A Review of developments in

The Global & Indian Steel Industry

Monthly edition

Issue No. 32

October 2018 (covering September 2018)

Compiled on behalf of Indian Steel Association,

Mr. Anup Kashyap

Strictly for Internal circulation

Our eight Full Members are:

• JSW Steel Ltd

• Steel Authority of India Ltd.

• Tata Steel Ltd.

• Rashtriya Ispat Nigam Ltd.

• Essar Steel Ltd.

• Jindal Steel & Power Ltd.

• Bhushan Power & Steel Ltd.

• Bhushan Steel & Strips Ltd.

Our Seven Affiliate Members are Monnet

Steel, INSDAG (Institute for Steel

Development and Growth), KISMA

(Karnataka Iron and Steel Manufacturer’s

Association), Gerdau Steel, Visa

Steel,Electrosteel Steels and Orissa

Metalliks Pvt. Ltd

About Indian Steel Association

GLOBAL ECONOMIC DEVELOPMENTS

Source: The Economist Intelligence Unit, Global Forecasting Service

Country-wise Growth Forecasts

2018 - 2023

As of September 19th 2018

The assumptions for forecasts are available on the website of the Economist Intelligence Unit

In % 2018 2019 2020 2021 2022 2023

India

Real GDP Growth 7.4 7.6 7.4 7.6 7.8 6.9

Inflation 4.7 4.9 4.6 4.8 5.1 4.7

China

Real GDP Growth 6.6 6.2 6.1 5.5 5.2 4.9

Inflation 2.1 2.8 2.5 2.6 2.8 2.8

U.S.A

Real GDP Growth 2.8 2.2 1.3 1.7 1.9 1.9

Inflation 2.5 2.4 1.6 1.8 1.9 1.8

Japan

Real GDP Growth 1.3 1.4 0.5 1.1 1.1 1.1

Inflation 0.9 1.4 1.5 1.0 1.2 1.1

Russia

Real GDP Growth 1.7 1.8 1.6 1.7 1.8 1.8

Inflation 3.1 4.5 4.3 4.1 4.1 4.1

Source: PwC report on world Economic-September 2018

Global Economic scenario

October 2018

➢ Global economic growth on track to be the fastest since 2011: In our main scenario, we

project the global economy will grow by almost 4% in purchasing power parity (PPP) terms,

its fastest since 2011, adding an extra $5 trillion to global output in current value terms.

More importantly, we expect growth to be broad based and synchronised, rather than

dependent on a few countries. The main engines of the global economy - the US, emerging

Asia and the Eurozone, which comprised 60% of world GDP in 2017 - are expected to

contribute almost 70% of economic growth in 2017 in PPP terms compared to their post-

2000 average of around 60%.

➢ The beginning of the end of easy money: Since the Federal Reserve started to gradually

reduce the size of its balance sheet and raise rates, the question has been who will follow

next. We expect the European Central Bank (ECB) to further reduce its monthly asset

purchases in 2018. If Eurozone inflation rebounds faster than our baseline projection, 2018

could see the end of the ECB’s asset purchase programme. In Japan, however, we don’t think

there will be a dramatic shift in monetary policy. Generally, we expect monetary policy to

somewhat tighten in the G7, reflecting closing output gaps in some advanced economies and

stable inflation expectations.

Source: PwC report on world Economic-September 2018

➢ Global economy biggest, most energy hungry ever: The global economy is on course to

consume almost 600 quadrillion British Thermal Units (BTUs) of energy—double its

1980 level and the highest level on record. We expect India and China together will

consume about 30% of global energy, which will be about six times more than what the

African continent will consume. Reflecting the slow shift towards renewables, 10% of

global energy consumption is expected to be in renewables with China consuming twice

as much renewable energy as the US.

Global Economic scenario

October 2018

GLOBAL STEEL DEVELOPMENT

Source: Press Release of World Steel Association, October 2018

Global Steel Demand

Focus on Developed Economy

➢ Steel demand in developed economies is expected to increase by 1.0% in 2018 and 1.2% in

2019.

