Despite weakening demand, steel prices in India are unlikely to fall in January. Normally, steel makers revise prices on the first of every month. Seshagiri Rao, joint managing director and group CFO, JSW Steel said, “There won't be any price increases in January.” He said there is a month's lag effect in international and Indian steel prices and though, prices have come off, internationally, from $720 (Rs 38,000) a tonne to $600 (Rs 31,620) a tonne, domestic prices continue to be in the range of Rs 34,000 per tonne. Ankit Miglani, deputy managing director, Uttam Galva Steel seconded the view. He said, “We are not seeing prices coming down in the near future. They will be more or less remain at the same levels as now.”
Essar Steel is somewhat optimist on the possibility of a price rise. The company, without elaborating, said, “The price outlook looks positive.” However, the slowdown in growth for steel demand is a concern for steel makers. Rao said the steel production may end up at around four per cent higher than last year but that is nowhere near the projected 8-10 per cent growth. An industry official said, “Even though the demand has fallen to three per cent, it is still more than last year. There is definitely a case for rise but can't comment now.” According to the Joint Plant Committee's data, the increase in real consumption of steel in April-November stood at 3.9 per cent, at 45 million tonnes. Total production in the period rose 7.9 per cent. Rao said, “Steel production might increase in the coming months but demand pick-up will take longer to revive.”
An analyst tracking the sector said, “The domestic demand is not robust at all, in fact, it is sloppy at the moment but the companies have been able to maintain prices because of the coking coal push. Fall in imports due to the rise in domestic production is also helping the companies in maintaining steel prices.” November month alone saw a sharp rise in steel imports to the tune of close to a million tonne. Total imports from April-November stood at 4 million tonne as against five million tonne in the same period last year. The analyst said, “Steel imported in the month of November was booked in September.
The rupee fall coupled with fall in steel prices internationally have caused heavy losses to traders importing steel. Imports will fall mirroring the current year's trend.” Coking coal, an important raw material in steel making has seen a fall in prices. The FOB price of coking coal in the December-quarter was about $290 per tonne and steel makers are expecting the price to be at $240 in the January-quarter. However, a fall in the rupee has completely wiped out any cost savings that steel makers were expecting with this price fall.

The Board of Visakhapatnam Steel Plant has given its nod for new units in the company's vicinity here. These include setting up of a seamless tube mill at an estimated cost of Rs 2,300 crore and installation of coke oven battery-5 for Rs 2,620 crore. The company has already taken up a Rs 12,300-crore expansion plan, which is nearing completion, sources said. As a major initiative of expanding its product mix capacity, the Navratna company would set up the seamless tube mill of 400,000 tonnes per annum capacity. VSP would produce seamless tubes of 5.5 to 18 inch with a provision to produce even less than 5.5 inch tubes. Currently, only up to 14 inch tubes are being produced in the private sector. Once VSP completes its plan to produce 18 inch and above tubes, it will become the only steel plant in the country to produce such high dia tubes, AP Choudhary, chairman and managing director, said. The new mill will be completed in 30 months from the date of order placement. The proposed tube mill will cater to the needs of oil exploration and refining, gas, petrochemicals, power sector, fertilisers as well as engineering industries. VSP will have the advantage of being shore-based to export these tubes to neighbouring nations like Malaysia, Singapore and Korea. The mill will either be through a joint venture or standalone, he said. Besides, in its journey to become a 20-mtpa company by 2020 at a single location, VSP will build the coke oven battery-5 along with a byproduct plant and its associated facilities to meet its metallurgical coke needs. MN Dastur & Co, the consultant, has already made the detailed project report. Choudhary said of the Rs 2,620 crore envisaged for new coke oven plant, around Rs 500 crore would be spent on the environment management system.

