a review of developments in the global & indian steel industry · 2019 recorded at 68.5 mt...
TRANSCRIPT
A Review of developments in
The Global & Indian Steel Industry
Monthly edition
Issue No. 38
May 2019 (Covering April 2019)
Compiled on behalf of Indian Steel Association,
By Mr. Anup Kashyap,
Senior Executive-Technical
Strictly for Internal circulation
About the Report
❑ The Indian Steel Association introduced a monthly report titled ‘A REVIEW
OF DEVELOPMENTS IN GLOBAL & INDIAN STEEL INDUSTRY’, from August
2016.
❑ The report provides general background information reviewing the status
of the developments in the global and Indian steel industry, pertaining to
raw material, production & consumption, trade, shipping, pricing &
forecasts, country reportage, policy developments, economic parameters
etc.
❑ The consistent format of the report provides an insight into the relevant
aspects of steel scenario globally and domestically .
❑ The information has been sourced from independent third party databases,
knowledge sources and news reports, and the authenticity of the same has
not been independently verified by ISA.
❑ The report is issued in the last week of each month to the members of
Indian Steel Association , various ministries / departments / institutions.
Contents of the Report
SI.
No
Title Page
Number
1. Global Economic Development 4-7
2. Global Steel Development 8-15
3. Domestic Steel Development 16-21
4. Indian Economic Development 22-25
5. About ISA 26-31
GLOBAL ECONOMIC DEVELOPMENTS
4
Source: Global Forecasting Service
Country-wise Growth Forecasts
2019 - 2023
As of May 15th 2019
The assumptions for forecasts are available on the website of the Economist Intelligence Unit
In % 2019 2020 2021 2022 2023
India
Real GDP Growth 7.2 7.2 7.5 7.4 7.1
Inflation 3.3 3.2 3.9 4.4 4.1
China
Real GDP Growth 6.4 6.1 5.6 5.2 5.0
Inflation 2.5 2.4 2.6 2.8 2.7
U.S.A
Real GDP Growth 2.2 1.7 1.8 2.0 1.7
Inflation 2.2 1.4 2.2 2.1 1.8
Japan
Real GDP Growth 1.0 0.4 1.1 1.1 0.9
Inflation 1.4 1.6 1.0 1.1 1.3
EU 28
Real GDP Growth 1.5 1.6 1.8 1.8 1.7
Inflation 1.5 1.6 1.9 2.0 1.9
5
Source:Atradius_Economic_Research-Economic_Outlook_May_2019 6
➢ The global economy is losing steam in 2019 and 2020. After a tumultuous start to the year though,
positive policymaking developments have helped ease uncertainty. Central banks across advanced
markets have put their plans for policy normalisation on hold; China has ramped up fiscal and monetary
stimulus to boost its growth rate; and trade tensions had momentarily eased. Ongoing uncertainty
regarding the trade war continues to cloud the outlook but it remains relatively benign.
➢ Economic growth in emerging markets is edging slightly lower to 4.3% this year but will hold up
reasonably well beyond, rebounding to 4.7% in 2020. Emerging Asia and Eastern Europe are both slowing,
from 5.6% to 5.5% in 2020 and from 2.7% to 2.5% respectively. Latin America and MENA are both
expected to see worse performances in 2019 but gain some steam in 2020. Sub-Saharan Africa is
expected to see economic growth accelerate both this year and next.
➢ Insolvencies are expected to begin increasing in 2019 as the global economic growth loses steam. After a
modest 2% decline in 2018, corporate insolvencies are expected to increase 2%, marking the first annual
increase since the global financial crisis.
➢ The metals consumption growth of the most obvious candidate, India, is in line with GDP growth. Hence
the underlying weakness: there is no longer a need for price increases that trigger large investments
accommodating a rise in demand.
➢ In particular, capacity reductions in China and Europe have thus far been insufficient. The OECD Steel
Committee has concluded that there is still 24% overcapacity in the market. Moreover, steel demand is
weak now that there is pressure on car sales in the US, the EU and China.
Global Economic Outlook
May 2019
Source: United Nation-Report on Investment Trend Monitor 7
➢ Global foreign direct Investment (FDI) fell by 19 % in 2018,to and estimated US $ 1.2 trillion from US $
1.47 trillion in 2017.The third consecutive drops brings FDI flows back to the low point reached after
the global financial crisis.
➢ The decline was concentrated in developed countries where FDI inflows fell by 40% to an estimated US
$451 billion, mainly due to large repatriations of accumulated foreign earnings by United States
multinational enterprises (MNEs).