➢ US steel demand grew strongly in 2017, benefiting from strong consumer spending and

business investment supported by tax and regulatory changes and fiscal stimulus, although

growth in the construction sector moderated. Steel demand growth in 2019 is expected to

slow as auto manufacturing and construction activity is expected to see modest growth.

The manufacturing sector is expected to perform well thanks to the strength of the

machinery and equipment sector.

➢ The broadening recovery of EU steel demand is expected to continue, though at a reduced

pace, mainly driven by domestic demand. With business confidence high, investment and

construction continued to recover while the automotive market may see slower demand

growth. Though the economic fundamentals of the EU economy remain relatively healthy,

steel demand in 2019 will show some deceleration over the growth seen in 2017-18, partly

due to uncertainties resulting from global trade tensions.

➢ Steel demand in Japan is expected to remain stable due to supportive factors on

investment (record high corporate earnings, the continuation of monetary easing, demand

associated with the Tokyo Olympics and the increasing need for labour-saving investments).

Source- Press Release of World Steel Association, October 2018

Global Steel Demand

Focus on Developing Economy

➢ As India recovers from the twin shocks of demonetisation and the goods and services tax

(GST) implementation, India’s steel demand is expected to move back to a higher growth

track. Steel demand will be supported by improving investment and infrastructure

programs. Stressed government finances and corporate debt weighs on the outlook.

➢ Sluggish construction activities and stock adjustments led to slow growth of steel demand

in the ASEAN region in 2017 and 2018, but demand in the ASEAN region is expected to

resume its growth momentum backed by infrastructure programmes in 2019 and

onwards. Risks are largely related to rising trade tensions between the US and China,

currency volatilities and political instability.

➢ In the remainder of the emerging and developing economies, the recovery has been slow

to gain momentum, with rising uncertainty in both domestic and external environments.

Structural reforms, high financial market vulnerability and possible currency pressures

from the tensions in the global economy are amongst the main reasons.

➢ In the Gulf Cooperation Council (GCC) countries, reforms and a stronger oil market

have led to an upward momentum in steel demand, but at a slow pace. The outlook for

Iran has turned less favourable due to the reinstatement of sanctions by the US.

Source: World Steel Association; Figures in ‘’000 tons

Region wise Crude Steel Production

As Per World Steel Association

Region Sept. 2018 Sept. 2017 % Change

EU-28 13,945 13,915 0.2

Other Europe 3,112 3,252 -4.3

CIS(6) 8,387 8,611 -2.6

N.America 10,026 9,442 6.2

S.America 3,814 3,775 1.0

Africa 1,176 1,152 2.0

Middle East 2,929 2,846 2.9

Asia 107,841 101,813 5.9

Oceania 481 473 1.8

Source: World Steel Association; Figures in ‘’000 tons

Region wise Crude Steel Production

As Per World Steel Association

Region Jan-Sept. 2018 Jan-Sept. 2017 % Change

EU-28 128,025 126,321 1.3

Other Europe 30,557 30,033 1.7

CIS(6) 76,221 74,904 1.8

N.America 89,704 86,784 3.4

S.America 33,168 32,348 2.5

Africa 10,753 9,979 7.8

Middle East 26,870 23,702 13.4

Asia 946,820 897,595 5.5

Oceania 4,868 4,383 11.1

Source: World Steel Association, in ‘000 tons

Top Crude Steel Producing nation

As Per World Steel Association Jan-Sept. 2018

Nation Jan-Sept.18 Jan-Sept. 17

China 699,424 659,425

India 79,660 75,048

Japan 78,615 78,266

United States 64,170 61,388

Russia 54,288 53,349

South Korea 54,187 53,119

Germany 34,030 32,876

Turkey 27,982 27,742

Brazil 26,094 25,460

Source: Steel mint research

➢ According to General Administration of customs ,China-the world’s largest iron ore

consumer and importer at 88.4 MT. Imports hit the 4 month low. On monthly basis,

China iron ore were down by 5% compared to 93.08 MT in Sept. 18.Imports are due to

slow iron ore cargoes movement by the top iron ore supplier from Australia.

