India's steel industry is set to expand significantly over the next few years, with plans to add around 23 million tonnes (MT) of crude steel capacity between FY24 and FY27, according to a report by Nomura.
As per the report, the industry is reflecting a compound annual growth rate (CAGR) of 4.8 per cent. The report noted that this growth target is in consistent with the industry's long-term average growth from FY15 to FY24.
Despite this substantial increase in capacity, experts believe that the Indian steel sector is poised to enter a favorable phase.
"We estimate India's steel industry will add approx. 23MT crude steel capacity over FY24-27F, at an implied 4.8 pc CAGR, in line with the FY15-24 long-term average" said the report.
The report noted that the steel majors JSW, JSPL, Tata Steel and ArcelorMittal & Nippon Steel should account for nearly 87 per cent of the ongoing capacity expansion. Although the report noted that significant capacity will come onstream over the next three years.
India will need to invest $ 283 billion (approximately ₹23.52 lakh crore) for decarbonising existing local steel production. This, along with tapping Energy Efficiency Revolving Funds (EERF) and defining what should be 'green steel' are parts of a comprehensive decarbonisation strategy devised by the steel ministry.
The plan, officials say, will focus on increasing renewable energy penetration in the steel sector to 43% by 2029-30 from 7.2% in fiscal 2021-22. There may also be lower taxes for green steel production to incentivise adoption along with a mandate on luxury car producers for using the cleaner feedstock.
"The existing steel plants in India alone are estimated to need $283 billion investment to become green. The adoption of best available technologies in the existing small steel plants alone is estimated to be more than $13 billion and cost of process transition is an additional $ 150 billion," the roadmap and action plan for greening the steel sector in India said.
China has a problem of plenty. It is making far too many goods for its own consumption. Due to low demand and the crisis in the real estate sector, it is buried in overcapacity. From solar panels to electric vehicles, various Chinese goods head to overseas markets where they kill the local industry due to their ultra low prices made possible by Chinese state subsidies and various other incentives. As China exports its problem of overcapacity to other countries, it is facing a blowback. Europe and the US have imposed duties on cheaper Chinese EVs recently.
India too is grappling with this Chinese problem in the steel sector. With its own market bereft of demand, China is dumping low-priced steel into India where demand is robust. A flood of cheap Chinese steel prevents Indian steelmakers from growing since they can't match the prices of Chinese steel which is highly subsidised by the Chinese government at different stages.
Reuters reported that the steel ministry has now asked the commerce and industry ministry to investigate cheaper steel imports from China, and Vietnam too which imports steel from China and manufactures steel products to export to India.
India, the world's second-biggest crude steel producer after China, turned net steel importer in the fiscal year through March and the trend continued with finished steel imports scaling a five-year high in April and May, according to provisional government data. Meanwhile, the government is set to extend the anti-subsidy duties already imposed on welded stainless steel pipes and tubes from China and Vietnam, ET has reported. The Directorate General of Trade Remedies (DGTR) has proposed the government should continue with the countervailing duties — first imposed in 2019 — on welded stainless steel pipes and tubes imported from China and Vietnam. The ministry usually approves such proposals.
A steelworkers' union planning to begin industrial action over Tata Steel UK future plans for its Port Talbot plant in Wales on Monday called off their strike, saying further investment talks had been assured. Unite the Union had said they would begin their strike action from July 8, leading to Tata Steel UK challenging the balloting process and also bringing forward a planned closure of blast furnaces.
The company welcomed Unite's decision against a strike and shelved the early closure plans.
"We have received written confirmation from Unite Union that with immediate effect they are suspending their current action short of a strike as well as the potential strike action due to commence on Monday 8 July," said a Tata Steel spokesperson.
"As a result, and given we can now be confident of ensuring appropriate resourcing of activities to operate safely, we will halt preparations for the early cessation of operations on Blast Furnace 4 and the wider heavy end in Port Talbot, planned for this week - we welcome the fact that we have avoided having to progress down this path," the spokesperson said.
The steel demand is expected to grow in the range of 9-12 per cent during the ongoing 2024-25 fiscal, according to India Ratings and Research (Ind-Ra). The demand will be supported by steady growth in the end-user industries such as automobile and infrastructure sectors, the rating agency said in a report on Tuesday.
The agency forecasts the steel demand growth in the range of 9-12 per cent year-on-year for FY25, it said.
"Raw material and finished goods prices are expected to be range-bound on a moderate recovery in global demand.
