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Cr Ore _ Alloy market - steel furnace associate of india

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					Ferro Alloy Industry in India –
Challenges & Opportunities
Steel Furnace Association of India


Subodh Pandey
Chief of Marketing & Sales
Ferro Alloys & Minerals Division, Tata Steel India


                                                     ‹#›
DISCLAIMER:




   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.




                                                            ‹#›
           CONTENTS



CHROME ALLOYS INDUSTRY IN INDIA


MANGANESE ALLOYS INDUSTRY IN INDIA




                                     ‹#›
STAINLESS STEEL DEMAND: SHIFT IN USAGE PATTERN
All figs in million MT
                                                • Consumption mix shifting
                            7%                    towards premium grades:
                                                  300S+400S likely to
                                                  become 40% of total
                                                  demand
                   7%

                                                • Construction, transport &
                                                  industrial applications to
                                                  drive future growth




                                                   Ferro Chrome Demand
                                                      in India (‘000MT)
                                                   2005     2010      2015
End use application:
300S: Rail, Construction, Process Equipment &      300       350       500
Transport
400S: Electronics & Transport
200S: Tubular Products, Kitchenware                                            ‹#›
INDIA FERRO CHROME PRODUCTION
fig in ‘000 MT

                                                   • India has been a net
                             7%
                                                     exporter of value added
                                                     Ferro Chrome to the world

                                                   • Further capacity additions
                                                     are also planned in the
                 10%                                 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


    India’s position in the Ferro Chrome market is primarily because of the
                      Chrome Ore availability in Orissa belt
                                                                                  ‹#›
Source: IFAPA
CHROMITE RESERVES IN INDIA
              SUKINDA VALLEY: The Chrome Capital


                         3.5 million MT production in 2010   • 8 players are
                              (12% of world in 2010)           having Cr ore
                          Proven reserve: 213 million MT
                                                               mines with most of
                                                               them having
                                                               downstream Ferro
                                                               Chrome production
                                                               facilities

                                                             • U/G mines likely to
                                                               be explored in next
                                                               five years with
                                      Cr Ore Reserve           higher grade of Cr
                                                               Ore.

                                                             • Higher
                                                               refractoriness in
                                                               Indian ore




Source: IBM             Source: IBM
                                                                                   ‹#›
ADVANTAGE INDIA:

                • Stainless Steel production in India is projected to
                  grow @ ~7-8% in the next five years including
Strong Growth     potential for increasing exports of Stainless Steel
in Demand         from India.
                • This will lead to a sustained demand of FeCr in
                  line with the Stainless Steel production.


Backward        • Indigenous Chrome ore available of High grade
linkage           quality.


                • Commissioning of many new power plants
Power cost        including captive ones(CPP)- may help reduce the
                  gap in cost of power compared to SA, China


                • Freight advantage in SS markets such as China,
Proximity to      Korea & Japan compared to Kazakh, South Africa
market          • Short sailing time.
                                                                        ‹#›
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
                                                                        ‹#›
           CONTENTS



CHROME ALLOYS INDUSTRY IN INDIA


MANGANESE ALLOYS INDUSTRY IN INDIA




                                     ‹#›
CARBON STEEL OUTLOOK IN INDIA
Projected Indian Carbon Steel Growth (Mn MT)

                                  FP    LP   India
                                                                                 97
                                                                   89
                                                     82
                                  73
                    68                                                            52
       64
                                                                   48
                                                     44
                                  39
                    36
       34




                                                                   41             45
                                  34                 38
       30           32




      FY12 E        FY13         FY14                FY15         FY16           FY17



  PMT of FP FeMn : ~3.5 kg SiMn : ~ 2kg               PMT of LP: FeMn : ~2 kg SiMn : ~12kg
                                                                              Source MBR, CRU



                                                                                                ‹#›
SILICO MANGANESE DEMAND IN INDIA
     800
                                SiMn Demand – Domestic (kT)
                                                                              683
     700
                                                              632
     600                                         560                           46
                                        517                    43
                          489
     500    461                                   39
                                        36
                           35
     400     35

     300                                                                      579
                                                              535
                                        438      474
     200    388           413

     100

       0
            FY 12         FY 13        FY 14     FY 15        FY 16           FY 17
                    SiMn Long        SiMn Flat   SiMn Other           Total




     • Indian LP Steel production at CARG of 9% based on expected
       infrastructure lead demand in the 5 year period.