Steelcast LLC, a 50:50 joint venture between, Gujarat-based Steelcast Ltd and US-based Michigan Steel, will make casnub bogies for US railways in the large capacity wagon segment of 110 tonnes and 125 tonnes. The company is awaiting certification from the Association of American Railroads (AAR) for its manufacturing facility in Bhavnagar in Gujarat. An inspection team will visit Bhavnagar facility of Steelcast Ltd in the month of February 2012. It seems, Chinese suppliers are focusing more on their domestic market, hence for players outside China, there is a huge potential in US railroad market, said Vaughn Makary, president and CEO, Michigan Steel. According to Makary, the cars or wagons will be largely used for dry cargo transport for the commodities like coal, iron ore, plastic pallette and automobile. "US railways' freight transport is one of the largest in the world. BSE-listed Steelcast Ltd has invested Rs 25 crore for the facility in Bhavnagar to make casnub bogies, mainly used for freight wagons. Currently, the plant has a capacity of 17,000 tonnes of steel casting products, which will be ramped up to 24,000 tonnes by December 2012. Once the company gets the certificate from the US agency, it will be able to bid contracts there. This would also give us advantage to bid for project of Indian Railways in future. We are hopeful for newer opportunities emanating from the proposed Delhi-Mumbai Freight Corridor as well, said Chetan Tamboli, chairman and managing director, Steelcast Ltd. According to Tamboli, the US JV is likely to achieve revenues in excess to Rs 200 crore over the next five years. "In the first year itself, we expect sales of Rs 40 crore from Steelcast LLC," he said. The US JV was formed in June 2010. By 2013, the company is looking to expand its manufacturing capacity to 36,000 tonnes per annum, for which an investment of Rs 45 crore is being planned. Steelcast Ltd has registered sales of Rs 100 crore in the first half period (April-December) of the current financial year.

The Rourkela Steel Plant (RSP) has shut down one of its sinter plant and a boiler of its captive power plant (CPP) as the Orissa State Pollution Control Board (OSPCB) denied the steel making unit to give any more time to operate these plant. RSP has complied with the directive of SPCB and has shut down the Sinter Plant-I and MP Boiler-3 of CPP-I, said a statement from the company. On December 19, the OSPCB had ordered the Steel Authority of India Ltd (SAIL) unit to close units of its captive power plant (CPP) and sinter plant for violating environmental norms. The stern action was taken after the steel producer failed to take necessary measures to control pollution from these units. The RSP authority had then requested for some more time to take corrective action. RSP has currently has two sintering units. These units were built during the initial phase construction and did not have necessary technology to reduce pollution. Even though RSP has been aggressively expanding its capacity along with new climate-friendly technology in the second phase, it did not have plans to upgrade these units. RSP clarified that it has already taken steps to reduce pollution levels. It also requested the government to reconsider their decision citing that the plant cannot sustain production for long if these two units are closed.

Local protesters have forced India's biggest iron ore miner, NMDC, to suspend production and shipments from a central state which accounts for two-thirds of its 25 million tonnes annual output. NMDC's mines in Chhattisgarh produce about 40,000 tonnes of the ore, which is vital for the steel industry, every day. Vast areas of the mineral-rich state are a stronghold of Maoist rebels and public protests against the government are common. "There is a total halt in iron ore transportation and mining as well. India, one of the world's biggest iron ore exporters, uses just over half its annual production of around 213 million tonnes at home. Most of NMDC's output is used domestically. Work at the Chhattisgarh mines has been disrupted for almost a week and NMDC said it was not sure when shipments would resume. The protesters are demanding the state-run railways improve the network in the area. Shipments stopped after the railways refused to supply wagons on fears they could be attacked. Piling stocks then forced suspension of production. Exports of iron ore have plunged due to rising export duties as the government pushes to conserve supplies for domestic steelmakers.

The Asian steel market may hold up better in the future than in other parts of the world although demand could be further dampened by a weak economic outlook, says OSK Research Sdn Bhd. The research firm also expected long steel producers to fare better as governments worldwide cannot avoid carrying out some pump-priming activities, which could help spur demand for long steel. "On the local front, steel mills are waiting with bated breath for the rollout of "mega" government projects under the Economic Transformation Programme which is expected to boost steel demand."However, concerns still linger over its smooth and successful execution," it said in a statement. OSK recently revised lower some of its estimates due to the global economy sluggishness. "We are trimming our fair values across the board as the steel stocks currently offer limited price upside.”We are "neutral" on most counters except Perwaja and Kinsteel, on which we add on a 10 per cent discounted cash flow valuation on their potential in securing the iron ore mine as well as our "buy" and "trading buy" recommendations, respectively," it added.

