, wider product mix using a caster with a larger caster radius.

Manpower optimization

In order to improve efficiency and safety, steel plants are continually striving to reduce man-power in the casting area, particularly for potentially dangerous applications.

The following standalone package solutions can be considered to assist in this reduction:

♦ Remote-controlled oxygen lancing by robot in case of slide gate opening failure

♦ Automatic powder feeding ♦ Automatic SEN exchange mechanism ♦ Remote controlled sampling (composition

and temperature) in tundish ♦ Remote controlled handling of segment

during segment exchange ♦ Remote controlled of roll gap in segments

for automatic thickness changes

Automation and diagnostic packages

Significant plant performance improvements can be achieved by implementing, as standalone software packages, some dedicated applications specifically developed by Danieli that can help in the collection, interpretation and systematization of available data from the field, for product quality prediction and tracking. Among these packages we can mention:

Spray layout alternatives


TECHnOLOGy

Sanat Bhaumik is Sr. Vice President (Flat Products), Danieli India Ltd.

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

Advanced mould thermal mapping packagesThis software, together with the proper arrangement of thermocouples in the mold, is a powerful tool to monitor “life” inside the mold during the “first skin” process.

This tool provides an advance breakout warning function and automatic handling of prevention practices, but allows also monitors the lubrication powder performances, check of liquid steel flow distribution in the mold, and relevant possible anomalies It is helpful also for identifying slab surface damage, such as longitudinal cracks.

Slab quality assessment in real time (QUART) packages This software is capable of “live” correlation of the information concerning the real casting conditions with the “ideal” casting conditions for each steel grade and product, as well as considering specific final users’ specifications, and resending a detailed slab quality prediction chart to the plant quality manager.

With this tool, the slabs can be automatically rated for quality and properly routed for downstream processing (hot

charge, cold charge, visual inspection, grinding/scarfing process), minimizing time and man-power required for visual slab inspection “by default” after casting. The key to this software is its real-time analysis, which allows the slab cutting schedule to be adjusted to cut out the poor quality material, thus maximizing yield.

More intelligent packagesFor overall caster production and maintenance data correlation, it is a Multi-dimensional Database Analysis system that transforms the huge amount of production and process data gathered by the various automation systems into tangible information for decision-making and improved process knowledge.

Via advanced DWH (Data Warehousing) and OLAP (On-Line Analytical Processing) functionalities, MORE Intelligence rapidly and readily reveals important items of information that are often hidden within the huge amount of data generated by modern automation systems.

Conclusion and outlook

Current market conditions call for

optimization of existing facilities instead of supporting the installation of new complete plants. In spite of budget restrictions, it is mandatory for existing slab casters to be put in line with the performances given by the new ones installed in recent “boom market” years, particularly in developing countries, in order to guarantee plant competitiveness.

Aside from overall caster revamping projects, limited investments can be considered to significantly improve existing casting facilities for plants that have not reached the end of their service life but are not equipped yet with the latest state-of-the-art design features, as well as production and maintenance tools. In order to assist its customers, Danieli has already developed a complete collection of proven solutions and technological, mechanical, plus automation packages, as powerful tools to improve the performances of its casters.



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RSP coke ovens battery complex commences production

RSP has achieved a major milestone in its ongoing modernisation and expansion activities with the commencement of coke pushing from its new state-of-the-art Coke Oven Battery No. 6.

Coke dry cooling plant (CDCP), Coal Handling Plant as well as Coal Chemicals unit also became operational concurrently. The total investment in this entire complex is around `1,400 crore.

The new Battery, which is second of its kind in SAIL, is top charged having compound twin flue, under jet, regenerative heating with partial recirculation of waste gases. The 7 metre tall battery of 67 ovens will produce 0.768 MT/Year of gross coke. The Computerised Heating Control System (COHC) has been installed for the battery operation for the process management system to reduce environmental emission, improve coke quality and productivity.

C S Verma, chairman, SAIL said with the start-up of this new battery at RSP as well as the new Coke Oven Battery #11 at ISP in February 2013, SAIL has reaffirmed its commitment towards environment friendly coke making through adoption of CDCP and other pollution abatement systems. Additionally, this is a major milestone towards integrated commissioning of RSP modernisation wherein the new state-of-the-art 4060 m3 Blast Furnace, the largest in the country, is also expected to be commissioned within one month.

It is noteworthy that RSP is all set to double its capacity from the current level of 2 mtpa to 4.5 mtpa of Hot Metal on completion of on-going modernisation and expansion with commensurate increase in crude steel and saleable steel capacity.

Two more key units namely the New Sinter plant and the Raw Material circuit of Ore Bedding and Blending Plant Phase-II have already been made operational and are in the process of stabilisation. Test and trial runs of new units like Blast Furnace-5, Power Blowing Station and New Caster are in progress and the units are likely to be put into operation soon. To meet the enhanced power requirement, the 220 KV bays at Tarkera Grid Sub- Station and the 220 KV double circuit transmission lines from the sub-station to MSDS-IV of RSP have been energised successfully.


Steel Authority of India Limited (SAIL) has recorded 4 percent growth in the production of value added steel

in 2012-13 over the previous fiscal. The company produced over 5 million tons (mt) of special steel products designed for specific end-use during the year, the company said in a statement.

Among the various SAIL plants, Bhilai Steel Plant developed special soft iron magnetic plates for the prestigious India-based Neutrino Observatory (INO) project of Bhabha Atomic Research Centre (BARC). For the first time ever, SAIL plants at Bokaro and Salem started production of IS 2062 E450 and E 350 HR Coils tailor-made for wagons of Indian Railways.

For the petrochemicals industry, Bhilai and Rourkela steel plants developed a new grade of ASTM 537 plates which finds application in pressure vessels. The Bhilai plant also developed the NACE quality plate which caters to the petrochemical industry. These cracking-resistant plates are ideal for

transportation of gases having higher content of hydrogen-sulphide, the statement said.

For the automobile sector, SAIL Bokaro came out with ultra high strength HR and CR steel with Mn-B, especially for auto body components.

Besides catering to large scale industry, the Durgapur Steel Plant rolled out 31 CrV3 grade billets (for the first time in India), a product highly appreciated among makers of spanners and hand tools.

The year 2012-13 was also a year of best-ever techno economic parameters at SAIL for Coke Rate, energy consumption and Blast Furnace productivity; the latter two registering an improvement of 3 percent and 5 percent, respectively.

Significant progress was also made in the modernisation and expansion projects in 2012-13, especially at Rourkela (RSP) and IISCO (ISP) Steel Plants. At RSP, the new Sinter Plant and new Coke Oven Battery #6 commenced production. At ISP, a new Coke Oven Battery #11 and Sinter Plant were operationalised, while the hot trials for the new Wire Rod Mill were also commenced.

SAIL records 4% growth in value added steel production in FY13


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SAIL’s performance set to improve with addition of coke ovens


The Steel Authority of India Ltd (SAIL) is likely to report an improved performance in 2013-14 as the

company has managed to fix to a great extent the operational and maintenance problems related to coke oven batteries (COB) at its various plants, an official of the company told Steel Insights.

SAIL’s overall performance was affected to some extent because a few COBs were under planned shutdown in 2011-12 and early part of 2012-13.

“But now with gradual coming back of the refurbished COBs and commissioning of a few new ones, the situation is likely to improve,” the official said.

The new and refurbished COBs have been added at Bhilai Steel Plant (BSP), Rourkela Steel Plant (RSP), IISCO Steel

Plant (ISP) and Durgapur Steel Plant (DSP) during the last nearly one year, of which three came in operation in 2013 alone, he said.

BSP

The latest addition in SAIL armoury was the commissioning of COB 10 at BSP on April 25 which followed the commissioning of COB No 8 at BSP in February this year. Earlier, COB 7 at BSP was commissioned ahead of schedule in April 2012 after hot repairs and COB 1 was commissioned in November 2012.

“The COB 8 was commissioned after cold repairs in February 2013 and in the new financial year (2013-14), COB No.10 was charged on April 24, 2013 and commissioned the following day,” the official added.

The COB 8 was cooled down for cold repairs on January 11, 2012 to undertake refractory repairs, replacement of oven top

equipment and hydraulic main gas lines to enable coke production from the battery, he said.

Following completion of cold repair, the COB 8 at BSP was charged on February 27, 2013 and commissioned on 28th Feb 2013, thus further strengthening BSP’s production facilities in the last quarter of 2012-13.

An official of BSP said for them financial year 2012-13 had begun with a clear objective of overcoming operational and maintenance problems at Coke Ovens to achieve a certain level of consistency in oven pushing and thereby ensure an overall improvement in Plant performance. Several strategies were adopted and conscious decisions taken to optimize production from available gas.

“As the year ended, the BSP had arrested the deterioration in the health of batteries by strategically planning and innovatively executing battery repairs within scheduled time frames so as to reverse the downward trend of average monthly oven pushing to the present upward trend,” the official said.

He pointed that for the first time in the country, BSP commissioned COB 10 while at the same time changing Gas Collecting Main (GCM). “This was for the first time that GCM was executed in a running coke oven battery,” he added.

The first phase of Gas Collecting Main (GCM) changing in COB 10 was taken up from March 11 and completed on April 24.