"Domestic players are likely to see stable credit metrics, due to higher profitability and improved operating cash flows amid debt-led capex," Rohit Sadaka, Director and Head, Materials and Diversified Industrials at Ind-Ra, said.
The agency further said that it expects the global steel demand to be steady with some moderation in China demand due to its transition to low carbon initiatives and moderate demand from the European Union (EU) but supported by growth in emerging economies such as India.
India produced 120 million tonne (MT) of crude steel during financial year ended March 31, 2022, Steel Minister Ram Chandra Prasad Singh has said.
At 120 MT, the output was about 18 per cent higher compared to the country's production in the preceding fiscal year.According to official data, India produced around 102 MT steel in 2020-21.
"Steel sector in India has traversed a fascinating journey from a mere 1 MT at the time of independence to 120 MT in the last (2021-22) financial year," a steel ministry statement quoted Singh as saying at National Metallurgist Award 2021 on Wednesday.
Steel Authority of India Ltd has added 15.9% over last one month compared to 10.17% gain in S&P BSE Metal index and 1.83% rise in the SENSEX
Steel Authority of India Ltd gained 2.8% today to trade at Rs 44.1. The S&P BSE Metal index is up 1.1% to quote at 10518.25. The index is up 10.17 % over last one month. Among the other constituents of the index, Jindal Steel & Power Ltd increased 1.8% and JSW Steel Ltd added 1.79% on the day. The S&P BSE Metal index went down 7.3 % over last one year compared to the 15.4% surge in benchmark SENSEX.
Steel Authority of India Ltd has added 15.9% over last one month compared to 10.17% gain in S&P BSE Metal index and 1.83% rise in the SENSEX. On the BSE, 54758 shares were traded in the counter so far compared with average daily volumes of 17.21 lakh shares in the past one month. The stock hit a record high of Rs 60.1 on 08 Apr 2019. The stock hit a 52-week low of Rs 29.5 on 23 Aug 2019.
U.S. Steel and ArcelorMittal have been raising steel prices of late.
Both steelmakers, two of Northwest Indiana's largest employers, have raised flat-rolled steel prices three times in less than a month.
U.S. Steel has increased prices by $110 a ton since Oct. 25, and is now charging a target price of $590 for hot-rolled steel and $790 a ton for cold-rolled coil and hot-dipped galvanized, according to the trade publication Argus Metals. ArcelorMittal has boosted prices to $600 a ton for hot-rolled steel and $810 a ton for cold-rolled coil and hot-dipped galvanized.
Steel production in the United States is up 2.3% so far this year, according to the American Iron and Steel Institute. But low steel prices have hammered steelmakers financially, with U.S. Steel losing $84 million and ArcelorMittal $539 million in the third quarter.
It's taken a toll on Northwest Indiana, where U.S. Steel is idling East Chicago Tin and Blast Furnace No. 8 at Gary Works, resulting in about 150 layoffs. ArcelorMittal is idling Blast Furnace No. 3 at ArcelorMittal Indiana Harbor in East Chicago.
Steel prices have been depressed because of a number of factors, including sagging demand from automakers after four straight years of more than 17 million units sold, record imports of appliances, a slowdown in the manufacturing sector, and stagnant spending on construction and infrastructure.
The steel price tracking service Steelbenchmarker reported that as of the week of Nov. 11 hot-rolled band was selling for an average $557 a ton in the United States, cold-rolled coil for $775 and standard plate for $650 a ton.
Standard plate prices fell 14%, cold-rolled coil prices ticked up by 2%, and hot-rolled band prices were flat.
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India has initiated a probe into an alleged subsidised export of certain steel products by Indonesia, following complaints by domestic industry. The petitioners have alleged that the producers/exporters of certain steel products in Indonesia have benefited from the actionable subsidies provided at various levels by the Indonesian government. The commerce ministry's investigation arm Directorate General of Trade Remedies (DGTR) has started the probe to see whether the subsidy programmes are impacting the Indian industry.
Indian Stainless Steel Development Association (ISSDA), Jindal Stainless, Jindal Stainless (Hisar) and Jindal Stainless Steel have filed an application on behalf of domestic industry before the directorate, alleging subsidisation of these products by Indonesia.
They have requested for initiation of an anti-subsidy investigation for levy of countervailing duties on imports of the goods.
According to a notification of the DGTR, it has found evidence of "countervailable subsidies" on production and export of the goods.
Such subsidised imports are causing material injury to the domestic industry, it said.
