Indian Steel Moving Owards a Slowdown

8/2/2019 Indian Steel Moving Owards a Slowdown

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Moving towards a slowdown- Sanjay SenguptaIntroduction:

India's liP (Index of Industrial Production) grew by ameager 1.9 per cent in September, 2011 over 6.1 percent in the same month of 2010. The liP growth duringApril-September (HI of 2011-12) rose by 5.0 per centover 8.2 per cent in the same period of 2010-11. Themanufacturing sector, havinga weight of 75.5 per cent inthe liP grew5.4 per cent over8.8 per cent in HI of 2011-12 vis-a-vis H1 of 201 {}-11.

Dr. Rangarajan, Head of Prime Minister's EconomicAdvisoryCouncil said, "The liP numbers (for September)are disappointing it is well below our expectation.But I do see a pick-up by the end of March. We hadoriginally expectedoverall liP at 7 per Gentfor the fiscal,but now it could be 6 per cent." He asked theRBI to rethink the conventional policy of interest rates.

The eight infrastructure industries known as "CORESECTOR" having a weight of 37.90 per cent in the liPregistered a growth of 5.3 per cent during April-August,2011 over 6.1 per cent during the same period of thepreced ing year.Auto Industry: Growth Slows Down

Production, domestic sales and exports by the IndianAutomobile industry during April-August, 2011 are shownin Table-A (next page).

The decline became more severe in September andOctober, 2011. Car sales fell 23.8 per cent in October,2011 on a y-o-y basis. Two wheelers sales recorded amarginal growth of 2 per cent. Three Wheelerspostedanegative2.06 per cent growth and overall domestic salesat 1.44 million units recorded a negative 1.05 per centgrowth in October, 2011 on a y-o-y basis. The Director-

14 .IRON & STEEL REVIEW. DECEMBER 2011


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L~. The NMP givesspecialattentionto focussectors that it identifiesas employment-generatingones, capitalgoods, strategicindustries and sectorswhere India enjoyscomfortable advantagessuch as automotive andpharma.

The Indian industryhas welcomed theNational ManufacturingPolicy.But someexpertsareskeptical becauseofthe landrequirementand

experience with the SEZs. A member of the PlanningCommission has observed that "As far as the subject oland acquisition for the NMIZs is concerned, it will nobe easy in our country."

However, if the policy is implemented success fullyand all its objectivesarefulfilled, the Indiansteel industrwill benefit to a large extent in the future yearsCapacityof the IndianSteelIndustry

--- ----Table A: Performance of Automobile Industry: April-August, 2011

Souf[e:5/AM.nff - NumberofVehidesN.B.: 1)% Chongeisthe chong' overthe corresponding period ofprevious yeo,

1) Rgures in bll1Cketsshow growth in HI of10111-11overHI of1009-10.

General, SIAM said, "The auto industry is facing thedouble whammy of high interest rates and rising fuelprices." Market leaderMaruti Suzuki lost a production of75,000 units due to strike at its Manesar and Gurgaonplants.NationalManufacturingPolicy

The Union Cabinet has approved the NationalManufacturing Policy (NMP), which among other thingsaimsto:a) Enhancethe share of manufacturing in the country's

GDPto 25 per cent by 2022 from the current level of15-16 per cent.

b) Create 100 million jobs in the manufacturing sector.c) Establish minimum 5000 hectare of land for the

National Manufacturing Investment Zones (NMIZs).d) Enhancethe skill of rural youth.

The policyenvisagesto setup five integratedtownshipsin the NMIZsenjoyingstate-of-the-art infrastructure, lesserregulatoryand compliance of environmental issues,fasterclearances and some fiscal incentives. These zoneswillbesetupthroughSpecialPurposeVehicles(SPVs)includingthe central and state governments as well as otherstakeholders.

The landto beacquiredwill preferablybewasteinfertilelandwhich is not suitable for cultivation; not in the vicinityof any-ecologicallyfragile areaand with reasonableaccessto basic resources:

The projected capacity of the Indian steel industryby2012-13 is likely to reach 122.95. The capacityin 2009-10, the BrownfieldandGreenfieldexpansionsup to 2012-13 are shownTable- 1.