The battery consists of 4 GCMs, 2 on each pusher side and coke side of the battery. One part of the pusher side GCM connects oven from 1001 to 1033 and the other from 1034 to 1067.

In the shutdown, the GCM from 1001 to 1033 on both pusher side and coke side have been completely dismantled and replaced by a new main. Half of the running battery was taken under shutdown for the above job while the remaining half of the battery covering the ovens 1034 to 1067 was under operation.

RSP

Earlier this year, RSP achieved a major milestone in its ongoing modernisation and expansion activities with the commencement of coke pushing from its new state-of-the-art COB #6.

The new Battery, the second of its kind in SAIL, is top charged having compound twin flue, under jet, regenerative heating with S Chandrasekaran, CEO, BSP at the 44th operating committee meeting at Ranchi.


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partial recirculation of waste gases. The 7-metre tall battery of 67 ovens will produce 0.768 million tons (mt) of gross coke per year.

RSP is all set to double its capacity

from the current level of 2 million ton per annum (mtpa) to 4.5 mtpa of Hot Metal on completion of on-going modernisation and expansion with commensurate increase in crude steel and saleable steel capacity.

ISP

On February 15, 2013, the first oven pushing of newly built COB #11 of ISP, with 74 ovens, each 7 metre tall, having an annual production capacity of 0.882 mtpa was done.

SAIL Chairman C S Verma, while inaugurating the COB at RSP, said that with the start-up of their new battery at RSP as well as the new COB 11 at ISP, SAIL has reaffirmed its commitment for environment-friendly coke making through adoption of CDCP and other pollution abatement systems.

DSP

DSP’s rebuilt COB No. 2 was lighted up on February 25 by CEO P K Singh. It has 78 ovens, with volume of each oven being 23.8 cubic metre (length 13.59 metre and height 4.45 metre).

As a special feature, double gas collecting mains has been introduced in the battery, which will ensure improved recovery of valuable coke oven gas from the battery.

Moreover, several advanced pollution control measures, which include leak proof doors and stationary high pressure water jet cleaner have been incorporated in this battery.

Jindal Stainless signs pact with PoscoJindal Stainless (JSL) has signed an agreement with Posco for selling stainless steel products to the South Korean steel maker but the alliance does not extend to its proposed $12-billion venture in Odisha.

“JSL, a part of the $15 billion OP Jindal group has signed a memorandum of understanding (MoU) with Posco... to mutually cooperate with each other for long-term joint business opportunities,” the company said in a statement.

It further said that the pact would entail joint cooperation in its Odisha project and not Posco’s $12 billion proposed mill in the state.

The pact would be for three years with a provision to further extend it and would focus on “long term based supply of 200 series stainless steel products of the company to Posco or its subsidiaries.”

The move is set to benefit the domestic player as Posco is the world’s largest producer of stainless steel. The 200 series finds application in domestic as well as industrial use.

Both the companies would also review “joint establishment and exploration for a nickel smelter process in Indonesia” besides “joint cooperation in the company’s Odisha project,” the statement said.

Besides, the MoU would also review “overseas joint projects including but not limited to the establishment of service centres and cold rolling mills,” the company said.

The parties have engaged in discussions for mutual cooperation and wish to set forth their basic understanding and intents in the MoU, the company added.

ISP’s coke oven battery


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Tata Steel Ltd, India’s leading private sector steelmaker, has said that its total saleable steel production rose

27% to 2.26 million tons (mt) in January-March, 2013 over the same period last year.

The company’s steel sales rose 29% to 2.28 mt in fiscal fourth quarter ended March 31, 2013 from 1.77 million tons a year earlier, the company said in a statement.

In 2012-13, Tata Steel’s saleable steel production rose 14% to 7.94 mt and sales were up 13% to 7.48 mt. Overall crude steel production in 2012-13 was 8.13 mt, a rise of 14% year-on-year.

In FY13, Tata Steel’s raw materials division, Ore Mines & Quarries (OMQ) achieved its highest ever iron ore despatch of 15.0 mt, west Bokaro Division (one of the Collieries) achieved its highest ever clean coal production of 2.33 mt and best ever total coke production (Jamshedpur & Haldia) of 3.7 mt.

The Steel Melting Shop LD#1 achieved its best ever production of 3.18 mt. Cold Rolling Mill achieved its highest ever production of CRCA auto EDD/IF volumes, CRCA skin panel processing volumes, and Galvanneal (GA) volumes at 329.5 kt, 73.6 kt, and 118 kt respectively.

New Bar Mill achieved its highest ever production of 0.8 mt. Wire Rod Mill achieved its highest ever production of 0.43 mt, while Merchant Mill achieved its highest ever production of 0.41 mt.

On the sales front, flat product sale in FY13 increased by 20.2% to 4.49 mt. The Flat Products division achieved its highest ever annual high end product sales of 190 kt to Auto customers and best ever annual Steel Roofing sales volume (Tata Shaktee + Durashine) of 261 kt.

The Long Products division achieved its highest ever sales of 2.99 mt. The Long Products division achieved its highest ever annual retail sales of 1.16 mt.

Company raises $242 mn through overseas bonds

Meanwhile, Tata Steel has raised $242 million (SGD 300 million or `1,316 crore) through a bond issue in Singapore, media reports said.

The 10-year unsecured notes will carry a coupon rate of 4.95% and will be due in 2023. In fact, the issuer was the company’s Singapore arm but the bonds are backed by Tata Steel guarantee.

Tata Steel said in a BSE filing that the guarantee will be an unsecured obligation of Tata Steel and will rank equally with

all its other existing and future unsecured obligations. The Notes will be listed on the Singapore Stock Exchange.

Tata Steel targets SMEs

In order to sell its 13 mt of flat steel, which the company aims to produce each year from 2016, Tata Steel is betting on small and medium enterprises (SMEs), especially firms that do not supply to the auto sector, according to industry sources.

Currently, SMEs consume around 40 percent of the total volume of steel produced in India. They consume in small quantities and instead of buying from steelmakers, they buy from stockists and distributors. Organised players such as Tata Steel now want to remove the middlemen and improve their own margins amid strong competition from rivals like Essar Steel and JSW Steel.

Commenting on the issue a company source said, “We have mapped the segment, and have a directory of more than 5,000 customers.”

He further added that the company “will use its network of more than 40 service centres, which is being expanded, to customise the product according to customer needs.”

Tata Steel posts 27% rise in saleable steel production in India

Production & sales performance Fig in ‘000 tons

ItemsQ4 April - March

FY12 FY13 % Change FY12 FY13 % Change

Hot Metal 1,959 2,458 25 7,750 8,858 14

Crude Steel 1,830 2,298 26 7,132 8,130 14

Saleable Steel 1,777 2,263 27 6,970 7,941 14

Sales 1,768 2,279 29 6,632 7,482 13

Source: Tata Steel

Tata Steel to shut UK technology centres

Tata Steel has reportedly warned the British government that it plans to shut down two research and development facilities in the country and shift them overseas including to India, resulting in 300-400 job cuts in the UK, a media report said.

The company plans to close its technology centres in Teesside, in the north-east of England, and in Rotherham, South Yorkshire, in the next 18 months, the report said.

According to market sources, the European steel operation of Tata is seen to be operating with towering debts of 3.4 billion pounds currently. Tata Steel employs around 19,000 workers in Britain and controls 46 percent of the domestic market.


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JSW Steel, the leading private sector steel manufacturer, has reported that its crude steel production was up 2% in the

January-March 2013 (Q4) quarter at 2.11 million tons (mt) against 2.07 mt in the same period last year.

Production of flat products, which are largely used in the automobile and consumer goods sectors, increased 11% to 1.65 mt (1.49 mt). Long product production was down 6% at 0.44 mt (0.46 mt).

The company has been facing a huge shortage of iron ore after the Supreme Court banned mining in Karnataka. Although the Supreme Court lifted the ban on Grade ‘A’ and ‘B’ mines recently, supply is yet to normalise.

In the financial year 2012-13, the company’s crude steel production jumped 15% to 8.52 mt against 7.43 mt recorded in the same period last year. It has a steel production capacity of 10 mt at Vijayanagar in Karnataka. Flat product output increased 17% to 6.28 mt (5.36 mt), while that of long products was up 18% at 1.80 mt (1.52 mt).

Industry keeping watch on JSW’s expansion post iron ore verdict

Meanwhile, the steel industry is keeping a close watch on whether the re-opening of Category ‘B’ iron ore mines would alter

JSW Steel Ltd’s decision to go slow on its expansion plans.

JSW Steel welcomed the Supreme Court’s verdict which allowed restart of operations of more iron ore mines in the southern state of Karnataka. Joint managing director Seshagiri Rao noted that the verdict came “at a time when the steel industry was at the brink of closure due to non-availability of iron ore.”

JSW Steel operates a 10 mt per annum (mtpa) integrated steelworks at Vijayanagar in Karnataka and a 1 mtpa integrated works at Salem in neighboring Tamil Nadu. With no captive iron ore mines, the steelmaker saw capacity utilisation at its works averaging 70-80% or lower due to raw material supply constraints.

In March, JSW Steel said it was slowing down expansion at Vijayanagar owing to lack of guaranteed iron ore supplies.

Crude steel production capacity at Vijayanagar was earlier planned to be lifted to 12 mt from 10 mt, with the expansion set for completion this year.

