Steel: India
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Consumption of steel: initiatives to boost it
2017/ Gaon ki Ore campaign (SAIL)
14 September, 2017: Press Information Bureau
Steel Authority of India Ltd. (SAIL), is running a nation-wide campaign सेल स्टील – गाँव की ओर (SAIL steel – Gaon ki ore) which is aimed at boosting steel consumption in country. This has started to reflect positively through the dealer sales numbers, which recorded an 18% jump in the month of August 2017 over CPLY selling 91,000 tonnes of steel in the month. SAIL targets to sell 1 Million Tonnes steel through its dealer network this financial year and aims at doubling it in next three financial years, as per the directions from Steel Minister Shri Birender Singh to SAIL to go for smart marketing.
SAIL had identified the potential of rural markets for enhancing steel consumption which is currently around 10 kgs per capita per year as against around 150 Kg per capita consumption in Urban India.
The Gaon ki ore campaign is designed to familiarize end users at the Grass-root level, especially of rural areas, with innovative usage of SAIL steel and its applications and advantages in construction, household equipment, agriculture etc. Through engagement activities the audience are informed how using SAIL steel can increase durability, life, safety and longevity of any construction and product. SAIL’s product basket has branded products like SAIL TMT, SAIL Jyoti GP/GC sheets, Salem stainless utensils products in its basket which fit the rural requirements well and has popular acceptance.
Through this nation-wide campaign initiated at Nalbari, Assam, SAIL aims to cover more than 100 locations by the end of this year and within months of its inception around twenty workshops have already been conducted in various states. This new age marketing campaign strategically aims to develop a stronger link with consumers through direct engagement. All workshops of the campaign are designed to familiarize participants about SAIL’s production process, product range, applications and advantages and the interactive sessions are conducted in local language for easier connect with audience. SAIL Earth-Quake Resistant (EQR) TMT Rebars received special attention of the audience who were keen to know regarding the bendability of the EQR and its higher resistance to earthquakes.
Company’s recently held campaign at Mandi, Himachal Pradesh successfully involved a wide participation from locals and their families. Taking the buzz forward, SAIL organized another round in Palampur today, integrating it with an on-going exhibition on ‘Destination Himachal’ leveraging the crowd presence to raise awareness about steel consumption.
Production, year-wise
2014: India world's no. 3
Mar 23 2015
India replaces US as No. 3 steelmaker
India has overtaken the US to become the thirdlargest steel producer in the world with a production of 14.6 million tonnes (MT) in first two months of the year. India has been the fourthlargest steel producer for the past five years, behind China, Japan and the US.
World Steel Association data showed that the country's production growth was the highest during the JanuaryFebruary period at 7.6% as compared to the global average of just 0.6 per cent at 127.6 MT.
Production in China, which accounts for nearly half of the global steel production, fell during the period by 1.5%.
2017, steel production in India
From: July 28, 2018: The Times of India
See graphic :
Steel production in India and other major Steel producers, in 2017
2018: India overtakes Japan as the second largest producer
April 4, 2018: The Times of India
HIGHLIGHTS
Currently, China is the largest producer of crude steel in the world, accounting for more than 50 per cent of the production
India's crude steel production was up 4.4 per cent and stood at 93.11 million tonnes (mt) for the period April 2017 to February 2018
In a major achievement, India has overtaken Japan to become the world's second largest producer of crude steel in February 2018, according to the Steel Users Federation of India (Sufi). At present, China is the largest producer of crude steel in the world, accounting for more than 50 per cent of the production.
India's crude steel production was up 4.4 per cent and stood at 93.11 million tonnes (mt) for the period April 2017 to February 2018, compared with April 2016 to February 2017, which has helped India to overtake Japan and becomes the second largest producer of crude steel in the world, the federation said in a statement.
India overtook the US in 2015 to become the third largest producer of crude steel.
Attributed the growth in steel production to the right policies undertaken by the Modi government, Nikunj Turakhia, president, Sufi said, "The government has taken host of steps to curb imports, push local demand with initiatives like 'Make in India', implementation of the GST and infrastructure projects, to encourage the domestic market."
According to the World Steel Association, India produced 8.4 mt of crude steel in February 2018, up 3.4 per cent over February 2017.
Turakhia said the steel ministry is working proactively to lay down the road map to achieve 300 million tons by 2030 and "we seem to be on the right track".
