IFN 09 2008 by 85JaGD


Globally inflationary pressure has become great concern for governments, business
enterprises as well general public. Slowing down of U.S. economy has repercussion on the
economy of other nations also. Rising prices of input materials for Steel making has steeply
increased steel prices internationally. However, Govt. of India in its effort to rein the inflation
has been able to hold the Steel price rise by making the Steel producers of the country to
agree to effect price cut. But the government is not complacent with this achievement knowing
that it is a temporary respite.

Steel price hike is attributed to the hike in all input prices and increased domestic demand of
Steel. The rate of growth in demand is almost double of that of production. In order to bridge
the demand-supply gap it is imperative to operationalize on going expansion and new projects
as early as possible. Ironically, inspite of high demand, Steel price rise has temporarily
slowed down procurement of Steel by the consumers, resulting build up of inventories.

The inflation has resulted in general a huge build up of inventories which have been seen,
across the board from cement and Steel to capital goods, FMCG, Petroleum products, Sugar
and Automobiles. Not with standing increase in demand of Steel, this apparent recession is
attributed to hike in price and interest rates to a level that consumers deferred Steel
procurement plan anticipating that the Government’s intervention will bring down the prices.
Due to this, unsold stock of Steel piled up. The combined inventory of Steel producers has
risen over three folds from Rs 716 crore in 2006-07 to Rs 2565 crore in 2007-08. The
inventories of Steel firms are added up to 18.6% of their profits now, up from 7.0% a year ago.
Though govt. has succeeded in pursuing Steel producers to reduce price, but they have clearly
indicated their inability to hold price line beyond three months i.e. August 2008. The recent
Steep hike on Iron Ore price may compel Steel producers to make a substantial hike in steel
price even before August.


The Induction Furnace industry is presently contributing around 30% of the total Crude
Steel production in the country. Realizing the important role played by this sector in
Indian Steel industry and for its sustained growth, Joint Plant Committee (JPC), under
Ministry of Steel has undertaken to carry out its National Survey.

The Survey findings will focus the changes the industry has undergone, to highlight the
issues relevant for Policy making with the appropriate authority for supporting the growth
of this sector, and to update the existing data base. The Ministry is considering to spend a
substantial amount for R&D for Induction Furnace industry to improve the quality of steel
production through this route. Your cooperation in making the Survey a success will help
the government for up-grading this industry and quality of its products.

AIIFA is making an EARNEST APPEAL to its member units to fill-up the Questionnaire and
send the same to JPC. The questionnaire has been printed in the Induction Furnace
ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                       5
Newsletter, issue No. 7, Vol. VI, dated 01.06.08 to 15.06.2008.

Indian domestic steel markets see volcanic erupti on
Despite the fact that Indian steel majors Steel Authority of India Limited, TATA Steel and
few others, who decide the Indian domestic steel price line, are marinating their price line
for 3 months as promised to the Indian government in the second week of May 2008, raw
material cost prices, global levels and speculation of impending increase has put Indian
domestic steel market on fire. Domestic prices for input materials, long products as well as
flat products have all witnessed big jumps in all the regions across India since June 16th
2008. Price movement for Mumbai market during this fortnight is given below to outline
that the increase is spread across all product categories
             Input materials
               Product       Grade Size            16-Jun     27-Jun      Change   %
               Melting scrap 80:20 HMS             31296      32724       1428     4.6%
               Pencil ingot                        39269      42601       3332     8.5%
               Billet        IS 2830 125x125       41827      45219       3391     8.1%
                                      Prices are in INR per tonne/Inclusive of ED and VAT
               Long products
              Product     Grade      Size         16-Jun      27-Jun      Change       %
              TMT         Fe 415     12mm         44743       46647       1904         4.3%
              ANGL        GR A       65x6         46647       47837       1190         2.6%
              CHNL        GR A       75/100       46647       47837       1190         2.6%
              JSTI        GR A       250x125      49979       55334       5355         10.7%
                                      Prices are in INR per tonne/Inclusive of ED and VAT
               Flat products
             Product       Grade      Size           16-Jun      27-Jun       Change     %
             HRC           Tube       2.5x1250       51480       55120        3640       7.1%
             HRPO          DSK        2.5x1250       52000       55640        3640       7.0%
             PLTS          GRA        8x1.25         51480       54600        3120       6.1%
             PLTS          GRB        12-20x2.5      52520       56160        3640       6.9%
             CR            DSK        0.63x1000      53040       55120        2080       3.9%
             GP            100Gms     0.63           59000       62500        3500       5.9%
                                      Prices are in INR per tonne/Inclusive of ED and VAT

Similar increases have been reported in other important markets like New Delhi, Chennai,
Kolkata and Raipur. Market sources attribute following reasons for such unprecedented rise.

1.     Input material costs Indian steel makers are facing sever cost pressures due to surge in
       input material costs.