                                                                                      ‹#›
MANGANESE ALLOY DEMAND IN INDIA
    250
                          FeMn Demand – Domestic (kT)
                                                                           210
                                                                  196      11
    200
                                                   180                13
                                       166                                 34
                                                   12
                         153                                          33
           140                         18          29
    150                                                                    39
                         18
           11                          24                             35
           18            20                        32
                                       29
    100     25           26


                                                                  115      126
     50                                96          107
            86           89


      0
           FY12          FY13          FY14        FY15           FY16     FY17
                  Flat          Long          SS          Fdy & Oth



   • Indian Steel & Stainless Steel (200S) production at CARG of 9% in
     the 5 year period.


                                                                                  ‹#›
MANGANESE ALLOY PRODUCERS IN INDIA
                 1730                         449

                  Oth
                 1250

                   24                       OTHER
                                                              Key concern:
                Haldia,                     S, 206
                  30                                          • Availability of
                Maithan,
                   48
                                                                High Grade
                Sova, 50
                                            CORP 18             Mn Ore in
                Impex, 50                   SHYAM 19
                                            IMPEX, 26
                                                                India
                 Sri, 50
                                            HIRA, 32
                MEL, 54                     SARDA,            • Increase in
                                               32
                Hira, 70
                                                                power cost
                                            TSL, 50
                                                                across India
                Shyam,
                  80                        MEL, 65


    SiMn Production in 2010       FeMn Production in 2010

• 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                                                                        ‹#›
DEPENDENCE ON Mn ORE ON GLOBAL ORE MARKET
in million MT Mn content

                                                                                  18.8
                                                                 17.5
                                                  16.5
                           15.0     15.6
              14.0                                                           6.25814297699998
                                                             5.47925350000003
                                                  4.91889
                                      4.399
                             4.2
                 4.2                                                           1.871773696
                                                  1.73056        1.7997824
                                      1.664
                             1.6
                 1.5                                             2.6996736     2.807660544
                                      2.496       2.59584
                             2.4
                 2.1
                                                                 3.3874537     3.489077311
                                      3.193   3.28879000000001
                 2.7         3.1



                 3.5         3.7      3.848       4.00192    4.161996799999994.32847667199997



               CY11        CY12      CY13          CY14           CY15            CY16


                 China       Aus     SA         Gabon            Others


  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
                                                                                                ‹#›
 MAJOR MN ORE PRODUCERS (INDIA)
                            In Million MT
         Others, 0.5,
            19%


                                                    Manganese
                                                     Ore India
                                                     Ltd      ,
                                                     1.1, 41%
Tata Steel,
0.32, 12%




  Rungta , 0.2,
      8%

              OMC, 0.25,            Sandur , 0.3,
                9%                     11%




                           MOIL is the largest player in open market for HG Mn

                                                                                 ‹#›
ADVANTAGE INDIA
                         • Large Capacity for Ferro Alloys
 Ability to
                         • Industry currently operating at 60% of rated capacity
 immediately
                         • New capacities coming up. Capacities coming up near
 scale up
                           ports (Vizag, Haldia).



 Location near           • Freight advantage in markets such as China, Korea &
 high growth               Japan compared to Ukraine or South Africa
 regions                 • Short sailing time, freight advantage




                          • Domestically sourced LG & MG Mn Ore available for
 Cost Advantage             blending with imported HG Mn Ore.
 over China               • 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

                                                                                   ‹#›
IN SUMMARY…
• 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

   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
                                                                                    ‹#›
THANK YOU


            ‹#›
POWER TARIFF IN INDIA


                    CY11 (c/kwh)        FeCr / Ch Cr producing             CY12 (F) (c/kwh)
                                               countries
                              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

      • 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
                                                               Source : Own resources, info in public domain
Ferro Alloys & Minerals Division

				
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