FDI inflows :Global and by group of economies,2007-2018 (billion of US Dollars)
Trend in Global FDI Inflows
GLOBAL STEEL DEVELOPMENTS
8
Source: World Steel Association 9
➢ World crude steel production for the 64 countries reporting to the World Steel
Association (world steel) was 155.0 million tonnes (Mt) in March 2019, a 4.9% increase
compared to March 2018.
➢ World crude steel production was 444.1 Mt in the first three months of 2019, up by 4.5%
compared to the same period in 2018. Asia produced 312.9 Mt of crude steel, an increase
of 7.0% over the first quarter of 2018. The EU produced 42.3 Mt of crude steel in the first
quarter of 2019, down by 2.0% compared to the same quarter of 2018. North America’s
crude steel production in the first three months of 2019 was 30.7 Mt, an increase of 4.0%
compared to the first quarter of 2018.
➢ China’s crude steel production for March 2019 was 80.3 Mt, an increase of 10.0%
compared to March 2018. India produced 9.4 Mt of crude steel in March 2019, down 1.0%
on March 2018. Japan produced 9.1 Mt of crude steel in March 2019, unchanged from what
it produced in March 2018. South Korea’s crude steel production stood at 6.3 Mt, up 2.8%
on March 2018.
➢ In the EU, Italy’s crude steel production for March 2019 was 2.3 Mt, down by 0.3% on
March 2018. France produced 1.4 Mt of crude steel in March 2019, an increase of 2.3%
compared to March 2018. Spain produced 1.4 Mt of crude steel in March 2019, an increase
of 5.9% on March 2018.
Global Steel Output
Source: World Steel Association 10
Region wise Crude Steel Production
As Per World Steel Association
RegionJan – Mar 2019 in
(MT)
Jan-Mar 2018 in
(MT)
% Change
EU-28 14.994 15.182 -1.2
Other Europe 3.317 3.654 -9.2
CIS 8.438 8.588 -1.7
N. America 10.742 10.343 3.9
S. America 3.518 3.905 -9.9
Africa 1.296 1.226 5.7
Middle East 3.176 2.738 16.0
Asia 109.054 101.546 7.4
Oceania 474 529 -10.4
World 155.009 147.712 4.9
Source: Steel Mint 11
Trend in Chinese Iron Ore Production and Price
➢ China’s world’s largest consumer and importer of
iron ore has witnessed fall in crude iron ore
production for April 2019.The production in April
2019 recorded at 68.5 MT ,down 2% against 69.8
MT in Mar 2019.
➢ On yearly basis, production picked up as against
67.47 MT in April 2018.For CY 19 ( Jan- Apr 19)
production recorded at 256.82 MT as against
257.82 MT in CY 2018 (Jan-Apr 2018).
➢ Monthly average global iron ore fines (Fe-62%)
increased sharply by 8% in Apr 19 at USD 93 per
ton, CFR China against last month at USD 86 per
ton, CFR China.
➢ Worlds major iron ore miners announced
reduction in output for 2019 amid, dam collapse
and cyclones in Australia.
➢ It is predicted that Global Iron Ore prices are
expected to remain on the higher side.
Source: Coal Mint Research 12
➢ Premium HCC prices were assessed at USD 206.25 per
tons FOB Australia.
➢ Indonesian low CV thermal coal prices are firming up
on higher offers for spot cargoes amid tight supply
compared with demand, especially as few Chinese
power plant utilities issued fresh tenders for seaborne
coals.
➢ Indonesian prices are expected to continue on uptrend
in the short term supported by the liquidity of recent
Chinese tenders, seeking various grades for may and
June loading.
➢ South African thermal coal prices have gained strength
despite stiffening global competition, boosted by firmer
demand from main export market India as buyers
replenish stock levels ahead season.
➢ Prices are anticipated to recover further with sellers
reducing discounts in light of scarce availability.
Trend in Coking Coal Prices
Source: Steel Mint 13
Quantity in tons
➢ United States witnessed a drop in export of raw materials in Q1 CY 2019,while finished steel exports
witnessed an increase, as per custom data. USA total crude steel production in Q1 CY 19 stood at 22.3
MT marginally down by 1% Q-o-Q against 22.57 Mt in Q4 CY 2018.
Highlights of USA Steel Industry
Source: Steel Mint 14
➢ South Korea’s flat steel export recorded 2 MT in April 2019 , inched up by 1% in comparison to 1.98
MT in previous month.
