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Ferro Alloy Industry in India – Challenges & Opportunities
Subodh Pandey
Chief of Marketing & Sales
Ferro Alloys & Minerals Division, Tata Steel India
Steel Furnace Association of India
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The presentation is an amalgamation of author’s own views and thoughts.
Tata Steel does not necessarily subscribe to the views and thoughts expressed in the presentation and should not be held responsible for the same.
DISCLAIMER:
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CONTENTS
CHROME ALLOYS INDUSTRY IN INDIA
MANGANESE ALLOYS INDUSTRY IN INDIA
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1.6
2.2
3.1
1.2 (78%)
1.8 (82%)
1.8 (60%)
0.1 (5%) 0.1 (5%)
0.4 (13%)
0.3 (17%) 0.3 (13%)
0.8 (27%)
2005 2010 2015
CrNi steels (300 series) Cr steels (400 series) CrMn steels (200 series)
STAINLESS STEEL DEMAND: SHIFT IN USAGE PATTERN
• Consumption mix shifting towards premium grades: 300S+400S likely to become 40% of total demand
• Construction, transport & industrial applications to drive future growth
All figs in million MT
End use application:300S: Rail, Construction, Process Equipment & Transport400S: Electronics & Transport200S: Tubular Products, Kitchenware
Ferro Chrome Demand in India (‘000MT)
2005 2010 2015
300 350 500
7%
7%
5
31
40
100
110 180
216
39
85
123
50
91
120
30
45
50
143 145
450
208
421
363
611
1,006
1,422
FY06 FY11 FY16
TSL IMFA Balasore Rohit JSL FACOR Others
INDIA FERRO CHROME PRODUCTION
Source: IFAPA
fig in ‘000 MT
• India has been a net exporter of value added Ferro Chrome to the world
• Further capacity additions are also planned in the next 5 yrs
• While the demand of Ferro Chrome in India would increase, still India will continue to be a net exporter of Ferro Chrome.
• 60% production by 6 players while the balance is fragmented
10%
7%
India’s position in the Ferro Chrome market is primarily because of the Chrome Ore availability in Orissa belt
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CHROMITE RESERVES IN INDIA
Source: IBM
SUKINDA VALLEY: The Chrome Capital
SUKINDA VALLEY: The Chrome Capital
Cr Ore Reserve
Source: IBM
3.5 million MT production in 2010 (12% of world in 2010)
Proven reserve: 213 million MT
• 8 players are having Cr ore mines with most of them having downstream Ferro Chrome production facilities
• U/G mines likely to be explored in next five years with higher grade of Cr Ore.
• Higher refractoriness in Indian ore
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• Indigenous Chrome ore available of High grade quality.
• Commissioning of many new power plants including captive ones(CPP)- may help reduce the gap in cost of power compared to SA, China
ADVANTAGE INDIA:
Strong Growth in Demand
• Stainless Steel production in India is projected to grow @ ~7-8% in the next five years including potential for increasing exports of Stainless Steel from India.
• This will lead to a sustained demand of FeCr in line with the Stainless Steel production.
Backward linkage
Power cost
• Freight advantage in SS markets such as China, Korea & Japan compared to Kazakh, South Africa
• Short sailing time.
Proximity to market
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HOWEVER, COMPETITIVE ADVANTAGES OF INDIA IS A CONCERN COMPARED TO OTHER PRODUCING REGIONS
Key Success Factor SA Kazakh China India
Power + +++ + -
Chrome ore reserves +++ ++ - ++
Availability of Chrome ore +++ ++ - +
Reductants (Coke/Char/Anthracite)
++ +++ +++ -
Proximity to markets ++ +++ +++ ++
Basic infrastructure (ports/ Rail/road) ++ - ++ -
Government Support +++ ++ ++ +
Overall Competitive Advantage +++ +++ ++ +
+++ : Strongly positive
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CONTENTS
CHROME ALLOYS INDUSTRY IN INDIA
MANGANESE ALLOYS INDUSTRY IN INDIA
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CARBON STEEL OUTLOOK IN INDIA
Source MBR, CRU
Projected Indian Carbon Steel Growth (Mn MT)
FY12 E FY13 FY14 FY15 FY16 FY17
30 32 34 38 41 45
3436
39
4448
5264
6873
8289
97
FP LP
PMT of FP FeMn : ~3.5 kg SiMn : ~ 2kg PMT of LP: FeMn : ~2 kg SiMn : ~12kg
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• Indian LP Steel production at CARG of 9% based on expected infrastructure lead demand in the 5 year period.
SiMn Demand – Domestic (kT)
SILICO MANGANESE DEMAND IN INDIA
FY 12 FY 13 FY 14 FY 15 FY 16 FY 170
100
200
300
400
500
600
700
800
388 413 438 474535 579
3535
3639
4346
461489
517560
632683
SiMn Long SiMn Flat SiMn Other
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• Indian Steel & Stainless Steel (200S) production at CARG of 9% in the 5 year period.