"In addition, quick resolution of various big-ticket steel mills under the Insolvency and Bankruptcy Code and the National Company Law Tribunal is expected to further hasten the process of achieving higher capacity utilisation," he added.
2018: the world’s biggest producers
From: January 31, 2019: The Times of India
See graphic:
Steel production in India and other major Steel producers, in 2018
Protectionism
2019: The Cost Of Protecting Steel
Ritesh Kumar Singh, The Cost Of Protecting Steel, March 8, 2019: The Times of India
India’s steel industry is a standing example of how protectionism harms the economy
Despite a long-standing global glut, Indian steel companies have been adding up production capacities. India is now the world’s second largest producer of crude steel after China and the EU. Thus, it’s not surprising that despite India losing a WTO dispute on steel import duties, Indian steel companies are increasingly relying on ‘economic nationalism’ and their ‘strategic industry’ tag to get the government to raise import barriers, force automakers (the top consumer) to use locally made alloy steel and ensure for them preferential access to the fast growing domestic market.
However, expensive steel hurts downstream industries that add much more value and could create many more jobs – for instance, automobile and components manufacturing or construction – that are already struggling with slowing demand and rising input costs. Higher import duties on steel add to their predicament.
With steel being a common industrial input, any increase in import duties on steel causes widespread cost inefficiencies for user industries and induces import of steel-intensive goods such as earthmover and construction equipment from countries like China. Besides, it also discourages export of steel-intensive value added products, for example engineering goods, by making them expensive – adding to India’s current account woes.
Thus, it’s time India categorised a ‘strategic industry’ based on its net effect on domestic value addition as well as contribution to exports and jobs, rather than clinging to its conventional definition of strategic industry that gives too much importance to globally over-supplied basic commodities such as steel.
India’s steel industry – dominated by large companies – remains the most pampered one. It has one of the lowest effective taxations after adjusting for numerous deductions and exemptions, besides having access to an increasingly captive domestic market. It gets preferential treatment compared to non-ferrous metals such as aluminium and copper. For example, the import of flat rolled steel products attracts a basic customs duty of 12.5% compared to flat-rolled aluminium products at 7.5% and copper plates and sheets at 5%.
The government often resorts to highly prohibitive protectionist tools such as imposition of minimum import price that prompts indigenous steel manufacturers to increase their prices unreasonably. The last such imposition led to a surge in domestic steel prices forcing government to warn steel companies not to keep prices above Rs 40,000 a tonne.
Further, large steel manufacturers have successfully lobbied for continued imposition of a whopping 30% export duty on high grade (Fe content above 58%) iron ore, their key raw material. That discourages exports and keeps iron ore prices artificially low in domestic market – which benefits steel companies at the cost of iron ore miners.
Thus, Indian steel companies have access to cheaper raw material, a fast growing domestic market protected from import competition along with low effective taxation. No surprise, sale of steel assets prompted by insolvency and bankruptcy proceedings have best recovery rates and there is intense competition among major bidders including defaulting promoters to acquire distressed steel assets.
Indian policy makers tend to think that steel is a basic input for other industries including capital goods, hence it needs to be nurtured and protected. Fair enough, but what they forget is that it will impose cost on much more dynamic but dependent downstream industries such as automobile and component manufacturing, construction and infrastructure, engineering goods, electrical equipment and machineries, and in the process, adversely affect their cost competitiveness. Iron and steel accounts for roughly 15-20% of the total cost in real estate.
Even for steel companies, though high import duty may lead to increased top lines, it results in lower profitability due to its widespread inflationary impact on other industries. That in turn affects their future ability to invest and may force many of them to over-borrow as rightly observed by the steel minister. Investors too are taking too much risk betting on continuation of protection that may backfire on them.
Given India’s looming demographic crisis – inability to find productive employment for more than a million youths joining the country’s workforce every month – the basic criteria to define a strategic industry needs urgent tweaking. A strategic industry should be defined on the basis of its multiplier effect on employment, value added production and exports. A basic raw material or commodity with excess capacities globally shouldn’t be considered ‘strategic’ especially when it adversely affects the cost efficiencies of more value adding downstream industries.
The country should use its limited financial tools such as subsidies and differential taxation policy to boost futuristic industries such as artificial intelligence, robotics or semiconductors as envisaged by Made in China 2025, and not oligopolistic raw material processors that’s imposing a cost on the economy in terms of lower exports and number of jobs created.