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                     6
      Domestic price levels for HMS, which are still suppressed compared to international levels, which are
       above USD 720 per tonne level, are inching upwards to reach equilibrium.
      Following the international settlements by CVRD and realizing freight premium by Rio Tinto and
       coupled with mining constraints due to heavy rains, domestic iron ore prices have surged this fortnight
       and further increase is expected in the coming week.
      There has been a shortage of coal, again due to mining operations hit by heavy rain, resulting in power
       supply as well as coal shortage to small steel plants.
      Global levels of coking coal and coke prices are very firm amid huge demand from steel makers

2.      Global price levels. International prices are ruling at all time high and global steel giants
        are announcing further increases almost everyday. Just to give some examples. The
        SteelBenchmarker reported following World Export Price for benchmark hot band for June
        23rd 2008 as under

     i) USD 1,097 per tonne FOB the port of export
     ii) Up by USD 21 per tonne versus USD 1,076 two weeks ago
     iii) Up by USD 547 per tonne from the recent low of USD 550 on July 23rd 2007. It means that in last 11 months
          hot band prices have surged by USD 547 per tonne or 100%
     iv) Up by USD 501 per tonne from the recent high of USD 596 on March 26th 2007

Rebar prices in UAE are ruling at AED 5750 per tonne levels, which is equivalent to 1565 per
tonne considering current exchange rate. Turkish billet makers are trying to achieve USD 1300
per tonne FOB levels. Speculation. As buyers and sellers are anticipating price hike
announcements by Indian steel majors sometime in July, every player in the chain is in buying
mode rather than selling, thus limiting supply, which is pushing up the prices.

Steel industries list out challenges in Orissa
SNS reported that steel producers in Orissa have listed out problems faced in setting up projects
while the state government said challenges are part of life. Arcelor-Mittal's Mr Sanak Mishra and
POSCO India's Mr Soung Sik Cho, besides many in the sector, expressed their concern over the
manner in which the industrialization is being carried out in the state.
Mr Mishra said that "Land acquisition problem is the bottom line truth which affects
industrialization in the state." He added that three major problems faced by the industries were
listed like land acquisition, iron ore linkage and water sources. Mr BK Singh VP of TATA Steel
has suggested an action plan to overcome the issues faced by the industries while Mr BP Modi
deputy MD of Visa steel was for working in tandem with the government. But, Mr Pradeep Amat
steel & mines minister of Orissa said that "Life is never without challenges and let me assure you
that the Orissa government is committed to face all challenges boldly."

Punjab excise department plans to target steel units
It is reported that Punjab excise & taxation department will have to work hard this year to meet

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                                      7
its target of INR 7,000 crore for this financial year. The target is 25% ahead of last year’s tax
collection, which was INR 5,800 crore. The officers have been told to focus more on steel, hosiery,
sanitary ware, marble and plywood industry. Mr A Venuprasad chief commissioner of excise &
taxation department said that "These sectors indulge in tax evasion. We can grow up to 40% in
these areas. Last year, we registered a growth of about 15%. Punjab has a huge potential to
generate revenue for the department, especially hosiery, iron and steel industry. This needs to be
tapped.” He said further added that "Though we had introduced e filing scheme in the last
financial year, we did get encouraging response. We want to make it more popular."
Meanwhile, the department is still not clear as whether the dhaba tax and tax on embroidered
cloth has to be levied or not.

Mr Marcus predicts sharp fall in steel prices to end boon
Financial Times quoted a leading industry consultant Mr Peter Marcus of World Steel dynamics
as saying that global steel prices are set to fall steeply this year, bringing to an abrupt end a
remarkable boom for the world steel industry. Mr Marcus told the Financial Times that he is
overwhelmingly negative about the outlook for steel prices in the remaining months of 2008, after
a 12 month period in which prices have increased by more than 60%, even in the face of a
slackening global economy. He said that “The steel industry could be on the brink of a supply
and demand disaster due to an upswing in global steel production coinciding with a faltering in
global steel consumption, as credit problems and weak consumer and industry demand finally
feed through to steel plants.” Mr Marcus believes that “In spite of recent hefty rises in the price of
raw materials such as iron ore and coking coal, most steel companies have increased their prices
by a rate greater than their own cost increases.” The report however quoted some other senior
industry persons as believing that steel prices will hold up.

   1. Mr Ralph Oppenheimer chairman of Stemcor said strong demand from developing regions
      will keep price firm for a few more years.
   2. UK based steel consulting firm MEPS has said that prices will stay fairly stable at least
      until the end of 2008.

Government cannot ask steel major to hold prices - Mr Paswan
Mr Ram Vilas Paswan union steel minister said that the government cannot intervene again and
ask major steel producers to hold prices for another few months at a time when global prices are
hardening. He added that "Government cannot intervene every time as steel rates are governed
by international prices." Mr Paswan said that prices of iron ore and coking coal, the two main
raw materials for steel making, have significantly shot up in the global market in over the last one
year adding to cost of production of domestic steel players. He said that “The government would
not like the steel industry to close down for lack of profit, but would certainly monitor if prices
have been upped in proportion to the increase in cost of raw materials. The government has no
problem as long as steel producers raised prices in proportion to hike in input costs." It may be
noted that, in May 2008, leading steel makers had reduced prices of flat products by INR 4,000
per tonne and that of rebars and structural steel by INR 2,000 per tonne, endorsing government's
concern that steel prices were exerting inflationary pressures on economy. The producers had
also promised the government to hold their price line for 3 months.
Global DRI production in May 2008 up by 7.6% YoY
International Iron and Steel Institute have released the production figures for direct reduced iron
for the month of May 2008. The global production of DRI in May 2008 was 5.078 million tonne
ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                         8
up by 7.68% YoY.India retained the top slot with 1.650 million tonne production.

