CAN INDIA BE THE NEXT CHINA?

India is currently the world’s 8th largest steel producing country – with nearly 33 million tonnes of crude steel output in 2004 – and is increasingly being talked of as the next China. With a 12 percent increase in supply in the first half of this year, Indian steel production is growing strongly. Now the government is working on plans for a massive expansion. But, unless Indian demand also rises quickly, excess capacity will develop and put pressure on world markets.

The Indian government’s new National Steel Policy has not yet been approved, but steel minister Ram Vilas Paswan recently revealed its broad outlines to parliament. The chief goal is to increase steel production to 110 million tonnes by the 2019/20 financial year. This would mean tripling the current rate.

Because the government no longer regulates the steel sector, as it did until the early 1990s, it does not actively plan or implement steelworks expansions – other than at the state-owned companies. It now sees its role as facilitating growth by removing impediments and bottlenecks, particularly on the supply side of the industry.

So the new policy will include a series of measures designed to improve the availability of raw materials such as iron ore and coal. It will also encourage the creation of infrastructure such as the roads, railways and ports that will be required to support the steel industry’s growth.

Iron ore supply is a sensitive issue in India. The country has large reserves of high-grade material, but some of the mining, processing and transport facilities are inadequate. The government is expected to take steps to restrict exports in order to ensure a sufficient supply to the expanding domestic industry.

India is currently the world’s third largest iron ore exporting nation – behind Australia and Brazil – and local traders have been largely responsible for the development of a substantial spot market to cater for Chinese demand. This business may be curbed if the ore is needed to keep domestic mills supplied.

Coal is a different matter. India has large reserves of coal, but the quality is such that it needs to be blended with imports of high-grade coking coal to produce adequate blast furnace feed material. From time to time, a shortage of coking coal has constrained Indian steel production; hence the government is encouraging steel companies to secure supplies by investing in coal mines abroad. Tata Steel recently bought a stake in an Australian mine.

Many Indian steel makers already have plans to raise their production in line with the government’s target. State-owned enterprises, Sail and Vizag, propose adding a total of about 14 million tonnes of annual capacity by 2010/12. Tata Steel is raising output at its existing works from 5 million tonnes per year to 7.5 million tonnes per year and is also contemplating a new works of 5 million tonnes annual capacity. Many other private sector steel companies are implementing plans for multi-million-tonne expansions.

The government says it also wants to attract more foreign investment in steel. The biggest foreign-backed project so far is Posco’s intention to build a new plant in eastern India to take advantage of local iron ore. This unit will have an initial capacity of 3 million tonnes per year, rising eventually to 12 million tonnes annually. Among the other companies looking at investing in India is Mittal Steel, the world’s largest producer, which is domestically owned.

The government acknowledges India’s low per capita steel consumption – less than 30kg compared with the world average of about 150kg – and says it wants to stimulate growth in demand to improve the quality of life, especially in rural areas. So the new steel policy will include measures to strengthen distribution channels, to develop new steels suited to rural needs, and promote the use of the material generally.

India’s per capita steel consumption has increased by close to 50 percent in the last ten years. But a lot more will have to be done if it is to grow in line with production – as this means rising threefold in the next 15 years. India has China for a model, but it remains to be seen whether such large-scale advances in demand are achievable.

It is relatively straightforward to install new steelmaking capacity, but not easy to develop new markets to consume it. The clear danger is that India will build up a large additional steel producing potential without having a comensurate domestic market. The country could then become a significantly bigger exporter, with potentially disruptive consequences for steel markets in other regions of the world.

SOURCE: MEPS-INTERNATIONAL STEEL REVIEW

Price trend

No increase in steel price for next three months: SAIL

“I feel that this is just a temporary measure by the government. If the government is not going to roll back the export duty and the inputs costs remain as high, we might consider revising our decision after three months.”

From correspondents in Delhi, India, 05:31 PM IST Public sector major Steel Authority Of India Ltd has ruled out any increase in the prices of its products in the next three months, its chairman said Friday. via India eNews

http://www.topix.com/business/steel/2008/05/no-increase-in-steel-price-for-next-three-months-sail

spring steel strip-heat treatment

The heat-treatment process of any kind of steel is very critical and important.One cannot get the desired results, until and unless heat treatment is done properly.

Hardening temperature,tempering temperature,cooling period,soaking time,etc. are a number of factors which if not maintained properly, the desired hardness and physical properties cannot be attained.

In spring steel strips, the required hardness of the finished components varies from 40HRC to 55HRC. This can be attained in the same material , by changing the cycle of heat treatment.

MODERN PRODUCTION METHODS OF STEEL

Blast furnaces have been used for two millennia to produce pig iron, a crucial step in the steel production process, from iron ore by combining fuel, charcoal, and air. Modern methods use coke instead of charcoal, which has proven to be a great deal more efficient and is credited with contributing to the British Industrial Revolution. Once the iron is refined, converters are used to create steel from the iron. During the late 19th and early 20th century there were many widely used methods such as the Bessemer process and the Siemens-Martin process. However, basic oxygen steelmaking, in which pure oxygen is fed to the furnace to limit impurities, has generally replaced these older systems. Electric arc furnaces are a common method of reprocessing scrap metal to create new steel. They can also be used for converting pig iron to steel, but they use a great deal of electricity (about 440 kWh per metric ton), and are thus generally only economical when there is a plentiful supply of cheap electricity

                                                                                            SOURCE: Wikipedia

Steel Prices to melt down in future

Leading steel producers today offered to reduce prices of hot rolled coils by Rs 4,000 a tonne, as part of efforts to ease inflation.

“We have offered to reduce prices by Rs 4,000 per tonne on Hot Rolled coils,” a senior steel industry official said after a meeting with Steel Secretary Raghav Sharan Pandey.

The producers would also meet Prime Minister Manmohan Singh later today to discuss, among other issues, the pricing situation.

Steel prices have risen by 49 per cent during the past one year triggering concerns that soaring prices of the metal was augmenting inflationary pressures on the economy.

The government had recently decided to impose export duty on steel products following a sharp in rise in prices of the metal and its increasing demand-supply mismatch.

 

Earlier, the government had charged the steel industry with cartelisation and raising prices of the metal in tandem.

 

Leading steel makers who formed the Indian Steel Alliance (ISA) as their umbrella organisation dissolved it amid fears that the industry was indulging in cartelisation.

 

Incidentally, ISA had been on the forefront of a campaign against imposing export duty and setting up a regulator for the industry.

 

Among those who met the Steel Secretary included Tata Steel Managing Director B Muthuraman, JSW Steel Vice Chairman and Managing Director Sajjan Jindal, SAIL Chairman Sushil Kumar Roongta, Ispat Industries Managing Director Vinod Kumar Mittal and Essar Steel chief Shashi Ruia.

Press Trust of India / New Delhi May 07, 2008