SaJ=MinisI1yofSll"JQt,SII~&_(l'amrJfq}...,""_upbylO1Z.1J.N.B./rpIJfhrJs"""_"JSW/rpIJf.Wl~Iigvno"'''P'fIhdr_-


Typeof Vehicles Production %Change DomesticSales % Change Exports %ChangePassengerVehicles 1,249,464 8.5 977,201 1.94 220,256 22.40

(31.20) (32.91) (1.48)Commercialehicles 355,430 25.05 301,267 17.80 34,011 30.04

(46.81) (45.59) (84.01)ThreeWheelers 361,727 18.37 199,721 (-)0.27 166,821 50.11

(36.86) (19.87) (99.99)TwoWheelers 6,232,284 16.89 5,357,851 15.94 850,273 30.44

(29.85) (29.85) (25.86) (52.33)Total 8,198,905 15.92 6,836,040 13.26 1,271,361 30.23

(31.06) (27.32) (43.61)

Producers Capadty Expansion Planned Total Capadty2009-10 Brownfield Greenfield in2012-13Private SectorTataSteel 6.80 3.20 3.00* 13.00*Essarteel 4.60 3.90 6.00* 14.S0*JSWSteel 6.60 4.40 - 11.00JSPL 2.40 4.80 3.25 10.45Ispatndustries 3.60 0.60 - 4.20Bhushan Power &Steel 1.20 1.60 - 2.80Bhushanteel 0.80 2.20 - 3.00Others&SecondarY 31.00 3.20 - 34.20PublicSectorSAIL 12.84 10.66 - 23.50RINUVSP 2.90 3.40 - 6.30Total 72.74 37.96 12.25 122.95


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SPECIAL FEATURE

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India'sSteelDemand. UnionSteelMinisterShriBeniPrasadVermasaid atAssocham Summit in October, 2011 that by 2011-12,India's steel capacity might reach 90 Mtand is likelytocross 110 Mt bythe end of 2012-13.He also said that the growthof India's steel demand

averaged 10 per cent per year over the last seven yearsand there was a likelihoodthat the trend wouldcontinuefor at least the next decade. He also hoped that thedemand mayexceed ten per cent at times duringthe next10 to 15 years. Heopined that the countrywould be ableto meet the steel demand through domestic productionat least for the next five years. India's present demandhas been estimated at about 66 Mt.Performlnceof theIndlln St..llndultry: 2010.11Production of CrudeSteel

India's production of Crude Steel in 2010-11 vis-a-vis 2009-10 is shown in Table- 2.~ction ofCrudeSteelnIndian2010-11vis-ii-vis2009-10 I('000onnes)

IIIrrrSOlm:K(I?-/f}=-ttB.",.."".""""" "."fIIo""""'ri__'''''1mI-"""""''''''''''ri--It is observed from the above table that the overall

production of crude steel in India has increased by 5.7per cent in 2010-11 over 2009-10.Accordingto the WorldSteel Association(WSA), Indiawasthe fifth highest producerof crude steel in the worldin the calendar year2010 at 66.8 Mt, marginally lowerthan Russia'soutput of 67.0 Mt at the fourth placeduringthe sameperiod.

During2010-11, TataSteel was the highest domesticproducer as an individual steel plant with an output of6.86 Mt. JSPL recorded the highest growth of 15.9 percent in crudesteelproductionin 2010-11 overthe previousyear, followed by Jindal South West Steel Ltd (JSWSl)

with a growth of 11.3 per cent in the abovecomparativeperiods.

The public sector producers, SAIL and RINL (VSP)postedmarginal increase in production of crude steel in2010-11 over the preceding yearwhile Ispat Industriesand Essar Steel Ltd. recorded negative growths.Productionfor Ille of Clrbon FinishedSteel

...

)~t . -,,1."", ...TheJoint PlantCommittee(JPC)is presentlymonitoring

"Production For Sale" which is arrived at after deductionInter-PlantTransfersOPT)and producersownconsumptionfrom grossproduction.