➢ The total imports for Jan-Oct’18 witnessed down 2% to 891 MT as against the same

duration previous year (Jan-Oct’17) at 906 MT

China Iron Ore Import Trend

October 2018

Source: Steel Mint Research

Trend in Japan’s Flat steel Export

October 2018

➢ According to latest custom data

released, Flat steel exports which

includes 7208 (HR

coils/Plates),7209 (CR coils

),7225(Electrical

Sheets),7210/7212(GP/GC) hit all

time low at 1.87 MT in Sept.18.

Thus flat steel export is nearly six

years low in Sept. 18.

➢ China remained the largest flat

steel importer of Japan and

procured 0.34 Mt in September 18

decline by 11% against 0.38 MT in

previous month. Second largest

importer was Thailand at 0.32 MT

in Sep’18 fell by 16 % as compared

to 0.38 Mt in previous month.

South Korea was the third largest

importer of steel to Japan.

DOMESTIC STEEL DEVELOPMENTS

Source:CMIE

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18

Crude Steel Production Finished Steel Production for sale

Finished Steel Final Consumption

‘000

tons

Indian Steel Insight

October 2018

Source:Steel mint

➢ According to Custom data released, Indian flat steel imports stood 0.52 MT in Oct’18

witness the growth of 8% as compared to 0.48 MT in previous month.

➢ Indian importers have booked around 25000 tons of HRC ( 2mm) from Korea at USD

620-625 per ton CFR India down, by USD 10-15 per ton for October shipments.

Meanwhile Indian importers also booked around 20000 ton of HRC from Japan in Sep’18

at USD 645 per ton CFR basis for Oct for early Nov shipments.

➢ Thus Indian Importers booked significant quantities of HRC from South Korea ,Japan and

China and downtrend in global prices

Trend in Indian Flat steel imports

October 2018

Source:Steel Mint

➢ India-World’s one of the largest steel producer has registered fall in its Finish long steel

exports in Q3 CY 18 against the same period of CY 17.

➢ As per the customs, the nations has exported about 257,590 tons finish long steel in Q3

CY 18 down by 33.8 % against 389,636 tons in Q3 CY 17.

➢ Bar and rods at 137,804 tons up by 131 % against 59,579 tons in Q2 18 wire rod at 69714

tons in Q3 18 up by around 1% against 69371 tons in Q2 18 and

Trend in Indian long steel Exports

October 2018

Source: Steel mint

➢ Amidst uncertainty of winter output cuts in China and less inquiries from non Chinese

market resulted fall in pellet exports from India.

➢ Indian iron ore imports from South Africa dropped by 40 % to 0.20 tons in Oct 18 owing

to logistics issues.

Indian Iron Ore and Pellets Statistics

October 2018

INDIAN ECONOMIC DEVELOPMENT

Source: World Bank

Ease of doing business in India

October 2018

➢ India’s rank in the World Bank’s Ease of Doing Business 2019 survey climbed 23 places to 77 among 190 countries

surveyed, making it the only country to rank among the top 10 improvers for the second consecutive year.

➢ The reforms in India included streamlining the process of obtaining a building permit and improved building quality

controls. Starting a business was made easier through consolidation of multiple application forms and introduction

of a goods and services tax (GST), while getting electricity was made faster and cheaper. Other reforms in India

included strengthening access to credit as well as making it easier and faster to pay taxes and trade across borders.

➢ India saw a massive jump in the parameter “dealing with construction permits” to 52th position from 181st a year

ago by reducing time for processing permit applications, streamlining procedures, and improving transparency among

other measures

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 September 2018 or prior.