FeMn Demand – Domestic (kT)
FY12 FY13 FY14 FY15 FY16 FY170
50
100
150
200
250
86 89 96 107 115 126
25 2629
3235
39
18 2024
2933
34
1118
1812
1311
140153
166180
196210
Flat Long SS Fdy & Oth Series5
MANGANESE ALLOY DEMAND IN INDIA
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Shyam; 80
Hira; 70
MEL; 54
Sri; 50
Impex; 50
Sova; 50
Maithan; 48
Haldia; 30
MICL; 24
Oth 1250
1730
SiMn Production in 2010
MEL; 65
TSL; 50
SARDA; 32
HIRA; 32
IMPEX; 26SHYAM 19
CORP 18
OTHERS; 206
FeMn Production in 2010
449
MANGANESE ALLOY PRODUCERS IN INDIA
• Many Producers (~ 50) with wide range of furnaces : 4 to 33 MVA• Export led production growth (50% exports) of Mn Alloys based
on imported ore • Capacity addition of ~ 954 kt in next 5 yrs in SiMn and ~ 223 kT
in Fe Mn
Key concern:
• Availability of High Grade Mn Ore in India
• Increase in power cost across India
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DEPENDENCE ON Mn ORE ON GLOBAL ORE MARKET
CY11 CY12 CY13 CY14 CY15 CY16
3.5 3.7 3.848 4.00192 4.161996799999994.32847667199997
2.7 3.1 3.193 3.28879000000001 3.3874537 3.4890773112.1
2.4 2.496 2.59584 2.6996736 2.8076605441.51.6 1.664 1.73056 1.7997824 1.8717736964.24.2
4.3994.91889
5.479253500000036.2581429769999814.0
15.0 15.616.5
17.518.8
China Aus SA Gabon Others Series6
SA, Gabon, Brazil & Australia have high grade ore reserve( >44% Mn content). China has primarily low grade ore reserves(<30% Mn Content) India Produces ~ 3MnT of Mn Ore mainly Medium Grade
in million MT Mn content
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MAJOR MN ORE PRODUCERS (INDIA)
Manganese Ore India Ltd ;
1.1; 41%
Sandur , 0.3, 11%OMC, 0.25, 9%
Rungta , 0.2, 8%
Tata Steel, 0.32, 12%
Others, 0.5, 19%
In Million MT
Players Grade Mn MT UsageMOIL HG+MG 1.10 Own use + SaleSandur MG+LG 0.30 SaleOMC MG 0.25 SaleRungta MG 0.20 Own use + SaleTata Steel MG 0.32 Own UseOthers MG 0.50 Own Use+SellTotal 2.67
MOIL is the largest player in open market for HG Mn
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ADVANTAGE INDIA
Ability to immediately scale up
• Large Capacity for Ferro Alloys• Industry currently operating at 60% of rated capacity• New capacities coming up. Capacities coming up near
ports (Vizag, Haldia).
Location near high growth regions
• Freight advantage in markets such as China, Korea & Japan compared to Ukraine or South Africa
• Short sailing time, freight advantage
Cost Advantage over China
• Domestically sourced LG & MG Mn Ore available for blending with imported HG Mn Ore.
• Comparable power, labour & inland freight costs to China.
Import of Mn Ore has increased from ~ 0.3 MnT in FY07 to 1.3 MnT in FY11
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• India has grown rapidly in Ferro Alloy Production and is a significant producer with more than 50 % getting exported
• Robust growth in domestic consumption of both Ferro Chrome & Ferro Manganese alloys due to strong growth in both Crude & Stainless Steel
• Apart from domestic demand, proximity to fast growing developing & developed economies provides exciting export opportunity
IN SUMMARY…
Likely future growth of Ferro Alloys in India augurs well for demand of furnaces. However…
• Impending power crisis – availability and prices of coal is a cause of concern
• Infrastructure issues – bottleneck in road, rail transport, port etc may impede export driven growth as well imports of higher grade Mn Ore
• Investments in existing & new mines needs to be expedited to augment mineral resources
• Technological investments: Usage of low grade mineral resources; increase efficiency of furnaces for cost reduction / productivity enhancement
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THANK YOU
Ferro Alloys & Minerals Division
POWER TARIFF IN INDIA
CY11 (c/kwh) FeCr / Ch Cr producing countries
CY12 (F) (c/kwh)
8 China 9
7.6 SA – Winter Season 9.5
5.4 SA – Normal 6.8
4 Kazakh 4.5
10.3 India - Orissa 10.9
5.9 India – Andhra 9.6
CY12 rates considered at same exchange rate as in CY11 for all currencies
Source : Own resources, info in public domain
• Likely increase in power tariff in India/China due to escalation in raw material and input cost
• South African tariff continue to be on rise during winter season ~ 40%.• Normal tariff in SA also to increase by 25%• Indian power tariff to increase further due to unavailability and high
sourcing cost of imported thermal coal