Categorywiseproductions for sale of carbon finishedsteel in India in 2010-11 vis-a-vis 2009-10 are shownin Table - 3.Table 3 : Categorywise Production for sale of Carbon Finished Steel in India:

('000onnes)

/lQtQSouItP:JPC.{p)=1'tIMsionoI

18 "IRON & STEEL REVIEW" DECEMBER 2011

Producers Productionof CrudeSteel %Change2010-11(P) 2009-10A.SAIL 13761 13509 1.9B.RINLVSP) 3235 3205 0.9CTataSteel 6856 6563 4.5D.SecondaryMajorsJSWSL 5853 5257 11.3Ispatndustries 2377 2689 (-)11.6Essarteel 3367 3474 (-)3.1JSPL 2273 1961 15.9E.OtherProducersE) 31853 29181 9.2GrandTotal 69575 65839 5.7

Category ProductionForSale %Change2010-11(P) 2009-10Bars&Rods 24,368 21,770 11.93Structurals 5,S37 4,141 33.71Rly.Materials 1,094 1,041 5.09TotalLongProducts 30,999 26,952 15.02Plates 4250 3973 6.97HRCoils Skelp 12,362 12,002 3.00HRSheets 570 603 (-)5.47CRSheets/Coils 5762 5914 (-)2.57GP/GCSheets 5,596 5,620 (-10.43ElecSheets 176 146 20.55TinplateInd.W/W) 233 239 (-)2.51Pipes(LarQeDia) 1,851 1,636 13.14TinFreeSteel 0 7 -TotalFlatProducts 30,800 30,140 2.19Grand Total Fin. Steel 61799 57092 8.24


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SPECIAL FEATURE

It is evident from the table 3 that the share of longproducts in the total productionfor saleof carbonfinishedteel in 2010-11 has gone up to 50.16 per cent from7.21 per cent in the previous year. The overall growthin production for sale of carbon finished steel in 2010-11 was8.24 per cent over 2009-10.

The growthof the long product segmentwasa healthy15.02 per cent due to the rise in demand from theconstruction sector.Constructionsector recordedagrowthof 8.1 per cent in 2010-11 over 7.0 per cent in thepreviousyear.The lowgrowthof 2.19 per cent of the flatproductsgroupwasmainly due to a decline in the growthof the Manufacturing Sector at 8.3 per cent in 2010-11as against 8.8 per cent in the preceding year.Imports

Imports of Carbonfinished steel by India in 2010-11vis-a-vis2009-10 are shown in Table - 4.I Table4: Imports ofCarbonFmlslieil5teel;in2Q10"llvis-a-vls2oo9"10 I

('000onnes)

OatIl Soun:e:JPC{ P} = Provisionol

It is observed from the above table that the overallimports of carbon finished steel by India in 2010-11 at5.96 Mt over 6.34 Mt in 2009-10 hasdeclined by about6.0 per cent. The hefty decline in the import of longproducts may be attributed to higher domesticproduction.Exports

Exportsof carbon finished steel by India in 2010-11vis-a-vis 2009-10 are shown in Table - 5Tatile 5: EJ!ports of Carlion Fmlsheil5teelm.20JO-11 vis-a-VIs 200.9"JO I

('000onnes)

OatIl Soun:e:JPC.(P) = Provisionol

It is evident from the above table that the overallexportsof carbonfinishedsteelby Indiadeclinedmarginally

by 1.27 percent in 2010-11 overthe previousyear.Exportof long products hasdeclined by a hefty 33.71 per centin 2010-11 over 2009-10 due to a robust domesticdemand as well as lack of adequate demand and lowprocessin the global market. The export of flat productrose marginally by 1.81 per cent due to a low growth indomestic production as also due to a low demand in theworld market.ApparentConsumptionof CarbonFinishedSteel in India:2010-11

Categorywiseapparentconsumptionof CarbonFinishedSteel in India during2010-11 and 2009-10 arepresentedin Table6.

('000 tonnes)

OatoSoun:e:JPC.{P}= Provisionol

It appearsfrom the abovetable that the overallgrowthin apparentconsumption of carbonfinished steel in Indiain 2010-11 hasbeena healthy 10.79 percentwhich wasone of the highest in the world.