In view of this, "the authority hereby initiates an investigation into the alleged subsidisation and consequent material injury and threat of injury to the domestic industry," it said.
The directorate would determine the existence, degree and effect of alleged subsidisation.
If it is established that subsidies by Indonesia is impacting domestic industry, the DGTR would recommend the amount of countervailing duty, which if levied, would be adequate to remove the injury to the domestic industry.
Under the global trade rules of the World Trade Organisation (WTO), a member country is allowed to impose anti-subsidy to countervailing duty if a product is subsidised by the government of its trading partner.
These duties are trade remedies to protect domestic industry. Subsidy on a product makes it competitive in price terms in other markets. Countries provide this to boost their exports.
India and Indonesia are members of the WTO. Indonesia is a major trading partner of India.
The bilateral trade between the countries have increased to USD 21.12 billion in 2018-19 from USD 20.4 billion in the previous fiscal. Trade balance is in the favour of Indonesia.
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BHUBANESWAR : The Indian steel industry is seeking a safeguard duty of 25% ad valorem on a wide range of steel products in the face of a sharp and significant increase in imports.
In a petition filed with the Directorate General of Trade Remedies, the Indian Steel Association (ISA), on behalf of domestic steelmakers, has argued that as a consequence of duties imposed by the USA, and consequently by the EU, Turkey and Canada, steel exports from some Asian countries are being diverted to India.
Steel exporters from South Korea, Japan, China, and Asean countries have diverted as much as 43% of the volume, or 1.204 million tonnes, that they lost from the US into India, the petition claimed.
Domestic steelmakers, who had convinced the government to impose trade remedial measures in 2016 and 2017, argue that whatever gains those measures achieved will be eroded if the government failed to immediately impose safeguards against steel imports. They expect the trend to worsen with the Eurasian Economic Union – which includes Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan – also having initiated safeguard investigations.
The ISA petition seeks a tapering safeguard duty on semis, flats, longs, pipes and tubes, stainless steel and railway products, over a period of four years – starting with 25% in the first year and going down to 22% in the fourth year.
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NEW DELHI: India fears China could soon start flooding excess steel into its market after the United States raised tariffs on Chinese products due to the escalating trade war between the world's two largest economies, according to three government sources and four industry officials.
As a result, the Indian steel industry has asked the Indian government to put in so-called safeguard duties of as much as 25 percent to protect it from growing imports. These would be imposed on steel that the government determines has been dumped in India at prices below the cost of production.
Since last year, China and the United States have been locked in a trade conflict as Washington seeks to fix the trade balance, currently tilted in favour of Beijing. The two nations have raised or threatened to raise tariffs on each other's goods, moves that could re-draw trade flows and that have threatened to derail the global economy.
"China has excess (steel) capacity and there is a concern they could re-route it through other countries like Vietnam and Cambodia into India," an Indian government source with direct knowledge of the matter said.
"Steel sector is vulnerable," the source said, declining to be identified due to the sensitive nature of discussions.
India, the world's second-largest steel producer, turned net importer in the year ended March 31, 2019 after a gap of three years. That is because the country lacks the capability to produce high-quality steel and has lost some of its global clients to cheaper exports from China, Japan and South Korea.
"China, Japan, Korea which are major exporters to U.S., Europe and Canada, because of trade actions, they are also diverting steel into India," Seshagiri Rao, joint managing director at JSW Steel LtdNSE 4.37 %, told Reuters.
"It is very much essential for government of India to increase the safeguard duty to 25 percent as soon as possible," said Rao. Currently, there are a range of such duty levels. Last month, steel companies JSW, Steel Authority of India , Tata Steel, Jindal Steel and PowerNSE 5.85 % - controlling over 45 percent of India's total steel production - met with government officials to ask for safeguards, according to a source who attended the meeting.
During the meeting, Steel Secretary Binoy Kumar, the top bureaucrat in the Ministry of Steel, also said that the steel industry was at risk from global excess capacity, the source said.
Kumar said India need to act soon to protect its fragile steel industry from predatory imports as it would be difficult to revive it if the situation was allowed to deteriorate for three-to-four years. However, he said a decision on safeguard duties has not yet been taken.
The steel ministry did not respond to Reuters' emails and phone calls seeking comments. Neither did SAIL, Tata and JSPL.
"What we are seeing is that part of displaced exports is already making inroads," said Arnab Kumar Hazra, assistant secretary general at the Indian Steel Association, which represents major steel producers. There was therefore every reason to argue for safeguard duties given the perceived threat, he said.