Steel companies should rather be asked to focus on moving up the value chain where quality and services and not price affect effective demand. That’s the way to survive and thrive going forward. Besides, India should remove import duties on recyclable steel scrap or metal scrap in general – opposed by politically connected big guns of India Inc. Recycling is ecofriendly, saves energy and should be embraced as a policy.
Scrap steel
2019: New policy for recycling
Dipak Dash, Nov 8, 2019: The Times of India
Nov 8, 2019: The Times of India
The Centre has notified a policy on steel scrap recycling, assigning various ministries specific tasks to increase availability of the scrapped material by another 7 million tons, the quantity that India currently imports and is valued at about Rs 24,500 crore annually.
In a bid to ensure quality scrap for the steel industry, the government on Friday came out with a Steel Scrap Recycling Policy that aims to reduce imports, conserve resources and save energy. The country's steel scrap imports were valued at Rs 24,500 crore in 2017-18, while the deficit was to the tune of 7 MT. "The policy aims to ... promote circular economy in the steel sector", besides promoting "a formal and scientific collection, dismantling and processing activities for end of life products that are sources of recyclable (ferrous, non- ferrous and other non-metallic) scraps which will lead to resource conservation and energy savings and setting up of an environmentally sound management system for handling ferrous scrap," the Ministry of Steel said in a statement. National Steel Policy 2017 aims to develop a globally competitive steel industry by creating 300 MT per annum steel production capacity by 2030 with a contribution of 35-40 per cent from EAF/IF (Electric Arc Furnace/Induction Furnace) route. It said the scrap policy will ensure processing and recycling of products in an organised, safe and environment friendly manner, besides evolving a responsive ecosystem and producing high quality ferrous scrap for quality steel production minimising the dependency on imports. The statement said the policy envisages a framework to facilitate and promote establishment of metal scrapping centres in India, which will ensure scientific processing and recycling of ferrous scrap generated from various sources and a variety of products. Among others, it also aims to decongest the Indian cities from reuse of ferrous scrap, besides creating a mechanism for treating waste streams and residues produced from dismantling and shredding facilities in compliance to Hazardous & Other Wastes (Management & Trans boundary Movement) Rules, 2016 issued by the Ministry of Environment and Forests. The policy is based on "6Rs principles of Reduce, Reuse, Recycle, Recover, Redesign and Remanufacture through scientific handling, processing and disposal of all types of recyclable scraps including non-ferrous scraps, through authorized centers / facility". The gap between demand and supply of scrap can be reduced in the future and the country may be self-sufficient by 2030, it added. The ministry said its endeavour is to develop a globally competitive steel industry by adopting state-of-the-art environment friendly technologies. Although scrap is the main raw material for secondary sector, the primary sector also uses scrap in the charge mix of BOF (Basic Oxygen Furnace) to the tune of 15 per cent to improve efficiency, minimise cost of production and other process needs. There is a worldwide trend to increase steel production using scrap as the main raw material as recycling of scrap helps in conservation of vital natural resources besides other numerous benefits. The use of every tonne of scrap shall save 1.1 tonne of iron ore, 630 kg of coking coal and 55 kg of limestone. There shall be considerable saving in specific energy consumption also, the statement said. It said the availability of scrap is a major issue in India and in 2017 the deficit was to the tune of 7 MT. This was imported at the cost of more than Rs 24,500 crore in 2017-18. The government said the scrapping policy shall ensure that quality scrap is available for the steel industry. Scrap is an important input for the electric furnaces. If quality scrap is provided as the charge to the electric furnaces, then the furnaces can produce high grade steel. High grade steel scrap shall not have the impurities if processing is done with the scrap processing centres and by shredders etc. "The current supply of scrap is 25 MT from the domestic unorganised scrap industry and 7 MT from import of scrap. There is potential to harness this 7 MT of scrap that is currently being imported... "To produce 7 MT more of scrap, the country shall require 70 scrap processing centres each with the capacity of 1 lakh tonnes; this is without disturbing the existing dismantling centres. The 70 scrap processing centres shall require about 300 collections and dismantling centres on the presumption that 4 collecting and dismantling centres cater to scrap processing centre," the statement said. In case of steel production rising to 250 MT, the requirement of scrap shall rise to 70-80 MT, it noted. "This shall require about 700 scrap processing centres, that is 700 shredders. These shall in turn be fed by 2800-3000 collections and dismantling centres spread all over the country," the statement said. It added operating on the 4+1 hub and spoke model, where 4 collection and dismantling centres are to cater to 1 scrap processing centre, then 400 jobs would be created by one such composite unit. "And for 70 units producing a total of 7 MT of scrap the potential for employment generation would be of 2800 persons. If the country was to produce 70 MT, as expected as per NSP 2017, the employment generation could be in the range of 3 lakh jobs," the statement said. NAM ABM
S&P Global: concerns on higher unprocessed imports
Nov 8, 2019: The Times of India
Author: Clement Choo, Samuel Chin, Marcus Ong
Editor: Kshitiz Gotiya
Singapore — India's new scrap policy has raised several market concerns ranging from a surge of mixed metal (unprocessed) scrap flowing into the country to challenges of setting up recycling centers, market participants said. India's Ministry of Steel on November 6 unveiled its steel scrap recycling policy after seeking industry feedback on a draft of the policy in July.