Doublecounting occurs only in caseof flat products.After deducting the same from apparent consumption,the real consumption of flat products in 2010-11 worksout to 3.98 Mt less than 31.16 Mt for long products.While all the long products haverecorded double - digitgrowths in 2010-11 over2009-10, Pipes(Large-Dia)hasachieved the highest growth in flat product segment at31.85 per cent. CR Sheets/Coils and GP/GC Sheetsrecordedgrowthsover4 per cent.


Product Imports During %Change2010-11(P) 2009-10longProducts 529 693 (-)23.67FlatProducts 5434 5648 13.79Total 5963 6341 (-)5.96

Product Exports During %Change2010-11 (P) 2009-10

longProducts 177 267 (-)33.71FlatProducts 2862 2811 1.81Total 3039 3078 1.27

Cateaorv ADDarent ConsumDtion %Chanae2010-11(P) 2009-10Bars&Rods 24439 21616 13.06Structurals 5621 4199 33.87

Rly.Materials 1096 986 11.16TotalLongProducts 31156 26801 16.25Plates 4762 4774 {-J0.25HRCoils/Skelp 13970 14244 (-)1.92HRSheets 622 603 3.15CRSheets/Coils 6637 6344 4.62GP/GC Sheets 4738 4513 4.99Elee.Sheets 488 424 15.09TinplateIncl.W/W) 343 359 (-)4.46TMBP 1 1 -PipeslargeDia) 1536 1165 31.85TinFreeSteel 56 41 36.59TotalFlat Products 33153 32468 2.11lessDoubleCountinq 2172 3185 31.81GrandTotalFin.Steel 62137 56084 10.79


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Table 8: Categorywise Production for sale ofCarbon Finished steel in H1of I2JU.1-1.t~~visH1,gf20111- I('000onnes)

SPECIAL FEATURE

of the IndianSteel Industryduringof 2011-12The performance of the Indian steel industry during- Septemberof 2011 (HI of 2011-12) is presentedctionof CrudeSteel

Production of Crude steel in India during April -eptember of 2011 vis-a-vis the same period of theeviousyear is shown in Table- 7.Table 7: Production of Crude Steel in India in H1oh011- 12 vis-a-vis Iii' of

2010-11: Producer wisL-('000onnes)

DataSourre:IPC.PI=_al

The overall growth in Indian crude steel production inI of 2011-12 was a low of 3.1 per cent. Tata steel washe highest domestic producer of crude steel as anndividual plant producing 3.54 Mt in HI of 2011-12.

CategorywiseProduction for sale of Carbon finishedteel during HI of 2011-12 vis-a-vis HI of 2010-11 arehown in Table - 8.Theoverallgrowth in the ProductionForSaleof carbon

inished steel in HI of 2011-12 has been8.58 per centerthe sameperiod of the previousyear.The growth ine productionfor saleof long productswas6.91 per centnd that of flat productswas 10.29 per cent in the above

DataSourre:IPC. "" abovefigulPSall'provisional

comparativeperiods.Thehighestgrowthamongthe finishedsteel products was that of HR Coils/Skelp at 12.02 percent.Imports

~Imports of carbon finished steel by India during HIof 2011-12 vis-a-vis HI of 2010-11 are shown in

Table - 9.

ITable.9 : ImportsofCarbonFinishedSteel inH1 of2011-12--- !lis.-a-,usHtof2010-11 - -- --('000onnes)

Oat.Sawrt:K. N.B.AIIlheabaw/iglm"'''''''''''''

Hefty declines are seen in the total import of carbonfinished steel both in long and flat product segments inHI of 2011-12 overthe sameperiodof the previousyear.ExportsExports of carbon finished steel in HI of 2011-12vis-a-vis HI of 2010-11 are shown in Table - 10.

Table 10: Exports of Carbon Finished Steel in H1of 2011-12vis-a-vis H1012010-11

('000onnes)

Oat.SamrIK.N.B.AIIlheabaw/iguRs",,..,...,,,,.

