VIEWPOINT
Huge investments, untapped market make India the most lucrative destination for world steel onlookers
With strong foothold in despair, India’s domestic steel companies are in high spirits while
facing the odd. It seems to give a kind of feverish feel to the globe’s powerful industry
circle at the mention of the creepy economic situation and that how the production levels
would probably shape up when the economy still remains depressing? It’s absolutely true
that the world economy, after a keen observation, is still on a recuperating stage addressing
its most ugly woes.
FOCUS
World crude steel output to go below the 2007 outturn
Financial problems across the region are expected to negatively affect demand
over the coming months. This, coupled with weak export markets, will push
transaction values for all flat products lower in the short term. De-stocking
by distributors is forecast to continue during the final quarter. Consequently,
mill sales volumes are likely to drop further. This may prompt local producers
to further reduce selling offers in a bid to fill their depleted order books. The
auto and construction industries are reported to be particularly weak, impacting
heavily on cold rolled and coated figures.
GLOBAL STEEL SCENARIO
Input cost deflation not improving stainless steel mill demand
Demand for steel in the EU has collapsed. Current price levels are, however, hard to verify because very few forward orders are being placed. Buyers are afraid to purchase because selling values are dropping on a daily basis. Moreover, customers’ orders books have reduced dramatically - leaving OEM’s and distributors with excessive inventories. Preliminary data from MEPS (International) Ltd’s investigation for its, soon to be published, reports ‘World Steel Outlook’ and ‘Global Iron and Steel Production to 2013’ indicate a modest reduction in global crude steel production in 2008 at 1.34 billion tonnes. In the eight months to August, output was 6.1% up on the figure in the same period of 2007. Growth was recorded in all regions, with the exception of Africa.
REFRACTORY
Raw Material for Refractories in India - Problem & Prospects
Selection of raw Materials for manufacturing of Refractories depends mainly on the properties desired in the end product. However conventionally a compromise was always attempted with a view to the availability of raw materials. In fact earlier materials specification for various countries used to vary depending on the domestic availability of raw materials. Thus the silica brick specification in USSR. As per COST, was specified with two different Si02- Content for North and Southern part of the country, because of the availability of raw material quartzite of two different qualities in these areas. This was done due to the fact that the product was manufactured from as mined raw material. Such practice was found quite satisfactory with the metallurgical process technology prevailing at that time.
IRON ORE
Asian iron ore prices slide as China enquiries slow, imported scrap rescues Indian steel
India’s iron ore prices slipped further extending a 14% dip, as Chinese enquiries faded with falling steel prices, exporters and a trade body official said. “More than the price levels, it's the inquiries that have vanished in the last 15 to 20 days,” said Siddharth Rungta, director of eastern India-based Rungta Mines Ltd. “Steel prices in China have fallen. They are waiting for annual negotiations.” China’s steel exports in January and February fell 52% from a year earlier to 3.47 MT, data from Chinese customs.
INDIAN STEEL
Recessed but, the Indian steel sure to turn around
Those who speculate and those who hedge actually control the dynamics of the market and steel business is no exception to this generalised theory. Steel markets have continuously shown favourable environment for investment with good returns for the last 6 years since the last turn around in 2002. The main reason behind Indian steel business going completely haywire these days resulting in a great amount of displeasure among the market operators is the fact that there are no takers basically from whatever angle of the business perspective one would try to look at, be it the suppliers, manufacturers or traders – the main components of the business.
During the recession Indian steel experiences a turbulent time to carry on
Naveen Jindal, Vice-Chairman, JSPL said, “With the global slowdown, obviously like every other industry, every sector, steel is also adversely effected. But, in India, our requirement of steel is still strong, it is still there, so its matter of time. The demand will again pick up further and there should be no problem.” To the sharp contrast, Indian construction and engineering major, Larsen & Turbo Limited, doesn’t share the same optimism as they are of the opinion that the global slowdown has impacted the Indian economy and the flow of funds and investment into India severely, thereby slowing down the implementation of projects. Further in a recent report Mr. Naik, Chairman, L&T said, “What has really happened of the global economy impact on L&T, obviously the export is slowing down, prices are dropping and more importantly the liquidity situation which is caused with no investment and funds coming to India.”
STEEL INDUSTRY
Analysts say, market passing the lowpoint, light at the end of the tunnel
With the general elections in the country slowly getting momentum day after day and the stock markets again on the rise, there is also a percolating flow of good news for the entire Indian steel fraternity at the moment. A revival in demand is foreseen in the near term in the Indian steel sector, according to the recent reports, which is so far battling hard to acquire the lost grip and girth in the domestic as well as in the international market arena. If the Indian steel sector is recovering in real terms, is the million dollar question now.
METAL INDUSTRY
Indian aluminium high potential to move forward with world-best technology
The per capita consumption of aluminium in India continues to remain abysmally low at under 1 kg as against nearly 25 to 30 kgs in the US and Europe, 15 kgs in Japan, 10 kgs in Taiwan and 3 kgs in China. The key consumer industries in India are power, transportation, consumer durables, packaging and construction. Of this, power is the biggest consumer (about 44% of total) followed by infrastructure (17%) and transportation (about 10% to 12%). However, internationally, the pattern of consumption is in favour of transportation, primarily due to large-scale aluminium consumption by the aviation space.
Metals traders continue to focus on the market, but fundamentals still weak
Unlike LME, market bounced back quite sharply at the COMEX on back of technical buying. This was however quite an exception to other markets including SHFE. Meanwhile, the negative sentiment further deepened when data released by the World Bureau of Metal Statistics noted that the world copper market was in surplus by 286,000 tons in the first 11 months of 2008. This compares with a deficit of 201,000 tons for the same period of 2007. Mine production for the first 11 months of 2008 was 14.1 million tons, some 1.3% lower than in the first 11 months of 2007. Refined copper production rose 2.6% to 16.89 million tons.
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