➢ Nation majorly export flat steel to China. However in the month of April. China’s domestic demand
remained strong bullish market sentiments and higher steel prices. On the Other hand korea actively
exported flat steel to Indian steel mills amid cost effective imports compared to domestic prices. Also
nation’s flat steel export increased amid robust domestic demand from Construction and Automobile
sectors in Japan.
➢ Meanwhile on yearly premise
nation’s flat steel exports ascended
by 16 % in April 19 as against 1.72
MT in corresponding month of
preceding year.
➢ During Jan- Apr CY 19 Korea’s
exports accounted for 8.14 MT
marginally rose by 2% from 7.98
MT in same time period previous
year.
Trend in South Korean Flat steel Export
Source: 15
➢ India has replaced Japan as the world’s second largest steel producing country as Japan’s production
fell by 0.3% to 104.3 MT in 2018 (CY 18),compared to 2017.Meanwhile India’s crude steel production
rose by 4.9 % to 106.5 MT in 2018 from 101.5 Mt in 2017.
➢ In context to country’s import figure ,Japan’s finished long steel imports registered unaltered Q-o-Q in
Q1 CY 19.
➢ In line raw materials Japan Coal and Iron Ore imports also down by 5-8% in Q1 CY 19
Japanese Steel Industry Outlook
DOMESTIC STEEL DEVELOPMENTS
16
Source:Joint Plant Committee 17
Region wise Re-Rolling Industry
Region Unit Capacity
(MT)
% share in
total
East 253 11.17 24
North 639 10.29 22
West 491 13.04 28
South 327 12.54 26
Total 1710 47.04 100
State Capacity
(MT)
% share in
total
Chhattisgarh 5.79 12
Karnataka 4.39 9
Maharashtra 4.07 9
Punjab 3.92 8
Tamil Nadu 3.76 8
Top 5 21.93 47
All Total 47.04 10
➢ The total annual capacity of Indian Steel
Industry has emerged as 47.04 Million
tons. The regional distribution is provided
in the table and indicates West Region has
the highest share with 28% in total
capacity, which is followed by South 26% ,
East 24% and North 22 %.
➢ The unit of Re rolling industry in India is
around 1710.
➢ The top 5 states in terms of capacity is led
by Chhattisgarh (5.8 MT,12% share in total
capacity),followed by Karnataka which is
4.39 MT and share is around 9%.The top 5
states of India contributes around 47% in
total capacity of re-rolling industry which
has the capacity of 21.93 MT.
Region Wise Re-Rolling Industry
State Wise Re-Rolling Industry
Source: 18
➢ Odisha-India’s largest Iron Ore producing state recorded rise in total iron ore dispatches at 6.82 MT in
Apr’19 as against 6.30 Mt in Mar 19.The figures exclude movement for export and dispatches of Miners
like SAIL and TATA. In the beginning of April 19 Odisha based merchant iron ore miners offered discount
amid fresh EC limit for the new fiscal year.
➢ Rungta Mines, India’s largest private merchant miner dispatched the iron ore at 1.70 MT in April
2019.The dispatch recorded an increase of 28% against 1.33 MT in Mar 2019.
➢ OMC ,state owned miner
recorded 5% increase in
dispatches to 0.84 MT as against
0.80 MT in Mar 19.
➢ Serajuddin mine recorded iron
ore production at 0.81 MT in Apr
19 down 7% against 0.87 MT in
Mar 19.Serajuddn mine produces
around 10 MT iron ore annually
and has EC limit of 15.5 MT.
➢ Essel mining dispatches stood
stable M-o-M at 0.57 MT
Domestic Iron Ore Production
Source: Steel Mint Research, One tonne of crude steel production requires about 1.6 times of Iron Ore
Trend In Domestic Iron ore price
Nov 2018-May 2019
3850
2900 3000 3000
3000
2850
3100
500
1500
2500
3500
4500
Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19
Indian, Fines /Lumps (NMDC, 6-40 mm , Fe-65%)Domestic Iron Ore(Fe-65%) Price-Rs. Per tonnes
Excluding of Royalty , DMF, NMET and GST @5%
DMF-District Mineral Foundation
NMET-National Mineral Exploration Trust
➢ The Domestic NMDC Iron Ore price was 3850 Rs per tons in November 2018. The
Prices remain constant during January to march 2019 to Rs 3000 per tons and saw a surge
of 100 Rs in May 2019 and was around Rs. 3100 per ton.
➢ The prices are for fines and Lumps for the size 6-40 mm with iron content of 65% and its
price are excluding of Royalty, DMF, NMET and 5% GST extra.