22 .IRON & STEEL REVIEW' DECEMBER 2011

Producer Productionof CrudeSteel %ChangeH1012011-12 (P) H1012010-11 (P)

SAil 6569 6582 (-)0.2RINl(VSP) 1517 1599 {-I5.1TataSteel 3536 3353 5.5SecondaryMaiorsJSWSl 3467 3446 0.6JSWSPAT 1248 1357 (-)8.0Essarteel 2275 1668 36.4JSPl 1237 1068 15.8OtherProducersEST) 156S6 15358 1.9Total 35505 34431 3.1

Category Productionfor sale %ChangeH10f2011-12 H1 012010-11Bars&Rods 12656 11875 6.58Structurals 2940 2697 9.01Rly.Materials 534 515 3.69Total LongProducts 16130 15087 6.91Plates 2161 1970 9.70HRCoils/Skelp 6644 5931 12.02HRSheets 247 274 (-)9.85CRSheets/Coils 2939 2733 7.54GP/GC Sheets 2980 2713 9.84Elec.Sheets 84 87 (-)3.45TinplateInd.W/W) 129 113 14.16PipeslargeDia) 1043 892 16.93TotalFlat Products 16227 14713 10.29Grand Total Carbon 32357 29800 8.58Fin.Steel

Product Imports During %ChangeH10f2011-12 H10f2010-11longProducts 203 386 H47.41FlatProducts 2056 3595 (-)42.81Total 2259 3981 (-)43.26

Product Exports During %ChangeH10f2011-12 H1of2010-11

longProducts 111 99 12.12FlatProducts 1895 1207 57.00Total 2006 1306 53.60


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SPECIAL FEATURE

Overall exports of carbon finished steel has increasedby 53.60 per cent in HI of 2011-12 over HI of 2010-11 and that of flat products by a hefty 57.00 per cent inthe abovecomparative periods.ApparentConsumptionApparentConsumptionof carbon fi nished steel in HI

of 2011-12 vis-a-vis HI of 2010-11 are presented inTable - 11.Table 11: Apparent consumptionof carbonfi'iiiS'iiedsteel in Indiaiiuring Hl1I of2011-12is-a.:.vis;11IflliJI.-.J.1.. . --.J('000onnes)

Data SOU"" JPCN.B.A l l t heabove f igu~s Q~". .isional

Doublecounting occurs only in caseof flat products.Deductingdoublecountingfrom the apparentconsumptionof flat productsasshown above,the real consumption offlat products worksout to 15331 thousand tonnes in HIof 2011-12 'and 16099 thousand tonnes in HI of 2010-11 with a percentage change of minus 4.77.The decline in consumption of flat products may be

attributed to a lowgrowth of the manufacturing sector at5.4 per cent in HI of 2011-12 as compared to 8.8 percent in HI of 2010-11 and also a decline in marketdemand.OverseasVenturesIndian steel producers are earnestly trying to build

steel plants andacquire overseasiron oreandcoking coalmines to ensurerawmaterial security. Someof the majordevelopments in this regard are mentioned below:SAIL~ SAIL hasplannedto makeagreementswith the cokingcoal miners in Australia and South Africa. The valueof the two mines in South Africa and one in Australiais likely to be about US$ 1.5 billion and would beused to reduce SAIL's import bill. SAIL presentlyimports about 9.5 Mt of coking coal annually whichmay go up in future. SAIL's negotiations are donethrough ICVLin which the companyhasa shareof 26per cent.

. SAIL is planning to setup a 3-5 Mtpy capacity steelplant in SouthAfrica. It is learntthat the SouthAfricangovernment has proposed a joint venture plant withSAIL and haspromisedironore and coking coalminesfor it.. SAIL will build a steel plant in Omanwhich is a gas-rich country andwould get gasfrom Omanat a cheaprate.

.:t SAIL may also build steel plants in Mongolia andIndonesia in return for ironoreand coal mining leases.

'" SAIL has decided to rope in strategic partners likeNMDC,VizagSteelPlant,JSPLetc. to bid for acquisitionand development of HAJIGAK iron ore mines inAfghanistan. These mines havean estimated reserveof 1.8 billion tonnesof highquality magnetiteore.TheAfghan government has shortlisted 22 companiesincluding SAil. SAIL's proposal to setup a 3 Mtpycapacitysteel plant in Afghanistanmaybean additionaladvantagefor the Indian Company.TheHAJIGAKironore mines are located 130 km west ofKabul.