                                   M '08    M'07      Change     J-M '08      J-M '07   Change
         Total                     5.078    4.716     7.7%       24.261       21.926    10.7%
         India                     1.650    1.400     17.9%      8.100        7.050     14.9%
         Venezuela                 0.710    0.835     -15.0%     3.300        3.491     -5.5%
         Iran                      0.635    0.540     17.6%      2.937        3.038     -3.3%
         Mexico                    0.545    0.535     1.9%       2.541        2.625     -3.2%
         Saudi Arabia              0.377    0.329     14.6%      1.950        1.562     24.8%
         Libya                     0.180    0.162     11.1%      0.878        0.742     18.3%
         Trinidad & Tobago         0.177    0.137     29.2%      0.732        0.718     2.0%
         Qatar                     0.165    0.079     108.9%     0.809        0.385     110.1%
         Argentina                 0.149    0.136     9.6%       0.831        0.784     6.0%
         South Africa              0.129    0.145     -11.0%     0.505        0.756     -33.2%
         Canada                    0.084    0.090     -6.7%      0.279        0.314     -11.2%
         Brazil                    0.022    0.033     -33.3%     0.125        0.137     -8.8%
         Peru                      0.006    0.009     -33.3%     0.037        0.037     0.0%
                                                                                   In million tones
                                                                                   Source – IISI
Steel prices to raise sharply - Credit Suisse
According to Credit Suisse Group steel will extend gains from records this year as supply trails
even slowing demand growth, hurting consumers such as automakers and luring investors to the
shares of European makers of the metal. Mr Michael Shillaker a London based analyst said that
“The lack of response on the supply side to booming global prices is in our view a clear indication
that the world is not capable this time around of responding. He said that a steel shortage could
take years to resolve as prices get stronger and stronger.'' He also said that “Even if trend real
demand growth is slowing, supply has already slowed at a faster rate, adding that the shares of
European steelmakers may be major beneficiaries.” He added that “Steel equities maybe at close
to all-time highs in the US, but in Europe the equity market response to a booming steel market
has been muted.'' Credit Suisse maintains its overweight'' recommendation on the industry.

SAIL RDCIS develops rock bolt quality TMT rebars
Ranchi Express reported that Steel Authority of India Limited’s Research & Development Centre
for Iron & Steel has developed a new grade of rock bolt quality TMT rebars which is used
extensively to support overhead rock mass in underground mines, in tunnels in various strata
and securing rocks in hilly areas. Mr Biswajit Roy chief of communication at Research &
Development Centre for Iron & Steel said that the newly developed product in 20mm size is put
into operation as roof bolts in Korba area of SECL in collaboration with CMPDI on a trial basis.
He added that field tests conducted at the site revealed that new bolts performed much better
and could carry 17 tonnes against 11.5 tonnes by the existing bolts. Besides supplying the
newly developed bars to BCCL and UCIL, the same has also been supplied to JP Hydro recently
for their project at Karcham in J&K.

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                           9
Mr RS Pandey receives United Nations Public Service Award
Mr RS Pandey secretary of Indian ministry of steel has received the prestigious United Nations
Public Service Award for a unique program of communitization of public institutions & services
in Nagaland. The award was presented at the UN Head Quarters in New York to mark the Public
Service Day. The program was conceptualized and implemented by Mr Pandey during 2002-04
when he was chief secretary to government of Nagaland. The program has resulted in significant
improvement in government provided basic services in the area of elementary education, public
health and power utilities. Mr Pandey has also won the Civil Service Award for his contribution
to governance through this innovative program. He headed a 3 member delegation including the
present chief secretary to government of Nagaland Mr Lalhuma and Mr V Sakhri secretary to
government of Nagaland which received the Award. The Award consists of a trophy and a
certificate. There are 12 winners from different parts of the world this year including the
communitization program from India. The award is considered as the most prestigious
recognition of excellence in the public services.

Steel users must see new reality in prices – Mr Mittal
Bloomberg quoted Mr LN Mittal CEO & chairman of ArcelorMittal as saying that that steel users
will have to adjust to the new reality and the new pricing environment for the metal as producers
recover higher costs for raw materials. Mr Mittal in an interview in New York, without saying
how much prices will rise, said that “Steel cannot be supplied at a loss, which means that steel
prices will have to be increased.” He added that price increases will depend on the cost of coal
and iron ore

JSPL to put INR 32000 crore in CLT plan
ET reported that Jindal Steel & Power Limited has told the coal ministry that it planned to pump
INR 32,000 crore into a project for extracting 80,000 barrels per day of oil by synthesizing coal.
JSPL wrote to the ministry, asking to speed up allocation of coal mines for the project. It has told
the ministry it requires 900 million tonnes of extractable reserves, if the coal does not exceed 35%
ash content, for 30 years. Terming the CTL project as clean technology, JSPL said that such a
project does not have environmental issues and would convert coal reserves into productive end
use. JSPL has sought early allocation on the ground that it already has experience in mining,
annually digging up 7 million tonnes of coal and 3 million tonnes of iron ore for its steel plants.
With expansion plans for both steel and power plants in place, it has told the government it will
be mining 30 million tonnes of coal and 9 million tonnes of ore in the coming years.

