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1 Ferro Alloy Industry in India – Challenges & Opportunities Subodh Pandey Chief of Marketing & Sales Ferro Alloys & Minerals Division, Tata Steel India.

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Presentation on theme: "1 Ferro Alloy Industry in India – Challenges & Opportunities Subodh Pandey Chief of Marketing & Sales Ferro Alloys & Minerals Division, Tata Steel India."— Presentation transcript:

1 1 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

2 2 The presentation is an amalgamation of authors 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:

3 3 CONTENTS CHROME ALLOYS INDUSTRY IN INDIA MANGANESE ALLOYS INDUSTRY IN INDIA

4 4 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 & Transport 400S: Electronics & Transport 200S: Tubular Products, Kitchenware Ferro Chrome Demand in India (000MT) 200520102015 300350500 7%7% 7%

5 5 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% Indias position in the Ferro Chrome market is primarily because of the Chrome Ore availability in Orissa belt

6 6 CHROMITE RESERVES IN INDIA Source: IBM 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

7 7 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

8 8 HOWEVER, COMPETITIVE ADVANTAGES OF INDIA IS A CONCERN COMPARED TO OTHER PRODUCING REGIONS Key Success FactorSAKazakhChinaIndia 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

9 9 CONTENTS CHROME ALLOYS INDUSTRY IN INDIA MANGANESE ALLOYS INDUSTRY IN INDIA

10 10 CARBON STEEL OUTLOOK IN INDIA Source MBR, CRU Projected Indian Carbon Steel Growth (Mn MT) PMT of FP FeMn : ~3.5 kg SiMn : ~ 2kg PMT of LP: FeMn : ~2 kg SiMn : ~12kg

11 11 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

12 12 Indian Steel & Stainless Steel (200S) production at CARG of 9% in the 5 year period. FeMn Demand – Domestic (kT) MANGANESE ALLOY DEMAND IN INDIA

13 13 SiMn Production in 2010FeMn 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

14 14 DEPENDENCE ON Mn ORE ON GLOBAL ORE MARKET 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

15 15 MAJOR MN ORE PRODUCERS (INDIA) MOIL is the largest player in open market for HG Mn

16 16 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

17 17 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

18 18 THANK YOU

19 Ferro Alloys & Minerals Division POWER TARIFF IN INDIA CY11 (c/kwh)FeCr / Ch Cr producing countries CY12 (F) (c/kwh) 8China9 7.6SA – Winter Season9.5 5.4SA – Normal6.8 4Kazakh4.5 10.3India - Orissa10.9 5.9India – Andhra9.6 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


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