Tata Steel. Tata Steel has signed a binding agreement with theCanadian iron ore miner. New Millennium CapitalCorporation (NMCC)to develop the taconite iron oredeposits in Canada.The taconite project, cited astheworld's largest under-developed project, includes theLabMagand the KeMag iron ore deposits in Labrador,easternCanada.TataSteel will own 80 per cent stakein the joint venture.

24 -IRON & STEEL REVIEW - DECEMBER 2011

Product ApparentConsumptionn %ChangeH10f2011-12 H1of 201 0-11LongProducts 16481 15236 8.17FlatProducts 16634 17288 (-)3.78Total 33115 32524 1.82LessDoubleCount inQ 1303 1189 9.59RealConsumption 31812 31335 1.52


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SPECIAL FEATURETata steel has iron ore assets in IvoryCoast whichcould yield 20 Mtpyof ironore. The company signeda deal with the Ivorianstate mining firm to developiron ore mines at Mount Nimba and theassessment of the area would be completed by end2011.TataSteel is setting up a joint venture integrated steelplant with Vietnam Steel Corporation (VNSTEEU,Vietnam's largest steel company. Tata steel will havea share of 65 per cent in equity in the steel plant and30 per cent stake in the mines. The plant is likely tobe operational by 2013. The project which was put inblack burner over resettlement issues, is now beingcleared for a kick start.

SteelLtd.East Africa Holdings Ltd., (EAHU, a privately heldcompanyofthe EssarGroup,willformtwojointventurescompanies with ZimbabweGovernment. One of thiswillbe for revivingZimbabweIron& Steel Co.(ZISCO)and the other fordevelopingironore mines. Essarwillown60 per cent stake in the steel venture and 80 percent in the mineral venture. EAHLwill invest aboutUS$750 millionto reviveZISCO.Accordingto sources,ZISCOhas a probable reserve of ironore of about 20-30 billiontonnes.Essar Steel Holdings,a part of EssarGroupwhich hasacquired the U.S. based Minnesota steel, is planningto setup a plant of 2.5 Mtcapacity at a cost of aboutUS$ 1.6 billion. Synergies of the plant will beprovided by the captive supply of 1.4 billiontonnes iron ore, already procured by Essar SteelHoldings.Essar Groupwill increase the capacity of its proposedPellet Plant in the U.S.A. due to come up by 2012,from 4 Mtpyto 7 Mtpy.This will help to provide rawmaterials for Essar's steel plant at Algomain Canadaand will also enable Essar to sell about 1 Mtpyofpellets in the open market.Essar Group has bought a coal mine in Indonesia forits thermal power projects at a cost of Rs. 900 crore.The mines located at the Kutai region of EastKalimantan, has a reserve of 100 Mtof thermal coaland a mineable reserve of 64 Mt.

JindalSouthWestSteelLtd.(JSWSL). JSWSLhas acquireda cokingcoalmine inWestVirginiain the U.S. It has a total resource of 123 Mt whilereserve in the area, where drilling has already beendone, are estimated at 45 Mt.

. JSWSLwill invest about US$500 million for buyingcoal mines in South Africa and Australia to securesupplies for its local expansions.

. JSWSL has picked up a 5 per cent share in JFE ofJapan while JFE has purchased 14.99 per cent equityin JSWSL.Thetwo companies together willmake autograde steel in India using JFE's technology and buyironore mines.

JindalSteel& PowerLtd.(JSPL). JSPL has secured 3800 acres of land in ELMutan inBoliviaout of its total requirement of 5000 acres. Thecompanywillsetup a pellet plant, a sponge ironplantand an integrated steel plant in Bolivia.

. JSPL has acquired the shadeed Iron and Steel Plantin Oman and has started setting up a sponge iron plantthere. The company has also planned to setup anintegrated steel plant in Oman.. JSPL and the U.S. coking coal major, Massey EnergyCo., have decided to work jointly on bids to developand operate underground coal mining projects in India,Mongolia, Australia and the U.S.