The corporate rush for CTL projects stems from changes made sometime back in the Coal Mines
(Nationalization) Act of 1973 that said coal mining for synthesizing oil and gas would be
considered as end use and would thus be open to private entities under captive mining norms.
The high oil prices have only made such ventures more attractive. JSPL is the third major entity
to jump on the CTL bandwagon. The TATA group was the first to plan such a venture with South
Africa's Sasol, the global market leader in the technology. An inter-ministerial panel has approved
the TATA proposal and forwarded it to the coal ministry for allocation of coal mines for the
project. Estimates are that the project could cost up to USD 9 billion. Reliance Industries
Limited is the second entity to have sought permission and coal acreages for a USD 5 billion CTL
project. It is also holding talks for forming a JV with Coal India Limited for the purpose, wherein
the government-run firm will handle the mining operations and Reliance will be in charge of
ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                       10
synthesizing the coal into oil.

HMS & Shipbreaking scrap prices on increasing trend

        Location         16-Jun 17-Jun Change %
        Chennai           29154 30939   1785 6.1%
        Mumbai            31296 32129    833  2.7%
       Price is in INR per tonne/Price is inclusive of ED and VAT

       Ship plate cutting 1
       ocation – Alang
       16-Jun        23-Jun Change %
       35104         36889 1785    5.1%
                       Price is in INR per tonne
                       Price is inclusive of ED and VAT

       Ship mixed scrap
       Location – Alang
       16-Jun 23-Jun Change %
       29154 30701 1547     5.3%
                       Price is in INR per tonne
                       Price is inclusive of ED and VAT

Pencil ingot prices on fire in Kolkata region
     20-Jun 26-Jun Change %
      41887 46409    4522 10.8%
       Price in INR per tonne/Inclusive of ED and VAT

          The movement of prices has been as under
     20-Jun      23-Jun 24-Jun 25-Jun 26-Jun
     41887       43434 44624 45219 46409
Scrap and pencil ingot prices surge in Mandi in last 7 days

             Size     20-Jun 27-Jun Change   %
        Melting scrap 33072 36192 3120     9.4%
        Pencil ingot  40872 43680 2808     6.9%
                       Price in INR per tonne/Inclusive of ED and VAT

Less supplies from SA propelling ferroalloys globally
According to Mr Rohit Patni MD of Rohit Ferro Tech Ltd, the increase in global ferroalloy prices is
due to strong demand from steel industry and curtailment of production in South Africa which
accounts for 45% of world ferroalloy production.         Calcutta based Rohit Ferro Tech a
manufacturer of ferroalloys comprising chrome, Ferro-manganese and Silico-manganese has

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                      11
posted a profit after tax of INR 802 million on sales of INR 6137 million for 2007-08 up by 208%
YoY from INR 1991 million and net profit by 317% YoY from INR 192 million. The increased
revenues are due to commissioning of all the ferroalloy furnaces in Jaipur plant and higher
realization from ferroalloy products.

Nickel futures decline on poor demand
PTI reported that nickel prices on Monday fell by 0.57% in futures trading in India following poor
demand. As per report, Nickel was trading at INR 967 per kilogram down by 0.57% with a
business volume of 890 kilogram on the Multi Commodity Exchange at 1300 hrs. The report
added that metal for July contract lost 0.51% to INR 980 per kilogram with a business volume of
156 kilogram. An MCX trader said that "A fall in demand from stainless steel producers mainly
pulled down nickel prices.” He added that the report of rising trend at the London Metal
Exchange failed to lift the market.

Long products may see price rally this week
The prices of long products although went up by INR 476 per tonne to INR 714 per tonne during
last week in Mumbai market, are likely to see rally this week, as the prices of semis surged by
much higher amount.

               Product      Grade       Size       16-Jun     21-Jun      Change       %
               TMT         Fe 415     12mm         44743      45219       476        1.1%
               ANGL        GR A       65x6         46647      47123       476        1.0%
               CHNL        GR A       75/100       46647      47361       714        1.5%
               JSTI        GR A       250x125      49979      50455       476        1.0%
                                      Prices are in INR per tonne inclusive of ED and VAT
                                      Delivery is FOT

Semis prices escalate by 5% last week in Mumbai
Amid tight supply position, prices of feedstock for rolling mills witnessed a big jump of almost 5%
during the last week.

          Product       Grade Size                  16-Jun     21-Jun     Change      %
          Melting scrap 80:20 HMS                   31296      31534      238         0.8%
          Pencil ingot                              39269      41054      1785        4.5%
          Billet        Td    125x125               41827      44029      2201        5.3%
                                      Prices are in INR per tonne inclusive of ED and VAT
                                      Delivery is FOT

Indian domestic plate prices witness a big jump last week
It is reported that Indian domestic prices for heavy plates witnessed a sharp jump in major
trading centers Mumbai and Raipur during the last week. Plates 12mm to 20mm in 2500 width
and IS:2062 Grade B.
               16-Jun 21-Jun Change %
               52520     53560 1040        2.0%

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                      12
                 16-Jun 21-Jun Change %
                 49400    50440 1040  2.1%
                                      Rate in INR per tonne
                                      Including ED and VAT
                                      Delivery FOT

Power and steel ministries seek priority based gas allocation
FE reported that, amidst the central government’s move to finalize the gas utilization policy,
ministries of power and steel have made a strong pitch for the suitable allocation of gas on
priority. The power ministry, which is pursuing the capacity addition of 78,700 MW in 11th Plan
period, argued that there is a perpetual shortage of around 39 million standard cubic meters per
day of gas for the power plants in the country including about 7 million standard cubic meters
per day of gas for National Thermal Power Corporation’s power stations. The power ministry has
said that the additional demand may be met by making suitable gas allocation on priority. The
ministry wants prioritization for the power sector for the allocation of gas, in view of the current
power shortage in India, which even exceeds 14% during the peak time. The utmost priority
needs to be accorded to the power sector for the allocation of gas, which will not only help to
achieve the goal set by the country aimed at accelerated growth, but will also address concerns
about the global warming.