Whether the steelmaker would change its decision following the Court’s verdict could not be immediately ascertained.

JSW Steel puts Bengal steel project on hold

JSW Steel has put on hold its plans to set up a 10 mt steel plant in West Bengal as it

JSW Steel Q4 crude steel production up 2% y-o-y

has not been able to secure long-term iron ore supplies for the `35,000 crore project, industry sources said.

“Unless we are going to fix the iron ore matter and have the visibility of iron ore, we cannot move ahead. It’s on hold,” Sajjan Jindal, JSW Chairman & Managing Director of JSW said.

However, West Bengal industry minister Partha Chatterjee claimed that the project has not been stalled.

“The state government along with JSW management is working on our demand to the Centre for a national iron ore policy for a uniform supply of the ore among all states to make such projects smooth and more viable,” Chatterjee said.

According to media reports, JSW is working with the Centre and state government to secure iron ore mining lease as long-term visibility of iron ore is required to begin construction of the plant. When asked about any timeline for the project, Jindal said: “Nothing is in my control. The project is stalled at the moment.”

The steel project of JSW in West Bengal, first announced in 2007, has been facing delay for various reasons. This includes issues involving land acquisition with the state government after Mamata Banerjee-led government came into power in 2011. However, that issue has now been resolved and land acquisition has reportedly been completed.

The company is not willing to move further on any new project, including the ones in West Bengal, without securing either long term iron ore supply agreement or a captive iron ore mine due to its experience in Karnataka, reports said.

JSW’s Bengal project was envisaged to have a total capacity of 10 mt with a 1,600 MW captive power plant at a total cost of `35,000 crore. The project requires about 4,300 acres of land. In the first phase, the company had plans to set up a 3 mt steel plant and a 300 MW captive power plant with an investment of `20,000 crore.

Deallocation of Gourangdih ABC coal block last year by the Ministry of Coal (MoC) is also an issue JSW is facing currently as the company could have sourced coal from this block, allocated to JSW and Himachal EMTA jointly in July, 2009 for the company’s plant in Bengal.


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Rashtriya Ispat Nigam Limited (RINL), a leading steelmaker in India, would be investing around

`1,000 crore for the development of the allotted iron ore mines which would create employment for around 1,000 people, both direct and indirect.

This would be part of the company’s overall expansion plans to expand its steelmaking capacity to 20 million tons per annum (mtpa) in phases by 2025.

According to a company statement, Chief Minister of Andhra Pradesh, N. Kiran Kumar Reddy has signed allotment of iron ore mines to RINL in Andhra Pradesh, spread over an area of 2,500 hectares at Guduru (Warangal district), 2,500 hectares at Bayyaram (Khammam district), and 342 hectares at Bheemadevarapalli (Karimnagar district).

A.P. Choudhary, CMD, RINL said the allotment of iron ore mines will strengthen

the company’s expansion plans to become a 20 mtpa plant, the largest plant at single location in the country.

He said that so far no scientific exploration has been taken up by any government agency in the allotted mining areas and that exploration work will be taken up shortly by RINL to assess the quantity and quality of iron ore available in the allotted areas.

RINL to benefit from ore mine

RINL is one of the major integrated steel plants operating in the country without any captive iron ore and coal mines. For iron ore securitisation, RINL has had applied for 7 mining leases in the state of Andhra Pradesh since 2005. The company has also signed a MOU with Government of Andhra Pradesh with a commitment for an investment of `42,400 crore in the state and the state government had agreed to facilitate the allotment of iron ore mines to RINL on priority basis.

According to the statement, RINL

RINL to invest `1,000 crore to develop iron ore mines

is moving at a brisk pace to honour its commitment made in the MOU and has already got approved for investments of over `17,000 crore. The additional investment of around `25,000 crore, which pertains to the next phase of expansion to 12 mtpa, is linked to assured iron ore linkage by the Government of Andhra Pradesh.

The allocation of prospecting license for an iron ore mine in Andhra Pradesh for the first time is indeed a good news for RINL. The iron ore mines are located in the Khammam, Warangal and Karimnagar districts, about 500-700 km west of RINL’s integrated steelworks at Visakhapatnam.

Choudhary has requested the state government to take forward the recommendations as quickly as possible to Ministry of Mines, Government of India for their approval and subsequently issue of LOI by Government of Andhra Pradesh.

The mines are being allocated to RINL on the condition that it establishes an iron ore beneficiation plant and an integrated steelworks at Bayyaram in Khammam district. Industry sources said the mines hold an estimated 60 million tons of iron ore reserves. The steelmaker presently relies on ore supplies from state-owned miner NMDC.

Meanwhile, crude steelmaking capacity at RINL’s works is being scaled up to 6.3 million tons per annum (mtpa) from 3.3 mtpa previously, and the completion of this expansion is expected to be announced in near future.

Subsequent modernising and upgrading of existing units would lift steelmaking capacity to 7.3 mtpa. RINL has already contracted NMDC for the supply of necessary ore to feed 7.3 mtpa of steelmaking capacity.

RINL also has access to iron ore produced by state-owned Orissa Minerals Development Company (OMDC). The steelmaker holds 51 percent of an investment firm under the Indian steel ministry, Eastern Investments Ltd, which in turn holds a controlling stake in OMDC.

In fact, RINL has expressed its intent to set up commensurate value addition facilities such as beneficiation plant, pelletisation plant and steel mill, depending on the quantum of iron ore reserves available at Bayyaram (Khammam District) and other proposed allotment of mines in Warangal and Karimnagar districts.

NINL commissions steel melting complexSteel Insights Bureau

Neelachal Ispat Nigam Limited (NINL), a joint venture of MMTC (a central PSU) and IPICOL (a Government of Odisha enterprise), has commissioned its state-of-the-art and fully automated BOF shop and continuous casting plant

on March 31, 2013.The company has commissioned its one 110 tons capacity LD converter, one argon

rinsing station and 6 strand continuous billet caster, the technology of which was supplied by SMS-Siemag, Germany and SMS-Concast, HEC, Ranchi, BHEL-Bangalore. MECON has provided consultancy and project management services.

NINL has also commissioned another state-of-the-art unit i.e. 418 TPD Oxygen plant with the help of LINDE, Germany, the company said in a statement.

Speaking on the occasion, managing director of NINL S.P. Patnaik said, “This is a historic and proud moment for the company. With production of steel billet now NINL has become a full-fledged integrated steel plant.”

“This is one of the best plants in the country and the plant is dedicated to all those who have been associated with the commissioning of this sophisticated project since the beginning,” he added.


Sesa Goa’s iron ore operations impacted; pig iron, met coke output up


Sesa Goa Limited, a leading iron ore producer, has said that its iron ore operations continue to be affected in

the January-March quarter of 2012-13 due to suspension of mining in Goa and Karnataka.

In Karnataka, the matter for reopening of Category ‘A’ and ‘B’ mines has been heard by the Supreme Court, and the order has been reserved and is expected to be announced soon. Earlier, a few Category ‘A’ mines had been allowed to resume operations by the Court, the company said in a statement.

Regarding the suspension of mining in Goa, the Supreme Court is expected to fix the dates for initial hearings. In the meantime, the state government and major miners including Sesa Goa have filed their responses to the Central Empowered Committee report.

“Separately, we have filed an application

to the Court seeking a stay on the suspension of mining and restrictions on ore transportation,” it said.

In the fourth quarter (Q4), production of pig iron and metallurgical coke were 75 percent and 48 percent higher at 104,000 tons and 94,000 tons, respectively, due to the new capacities commissioned in the second quarter (Q2) of 2012-13.

The company said that in the Liberia iron ore project, exploration activities were progressing well, and the project remained on track to deliver the first shipment by end of the financial year 2013-14.

Sesa Goa cuts Liberia output target

Meanwhile, the company has cut its output target from Liberia iron ore mines from 4 million tons per annum (mtpa) to 2 mtpa.

According to media report, the company said on an analyst call that Western Cluster

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(WCL), a Liberian miner which is fully owned by it and holds iron ore leases in that country, would come out with its first shipment by March 2014 and ramp up the capacity to 2 mtpa by December 2014.

Although the Liberia iron ore project is on track, Phase I capacity has been cut from 4 mtpa to 2 mtpa in order to conserve cash. The Phase I of the project is expected to be in the Bomi region of Liberia, which has resources of 200 mt.

WCL has a mandate to develop the Western Cluster iron ore project in Liberia which includes development of iron ore deposits, necessary transportation and shipping infrastructure for export of iron ore. It has deposits of up to 1 billion tons of iron ore reserve, out of which 330 mt is recoverable, way above Sesa Goa’s own reserve in India of up to 300 mt.

Its major assets include the Mano River Iron Ore Deposits, Bomi Hills Iron Ore Deposits and the Bea Mountain Iron Ore Deposits (greenfield).