Source:Steel Mint price research 20
➢ Currently HRC (2.5-8 MM,IS2062) prices in traders market is around INR 41,000-41,500 (ex-
Mumbai),INR 41,200 per ton(ex-Delhi), and INR 43,500-44,000 per ton (ex-Chennai).Prices mentioned
above are basic and extra GST @ 18% will be applicable.
➢ Currently CRC (0.9 mm, IS 513) in traders market is around INR 45,000-46,000 per ton (ex-
Mumbai),INR 45,500 per ton(ex-Delhi) and INR 50,000 (ex-Chennai). Prices mentioned above are basic
and extra GST @ 18% will be applicable.
➢ Owning to Cheaper imports arriving to India from Korea and Japan amid free trade agreement have
pressured sales volumes in domestic market
Trend in Domestic Steel Price
INDIAN ECONOMIC DEVELOPMENT
21
Source: Ministry of Finance Government of India 22
➢ With the improvement in the economic scenario, there have been various investments in
various sectors of the economy. The M&A activity in India reached record US$ 129.4 billion
in 2018 while private equity (PE) and venture capital (VC) investments reached US$ 20.5
billion. Some of the important recent developments in Indian economy are as follows:• During 2018-19 (up to February 2019), merchandise exports from India have increased 8.85 per cent
year-on-year to US$ 298.47 billion, while services exports have grown 8.54 per cent year-on-year to
US$ 185.51 billion.
• Nikkei India Manufacturing Purchasing Managers’ Index (PMI) reached a 14-month high in February
2019 and stood at 54.3.
• Net direct tax collection for 2018-19 had crossed Rs 10 trillion (US$ 144.57 billion) by March 16,
2019, while goods and services tax (GST) collection stood at Rs 10.70 trillion (US$ 154.69 billion) as
of February 2019.
• Proceeds through Initial Public Offers (IPO) in India reached US$ 5.5 billion in 2018 and US$ 0.9
billion in Q1 2018-19.
• India's Foreign Direct Investment (FDI) equity inflows reached US$ 409.15 billion between April 2000
and December 2018, with maximum contribution from services, computer software and hardware,
telecommunications, construction, trading and automobiles.
• India's Index of Industrial Production (IIP) rose 4.4 per cent year-on-year in 2018-19 (up to January
2019).
• Consumer Price Index (CPI) inflation stood at 2.57 per cent in February 2019.
• Net employment generation in the country reached a 17-month high in January 2019.
Indian Economic Highlights
Source: Ministry of Finance. Mines, Power 23
➢ Some of the recent initiatives and developments undertaken by the government are listed
below:
▪ In February 2019, the Government of India approved the National Policy on Software Products –
2019, to develop the country as a software hub.
▪ The National Mineral Policy 2019, National Electronics Policy 2019 and Faster Adoption and
Manufacturing of (Hybrid) and Electric Vehicles (FAME II) have also been approved by the
Government of India in 2019.
▪ Village electrification in India was completed in April 2018. Universal household electrification is
expected to be achieved by March 2019 end.
▪ The Government of India released the maiden Agriculture Export Policy, 2018 which seeks to
double agricultural exports from the country to US$ 60 billion by 2022.
▪ Around 1.29 million houses have been constructed up to December 24, 2018, under Government
of India’s housing scheme named Pradhan Mantri AwasYojana (Urban).
▪ Prime Minister's Employment Generation Programme (PMEGP) will be continued with an outlay
of Rs 5,500 crore (US$ 755.36 million) for three years from 2017-18 to 2019-20, according to the
Cabinet Committee on Economic Affairs (CCEA).
Indian Economic Highlights
Source: Reserve Bank of India
CurrencyDate
27th May 2019
I USD 69.43
1 EUR 77.82
1 GBP 88.47
100 YEN 63.38
Base Rate : 8.95-9.40 %
Savings Deposit Rate : 3.50 %
MCLR (Overnight) : 8.05-8.50 %
Term Deposit Rate > 1 year : 6.25-7.50 %
Policy Repo Rate : 6.00 %
Reverse Repo Rate : 5.75 %
Marginal Standing Facility Rate : 6.25 %
Bank Rate : 6.25 %
CRR : 4 %
SLR : 19.00%
Reference Rates
Lending/ Deposit Rates
Reserve RatiosPolicy Rates
Rates at Reserve Bank of India
2019
24
ABOUT ISA
25
About ISA
➢ The Indian Steel Association (ISA) is the voice of the Indian Steel Industry,
in both domestic and global forums. It is at the forefront of all
deliberations pertaining to matters of public & regulatory policy, raw
materials, international trade, logistics, environmental concerns,
technology and other aspects of steel-making. The Indian Steel Industry
looks at ISA to further its critical agenda of sustained growth, both in
steel production and in generating domestic demand.