On the other hand, the steel ministry said that the gas based steel plants are mostly running
below their installed capacities in the range of 60% to 85%. Under the normal condition, if
natural gas is supplied uninterrupted through pipeline, these plants are capable of operating in
the 90% to 95% range. This phenomenon itself is causing a loss of 1.0 million tonne of steel
production in India. The steel ministry has demanded that the centre, under the gas utilization
policy, should consider steel as a priority sector for the supply of natural gas at par with
fertilizers and supply of allocated quantity to be made on the basis of long-term price contract
basis to the gas based steel units. Petroleum ministry sources said that as regard the order of
priority for allocation of gas, it has identified the following priority fertilizer plants, LPG and
petrochemical plants, power plants, city gas distribution network, refineries and other industries
including steel.

Global crude steel production in May up by 5.8% YoY
World crude steel production for the 66 countries reporting to the International Iron and Steel
Institute was 119.5 million tonnes in May 2008. This is 5.8% higher than the same month last
year. China produced 46 million tonnes of crude steel in May 2008. This is an increase of 10.5%
compared to the same month in 2007. India, Japan and Korea also showed growth. Overall, Asia
produced 67.6 million tons of crude steel in May 2008 as compared to 62.4 million tonnes in May
2007, an 8.3% increase in crude steel production. In Europe, Germany produced 4.1 million
tonnes of crude steel in May, an increase of 2.6% compared to May 2007. Turkish crude steel
production was 2.5 million tonnes, a 12% increase compared to the same month last year. Over
the first five months of 2008, Turkey produced 11.7 million tons of crude steel, which is 9% more
than the same period in 2007. Brazil’s crude steel production also grew in this month. In May
2008, Brazil produced 3 million tonnes as compared to 2.9 million tonnes in the same month last
year, an increase of 2.8%.

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                       13
Indian six core sector growth in April declines to 3.6%
IANS reported that, after a slowdown in industrial production, the growth in the output of 6 core
sectors, including crude oil refining, coal and electricity, has also registered a steep fall in April
2008. The growth of these 6 industries namely crude oil, petroleum refining, coal, electricity,
cement and finished steel, declined to 3.6% in April 2008 against 5.9% in April 2007. The 6 core
infrastructure industries had registered a 9.6% growth in March 2008. These core infrastructure
industries also have a combined weight of 26.7% in the overall Index of Industrial Production.
The refinery products growth slowed down considerably to 4.3% in April from 15.1% in the
corresponding month last year while the crude oil growth came down to 0.9% from 1.4%.
Electricity generation growth also declined to 1.4% from a robust 8.7% in April 2007. The other
3 sectors namely, coal, cement and steel, registered positive growth rates. Coal production saw a
10.3% increase from a mere 0.6%, cement increased by 6.9% from 5.8% and finished steel rose
by 4% from 2.7%.

Rebar prices in UAE cross USD 1500 mark
It is reported that the rebar prices in UAE market are being quoted at AED 5500 levels, which is
equivalent to USD 1500 per tonne and is a historic landmark. Rebars in BS 4449 grade 460 at
AED 5000 per tonne levels till June 9th 2008 and witnessed a jump of AED 200 per tonne on
June 10th 2008 followed by AED 300 on June 11th 2008. Since than, they have been at a level
of AED 5500 per tonne during the week. As per market sources, the prices may further increase
in the next week by a minimum of AED 100 per tonne.

BD Castings to set up steel plant in Birbhu m
FE reported that TMT bar manufacturer BD Castings Private Limited – a member of AIIFA has
come up with 2 new value added products for its Timcon brand TMT Bar Fe500 and Timcon
structural steel. The first one is used in construction, while the latter has use in the engineering
and fabrication industries. Mr Ramesh Chand Goyal chairman of BD Castings said that the
basic raw material of both the products is produced in the integrated steel manufacturing units
of the company. Regarding new ventures, he said that a new integrated steel plant with a
capacity of more than 300,000 tonne per annum would come up in Birbhum.

ISRI supports efforts to remove global trade barriers
Ms Robin Wiener president of Institute of Scrap Recycling Industries said that she is pleased to
see that the American Scrap Coalition has joined the bandwagon in support of the free and fair
global trade of scrap, but seriously questions the coalition’s underlying premise that steel scrap
processing and consuming industries are facing a steel scrap export crisis. Ms Wiener stated
that “Rather than a crisis, both the steel industry and the scrap industry are enjoying
extraordinarily strong export markets due to the quick pace of global infrastructure development.
In fact, finished steel exports alone have increased 81.5 percent since 2001.” She added that
“Scrap and finished steel are globally traded commodities. Efforts to artificially restrict that trade
can have negative repercussions that are felt around the world. One effect that economists have
noted is the potential for control reversal, where the implementation of export controls actually
results in the opposite impact of what was intended to be achieved. That is why we have long
taken an active position in support of free and fair markets by advocating for the removal of
export controls around the world. As late as last month, ISRI attended meetings where we raised
the issue of the need for free and fair trade practices between countries and continents.”
ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                         14
Mr Bob Garino director of commodities of ISRI said that “The price of scrap metal is only one of
many components that factor into the overall price of finished steel. Higher steel prices are
generally being driven by two major factors: higher global demand, primarily from emerging
markets like Brazil, Russia, India and China, along with the Middle East, and the dramatic
increase in the cost of raw materials. Since 2003, iron ore has risen 337%, while coking coal has
risen 491%. While scrap auto bundles have gone up significantly during this same period it has
been less than these other major raw materials.”