Unaudited consolidated production and sales summary

Particulars (in million dry metric tons or as stated)

Q4 Q3 Full Year

FY 2013 FY 2012 % change YoY FY 2013 FY 2013 FY 2012 % change

YoY

IRON ORE1

Sales 0.0 5.2 -100% 0.0 3.1 16.0 -80%

Goa 0.0 4.9 -100% 0.0 3.0 13.3 -77%

Karnataka2 0.0 0.2 -94% 0.0 0.1 2.7 -96%

Production of Saleable Ore 0.0 4.9 -100% 0.0 3.7 13.8 -73%

Goa 0.0 4.9 -100% 0.0 3.7 12.7 -71%

Karnataka 0.0 0.0 - 0.0 0.0 1.0 -100%

Production (‘000 tons)

Pig Iron 104 59 75% 83 308 249 24%

Met Coke 94 64 48% 91 331 257 29%

1. Iron Ore sales include internal sales of Nil million tonnes in Q4 FY 2013 vs. 0.10 million tonnes in Q4 FY 2012 and 0.17 million tonnes in FY 2013 vs. 0.30 million tonnes in FY 2012.2. Sales of iron ore from Karnataka were 0.01 million tonnes in Q4 FY 2013 and 0.11 million tonnes in FY 2013 through court sponsored e-auctions of inventory.

Source: Sesa Goa

Essar appoints new CEO for Odisha

operationsSteel Insights Bureau

Essar Steel India Ltd, an integrated steel producer, has announced the appointment of Rajendra

Mittal as the chief executive officer for its Odisha operations.

Mittal takes over from Shivramkrishnan who has assumed a larger role at the corporate level as chief commercial officer.

Mittal, a post graduate in chemistry and international trade, will be responsible for managing the Odisha operations. He has over 39 years of diversified experience in international trade, greenfield project management and corporate planning.

Prior to joining Essar, Mittal was in charge of Uttam Galva’s 3 million ton per annum (mtpa) ISP Project at Satarda, Maharashtra. He was also responsible for the 0.5 mtpa pig iron project at Wardha as Director and CEO of the project.


LOGIsTICs

ports showed a significant drop of 55.16 percent in April-March due to restrictions imposed on mining and a hike in export

duty on iron ore. The major ports together handled 27.08 mt of iron ore in the April-March period, compared to 60.40 mt handled in the same period last year.

Vishakhapatnam port handled the highest volume of 12.27 mt of iron ore in April-March. This volume, however, was about 12.55 percent lower than the iron ore traffic moved through the port in the same period last year.

Movement of container traffic in terms of tonnage fell in the April-March period, while that of TEUs also dropped during the period. The major ports handled 119.81 mt

of tonnage and 7.70 million TEUs in April-March period compared to 120.09 mt of tonnage and 7.77 million TEUs in the same period last year.

Among the major ports, Paradip port had the distinction of handling the highest volume of thermal coal of around 21.39 mt in April-March period. Visakhapatnam port handled the highest quantity of 6.82 mt of coking coal during the period.

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

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

In terms of growth, Ennore port topped the list with6 19.58 percent increase in cargo throughput. V.O. Chidambaranar port’s growth was lowest at about 0.55 percent during the period. In terms of traffic volume. Visakhaptnam port clinched the top rank with a cargo volume of 58.96 mt recorded for the period.

The Mormugao port registered the highest decline of 54.63 percent in traffic handling during the period due to a fall in iron ore export.


The 12 major Indian ports have handled 545.67 million tons (mt) of traffic during April-March of 2012-

13, about 2.58 percent lower than 560.13 mt recorded during the same period last year.

According to data released by the Indian Ports Association (IPA), the country’s major ports handled a total of 28.29 mt of coking coal in April-March period, up 1.19 percent as compared with the same period last year.

However, the movement of thermal coal through the major ports was up 15.78 percent to 58.84 mt during April-March, compared to 50.82 mt achieved in the same period last year.

Movement of iron ore through the major

Traffic handling by major ports down 2.5% in Apr-Mar

Traffic handled at major ports(During Apr-Mar, 2013* vis-a-vis Apr-Mar, 2012)

(*) Tentative (in '000 tons)

PortsApril to March traffic % variation against

prev. year traffic2013* 2012

Kolkata

Kolkata Dock System 11800 12233 -3.54

Haldia Dock Complex 28084 31015 -9.45

Total: Kolkata 39884 43248 -7.78

Paradip 56552 54254 4.24

Visakhapatnam 58960 67420 -12.55

Ennore 17885 14956 19.58

Chennai 53404 55707 -4.13

V.O. Chidambaranar 28260 28105 0.55

Cochin 19845 20091 -1.22

New Mangalore 37036 32941 12.43

Mormugao 17693 39001 -54.63

Mumbai 58037 56186 3.29

JNPT 64501 65727 -1.87

Kandla 93622 82501 13.48

Total 545679 560137 -2.58

Source: IPA


LOGIsTICs

month-on-month in March, mainly due to higher transportation of coal and iron ore. Revenue earnings from commodity-wise freight traffic during March 2013 stood at `8,360.58 crore, up 7.88 percent compared with `7,749.94 crore earned in March 2012.

Revenue from transportation of iron ore for exports, steel plants and for other domestic user in March 2013 increased to `738.58 crore, up 19.88 percent from `616.12 crore in February. The quantity of iron ore transported also rose to 10.35 mt as compared to 8.98 mt in the previous month.

Revenue from transportation of cement in March 2013 stood at `876.12 crore (11.05 mt) as compared to `715.83 crore (8.86 mt) in February, while that from food grains transportation climbed to `744.77 crore (5.24 mt) in March from `651.34 crore (4.54 mt) in February.

The Railways’ revenue from transportation of fertilizers in March 2013 rose to `313.09 crore (3.1 mt) from `304.17 crore (3.08 mt) in February.

Revenue from transportation of petroleum oil and lubricant (POL) in March 2013 stood at `409.49 crore (3.55 mt), while the same from pig iron and finished steel from steel plants and other points was `506.98 crore (3.37 mt). Revenue from container services was `393.7 crore (3.85 mt) and from transportation of other goods was `630.04 crore (7.46 mt).


The Indian Railways transported 48.79 million tons (mt) of coal in March 2013, up by 17.99 percent from 41.35

mt in February 2013, according to information available with Coal Insights. Railways’ revenue earnings from transportation of coal also rose to `3,608.30 crore in March from `3,041.45 crore in February.

Compared to last year, the transportation of coal in March 2013 was up more than 4.06 mt versus 44.73 mt transported in March 2012. However, the Railways’ revenue from coal transport surged by 7.57 percent to `3,608.30 crore in March 2013 compared with `3,354.38 crore in the same month last year.

Overall, the Railways’ revenue earnings from commodity-wise freight traffic rose

Railways coal handling up 17.9% in March

Commodity-wise revenue

CommodityQuantity (in mt) Earning (in ` cr)

March ‘12 March ‘13 March ‘12 March ‘13

Coal

(i) for steel plants 4.24 4.45 255.02 245.21

(ii) for washeries 0.12 0.14 2.17 1.72

(iii) for thermal power houses 29.6 31.33 2,305.46 2,474.81

(iv) for public use 10.77 12.87 791.73 886.56

(v) Total 44.73 48.79 3,354.38 3,608.30

Raw material for steel plants except iron ore 1.61 1.56 146.77 139.51

Pig iron and finished steel

(i) from steel plants 2.58 2.59 420.19 425.17

(ii) from other points 0.85 0.78 79.41 81.81

(iii) Total 3.43 3.37 499.6 506.98

Iron ore

(i) for export 0.12 0.6 29.39 150.58

(ii) for steel plants 5.57 5.04 261.12 238.97

(iii) for other domestic users 3.96 4.71 309.28 349.03

(iv) Total 9.65 10.35 599.79 738.58

Cement 10.59 11.05 808.01 876.12

Foodgrains 4.35 5.24 579.06 744.77

Fertilizers 4 3.1 398.74 313.09

Mineral oil (POL) 3.66 3.55 406.24 409.49

Container service

(i) Domestic containers 1 0.94 94.57 104.1

(ii) EXIM containers 2.62 2.91 226.58 289.6

(iii) Total 3.62 3.85 321.15 393.7

Balance other goods 8.21 7.46 636.2 630.04

Total revenue earning traffic 93.85 98.32 7,749.94 8,360.58Source: Railways


mACRO OuTLOOk

INR movement against select major currencies

105

125

145

165

185

205

Feb-12Mar-12 Apr-12 May-12

Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12Dec-12 Jan-13 Feb-13

Mining & Quarrying Manufacturing Electricity General Index

Source : Govt. of India, MoSPI

Industrial production growth slipped sharply to 0.6 percent in February 2013 as against 4.3 percent growth recorded in February last year due to contraction in power and a sharp fall in mining output. Mining sector output fell 8.1 percent, while electricity slipped 3.2 percent. Factory output had recorded 2.4 percent growth in January.

Index of Industrial Production

110120130140150160170180190200210220230

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

Source : OEA, GoI, Ministry of Commerce & Industry

Wholesale price index (Selected categories)

India’s wholesale price index (WPI) (Base 2004-05=100) stood at 170.6 in March 2013, almost similar to 170.2 recorded in the previous month. WPI for January this year was however revised to 170.3 this month. The index for primary articles group increased by 11.41 percent to 223.6 from 207.8 in March the previous year. The index for manufactured products group also rose by 4.95 percent to 148.4 from 142.6 in March 2012. Fuel and power index rose 9.27 percent to 195.9 from last year, while index for basic metals and metal alloys rose by 0.92 percent to 164.8 for the month. Steel index however remained unchanged.