➢ ISA was formed in 2014 and has 15 members – eight full members and
seven affiliates. The list of full members includes –Steel Authority of India
(SAIL) and Rashtriya Ispat Nigam Ltd (RINL) – while heavyweights from
the private sector include JSW Steel Ltd, Tata Steel Ltd, Jindal Steel and
Power Ltd, Essar Steel India Ltd, Bhushan Power and Steel Ltd and Tata
Steel BSL Ltd. ISA, an affiliate member of World Steel Association (WSA),
regularly collaborates with WSA on the organisation of events, as well as
taking part in other key meetings with global partners.
26
Our eight Full Members are:
• Tata Steel Ltd
• Steel Authority of India Ltd.
• JSW Steel Ltd.
• Rashtriya Ispat Nigam Ltd.
• Essar Steel Ltd.
• Jindal Steel & Power Ltd.
• Tata Steel BSL Ltd.
• Bhushan Power & Steel Ltd.
Our Seven Affiliate Members are Monnet
Ispat & Energy Ltd., INSDAG (Institute
for Steel Development and Growth),
KISMA (Karnataka Iron and Steel
Manufacturer’s Association), Arjas Steel,
Jindal Stainless, Electrosteel Steels and
Orissa Metalliks Pvt. Ltd
Members of Indian Steel Association
27
Vision and Objectives of ISA
➢Vision of ISA-
To work towards transforming the Indian Steel Industry as a
global leader acclaimed for its Quality, Productivity and
Competitiveness, with a focus on health, safety and
environment, along with a growing thrust on innovation through
R&D, adopting an inclusive and collective approach.
➢ Objectives of ISA-
▪ Promoting steel by raising awareness about the numerous
advantages of good quality steel
▪ Collaborating with international steel organizations to
tackle issues of mutual interest.
▪Working with the government on matters affecting the
steel industry.
28
Important Ministries/Department/Organization
Ministry of Steel
Name of the person Designation Contact Details
Shri Binoy Kumar Secretary [email protected]
Shri Saraswati Prasad Special Secretary & Financial Adviser [email protected]
Smt. Rasika Chaube Additional Secretary [email protected]
Smt. Ruchika Chaudhry Govil Joint Secretary [email protected]
Shri Puneet kansal Joint Secretary [email protected]
Ministry of Mines
Name of the person Designation Contact Details
Shri Anil Gopishankar Mukim Secretary [email protected]
Dr. K. Rajeswara Rao Additional secretary [email protected]
Ministry of Commerce
Name of the person Designation Contact Details
Shri Anup Wadhawan Secretary [email protected]
Shri Shudhanshu Pandey Additional Secretary [email protected]
Shri Alok Vardhan Chaturvedi DGFT [email protected]
Dr. K.C.Rout Additional Secretary-DGFT [email protected]
Ministry of Environment, Forest and Climate Change
Name of the person Designation Contact Details
Shri C K Mishra Secretary [email protected]
Control Pollution Central Board
Name of the person Designation Contact Details
Shri S.P. Singh Parihar Chairman [email protected]
Dr. Prashant Gargava Member Secretary [email protected]
Ministry of FinanceName of the person Designation Contact Details
Shri Rajiv Kumar Joint Secretary [email protected]
29
Contact Us for data related issues
Address:207-208, 2nd Floor
Kailash Building
New Delhi -110-001
India
Tel: +011 4266 8811
Fax: +011 4266 8805
E-mail: [email protected]
Website: http://indsteel.org/30
THANK YOU
DISCLAIMER
The material in this presentation has been prepared by Indian Steel Association (ISA) and is a general background information reviewing the
status of the developments in the global and Indian steel industry as at the date of this presentation. This presentation is strictly for internal use
of all the member companies of ISA, whose names have been stated in the presentation.
Information is given in summary form and does not purport to be complete or all inclusive. The information has been sourced from independent
third party databases, knowledge sources and news reports, and the authenticity of the same has not been independently verified by ISA.
Additionally, any third party forecasts on financial or economic parameters, projections or estimates should not be construed as an investment
advice or a recommendation to any ISA member. Recipients of this presentation from member companies of the ISA should each make their own
evaluation of the contents and adequacy of the information contained in the presentation.
ISA does not undertake any obligation to publicly release any changes to any revisions, modifications or forward looking statements in the
subsequent editions of this bi-monthly presentation. Unless otherwise specified, all information is for the period April 2019 or prior.
31