NEW DELHI: Steel demand in India is expected to grow above 7 per cent in the current as well as next year, according to the World Steel Association.
The global steel body in its report, titled 'Short Range Outlook April 2019', said it forecasts that global steel demand may reach 1,735 million tonne (MT) in 2019, a rise of 1.3 per cent over 2018.
In 2020, the demand is projected to grow 1 per cent to 1,752 MT, it said.
"In developed economies, steel demand grew by 1.8 cent in 2018 following a resilient 3.1 per cent growth in 2017. We expect demand to further decelerate to 0.3 per cent in 2019 and 0.7 per cent in 2020, reflecting a deteriorating trade environment," the body said.
Steel demand in emerging economies, excluding China, is expected to grow 2.9 per cent and 4.6 per cent in 2019 and 2020, respectively, it said.
For India, it said, "The wide range of continuing infrastructure projects is likely to support growth in steel demand above 7 per cent in both 2019 and 2020." In developing economies in Asia, excluding China, the demand is expected to grow by 6.5 per cent and 6.4 per cent in 2019 and 2020, respectively, making it the fastest-growing region in the global steel industry, it added.
The global association represents steel producers, including nine of the world's 10 largest firms, national and regional steel industry associations, and steel research institutes. Its members represent around 85 per cent of global steel production
Nikkei reported that world's fourth-largest iron ore supplie Fortescue Metals Group expects Chinese steel production to keep growing despite an economic slowdown as government stimulus stokes demand. FMG CEO Ms Elizabeth Gaines told Nikkei “Based on discussion with customers and other key figures, Fortescue sees a 3% to 4% increase in crude steel production in China this year. In addition to the Chinese led Belt and Road Initiative for building ports, highways and railroads across Eurasia, the government's focus on further infrastructure development" at home is also underpinning demand for steel, and thus for iron ore. Continued investment in infrastructure is a way to continue to stimulate the economy. High-speed rail projects have been announced and new airports built.”
She added “The trade war with the US, that is weighing on the Chinese economy, has no direct effect on China's steel sector. Steel produced in China is consumed domestically and very little is exported to the US. But there might be some indirect impact.”
China, which accounts for half the world's crude steel output, churned out a record 928 million tonnes last year, up 10% from 2017.
Domestic iron ore prices are likely to rise by three to four percent in 2019 on account of global supply glitch, rating agency Crisil said.
"We foresee domestic iron ore prices rising three to four percent during 2019. This would have a direct bearing on 62 percent of the steel production that is based on supply from merchant miners," Crisil Research Senior Director Prasad Koparkar said in a statement.
Further, domestic steel prices are likely to soften following global cues, he said.
"This would heap pressure on margins of steel makers who lack captive iron ore supply - especially long steel players - impacting their gross spreads by two-four percent," he added.
Global iron ore prices, the rating agency said, have surged 30 percent to USD 90 per tonne as of February 2019 from USD 69 per tonne in December 2018 because of supply disruption at Vale's mines in Brazil, which account for 90 percent of the country's production of high-grade ore.
Given that China sources 20-25 percent of its 1.06 billion tonne iron ore imports from Brazil, the disruption would keep global prices elevated in the near term as offsetting shortage takes time. "That said, moderating demand growth prospects in China could weigh on the prices in the second half of 2019, keeping them at USD 72-75 per tonne on average for the year," it said. "That augurs well for Indian miners. After a continuous decline since November, the local miners took price hikes of Rs 600-700 per tonne for 62 iron ore fines and Rs 800-900 per tonne for pellets in February," it said.
Elevated global prices, expectation of further depreciation of rupee, and modestly healthy demand growth prospects of 5.5-6.5 percent in domestic steel industry are expected to provide reasonable room for domestic miners to enjoy high prices through 2019, especially in the first half.
Amid the rising concern over cheap steel imports from China and countries that have signed a free trade agreement, some traders in India are worried about heavily discounted steel imports from Iran, which is facing US economic sanctions.
The first consignment is expected in two tranches of 32,000 tonnes and 50,000 tonnes from Bandar Imam Khomeini port and would be discharged at Nhava Sheva and Kandla ports in next few days, sources said.
In order to circumvent import restriction due to sanctions, the paper work is being routed through Dubai and line of credit is opened in euro or United Arab Emirates Dirham (AED).
Iranian mills are pricing steel lower than Chinese mills and are offering a discount of about $85 a tonne compared to global benchmarks, as their domestic demand is weak and they are not able to export legally due to US sanctions.