7.69

%

7.50

%

7.55

%

7.58

%

7.52

% 8.01

%

8.07

%

7.32

%

7.24

%

7.31

%

7.31

%

6.84

% 5.96

%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

Source : OEA, GoI, Ministry of Commerce & Industry

Inflation rate in India

India’s WPI based inflation slowed to below 6 percent, at 5.96 percent, for the first time in March 2013 since November 2009, comforting authorities and brightening prospects for an interest-rate cut by the central bank. Meanwhile, January inflation figures were revised sharply to 7.31 percent from the previously reported 6.62 percent, raising worries that the March print could also be changed later.

1400000

1450000

1500000

1550000

1600000

1650000

1700000

280000282000284000286000288000290000292000294000296000298000

in Rs crorein m

illio

n $

in Million $ in Rupees crore

Source: RbI

Foreign Exchange Assets

After two consecutive weeks of increase, India’s foreign exchange reserves were down by $485.9 million to $294.76 billion for the week ending April 19, in the wake of a fall in core foreign currency assets by $489.2 million at $262.41 billion. Forex reserves had gone up by $1.4 billion to $295.25 billion in the previous reporting week wherein reserves had risen by $1.40 billion to $295.24 billion for the week ended April 12. The gold reserves remained unchanged at $25.69 billion during the week ending April 19, while the special drawing rights (SDRs) were up by $2 million to $4.347 billion, and the country’s reserve position with the IMF was also up $1.3 million to $2.311 billion. The SDRs had grown by $11.5 million to $4.34 billion during the previous week, while reserves with the IMF went up by $6.1 million to $2.31 billion.

Macroeconomic indicators of India


Source: RbI

53

58

63

68

73

78

83

88

404346495255586164677073

INR vs G

BP & YEN

INR

vs U

SD &

EU

RO

USD EURO GBP YEN

The INR gained for the second month in a row on speculation that global central banks will extend economic stimulus measures which have spurred capital flows into emerging markets. The INR advanced around 0.2 percent in April 2013 to 54.22 per USD. It however showed a falling trend towards the end of the month after rising considerably during the middle of the month to almost 53.94 per USD.


mARkET REPORT

Chandrika Mitra

World crude steel production for the 63 countries reporting to the World Steel Association

(Worldsteel) rose by 8.79 percent to 134.883 million tons (mt) in March 2013 as compared to that reported in February 2013 at 123.981 mt. Crude steel production for March 2013 was higher by 1.04 percent compared to 133,495 mt in March 2012.

In March 2013, Asia produced 90.033 mt of crude steel, an increase of 4.84 percent over March 2012. In the first three months of 2013, Asia produced 259.8 mt of crude steel, an increase of 6.4 percent over the first quarter of 2012. The EU produced 14.597 mt of crude steel in March 2013, down by 6.63 percent compared to the same month of 2012 while production of crude steel stood at 41.5 mt in the first quarter of 2013, down by 5.4 percent compared to the same quarter of 2012. North America’s crude steel

production in March 2013 was 10.170 mt, 6.26 percent lower than the corresponding month of 2012 and their production in the first three months of 2013 was 29.7 mt, a decrease of 5.7 percent compared to the first quarter of 2012.

China, the single largest producer, produced 66.293 mt of crude steel in March this year, an increase of 6.64 percent as compared to the corresponding period in 2012, when production stood at 62.164 mt. Again, m-o-m production saw a rise of 7.22 percent as compared to February 2013’s produce of 61.830 mt.

Elsewhere in Asia, Japan produced 9.446 mt of crude steel in March 2013, an increase of 1.32 percent compared to the same month last year. India’s production for March 2013 stood at 6.860 mt, up 6.51 percent compared to March 2012. South Korea produced 5,664 mt during the same period, a 7.04 percent decrease on the same month 2012.

In the EU, Germany produced 3.8 mt of

Global crude steel production up 1% m-o-m in March

crude steel in March 2013, a decrease of 2.2 percent on March 2012. Italy’s crude steel production was 2.2 mt, down by 18.4 percent compared to March 2012. Spain produced 1.3 mt of crude steel, 2.3 percent lower than March 2012. France’s crude steel production was 1.3 mt, a decrease of 9.6 percent on March 2012.

In March 2013, Russia produced 6.0 mt of crude steel, a decrease of 2.8 percent compared to the same month last year. Ukraine’s crude steel production for March 2013 was 2.9 mt, 2.9 percent less than March 2012.

In March 2013, Brazil produced 2.9 mt of crude steel production in March 2013, a decrease of 7.6 percent compared to the same month last year while the US produced 7.3 mt of crude steel in March 2013, down by 8.4 percent on March 2012 and Turkey’s crude steel production for March 2013 was 3.0 mt, down by 4.6 percent compared to March 2012.

The crude steel capacity utilisation ratio for the 63 countries in March 2013 slid to 79.4 percent from 80.5 percent in February 2013. Compared to March 2012, it is 2.1 percentage points lower.

It is to be noted that the March 2012 to December 2012 data covers 62 countries while March 2011 to December 2011 contains 64 countries.

World crude steel production in ‘000 tons

April2012

May2012

June2012

July2012

August 2012

September 2012

October 2012

November 2012

December 2012

January 2013

February 2013

March 2013

Mar 13/Mar 12 (% change)

European Union (27) 14797.04 15406.46 14668.77 14212.89 12009.91 14271.79 14102.40 13519.21 11708.95 13542.74 13328.76 14596.94 -0.07

Other Europe 3081.08 3281.52 3150.56 3264.11 3174.74 3185.53 3011.51 3132.93 2980.97 3005.61 2787.04 3137.74 -0.06

C.I.S. (6) 9569.98 9614.62 9242.52 9171.85 9250.37 9280.40 8948.46 8779.18 8693.06 9099.93 8625.76 9419.00 -0.05

North America 10681.87 10769.81 9778.31 10012.84 10347.31 9586.47 9562.62 9520.78 9863.12 10122.01 9415.89 10170.45 -0.06

South America 4071.01 3942.43 3815.09 3921.98 3820.93 3819.11 4125.74 3719.37 3340.87 3667.03 3498.77 3964.59 -0.08

Africa 1309.52 1289.02 1223.23 1166.06 1213.43 1153.46 1225.35 1065.30 1154.00 1280.49 1122.80 1211.42 -0.11

Middle East 1919.65 1894.05 1856.70 1588.54 1770.47 1815.01 1776.56 1834.87 1815.74 1770.76 1814.41 1884.68 0.04

Africa/Middle East 3229.17 3183.07 3079.93 2754.60 2983.90 2968.47 3001.91 2900.17 2969.74 3051.25 2937.21 3096.10 -0.02

China 60575.00 61234.00 60213.00 61693.00 58703.00 57946.00 59096.00 57471.00 57656.00 63622.00 61830.00 66293.00 0.07

India 6394.00 6633.00 6392.00 6386.00 6582.00 6248.00 6653.00 6403.00 6602.00 6766.00 6200.00 6860.00 0.07

Japan 9076.68 9224.22 9197.53 9251.22 9206.84 8801.67 8836.29 8505.47 8566.76 8862.96 8321.01 9446.30 0.01

South Korea 5869.15 5951.50 5766.58 5893.60 5631.76 5657.08 5624.13 5607.70 5762.75 5738.50 4978.75 5664.08 -0.07

Taiwan, China 1782.98 1804.49 1780.72 1761.02 1729.60 1439.68 1674.77 1664.41 1766.60 1716.89 1600.00 1770.00 -0.05

Asia 83697.80 84847.21 83349.83 84984.84 81853.20 80092.43 81884.19 79651.59 80354.11 86706.35 82929.76 90033.38 0.05

Oceania 484.74 477.44 484.58 493.88 519.43 510.93 503.71 472.93 450.25 491.18 457.44 465.18 0.00

Rest of the world except China

69037.69 70288.55 67356.59 67124.00 65256.79 65769.12 66044.54 64225.14 62705.07 66064.08 62150.62 68590.38 -0.04

World 129612.69 131522.55 127569.59 128817.00 123959.79 123715.12 125140.54 121696.14 120361.07 129686.08 123980.62 134883.38 0.01Source: WSA


mARkET REPORT

Domestic long & flat markets

Low demand, liquidity impact markets


Depressed demand and liquidity issue may not support any proposed hike in flat steel prices in Indian domestic

market. Market participants highlight that primary steelmakers who hiked their prices by `1,000-1,500 per ton have failed to get any enthusiastic response from end customers and stockists.

However, some big manufacturers are indicating further hike in steel prices for May, despite weak demand and thin trading volumes.

Currently, MS Plate of 5-10mm size is offered at `34,500-36,000 (basic), medium thickness of size 10-20mm is trading at `34,500-35,500 (basic) and plate of size 20-40mm is offered at `34,500-35,500 (basic).

On the other hand, stockists and dealers rule out the scope of further hike especially when imported offers are comparatively cheaper.

Lack of projects of net worth `25-50 crore has resulted in low demand for flat steel products. Mostly demand is coming from big projects that accounts for 40-50 percent of sales, sources said. HR Coil of 2-8mm is offered at around `34,000-35,000 per ton (basic).

Importers wait and watch

Importers prefer to wait and watch on weak

demand and slow offtake in domestic market. Importers highlight that despite cut in offers by Chinese exporters, Indian buyers are not very keen.