Asian stainless steel may switch to rolling of carbon steel
It is reported that some East Asian stainless steel producers are considering switching some of
their capacity to produce carbon steel as the sluggishness in the stainless steel market shows
little sign of abating. As per report the carbon steel market is currently more profitable than the
stainless market. However, a Taiwanese stainless steel producer said that the biggest challenge
is to establish effective sales channels for carbon steel. Some mainland Chinese stainless mills
have been increasing carbon steel production after being forced to cut stainless production.
Stainless steel prices in East Asian have declined by more than 4% from mid May and business
remains very quiet. Traders said that it is difficult to predict the market in the months up to, and
even after, August.

Steel output to surpass requirements by 2011 -12 – Mr Paswan
Mr Ram Vilas Paswan union steel minister said that steel production in India will achieve 124
million tonnes of steel capacity by 2011-12, which would be more than the domestic requirement
leading to relenting pressure on its alloy prices. He added that India's requirement would be
around 110 million tonnes at that point of time. The annual demand for steel in India has been
rising by about 13% but production is growing by over 6%. India's crude steel production was
53.9 million tonnes in 2007-08 fiscal and out of it about 5 million tonnes were exported. India
imported nearly 7 million tonnes of steel.

Update on Chinese steel, iron ore and coal output in May 2008
According to latest data released by the National Bureau of Statistics China's crude steel
production in May up by 10.5% YoY to 46.01 million tonnes and 216.11 million tonnes for the
first five months up by 9.4% YoY. China churns out some 75.49 million tonnes of crude iron ore
in May and 310.91 million tonnes for January to May up by 28% YoY and 26% respectively over
same period last year.

         Product              May'08 May'07 Change J-M'08 J-M'07 Change
         Crude steel            46.01       41.62      10.5%      216.11      197.48      9.4%
         Pig iron               43.04       39.76      8.2%       203.00      187.77      8.1%
         Steel product          53.38       46.97      13.6%      246.04      218.67      12.5%
         Coke                   29.94       26.98      11.0%      140.79      125.33      12.3%
         Crude iron ore         75.49       59.01      27.9%      310.91      247.40      25.7%
         Ferroalloy              1.78        1.48      20.2%       7.67        6.47       18.4%
                                                                              (In million tonnes)
                                                                              (Sourced from MySteel.net)
Ferro Alloy Prices hit Stainless Steel Makers.

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                                15
High prices of bulk Ferro-alloy manganese and chrome, have started hurting producers of
alloy steels and stainless steels. Mukand Ltd, one of the bigger producers of alloy and
stainless steel, has shown drop in profit in the fourth quarter of 2007-08. Rajesh Shah, co-
chairman and managing director of the company, said that the drop in profit was due to a
sharp increase in prices of ferro-chrome, melting scrap, molybdenum, coke and furnace oil.
N.C. Mathur, Director International Sales, Jindal Stainless, said that the drop in profit of
Jindal stainless steel was due to doubling of the prices of Ferro-chrome and trebling of the
prices of manganese alloys. The profits of alloy steel producers have also fallen due to sharp
increase in prices of bulk alloys and other raw materials. Mukund net profit for January
March 2008 quarters fell to Rs 5.93 crore against Rs 36.15 crore for the same period last
year. Sales rose by 12.76 percent to Rs 611 crore against Rs 542 crore but total
expenditure was up by 17.35 percent to Rs 498 crore against Rs 425 crore. Mukand’s net
profit for 2007-08 decline by 43.99 percent to Rs 52.24 crore, against Rs 93.27 crore
during the previous year. Sales rose 6.43 percent to Rs 1926 crore from Rs 1810 crore. To
cut costs, the company is setting up a power plant at Ginigera in Karnataka at a cost of Rs
540 million to be commissioned in the third quarter of this year. The Alloy Steel Plant of
Durgapur saw sales increase to Rs 992 crore in 2007-08 from Rs 706 crore of the previous
year, but its profit before interest and tax fell to Rs 8.35 crore from Rs 22.73 crore of the
previous year. VISL of SAIL saw sales rising to Rs 702 crore in 2007-08 from Rs 664 crore
of the previous year, but its losses increased to Rs 52.05 crore from 29.8 crore. Jindal
Stainless Ltd also saw a sharp drop in profit during January-March 2008. Its total income
was Rs 1499 crore against Rs 1435 crore of the previous year , but net profit for the period
fell to Rs 53.11 crore as compared to Rs 92.12 crore in the previous year. For the whole of
2007-08, sales were Rs 5196 crore against Rs 4896 crore, but net profit was Rs 228 crore
against Rs 353 crore. According to Mathur, India’s demand for stainless steel in 2008 will
rise slower than the anticipated 5 to 7 percent due to rise in raw material prices like Ferro
chrome and Ferro manganese. While nickel prices have stabilized, Ferro alloy prices had
been going up steeply affecting stainless steel making. He said Indian domestic demand for
stainless steel was around 1.3 million tons and was forecast to grow at 10 percent in 2008
from the marginal growth of 1 to 2 percent noticed in 2007. Exports of stainless steel was
around 0.5 million tons. He said that the world production of stainless steel had fallen by
2.9 percent in 2007. There was excess capacity for stainless steel in china, which had now
reached around 12 million tons. But demand was around 7.5 million tons, and is expected
to rise slowly, creating idle capacity. If the Chinese resort to heavy selling in the export
market, then the prices are likely to fall. Chinese major mills are cutting output and
lowering sales and building stocks to avoid fall in prices, according to reports. China
reportedly produced 7.5 million tons of stainless steel in 2007 and is expected to produce 9
million tons in 2008.
We are reproducing below the name and address of a member who joined AIIFA recently.
The Association is grateful to this company for their becoming member of the Association.