The policy resulted from the Indian government's National Steel Policy of 2017, in which the country is expected to have 300 million mt/year of steel production capacity by 2030. About 35%-40% of the overall 2030 production is expected to come from electric arc and induction furnaces. "The scrapping policy shall ensure that quality scrap is available for the steel industry. Scrap is an important input for the electric furnaces," the ministry said.
POTENTIAL SURGE IN MIXED METAL IMPORTS
The policy could result in a surge of mixed metal (unprocessed) scrap into India, several market participants told S&P Global Platts.
This comes at a time when countries worldwide are seeking an outlet for waste metals after China's tightening of mixed metal imports.
With India having better capabilities to process scrap at a competitive cost, market participants said that imports would likely change in terms of the type of scrap rather than the volume.
"It's not a matter of increasing or decreasing imports, it's a matter of saving costs. Indian buyers would likely import more unprocessed scrap, which is $20-$30 below the processed scrap prices," a UK-based supplier said. "It is much more cost competitive to process it in India than in the US and Europe.”
The scrapping facilities that the policy aims to build could increase India's capacity to process mixed metal scrap and lead to greater flows of mixed metal imports into the country, according to market participants. However, some added that future government intervention might prevent an influx of such material.
The policy projected that India will need to set up about 70 scrap processing centers in the country to meet a current deficit of about 7 million mt.
Each center will have a processing capacity of about 100,000 mt/year, which will require about 300 collection and dismantling centers "on the presumption the four collecting and dismantling centers cater to [each] scrap processing center," the ministry said.
When India's steel production capacity reaches 250 million mt/year, its scrap requirements will reach 70 million-80 million mt/year, it said. Currently, India's scrap requirements hover at 30 million mt/year.
"This shall require about 700 scrap processing centers, that is 700 shredders. These shall in turn be fed by 2,800-3,000 collections and dismantling centers spread all over the country," the ministry said.
"It's definitely possible that India becomes a key destination for unprocessed scrap, however the facilities will only be coming soonest in two to three years after the policy is implemented," a major Indian mill source said. "A lot can happen in that time, the government may impose restrictions before that, if inflow gets too high.”
Following China's toughened stance on waste material imports into the country since 2017, countries like Japan were finding alternative avenues for its mixed metal scrap, which included places like Vietnam, Malaysia, and recently India, Platts reported previously.
"After China, Japan was sending mixed metal scrap to Malaysia and Vietnam. But the governments there are making it difficult now too. But India seems to be another avenue now," a Japanese trader told Platts.
NEED FOR VEHICLE RECYCLING POLICY
In the meantime, the Material Recycling Association of India said that achieving scrap self-sufficiency, a key goal of the policy, would be challenging because scrap demand will continue to be significantly higher than supply in India as there is a need to fulfill the country's target of 300 million mt/year steel production by 2030.
Other market participants also held the view that in order for India to reduce its scrap deficit, other policies have to be implemented complementary to the current policy. One potential policy highlighted was over India's End of Life Vehicle, or ELV, recycling procedures -- still under planning stage -- which have been strongly advocated by many in the nation's automotive sector.
"A solid ELV recycling policy would create a more consistent supply of steel scrap within India and solve its environmental issues as well," an Indian mill source said. "However to be self-sufficient would take time and may be hard to achieve within the next decade.”
The steel ministry said it will work with the Ministry of Skill Development and Entrepreneurship to develop "new vocational courses ... for equipping people in recycling of ELVs, white goods and other scraps in an environmentally sound and safe manner…"
Also, the steel ministry said it will "consider special status for eco parks that are to be set up for recycling and scrapping purposes and consider introducing targeted recycling-based tax incentives, both direct and indirect tax."