Monnetspat& Energytd.Monnet has acquired a coal mine in Indonesia from

PT Sarwa Sembada Karya Bumi at a cost of about US$24 million to use the high-grade coal for its proposedthermal powerprojects in India.NMDC

NMDC has signed a MoUwith Legacy Iron Ore Ltd. ofAustralia to acquire 50 per cent stake in the Australian

26' IRON & STEEL REVIEW. DECEMBER 2011


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. SAILwill setupa 3 Mtpycapacitysteel plant in a JointVenture with p~SCO of Koreanear its existing plantat Bokaro. The plant will use 'FINEX' technology ofp~sco which usesnon-coking coal and iron ore finesfor steelmaking.. JSWSL has placed an order with SMS Siemag ofGermanyfor supplying pickling-cum-tandem cold millat Vijaynagar. It will have a capacity of 2.3 Mtpy ofcold strips in widths up to 1890 mm and will beoperational in 2013. The five stand six high mill willhavecombined continuouslyVariableCrown/Enhancedshifting systemtechnology.. NMDCand severstal of Russiawill jointly invest Rs.9,000 croreto setup a 50:50 JVfor building a 5 Mtpycapacity steel plant in Bellary in Karnataka.The plantwill have an initial capacity of 2 Mtpy expandable to5 Mtpy. It would start in 2012 and is to be completedwithin 36 months. The JVwould haveits coking coalmining subsidiary in Russia and iron ore miningsubsidiary in India to ensure long-term supply of rawmaterials.. ArcelorMittal India has started drilling operations atthe Seregarhacoalblockin Latehardistrict of Jharkhandsignaling that work towardssetting up of the proposed3 Mtpy capacity steel plant may have alreadystarted.

SPECIAL FEATURE

mining company. Bythis investment, NMDC would expandits geological footprint and position itself for acquisitionof additional mineral assets in iron ore and coal in Australia.Other Important Developments

. SAIL has tied-up with Geneva-based CBMM fordevelopingAPIX- 80 gradesteel in its Bhilai andBokaroSteel Plants. This high strength steel is usedin line pipe applications for transportation of oil andgasand hasa huge market in India.. EssarSteelhassigneda MoUwith KobeSteelof Japanto produceauto grade steel. The collaboration will bein the areas of technology for manufacturing highstrength steel (AHSS) used in automotive and otherrelevant areas.. Tata Steel has signed a Joint Venture with NipponSteelof Japanfor setting upa Rs.2,300 crorespecialitysteelmakingline at Jamshedpurto caterto the domesticauto industry. The JV would setup India's firstcontinuous annealing and processing line to produce600,000 tonnes of automotive cold-rolled steelannually. TataSteel will hold 51 per cent stake in theJV. The plant is expected to be operational in2013.. The second strand of CSP plant supplied by SMSSiemag, Germany to Essar Steel at Hazira wassuccessfullymadeoperationalon 15th July, 2011, thefirst strand having been started up on 31st March,2011. Thethird strand will operate from 2012. EssarSteel with thus have the first 3 strand CSP plantworldwidewith anannual capacity of 3.5 Mtpyof HotStrips and a product range that covers carbon steelas well as pipe grades, silicon and duel phasesteels.. TenovaHYLandDanieli & CSPAasa consortiumhavemadean agreementwith JSPLto supply EnergironZRDR technology for the DRI plants to be installed inAngul and Raipur.The project consists of installationof four DRI plants using reformerless Energiron ZRprocessof 2.75 Mtpy capacities each. JSPL plans tobuild DRI plants at various locationswith a combinedproduction capacity exceeding 10-Mtpy of highlymetalized DRI for supplying to its steelplants.

Thecompany hasalreadyapplied for permissionfromthe Jharkhandgovernmentto commencedrilling operationsat the Karampadairon ore mines in the WestSinghbhumdistrict. The drilling operations or the geophysicalprospectingwould help the companyassessthe availabilityof coal and iron ore at these two mines for whichArcelorMittal has already obtained prospectinglicenses.. EssarSteel has granulated three iron tappings at its10 Mtpy plant at HazirausingUHT'sGranshotmethod.The plant has a capacity to granulate 140 tonnes ofpig iron in lessthan an hour. The Granshotmethod isan important buffering possibility between the blastfurnace and twoCorex2000 units and the downstreamrefining and casting processesin the newsteelmakingplant.The producedGranulatedPig Iron (GPI)is mainly used

in the Conarc's EAF to deoxidize the hot heel steel.Surplus GPI is used as an alternative iron source to

28 .IRON & STEEL REVIEW. DECEMBER 2011:


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SPECIAL FEATURE.