(i)    Name and Address                              :       MARUTHAM STEEL IND. (P) LTD.
       for Correspondence                                    VIII/885, New Indl. Development Area
                                                             Kanjikode, Palakkad – 678 621 Kerala
                                                             Tel: 0491-256 9898/9595
ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                         16
                                                             Fax: 0491-256 9966
                                                             Email: mathuramsteels_2k4@yahoo.co.in

       Membership No.                                :       659

       Name of the Chief Executive                   :       Mr. M. Kathiresh
                                                             Managing Director

       Products made                                 :       Mild Steel Ingots


ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                          17
                                      Market Prices (Jun As on 16-06-08)
                                                                                             (Rs per tonne)
                            ITEM                         Kolkata        Delhi     Mumbai       Chennai
     1   Pig Iron                                            33350        36000      36000          36925
     2   Billet 100 mm                                       34250        40600      39500          37450
     3   Blooms 150x150 mm                                   34250        40500      39500          37950
     4   Pencil Ingots                                       34800        40500      39000          36925
     5   Wire Rods 6 mm                                      42700        48000      42850          44250
     6   Wire Rods 8 mm                                      42875        48000      43000          43775
     7   Rounds 12 mm                                        40675        46000      43000          46800
     8   Rounds 16 mm                                        40900        46000      43000          46800
     9   Rounds 25 mm                                        40175        46000      43000          47850
    10 Tor/TMT/CTD Steel 10 mm                               42250        47800      45100          46175
    11 Tor/TMT/CTD Steel 12 mm                               42200        46800      46500          46175
    12 Tor/TMT/CTD Steel 25 mm                               43300        46800      46500          46275
    13 Angles 50X50X6 mm                                     42300        44200      43900          44725
    14 Angles 75X75X6 mm                                     42325        44600      43900          45250
    15 Joists 125X70 mm                                      42700        44800      45900          49100
    16 Joists 200X100 mm                                     45200        45500      46350          48675
    17 Channels 75X40 mm                                     45200        45200      43450          45750
    18 Channels 150X75 mm                                    45700        45200      44600          45750
    19 Plates 6 mm                                           45500        50500      45750          46800

    20 Plates 10 mm                                          43725        50500      45750          46800
    21 Plates 12 mm                                          46750        50000      45750          46800
    22 Plates 25 mm                                          47350        50000      45750          49925
    23 HR Coils 2.00 mm                                      48000        51000      45750          47850
    24 HR Coils 2.50 mm                                      46250        49000      45750          47325
    25 HR Coils 3.15 mm                                      45500        49000      45750          46800
    26 CR Coils 0.63 mm                                      48750        51000      49000          49925
    27 CR Coils 1.00 mm                                      48175        50000      47750          49400
    28 GP Sheets 0.40 mm                                     53000        59000      54000          61350
    29 GP Sheets 0.63 mm                                     51000        54600      53250          59800
    30 GC Sheets 0.40 mm                                     53500        59500      54000          61350
    31 GC Sheets 0.63 mm                                     51250        55000      53250          60125
    32 Melting Scrap H M S-I                                 30100        33300        N.A          22875
    33 Melting Scrap H M S-II                                29575        33000        N.A          23400
ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                                   18
    34 Sponge Iron (Coal Based)                              24000        29700      28500          22875
  Note: All Prices are in Rs./Tonne and has been compiled on the basis of average of Main & Secondary
  producer's price.