Though India is exempted from importing oil from Iran under US sanctions, it cannot trade in any other commodities.
Explaining the modus operandi, sources said a trader with an office in Dubai procures steel products from Iranian mills and raises a bill with loading port as Jebel Ali. The certificate of origin for the material is shown as Dubai even though there are no steel mills there. The Indian customs does not check such minute details. Once the material lands in India, payment is credited in euros in an European bank.
Flood gates of cheap imports from Iran are expected to open once imports in small quantity succeeds and put pressure on Indian steel companies that are already bogged down by rising imports from FTA countries such as Korea and Japan, besides China, sources said.
Iran has a steel production capacity of 34 million tonnes per year. It has set a target to achieve an annual production capacity of 55 million tonne and export about 25 million tonnes a year by 2025. The World Steel Association has ranked Iran as the world’s 11th biggest steel producer.
World Steel Association (worldsteel) has said in its latest report that India has jumped ahead of Japan to become world's second largest steel producing country in the world.
The report added that crude steel production of India in 2018 stood at 106.5 MT, an increase of 4.9 percent from 101.5 MT in 2017. On the other hand, Japan Japan produced 104.3 MT in 2018, down 0.3 percent compared to 2017
China is still on top with its crude steel production in 2018 reaching 928.3 Mt, up by 6.6% on 2017. According to the report, the crude steel output of China increased 6.6 percent to 928.3 million tonnes (MT) in 2018 from 870.9 MT in 2017. The share of China in global crude steel production jumped from 50.3 percent in 2017 to 51.3 percent in 2018.
Global crude steel production in 2018 stood at 1,808.6 MT from 1,729.8 MT in 2017, a jump of 4.6 percent, said the report.
The US was at the 4th position as it produced 86.7 MT of crude steel in 2018. The other nations in the Top 10 are South Korea (72.5 MT, 5th place), Russia (71.7 MT, 6th), Germany (42.4 MT, 7th), Turkey (37.3 MT, 8th), Brazil (34.7 MT, 9th) and Iran (25 MT, 10th).
The report showed that Italy produced 24.5 MT of crude steel in 2018, while France's output was 15.4 MT.
In 2018, annual crude steel production for South America was 44.3 Mt, which is 1.3% more than 2017. Brazil produced 34.7 Mt in 2018, a jump of 1.1% compared to 2017.
India's finished steel production during April to December period of the current financial year (FY19) rose by 4.5 per cent to 97.358 million tonnes (mt) while the country's consumption grew by 8.4 per cent to 71.862 mt in the same period, a Steel Ministry's report said.
However, India's finished steel export during the first nine months of 2018-19, was down by 38.5 per cent to 4.675 mt over the same period of 2017-18 and imports during the period under review stood at 5.908 mt, down by 3.1 per cent over corresponding months of previous fiscal.
India was a net importer of total finished steel in April-December 2018.
"Gross production of total finished steel was at 97.358 mt, and grew by 4.5 per cent during April-December 2018 over the same period of last year," the ministry's Joint Plant Committee's (JPC) report said.
It also said, "India's consumption of total finished steel saw a growth of 8.4 per cent in April-December 2018 (71.862 mt) over same period of last year, under the influence of a rising indigenous supply side.
Steel Authority of India (SAIL), Rashtriya Ispat Nigam Ltd (RINL), Tata Steel Ltd (TSL), Essar, JSW Ltd and Jindal Steel and Power Ltd (JSPL) together produced 54.154 mt during April-December 2018 which was a growth of 6.2 per cent over same period of last year.
The rest, 43.204 mt, came from the other producers, clocking a growth of 2.4 per cent over the same period of previous year.
According to it, the production of total finished steel was at 11.422 mt in December 2018, up by 4.3 per cent over corresponding month of previous year and it was up by 4.9 per cent over November 2018.
Consumption stood at 8.339 mt in December, up by 9.4 per cent over year-ago month and was also up by 9.2 per cent over previous month (November 2018), the report said.
Imports in the last month only, stood at 0.548 mt, down by 2.5 per cent over corresponding month of previous year and was up by 6 per cent over November 2018.
"Exports stood at 0.367 mt in December 2018, down by 61.9 per cent over December 2017 and was up by 7.9 per cent over November 2018," it added. Source: Metal Junction Source: India Brand Equity Foundation
Baraghata Industrial Area, Gwalior, MP, India
A 39 Anand Nagar, Gwalior, MP, India