HBI or asscrap within Essar'sproductionor is sold asgranulated merchant pig iron.Jindal Steel & Power Ltd. (JSPU has signed a MoUwith Rio Tinto to introduce HI smelt technology forthe first time in the world, other than a pilot plantcommissioned by the latter in Australia - the KwinanaHI smelt plant in which Rio Tinto has a 60 percentshare.As per the MoU, RioTinto's Kwinanaplant fromAustralia will be relocated to JSPL's steel plant atAngul in Odisha.HI smelt technology smelts iron ore fines directly

si ng non-coki ng coals, and offers sign ificantconomic and environmental benefits to the steelndustry.SAIL has issueda global tender for building a 10 Mtpycapacity beneficiation plant and a 4 Mtpy capacityPellet plant at Gua Iron Ore Mines to improve thequality of the ore and make operations of the minesmoresustainable.The first phase of Tata Steel's 6 Mtpy steel plant atKalinganagaris expectedto becommissionedbyearly2014 at an investment of Rs. 20,000 - 25,000 crore.The plant will produce only flat products catering tothe needs of automotive and white goodsindustries.

ningofRupeePullsDownNetProfitIn the second quarter of 2011-12, the rupee fell byout 10 per cent against U.S. dollar adverselyaffecting

he net profit of many companies including those in theron and steel sector.SAIL's coking coal imports became costlier due toweek rupee. The impact of appreciation of the dollaragainst rupee during the first half (HI) of 2011-12on SAIL's net profit was Rs. 579 crore.. UshaMartin Industries had to face a foreign exchangeloss of Rs. 120 crore in Q2 of 2011-12, due torestatementof outstanding foreign currency loansandacceptances.. Iron ore miner SesaGoareporteda profit of Rs. 1.28crore in Q2of 2011-12 againsta profit of Rs. 384.94crore in the same period of the previous year. Thecompany had to bear a foreign exchange loss of Rs.234.09 crore during Q2 of 2011-12 on its foreigncurrency loansand convertible bonds.

All major steel producers who have involvement inforeign exchange transactions have lost considerableportion of the net profits due to the weakening of therupee in Q2 of 2011-12.IronOreCrisisinKarnataka

The order of the India's SupremeCourt to suspendalliron ore mining activities in Karnataka, excepting thoseof NMDC, on environment grounds, has created a crisisfor the iron ore industry in the region. NMDCwill assurea supply of one million tonne of iron ore on a monthlybasis. But how much it will suffice to meet therequirement of Karnataka and its neighbouring statesthat annually consume about 40 Mt of iron ore is a bigquestion.

The worst sufferer in this regard is JSW Steel Ltd.which hasstepped up its production capacity to 11 Mtpy.According to a media report, the company has cut backits productionby30 percent aVijaynagar.Themanagementof the company has, therefore, lowered it production andsalestargets by 13 per cent and 14 per cent respectivelyfor the year2011-12.

The crisis hasalsoaffected smaller units in the regionadversely.Conclusion

India's GDPis likely to grow by7.5 per cent in 2011-12 as against 8.5 percent in the previous year. Themanufacturing sectorwhich grewby 5.00 per cent in HIof 2011-12 may record a growth of 7 per cent in theFY'12 fiscal as compared to 8.3 per cent' in 2010-11.India's inflation toucheda highof 9.73 percent in October,2011. Coreinflation or the inflation non-foodmanufacturedproducts roseto 7.6 percent in October,2011 from 7.1per cent in the previousmonth.

Production for sale of carbon finished steel rose by8.58 per cent in HI of 2011-12 as against3.89 percentin the corresponding period of the previousyear. But theconsumption of carbon finished steel nose-divedto 1.52per cent over 9.70 per cent in the above comparativeperiods. This has happened due to high interest rates,high inflation, lowgrowthof infrastructure sectorand lackof market demand.

The Indian steel industry is heading towards aslowdown in 2011-12 as compared to the preceding.year.


Indian Steel Moving Owards a Slowdown

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