Despite the dip in international price levels this month, coil imports into India remain unviable as importers are keen to avoid cargo arrivals in June/July when the monsoon season begins that traditionally pressures domestic prices downwards.

Current offers from China for 2.5mm commercial grade HRC is around US$565-585 per ton and from Ukraine at around $575 per ton CFR Mumbai in containers. Offers were sparse for Japanese- and Korean-origin cargoes and offer prices for 2mm thick and above HRC were around $610-620/ton CFR Mumbai.

“We are not comfortable importing it at the moment as it will cost us around ̀ 34,000-35,000 per ton + duty + taxes (delivery after 1 month) where as domestic market is hovering around `34,500-35,500/t + duty + taxes,” importers in Mumbai said.

Overall demand is weak from construction and capital goods segment. Above that liquidity is a major issue in the market, he added.

On the other hand, HRC prices in global market have corrected almost $5-7 per ton in last few days on falling scrap and iron ore prices (in global market). Current offers from Ukraine stands at around $530-540 per ton FOB Black Sea and $570-580 per ton CFR Turkey.

Finished long steel product prices fall

There is no relief for long product makers in India. Despite hike in power tariffs and railway freights, re-bar prices have corrected up to `1,500 per ton in last 15 days. Prices have dropped down majorly at Raipur, Hyderabad, Chennai and Mumbai.

Market participants blame lack of

requirement from projects, as many states will be undergoing elections next month and liquidity crunch in the market. Traders anticipate prices may fall further on lack of demand.

On the other hand some manufacturers believe that prices have over corrected and they see no reason for further fall.

Ingot, billet prices slip

MS Ingot prices that slip by ̀ 500-600 per ton in last few days of April. Major down trend was seen in central region where finished demand kept on hold. Market in south also expected to resume as manufacturer are not willing to reduce price further.

Raipur Ingot prices are down by `600 per ton and currently trading at `28,100-200 (ex-Works). Rourkela prices also slip downward by `500 per ton as offers stand at `27,400-200 per ton

There is no stopping in fall in billet prices in Indian market. Prices have corrected up to `1,000 per ton on falling re-bar and structure prices which have also corrected by the same amount. Damage has been most in western region as trade has been affected by strike opposing LBT tax in Maharashtra.

Traders based in central India blame poor demand for finished steel from southern India, which is leading to a fall in semi-finished prices.

HR Coil price trends (2.5-8 mm)

Place/Thickness Range 15-Apr-13 M-O-M

DELHI 39800-40000 + 500

KOLKATA 42200-42300 NA

LUDHIANA 40800 + 500

MUMBAI 41500 + 500

TATANAGAR 37000 0

Prices in ` per ton including excise duty, taxes extra

TMT 12 mm price trends

Place 12mm M-O-M

CHENNAI 40500+ + 300

MANDI GOBINDGARH 36200++ - 100

MUMBAI 33600-800++ - 1200

RAIPUR 31900-32100++ - 1000

ROURKELA 32200++ - 1300

` per ton basic

Ingot price trends

Place 3-May-13 M-O-M

CHENNAI 35000+ + 800

DURGAPUR 28100++ NA

GHAZIABAD 31100++ - 800

KOLKATA 28400++ NA

LUDHIANA 32100++ - 400

MANDI GOBINDGARH 31850-900++ - 150

MUMBAI 29400++ - 1800

RAIPUR 27700-800++ - 900

Prices in ` per basic


mARkET REPORT

19,000 per ton (basic) which was last seen in February 2011.

Pig iron market

The pig iron market displayed mixed trends with state-run NINL lowering its prices by `500 per ton at the beginning of April and then again hiking prices by the same amount to `22,500 per ton on improvement in bookings. Demand was weak in Q1, which is expected to improve before the arrival of monsoon.

Secondary pig iron producers also displayed divergent trends. Buying activity remained decent for steel grade material but there was some fluctuations in the foundry grade material.

Sources said pig iron monthly output had come down to 3,000-4,000 tons at Rourkela, but good demand accounted for around 8,000 tons in April and the excess inventory got sold out.

In South, pig iron plants utilised 60-70 percent of total capacity and were selling below the cost of production.

Indian pig iron exports

On April 3, NINL’s 30,000 tons pig iron (steel) export tender received highest bid at $413/ton FOB Paradeep Port as overseas prices were anticipated to strengthen. The tender was floated on March 21 and the deal was finalised on April 9.

On April 8, RINL floated 30,000 tons of pig iron (Si 0.05%) exports tender. Technical bids opening was extended due to non-availability of fresh stock.

On April 29, NINL floated 30,000 tons pig iron (Si 1.24%) export tender, with another 30,000 tons as optional. Submission and opening of technical bids is May 13.

Domestic raw materials

Subdued trends prevail in input materials


Scrap prices in Alang, India’s largest ship breaking yard and a major source of rolling plates for states like Punjab,

Madhya Pradesh, Gujarat and Uttar Pradesh, have fallen by `200 in April. Current offers for HMS scrap stood at `22,600-700 per ton (basic) and rolling plate of size 4 ANI is at `23,900 per ton.

Market participants said that there is limited scope for further correction in scrap prices. The only reason why prices have fallen in recent time is that many induction furnaces have cut their production due to hike in power tariffs which have reduced demand for HMS scrap.

Sources said demand is not that bad for rolling plates; but off-take for finished steel is low. On the other hand, melting scrap prices

have gone down as many induction furnaces have cut productions.

But the market sees prices have almost bottomed out and there is little scope for further correction.

Sponge iron market

Indian sponge iron industry seems to be getting into a consolidated stage with restricted supply of iron ore in the Indian market, rising power and rising imports of ferrous scrap. There is nothing much to cheer for sponge iron manufacturers based in India.

Data shows that sponge prices have dropped to almost 2-years low. Experts blame that many sponge manufacturers are using low grade iron ore, which make their quality inferior. Above that rising power tariffs are making induction furnaces to switch to scrap. Current prices are in the range of `17,500-

Scrap import market trends ($ per ton CFR)COUNTRY COUNTERPART ORIGIN GRADE PRICE CHANGE

INDIA

NHAVA SHEVAUK, EUROPE

SHREDDED 405-407 - 5

HMS (80:20) 385-390 - 15

DUBAI HMS (80:20) 390-400 - 15

KANDLA AFRICA, US HMS (80:20) 380-385 0

CHENNAIUK, EUROPE SHREDDED 408-410 - 2

EUROPE, AFRICA HMS (80:20) 390-395 - 5

Sponge iron price trends

Place FeM 3-May-13 M-O-M

BARBIL 78 17100-200++ - 200

BELLARY 7518300-500++*

- 300

DURGAPUR 77+ 19500-600++ NA

MANDI GOBINDGARH

80 21600++ - 600

RAIGARH 80 18500++ - 700

RAIPUR 80 18900++ - 1000

ROURKELA 78 17500-600++ - 200

` per ton basic


PRICE DATA

Indicative market price for March 2013Steel Insights Bureau

Sl. No. ITEM Kolkata Delhi Mumbai Chennai

1 PIG IRON 29380 30300 30500 35700

2 BILLETS 100 MM 40130 40200 42060 41030

3 BLOOMS 150X150 MM 38920 39340 40760 39330

4 PENCIL INGOTS 34000 34500 35300 36230

5 WIRE RODS 6 MM 45570 46390 47270 47010

6 WIRE RODS 8 MM 45200 45940 46450 46560

7 ROUNDS 12 MM 45140 45330 45380 46240

8 ROUNDS 16 MM 45140 45260 45380 46240

9 ROUNDS 25 MM 44790 45270 44970 46160

10 TOR STEEL 10 MM 46830 47080 47580 48040

11 TOR STEEL 12 MM 47170 46900 48240 48900

12 TOR STEEL 25 MM 47020 47080 47930 48350

13 ANGLES 50X50X6 MM 46750 46110 47740 48000

14 ANGLES 75X75X6 MM 45380 45520 46980 47050

15 JOISTS 125X70 MM 46270 46460 48010 47820

16 JOISTS 200X100 MM 46090 46460 48050 47820

17 CHANNELS 75X40 MM 46300 47360 47690 47770

18 CHANNELS 150X75 MM 45620 46650 46850 46950

19 PLATES 6 MM 47570 49370 49250 50050

20 PLATES 10 MM 47570 49370 49230 50050

21 PLATES 12 MM 48200 49900 49770 50630

22 PLATES 25 MM 48820 50420 50290 51220

23 H. R. COILS 2.00 MM 46690 48720 49530 49220

24 H. R. COILS 2.50 MM 45550 47660 48450 48150

25 H. R. COILS 3.15 MM 45460 47590 48430 48150

26 C. R. COILS 0.63 MM 51380 52980 52960 53630

27 C. R. COILS 1.00 MM 50280 51680 52230 52710

28 G. P. SHEETS 0.40 MM 55330 57430 56680 60100

29 G. P. SHEETS 0.63 MM 52940 54280 54040 59190

30 G. C. SHEETS 0.40 MM 54130 56600 54480 59710

31 G. C. SHEETS 0.63 MM 53040 54380 54060 59600

32 MELTING SCRAP H M S - I 29630 27600 32200 25200

33 MELTING SCRAP H M S - II 29250 27200 28600 24150

34 SPONGE IRON (COAL BASED) 21750 26000 29300 19950

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


PRODuCTIOn DATA

Source: Steel Ministry

Production, imports, exports, availability & apparent consumption (provisional) April - March 2013


(in ‘000 tons)

Producers

Finished Steel

Non-Alloy Steel (Carbon) Alloy Steel Total

2012-13 (Prov.)