Entering 2011 on a strong note amid buoyant demand from construction, consumer durables and automobiles, the steel sector lost its sheen as the year progressed, impacted by inflation, high interest rates and rising input costs. It was on January 5 that credit rating agency Fitch predicted 7-9 per cent demand growth for steel in 2011, supported by an expected spurt in consumption by automobiles, white goods and construction sector. The government's continuous thrust on infrastructure spending fuelled expectations, which were bolstered by steel makers reporting strong top-line growth in the January-March quarter. JSW Steel clocked 34 per cent growth, Tata Steel, 18 per cent and SAIL 7 per cent. Bottomline also showed remarkable growth that quarter. However, even before the end of March quarter, an element of uncertainty started creeping in. Steel makers as well as the policymakers were virtually clueless on the likely demand and movement in the price of coking coal, an important raw material for making of steel. Already hardening, coking coal prices shot up to a record high of USD 330 per tonne during April-June, from USD 200 a year ago due to paucity of supply in the global markets on account of a major flood in Australia's Queensland province, a major international supplier. India's steel sector was then set to take a major hit as the slowing global economy began taking its toll on demand in Europe and the US. The Greek debt crisis and its spill over to the euro-zone eroded demand further in the following months. The writing on the wall became clearer. Indian steel makers had to start living with costlier raw materials throughout the year, with margins shrinking. They weren't able to pass on the inflated cost to the customers. The 'New Year' euphoria faded. For the April-June quarter, SAIL reported 29 per cent dip in net profit over the same quarter last year bearing the burnt of 'red-hot' coking coal price, which alone inflated its expenditure on raw material by Rs 588 crore. SAIL's turnover grew 19.7 per cent to Rs 11,891 crore over a year-ago. Steel makers started pinning hopes on the moderation of coking coal prices as output in Australian mines showed sign of stabilising. They also hoped for a pick up in domestic steel demand after the monsoon. Instead, demand remained subdued, coking coal price did not decline, interest rates continued to hardened, the rupee depreciated and the bottomline of steel makers went from bad to worse in the next three months.

The International Surface Inspection Summit is finally coming to India on 6 – 7 March 2012, at Orchid Hotel, Mumbai. The entire Indian metal industry is talking about the International Surface Inspection Summit, ISIS.INDIA 2012, which is finally coming to India and bringing the world's leading manufacturers of surface inspection systems (SIS) with it.
The manufacturers and users of surface inspection systems are coming together to discuss the latest developments and experiences. Automatic surface inspection systems are indispensable for modern metal productions. They are faster, cleaner and more reliable than even the best non-automatic solution. In a modern plant, these systems are a “must have”!
The ISIS.INDIA 2012 event addresses current developments in surface inspection for steel and nonferrous metal, with a special look at the large markets in India and throughout Asia. Reports from research will also illustrate where the future development is headed. An online registration form is located at http://www.isis-world.com for easy registration. For the first time participants in the event can actively shape the program, since they can ask questions about surface inspection in advance. These will be collected and discussed at the congress in the form of thematic workshops. Other contents include, among others: 3D in surface inspection, the improvement of methods and tools, as well as requirements for inspection systems of tomorrow.
All information and news about the event can be found on the conference website at: http://www.isis-world.com/. One can also obtain information on participating as an exhibitor or sponsor, as well as the online registration form for participants.

JSW Steel, India's No. 3 steelmaker, posted a bigger-than-expected 56 percent fall in quarterly net profit on higher raw material costs and foreign exchange losses, and said shortage of iron ore supplies continues to be a major concern. JSW Steel, in which Japan's JFE Holdings owns about 15 percent, said it expects higher steel demand in 2012 but will be able to sustain operations at the current 90 percent capacity only if iron ore supplies are made available. To sustain production, it is necessary to get relief on iron ore," MVS Seshagiri Rao, joint managing director, told reporters. The company's iron ore stocks will last for another three-four months. Production at JSW Steel's Vijayanagar plant in southern Karnataka state has been affected since August after India's top court put an interim ban on mining in the state due to illegalities in some mines. Late last year, the steelmaker cut its production and sales forecast for the current fiscal year by 14 percent and 13 percent, respectively, due to acute shortage of iron ore.
The company expects steel demand in India to rise by 5 percent in the current fiscal year ending in March, but expects demand to rise further in the second half of 2012. It hopes to produce between 9.5 to 10 million tonnes in the next fiscal year starting in April, up from the current year's output target of 7.5 million tonnes. Steel demand in India has been growing at near-double-digits over the past few years, pushing local firms to boost capacity and attracting global steelmakers including ArcelorMittal and POSCO to set up base in the country. JFE, the world's fifth-biggest steelmaker, in 2010 bought 14.9 percent of JSW Steel for $1 billion, and has said it would look to further boost its stake in the company.
JSW's standalone net profit in October-December, its fiscal third quarter, fell to Rs 168 crore from Rs 382 crore a year ago. Net sales rose 78.6 percent to Rs 5770 crore. Analysts on average expected the company to post standalone net profit of Rs 260 crore for the quarter. JSW said sales volume rose 20 percent from a year ago to 1.91 million tonnes during the quarter. Net margins for the quarter slipped to 15.9 percent from 17.2 percent a year ago, due to a combination of lower selling prices and higher costs. The company reported foreign exchange loss of Rs 500 crore for the quarter, which analysts mainly attributed to its coking coal imports. The company imports its entire coal requirement.