         Prices are inclusive of Excise Duty & Sales / Vat Tax
         All prices are as on 16th June.
         Prices are indicative
         Delhi priceis estimated.
         NA=Not Available

  (These prices have been compiled by JPC)

                                      TABLE - 1 & 3
                          CAPACITY UTILISATION MAY 2008 (PROV.)
                                                                   %age of
                                        May'08           May'07    Current              % Capacity
                                                         Actual    Production Over       Utilisation
                                   Target      Actual    (Prov.)   May'08 May'07      May'08 May'07
                                                                   Target Actual
1. Main Producers
  (A) SAIL
       i) BSP                        402.0      406.0     422.0      101.0     96.2    122.0       127.0
     ii) DSP                         160.0      156.0     171.0       97.5     91.2    102.0       112.0
    iii) RSP                         167.0      169.0     156.0      101.2    108.3    105.0        96.0
    iv) BSL                          305.0      271.0     363.0       88.9     74.7     73.0        98.0
     v) ISP                            45.0      37.0      37.0       82.2    100.0     87.0        87.0
    vi) ASP                            10.0      16.0      11.0      160.0    145.5     79.0        57.0
   vii) SSP                          -           -         -          -        -        -           -
   viii) VISL                          12.0      14.0      14.0      116.7    100.0    136.0       141.0
  (B) Tata Steel                     477.0      416.0     377.0       87.2    110.3    100.0        91.0
  (C) V S P                          287.0      244.0     272.0       85.0     89.7    101.0       112.0
    Main Producers                  1865.0     1729.0    1823.0       92.7     94.8    101.0       104.0
2. Secondary Producers
  (A) STEEL MAJOR *                             800.0     780.0               102.6
  (B) OTHERS                                   1800.0    1668.0               107.9
   Secondary Producers              3500.0     2600.0    2448.0       74.3    106.2     74.3        75.3
         Total (1 + 2) :            5365.0     4329.0    4271.0       80.7    101.4     85.0        87.6

                                                  TABLE - 2 & 4

                            CAPACITY UTILISATION APR-MAY'08 (PROV.)

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                                19
                                                                                  %age of
                                    2008 -                               Apr-     Current             % Capacity
                                     2009              Apr-May'08       May'07    Production Over      Utilisation
                                    Target           Target    Actual   Actual     Apr-     Apr-     Apr-      Apr-
                                   Tentative                            (Prov.)   May'08 May'07     May'08 May'07
 1. Main Producers                                                                Target Actual
   (A) SAIL
        i) BSP                   4900.0        791.0    805.0     846.0    101.8     95.2    123.0      129.0
      ii) DSP                    1850.0        315.0    308.0     340.0     97.8     90.6    102.0      113.0
     iii) RSP                    1996.0        325.0    338.0     288.0    104.0    117.4    107.0       91.0
     iv) BSL                     4450.0        615.0    554.0     698.0     90.1     79.4      76.0      96.0
      v) ISP                      500.0          78.0    69.0      75.0     88.5     92.0      82.0      90.0
     vi) ASP                      115.0          19.0    30.0      23.0    157.9    130.4      77.0      59.0
    vii) SSP                      -            -         -         -        -         -        -          -
    viii) VISL                    140.0          23.0    28.0      25.0    121.7    112.0    144.0      126.0
   (B) Tata Steel                5500.0        924.0    827.0     789.0     89.5    104.8      99.0      95.0
   (C) V S P                     3440.0        551.0    508.0     523.0     92.2     97.1    105.0      108.0
     Main Producers            22891.0        3641.0 3467.0 3607.0          95.2     96.1    100.0      102.0
 2. Secondary Producers
   (A) STEEL MAJOR                                     1550.0 1505.0                103.0
   (B) OTHERS                                          3550.0 3405.0                104.3
    Secondary Producers        42000.0        7000.0 5100.0 4910.0          72.9    103.9      72.9      75.5
          Total (1 + 2) :      64891.0      10641.0 8567.0 8517.0           80.5    100.6      83.9      86.7
                          Note : 1) Major Units = Essar Steel, JSWL & Ispat Indus.
                                              Sec. Producers figures have been adjusted as per the revision
                                        2) of IF data.

NO.872/10/2008-CX, DATED 17.06.2008 [F.No. 206/08/2007-CX-6]
The Chief Commissioner of Central excise (All)
The Chief Commissioner, LTU (All)
The Commissioner of Central Excise (All)
The Director General of Audit, Customs and Excise.

     Appointment of Officers of Directorate General of Audit as Central Excise Officers-reg.

The undersigned is directed to refer to notification No. 28/2008-CE (NT) dated 05-06.2008, wherein
the officers of Directorate General of audit have been appointed as Central Excise Officers of
Corresponding grade.

This notification has been issued in the context of the updated Excise Audit Manual, 2008 (4 th
Edition) published and circulated recently by the Directorate General of Audit. The audit of Multi
Locational units has been revamped in order to yield better results. MLU broadly refers to an
assessee having factories at different places in which similar items are manufactured. As per the

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                                      20
revised procedure, the zonal ADG (Audit) has been authorized to obtain the consolidated Balance
Sheet, Profit and Loss Statement and other financial documents of the company from the
Head/Corporate office for scrutiny. They have also been entrusted with the responsibility to clearly
understand the role played by the Head office in the conduct of business by individual units, which
requires the officers of the zonal unit to visit the said office. Further, the zonal unit is required to
send out their staff to the said registered office/ corporate office, in case the jurisdictional audit
teams have identified certain issues that require any verification. Therefore, in view of the above,
notification No. 28/2008-CE(NT) dated 05.06.2008 has been issued to empower the officers of
Directorate General of Audit accordingly. The field formations may be suitably informed.
                                                                      (Rahul Nangare)
                                                             Under Secretary to the Govt. of India

Issue No. 09       Vol. VI     “Fortnightly”          Date: 01-07-2008 to 15-07-2008          Rs. 10/-

ISSUE NO. 09 VOL. VI INDUCTION FURNACE NEWS LETTER 01-07-2008 to 15-07-2008                           21

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