2011-12 (Final) % Variation 2012-13

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

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

SAIL 9744 9499 2.6 249 193 29.0 9993 9692 3.1

RINL 2719 2831 -4.0 2719 2831 -4.0

TSL 6428 5456 17.8 6428 5456 17.8

(a) Prod. of Main Producers 18891 17786 6.2 249 193 29.0 19140 17979 6.5

ESSAR 6328 6108 3.6 38 6328 6146 3.0

JSW ISPAT 3436 3025 13.6 85 3436 3110 10.5

JSWL 10580 9466 11.8 1110 972 14.2 11690 10438 12.0

JSPL 2163 2260 -4.3 2163 2260 -4.3

(b) Prod. of Major Producers $ 22507 20859 7.9 1110 1095 1.3 23617 21954 7.6

Others 40673 40436 0.6 3751 4036 -7.1 44424 44472 -0.1

Less : IPT/Own Consumption 9085 8382 480 326 9565 8708

(c) Total Production for Sale 72986 70699 3.2 4630 4998 -7.4 77616 75697 2.5

(d) Imports $ 6208 5438 14.2 1659 1425 16.4 7867 6863 14.6

(e) Exports $ 4641 4204 10.4 612 384 59.4 5253 4588 14.5

(e) Availability (c+d-e) 74553 71933 3.6 5677 6039 -6.0 80230 77972 2.9

(f) Variation in Stock -1072 543 2 4 -1070 547

(g) Apparent Consumption (e-f) 75625 71390 5.9 5675 6035 -6.0 81300 77425 5.0

Less : Double Counting 6646 5364 1324 1039 7970 6403

Real Consumption 68979 66026 4.5 4351 4996 -12.9 73330 71021 3.3


PRODuCTIOn DATA



Sponge iron production in 2012-13Steel Insights Bureau

Producers

MARCH MARCH Vis - A - Vis FEBRUARY APRIL - MARCH

2013 (Prov.) 2012 (Final) % Variation MARCH 2013 (Prov.)

FEBRUARY 2013 (Prov.) % Variation 2012 - 13

(Prov.)2011 - 12

(Final) % Variation

1 Major Producers

A JSWL 0 0 0 0 0 0

B JSW ISPAT 95 126 -24.6 95 95 0.0 1257 1207 4.1

C ESSAR 230 206 11.7 230 192 19.8 2458 3337 -26.3

D JSPL 97 70 38.6 97 86 12.8 1320 1318 0.2

Total - Major Producers 422 402 5.0 422 373 13.1 5035 5862 -14.1

2 Other Producers (Est.) 1522 1692 -10.0 1,522 1,523 -0.1 18288 19108 -4.3

GRAND PRODUCTION 1944 2094 -7.2 1944 1896 2.5 23323 24970 -6.6

Less : IPT / Own Consumption 325 491 -33.8 325 287 13.2 3555 5337 -33.4

Total Production for Sale 1619 1603 1.0 1619 1609 0.6 19768 19633 0.7

Pig iron production in 2012-13Steel Insights Bureau

ProducersMarch March vis - a - vis February April - March

2013 (Prov.) 2012 (Final) % Variation Mar 2013 (Prov.) Feb 2013 (Prov.) % Variation 2012 - 13 (Prov.) 2011 - 12 (Final) % Variation

1 Main Producers

A SAIL

a. Bhilai Steel Plant 0 0 0 0 14 7

b. Durgapur Steel Plant 0 0 0 2 3 7

c. Rourkela Steel Plant 0 0 0 0 0 9

d. Bokaro Stel Plant 0 9 0 4 84 26

e. Indian Iron & Steel Plant 5 3 5 13 65 49

f. Alloy Steel Plant 0 0 0 0 0 0

g. SSP 0 0 0 0 0 0

h. Vis. Iron & Steel 0 3 0 1 19 9

Total SAIL 5 15 -66.7 5 20 -75.0 185 107 72.9

B RINL (VSP) 30 5500.0 30 34 -11.8 493 395 24.8

C TSL 0 0 0 0 0 0

Total - Main Producers 35 20 75.0 35 54 -35.2 678 502 35.1

2 Major Producers

A JSWL 11 8 37.5 11 5 110 97 13.4

B JSW ISPAT 0 0 0 0 0 1

C ESSAR 0 0 0 0 0 0

D JSPL 0 2 -100.0 0 2 65 44 47.7

Total - Major Producers 11 10 10.0 11 7 57.1 175 142 23.2

3 Other Producers (Est.) 445 449 -0.9 445 446 -0.2 5327 5140 3.6

GRAND PRODUCTION 491 479 2.5 491 507 -3.2 6180 5784 6.8

Less : IPT / Own Consumption 7 33 -78.8 7 3 133.3 81 413 -80.4

Total Production for Sale 484 446 8.5 484 504 -4.0 6099 5371 13.6

(in ‘000 tons)

(in ‘000 tons)


fERRO ALLOy DATA

Product category Port

Jan ‘13 Jan ‘13 Jan ‘13 Feb ‘13 Feb ‘13 Feb ‘13 Mar ‘13 Mar ‘13 Mar ‘13 Product and portwise quantity total (in

tons)

Quantity (in tons)

Average unit price (in `/ton)

Average unit price (in $/ton)

Quantity (in tons)



Quantity (in tons)



FERRO BORONCHENNAI 20 186,970 3,409 20

KOLKATA 25 200,889 3,659 25 186,421 3,485 25 196,990 3,588 75

FERRO BORON Total 45 25 25 95

FERRO CHROME

CHENNAI 314 136,719 2,480 136 120,672 2,207 450

KOLKATA 293 168,806 3,104 88 205,652 3,798 204 190,515 3,460 585

MUNDRA 20 146,229 2,666 20

VIZAG 60 138,026 2,580 60

FERRO CHROME Total 627 284 204 1,115

FERRO MANGANESECHENNAI 172 86,256 1,566 5 111,646 2,021 382 79,929 1,455 559

KOLKATA 129 87,130 1,597 43 84,541 1,530 358 78,774 1,432 531

FERRO MANGANESE Total 301 48 740 1,090 FERRO NICKEL VIZAG 2,149 201,453 3,659 2,277 198,158 3,630 5,087 198,763 3,610 9,512

FERRO NICKEL Total 2,149 2,277 5,087 9,512

FERRO NIOBIUMCHENNAI 5 1,507,885 27,491 5

KOLKATA 9,164 221,121 4,021 9,164

FERRO NIOBIUM Total 9,169 9,169

FERRO PHOSPHORUSCHENNAI 129 25,263 459 129

KOLKATA 27 24,575 445 52 24,035 444 54 24,675 448 133

FERRO PHOSPHORUS Total 156 52 54 262 FERRO SILICO MANGANESE MUNDRA 105 91,156 1,666 84 89,993 1,634 189

FERRO SILICO MANGANESE Total 105 84 189

FERRO SILICON

CHENNAI 1,272 105,088 1,911 887 77,902 1,450 889 98,626 1,793 3,048

KANDLA 240 51,010 953 240

KOLKATA 332 108,719 2,015 81 142,527 2,664 109 112,074 2,033 523

MUNDRA 72 108,256 1,965 119 136,453 2,474 178 134,982 2,454 369

VIZAG 192 71,917 1,311 408 72,173 1,349 576 74,229 1,349 1,176

FERRO SILICON Total 1,868 1,736 1,752 5,356 FERRO SILICON BARIUM CHENNAI 24 92,074 1,667 25 96,569 1,757 49

FERRO SILICON BARIUM Total 24 25 49 FERRO SILICON CALCIUM CHENNAI 25 122,654 2,232 25

FERRO SILICON CALCIUM Total 25 25

FERRO SILICON MAGNESIUMCHENNAI 11 94,950 1,717 11

KOLKATA 50 94,658 1,748 50

FERRO SILICON MAGNESIUM Total 61 61 FERRO SILICON ZIRCONIUM CHENNAI 50 153,181 2,773 12 261,442 4,762 62

FERRO SILICON ZIRCONIUM Total 50 12 62 FERRO TITANIUM KOLKATA 63 318,507 5,942 57 453,645 8,226 120

FERRO TITANIUM Total 63 57 120 FERRO VANADIUM CHENNAI 16 1,333,200 24,108 16

FERRO VANADIUM Total 16 16 Grand Total 14,465 4,590 8,065 27,121

Ferro alloy imports through major Indian ports January ’13 - March ’13



Ferro alloys & metals price trendsSteel Insights Bureau

Ferro alloys & Metals April'13 March'13 February'13

Ferro Silicon (Si - 70%)Ex-works Rs/ ton

71500 72750 71750

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

71500 74500 71500

HC Ferro Manganese (Mn - 70%)Ex-works Rs/ ton

53500 53500 52500

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

54500 54500 53500

MC Ferro Manganese ( Mn - 70%, C -1.5)Ex-works Rs/ ton

76500 76500 76500

Ferro VanadiumEx-works Rs/ kg

845 845 863

Ferro Moly (Mo - 60% min)Ex-works Rs/ kg

940 1010 1045

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

155500 155500 155500

fERRO ALLOy DATA

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IROn ORE DATA

Iron ore export data for March 2013Steel Insights Bureau

Port Destination country Date Product category Fe content Unit price (in `/ton)