State industrial facilitation arm iNDEXTb inked a MoU with China Steel Corporation (CSC), a Taiwanese steel maker, to set up an electrical steel (ES) plant with one million tonne capacity at an investment of USD 1.2 billion (Rs 6,000 crore) at Dahej GIDC estate. The MoU was signed between Managing Director Industrial Extension Bureau (iNDEXTb) Mukesh Kumar and Chairman CSC (Taiwan) group J D Lin, in the presence of Gujarat Chief Minister Narendra Modi and Ambassador of Taiwan Ong Wen Chyi. "The electrical steel plant will have two lakh tonne production capacity in phase-I and by the end of phase-II it shall have an overall capacity of one million tonne per annum," a top iNDEXTb official said. CSC, Taiwan has incorporated a subsidiary China Steel Corporation (CSC) India, for setting up the plant in around 145 acres at Dahej GIDC estate. The company would be investing around USD 178 million (around Rs 900 crore) in the first phase, and totalling up to USD 1.2 billion (Rs 6,000 crore) by the second phase, expected to get completed by 2016. The investment has been approved by the Investment Commission, Ministry of Economic Affairs, Taiwan, an official statement said. The work for first phase is scheduled to commence from June 2012, while the plant is expected to go on stream from 2014. According to industry estimates, with increasing usage of transformers, generators and household appliances, the demand for electrical steel in the country in 2011 was over 5,00,000 tonnes. It is estimated to reach 6,70,000 tonnes by 2015. A six percent average growth rate is expected over the next five years, the industry estimates. The per capita steel consumption in India is currently pegged around 55 kg, which is projected to reach 150 kg by 2020.

Kobe Steel and Steel Authority of India Limited (SAIL) have agreed to establish a joint venture company to build a steel plant in India. Provisionally called SAIL-KOBE Iron India Private Limited, the proposed 50-50 joint venture will have its headquarters in New Delhi.
“The joint venture will bring about an era of path-breaking technological collaboration between the two advanced and modern companies, heralding a new dawn for the Indian steel industry,” said SAIL Chairman C. S. Verma. The two companies have so far been jointly working on a preliminary study to utilize the ITmk3 process developed solely by Kobe Steel since signing a memorandum of understanding in March 2010.
Itmk3 technology is the latest generation iron making technology where iron nuggets are produced by using iron ore fines and non coking coal. Conventional BF route requires iron ore lumps, sinter and coking coal to produce pig iron. ITmk3 technology produces high quality iron nuggets and the technology is also environmental friendly.

Though the slowdown in growth of Steel demand is a concern for Indian steel makers, they are optimist about the possibility of a price rise in 2012. Presently, the steel in the international market is priced between $600 to $750 a ton while in India, price is around Rs 34,000 per ton. According an industry official, even though the demand has gone down by 3%, still it is higher compare to 2010. During April-November 2011, the steel production was higher by 7.9% compared to same period last year and the consumption stood at 45 million tons. According to Seshagiri Rao, Joint Managing Director and group CFO, JSW Steel, the Steel production may increase in the following months but demand will take longer time to pick-up. Analysts said that the rise in production by the domestic companies reducing imports has helped the to maintain steady price in the market. But the fall in Indian Rupee against the dollar is worrying the Indian industries as the companies import most of the raw materials (coal and Iron Ore). As the currency falls, imports become more and more costly. Rupee declined by 8 paise against US dollar in early trade.