Presentation on theme: "Ferro Alloy Industry in India – Challenges & Opportunities"— Presentation transcript:
1 Ferro Alloy Industry in India – Challenges & Opportunities Steel Furnace Association of IndiaSubodh PandeyChief of Marketing & SalesFerro Alloys & Minerals Division, Tata Steel India
2 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.
3 CONTENTSCHROME ALLOYS INDUSTRY IN INDIAMANGANESE ALLOYS INDUSTRY IN INDIA
4 Ferro Chrome Demand in India (‘000MT) STAINLESS STEEL DEMAND: SHIFT IN USAGE PATTERNAll figs in million MTConsumption mix shifting towards premium grades: 300S+400S likely to become 40% of total demandConstruction, transport & industrial applications to drive future growth7%7%Ferro Chrome Demand in India (‘000MT)200520102015300350500End use application:300S: Rail, Construction, Process Equipment & Transport400S: Electronics & Transport200S: Tubular Products, Kitchenware
5 INDIA FERRO CHROME PRODUCTION fig in ‘000 MTIndia has been a net exporter of value added Ferro Chrome to the worldFurther capacity additions are also planned in the next 5 yrsWhile 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 fragmented7%10%India’s position in the Ferro Chrome market is primarily because of the Chrome Ore availability in Orissa beltSource: IFAPA
6 3.5 million MT production in 2010 Proven reserve: 213 million MT CHROMITE RESERVES IN INDIASUKINDA VALLEY: The Chrome Capital8 players are having Cr ore mines with most of them having downstream Ferro Chrome production facilitiesU/G mines likely to be explored in next five years with higher grade of Cr Ore.Higher refractoriness in Indian ore3.5 million MT production in 2010(12% of world in 2010)Proven reserve: 213 million MTCr Ore ReserveSource: IBMSource: IBM
7 ADVANTAGE INDIA:Stainless Steel production in India is projected to ~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.Strong Growth in DemandBackward linkageIndigenous Chrome ore available of High grade quality.Power costCommissioning of many new power plants including captive ones(CPP)- may help reduce the gap in cost of power compared to SA, ChinaProximity to marketFreight advantage in SS markets such as China, Korea & Japan compared to Kazakh, South AfricaShort sailing time.
8 HOWEVER, COMPETITIVE ADVANTAGES OF INDIA IS A CONCERN COMPARED TO OTHER PRODUCING REGIONS Key Success FactorSAKazakhChinaIndiaPower++++-Chrome ore reserves++Availability of Chrome oreReductants (Coke/Char/Anthracite)Proximity to marketsBasic infrastructure (ports/ Rail/road)Government SupportOverall Competitive Advantage+++ : Strongly positive
9 CONTENTSCHROME ALLOYS INDUSTRY IN INDIAMANGANESE ALLOYS INDUSTRY IN INDIA
10 CARBON STEEL OUTLOOK IN INDIA Projected Indian Carbon Steel Growth (Mn MT)PMT of FP FeMn : ~3.5 kg SiMn : ~ 2kgPMT of LP: FeMn : ~2 kg SiMn : ~12kgSource MBR, CRU
11 SiMn Demand – Domestic (kT) SILICO MANGANESE DEMAND IN INDIASiMn Demand – Domestic (kT)Indian LP Steel production at CARG of 9% based on expected infrastructure lead demand in the 5 year period.
12 FeMn Demand – Domestic (kT) MANGANESE ALLOY DEMAND IN INDIAFeMn Demand – Domestic (kT)Indian Steel & Stainless Steel (200S) production at CARG of 9% in the 5 year period.
13 MANGANESE ALLOY PRODUCERS IN INDIA 449Key concern:Availability of High Grade Mn Ore in IndiaIncrease in power cost across IndiaSiMn Production in 2010FeMn Production in 2010Many Producers (~ 50) with wide range of furnaces : 4 to 33 MVAExport led production growth (50% exports) of Mn Alloys based on imported oreCapacity addition of ~ 954 kt in next 5 yrs in SiMn and ~ 223 kT in Fe Mn
14 DEPENDENCE ON Mn ORE ON GLOBAL ORE MARKET in million MT Mn contentSA, 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
15 MAJOR MN ORE PRODUCERS (INDIA) MOIL is the largest player in open market for HG Mn
16 ADVANTAGE INDIA Large Capacity for Ferro Alloys Ability to immediately Industry currently operating at 60% of rated capacityNew capacities coming up. Capacities coming up near ports (Vizag, Haldia).Ability to immediatelyscale upFreight advantage in markets such as China, Korea & Japan compared to Ukraine or South AfricaShort sailing time, freight advantageLocation near high growth regionsDomestically sourced LG & MG Mn Ore available for blending with imported HG Mn Ore.Comparable power, labour & inland freight costs to China.Cost Advantage over ChinaImport of Mn Ore has increased from ~ 0.3 MnT in FY07 to 1.3 MnT in FY11
17 IN SUMMARY…India has grown rapidly in Ferro Alloy Production and is a significant producer with more than 50 % getting exportedRobust growth in domestic consumption of both Ferro Chrome & Ferro Manganese alloys due to strong growth in both Crude & Stainless SteelApart from domestic demand, proximity to fast growing developing & developed economies provides exciting export opportunityLikely 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 concernInfrastructure issues – bottleneck in road, rail transport, port etc may impede export driven growth as well imports of higher grade Mn OreInvestments in existing & new mines needs to be expedited to augment mineral resourcesTechnological investments: Usage of low grade mineral resources; increase efficiency of furnaces for cost reduction / productivity enhancement
19 FeCr / Ch Cr producing countries POWER TARIFF IN INDIACY11 (c/kwh)FeCr / Ch Cr producing countriesCY12 (F) (c/kwh)8China97.6SA – Winter Season9.55.4SA – Normal6.84Kazakh4.510.3India - Orissa10.95.9India – Andhra9.6CY12 rates considered at same exchange rate as in CY11 for all currenciesLikely increase in power tariff in India/China due to escalation in raw material and input costSouth 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 coalSource : Own resources, info in public domain