Quantity (in tons)

GANGAVARAM CHINA

13-Mar-13IRON ORE FINES (FE 56% BASIS) 56 5,203 6,953

IRON ORE FINES (FE 56% BASIS) 56 5,203 2,048

14-Mar-13 IRON ORE FINES (FE 56% BASIS) 56 5,203 90

17-Mar-13 IRON ORE FINES (FE 62% BASIS) 62 7,366 50,232

GANGAVARAM Total 59,322

KOLKATA CHINA

2-Mar-13

IRON ORE FINES FE 54%/54% 54 4,123 2,000

IRON ORE FINES FE 54%/54% 54 4,123 18,000

IRON ORE FINES FE 55% 55 4,312 11,500

4-Mar-13IRON ORE FINES FE 62%/61% MIN DEL 62/61 7,384 21,654

IRON ORE FINES FE 62%/61% MIN.DECL 62/61 7,384 3,000

7-Mar-13IRON ORE FINES FE 55% 55 4,312 600

IRON ORE FINES FE 58%/57% 58/57 5,775 19,200

9-Mar-13

INDIAN IRON ORE FINES FE 63.5%/635 63.5 7,751 3,578

INDIAN IRON ORE FINES FE 63.50%/63% 63.5 7,751 15,000

IRON ORE FINES FE 54%/54% BASIS 54 4,123 2,000

13-Mar-13IRON ORE FINES (FE 54% BASIS 54%MIN)

54 3,794 16,000

15-Mar-13INDIAN IRON ORE FINES FE 62.00/61.00%

62/61 7,303 19,286

26-Mar-13

840 WMT IRON ORE FINES ( FE- 55%) 55 2,493 840

IRON ORE FINES (FE 55% BASIS/55%MIN)

55 3,780 18,000

30-Mar-13

IRON ORE FINES FE 55.15% BASIS.AS 55.15 4,763 5,000

IRON ORE FINES FE 55.50% 55.5 4,350 6,725

IRON ORE FINES FE 55.50% BASIS.AS 55.5 4,350 4,475

IRON ORE FINES FE 58.15% 58.15 5,292 5,000

KOLKATA Total 171,858

PARADIP

OTHERS 15-Mar-13 IRON ORE FINES 4,878 52,000

CHINA

5-Mar-13 IRON ORE FINES 5,336 55,424




21-Mar-13 IRON ORE FINES 4,878 650



PARADIP CHINA28-Mar-13 IRON ORE FINES 4,589 86,327


PARADIP Total 313,574

VIZAG

CHINA

2-Mar-13 IRON ORE FINES (62% FE CONTENT) 62 6,969 49,220

5-Mar-13 IRON ORE FINES (62% FE CONTENT) 62 7,155 359

6-Mar-13

IRON ORE FINES FE CONTENT 55% 55 4,725 3,600

IRON ORE FINES OF FE : 57% 57 5,245 8,000

IRON ORE FINES OF FE:57% 57 5,245 3,685

13-Mar-13

IRON ORE FINES (63.5% FE CONTENT) 63.5 7,277 32,200

IRON ORE FINES 57% FE CONTENT 57 5,390 8,100

IRON ORE FINES 57% FFE CONTENT 57 5,390 900

15-Mar-13 IRON ORE FINES FE 56% 56 4,444 8,280

16-Mar-13 IRON ORE FINES (63.5% FE CONTENT) 63.5 7,317 368

20-Mar-13

IRON ORE FINES (58% BASIS REJECTION BELOW 56% FE)

58 6,179 7,107

IRON ORE FINES (58% FE BASIS REJECTION BELOW 56% FE)

58 6,181 1,892

IRON ORE FINES (62% FE CONTEN) 62 7,453 26,680

IRON ORE FINES (62% FE CONTENT) 62 7,453 23,460

21-Mar-13

IRON ORE FINES (58% FE BASIS REJECTION BELOW 56% FE)

58 6,179 594

IRON ORE FINES (FE 58%) 58 5,929 13,800

22-Mar-13 IRON ORE FINES (62% FE CONTENT) 62 7,453 345

23-Mar-13 IRON ORE FINES (FE 58%) 58 5,929 36,570

25-Mar-13 IRON ORE FINES (63.5% FE CONTENT) 63.5 7,263 38,640

26-Mar-13 IRON ORE FINES (57% FE CONTENT) 57 5,149 23,025

27-Mar-13

IRON ORE FINES (62% FE CONTEN) 62 7,412 20,240

IRON ORE FINES (62% FE CONTENT) 62 7,412 29,348

IRON ORE FINES (63.5% FE CONTENT) 63.5 7,236 118

28-Mar-13 IRON ORE FINES FE 59% CONTENT 59 5,367 16,426

JAPAN

5-Mar-13 IRON 65% FE (LUMPS) 65 6,184 287

7-Mar-13IRON ORE 65%FE (FINES) 65 5,692 43,747

IRON ORE 65& (FE LUMPS) 65 6,184 17,550

13-Mar-13 IRON ORE 65%FE (FINES) 65 5,692 64,020

14-Mar-13 IRON ORE 65%FE (LUMPS) 65 6,184 10,725

20-Mar-13 IRON ORE 65%FE (FINES) 65 5,724 77,018

VIZAG Total 566,303

Grand Total 1,111,057

Iron ore export data for March 2013, Contd...

Port Destination country Date Product category Fe content Unit price (in `/ton)

Quantity (in tons)

IROn ORE DATA


IROn ORE DATA

Iron ore import data for March 2013Steel Insights Bureau

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

Unit Price (in $)

Quantity (in tons)

KANDLA

LUMP

05/Mar/13 MALI IRON ORE LUMPS 6,496 118 986

06/Mar/13 MALI IRON ORE LUMPS 5,988 109 5,000

15/Mar/13 MALI IRON ORE LUMPS (NON SIZED) 6,593 120 1,000



PELLETS

04/Mar/13RUSSIA IRON ORE PELLETS 8,212 150 5,000

UKRAINE IRON ORE PELLETS 7,926 144 22,739

05/Mar/13 BAHRAIN IRON ORE PELLETS 8,846 161 2,000

06/Mar/13 AUSTRALIA IRON ORE PELLETS 9,280 169 5,000


09/Mar/13AUSTRALIA IRON ORE PELLETS 9,509 172 5,000

BAHRAIN IRON ORE PELLETS 8,846 160 2,000




19/Mar/13 RUSSIA IRON ORE PELLETS 8,249 150 5,000




29/Mar/13

AUSTRALIA IRON ORE PELLETS 9,289 169 5,000

FINLANDIRON ORE PELLETS (BF ACID PELLETS 65)

8,016 146 5,000

KANDLA Total 93,975

MUNDRA PELLETS01/Mar/13 AUSTRALIA IRON ORE PELLETS 7,767 141 5,000


MUNDRA Total 10,000

Grand Total 103,975


IROn ORE DATA

Iron ore export out of major Indian ports April ’12 - March ’13


Port Apr ’12 May ’12 Jun ’12 Jul ’12 Aug ’12 Sept ’12 Oct ’12 Nov ’12 Dec ’12 Jan ’13 Feb ’13 Mar ’13 Portwise total

Chennai 0 0 0 0 0 0 0 0 0 52,000 0 0 52,000

Ennore 0 0 0 0 0 0 0 0 0 0 0 0 0

Gangavaram NA NA NA NA 113,275 13,798 27,324 0 0 13,075 0 59,322 226,793

Kandla 0 185,374 0 93,756 68,000 64,346 230,829 63,638 202,609 91,264 0 6,000 1,005,816

Kolkata 155,000 129,284 267,145 149,774 79,342 24,000 83,224 102,889 121,800 190,059 194,730 171,858 1,669,105

Krishnapatnam NA NA NA NA NA NA NA 0 0 0 0 0 0

Mangalore 224,326 352,000 0 98,127 53,040 10,956 44,588 105,914 282,568 219,064 212,387 55,000 1,657,970

Mormugao 3,083,000 3,075,539 708,356 NA 50,112 0 0 0 0 0 0 0 6,917,007

Paradip 127,250 51,080 138,670 292,880 181,798 53,585 40,000 53,000 114,835 85,610 206,973 313,574 1,659,255

Tuticorin 0 0 0 0 0 0 0 0 0 0 0 0 0

Vizag 1,163,000 344,871 278,334 688,712 368,707 119,992 255,594 86,836 321,410 562,125 532,572 566,303 5,288,456

Monthwise Total 4,752,576 4,138,148 1,392,505 1,323,248 914,274 286,677 681,559 412,277 1,043,223 1,213,197 1,146,662 1,172,057 18,476,403

Iron ore import through major Indian ports Oct 2012 to Mar 2013

0

200000

400000

600000

800000

1000000

1200000

Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Oct-12 Dec-12 Jan-13 Feb-13 Mar-13

FINES FINES FINES FINES FINES FINES LUMPS LUMPS LUMPS LUMPS LUMPS

CHINA JAPAN SOUTH KOREA

Iron ore export through major Indian ports Oct 2012 to Mar 2013

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