Download In the US, the steel scene remained stable with US mill transaction

Def#$567
Trends ….. February 2015
With a 6 per cent share in total world production and a 9 per cent rise in
production over same period of last year, India emerged as the third
largest crude steel producer in the world in February 2015.
WORLD ECONOMY AT A GLANCE
 The J. P. Morgan Global Manufacturing PMI increased to 52.0 in February 2015 from 51.7
in January 2015, a six-month high as indicated by Marktit Economics release, as
companies hiked production levels to meet rising levels of new work and new export
orders.
 Growth was led by the USA whose February 2015 PMI at 55.1 increased to a four month
high. Growth was seen across much of the European manufacturing sector in February
2015, with the strongest expansion registered in the UK, Ireland, Spain and East European
nations such as Poland and the Czech Republic. This is in contrast to the mild growth
reported in the Asian countries viz. China, Japan, South Korea, Taiwan, India and Vietnam
while conditions deteriorated in Brazil, Turkey, Russia and Indonesia in February 2015.
 Marktit Economics release also indicate that global manufacturing employment rose for the
nineteenth successive month in February 2015 led by the US, the Euro area, the UK,
Taiwan, South Korea and Brazil. Average input prices declined for the second successive
month in February 2015, although the rate of deflation eased since the prior month.
Key Economic Figures
Country
GDP 2014:
HSBC Manufacturing PMI
% yoy change*
January 2015
February 2015
India
7.4^
52.9
51.2
China
7.4
49.7
50.7
Japan
0.1
52.2
51.6
USA
2.4
53.9
55.1
EU 28
1.3
51.0
51.0
Brazil
0.1
50.7
49.6
Russia
0.6
47.6
49.7
South Korea
3.3
51.1
51.1
Source: GDP-official estimates; PMI- Markit Economics, *provisional; ^1st 3 qrtrs,
based on new series data
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GLOBAL CRUDE STEEL PRODUCTION
World Steel Association data shows that world crude steel production for February 2015 was
127.63 million tonnes (mt), a growth of 0.6 per cent over February 2014 and 261.41 mt during
January–February 2015, down by 1.3 per cent year-on-year (yoy).
World Crude Steel Production: January-February 2015*
Rank
Country
Qty (mt)
% change
1
China
130.53
-1.5
2
Japan
17.46
-2.2
3
India
14.83
9.1
4
United States
13.52
-4.0
5
Russia
11.95
6.5
6
South Korea
11.01
-3.6
7
Germany
7.19
-0.7
8
Brazil
5.65
5.2
9
Turkey
4.98
-11.2
10
Italy
3.85
-10.5
Top 10
220.97
-1.0
World
261.41
-1.3
Source: WSA, JPC; over last year;* provisional
 China produced 65 mt of crude steel in February 2015, up by 3.4 per cent over
February 2014 and 130.53 mt during January – February 2015, down by 1.5 per cent
yoy and remained the largest crude steel producer in the world, fuelling world
production, which, excluding China, was down by 1 per cent.
 China accounted for 74 per cent of Asian and 50 per cent of world crude steel
production in January-February 2015.
 February 2015 Japanese crude steel production (8.4 mt) was a yoy decline of 0.2 per
cent and was further down by 2.2 per cent in January-February 2015 (17.46 mt). The
country remained the second largest crude steel producer in the world in 2015 so far.
 With a 6 per cent share in total world production and a 9.1 per cent rise in production
over same period of last year, India emerged as the third largest crude steel producer
in the world in January - February 2015, slipping past USA.
 Crude steel production in the EU (28) countries during February 2015 was at 13.62 mt,
down by 1.8 per cent yoy and at 27.9 mt in January-February 2015, it was down by 2
per cent yoy.
 At 87.26 mt, Asian crude steel production was up by 2.7 per cent yoy in February 2015
but production fell by 0.9 per cent in January–February 2015 (177.33 mt). Asia
accounted for 68 per cent of world crude steel production during this period.
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THE STEEL WORLD LAST MONTH
THE AMERICAS
 US Steel Corp. will temporarily reduce operating levels at its Fairfield flat rolled and tubular
operations in Alabama and Lone Star tubular operations in Texas, due to softening market
conditions.
 US Steel is to idle a 1.2 m.stpa BF at its Illinois mill in order to install a new caster.
 ThyssenKrupp Materials de Mexico is expanding its blanking operations in the Lagermex
facility in Guanajuato. The unit’s processing capacity will be increased by nearly 70% to
0.27 mtpa when the project is completed in Q4 2015.
 ArcelorMittal is to idle the loss‐making EAF and rolling mill at its Indiana Harbor Long
Carbon operation in the US in Q2 this year.
 The Canadian International Trade Tribunal has extended ADD on certain plate products
from Ukraine. The duties, originally imposed in 2010, were set to expire on February 1.
 The Brazilian Ministry of Development has said it will charge ADD on galvanized wire from
Sweden. The company Pacwire AB will be charged a duty of $245.41/t, while other
companies will have an additional fee of $501/t, during a period of five years, on
zinc‐coated, galvanized wire with 1.7‐3.5 mm diameter.
 ArcelorMittal expects to complete the first stage of its expansion project at its Monlevade
long products plant in the Brazilian state of Minas Gerais by the end of this year. The
expansion will increase rebar capacity from 50,000 tpa to 400,000 tpa.
ASIA
 Chinese steel exports surged in February 2015 to almost 100 mt out of total crude steel
production of 823 mt.
 China’s Jiangsu Shagang Group brought forward a planned maintenance shutdown of its
3.5 mtpa HSM to March 2015. The HSM will be idled for about 15 days and will lose
Shagang around 135,000 t of HRC production.
 Hyundai Steel expects to complete its second HDG line at the No.2 CRM complex in
Dangjin in February 2016. It also expects to commission its new 1 mtpa special steel plant
for bars and wire rod in Dangjin, south of Seoul, in February 2016.
 India's Tata Group plans to acquire flat rolled steel distributor, Totem Steel International, of
Portland, Oregon.
 Xichang Steel Vanadium Corp has said it plans to commission a second continuous
annealing line in March‐April, with a design capacity of 816,800 tpa.
 The Thai Industrial Standards Institute has introduced mandatory registration and licensing
for imports of finished steel. Importers who violate the regulations could face up to two
years in jail and/or a penalty fine of up to THB 1 million ($30,640).
 Posco plans to resume building its 0.5 mtpa No.7 CGL in Gwangyang from October.
 The Korea Fair Trade Commission has approved an application by Hyundai Steel to
acquire Dongbu Special Steel. The specialty subsidiary, which has been renamed Hyundai
Special Steel, sold 0.31 mt of products in 2014.
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 Thailand has revised its ADD on pre‐painted galvanized and zinc‐aluminum alloy coated
steel from China and South Korea and unpainted Zn‐Al alloy coated steel products from
China and Taiwan. Effective February 10, they now range from 2.65%‐29.5%.
 Indonesia has confirmed import duties of 26% on I‐beams and H‐beams under its 3‐year
safeguard measures announced last October which will fall to 22% in 2016 and 18% in
2017.
 Malaysia has imposed ADD of 6.35%‐25.4% on imports of HR carbon steel coil, including
checkered and pickled varieties, from China and Indonesia. The duties are effective for five
years from February 14, 2015.
RUSSIA, MID-EAST, AFRICA, AUSTRALIA
 Evraz has temporarily mothballed its new and as yet uninstalled 0.45 mtpa bar and section
rolling mill in Yuzhniy in south Russia’s Rostov region, citing low demand.
 NLMK has signed a five‐year contract with German steel plant manufacturer SMS to carry
out engineering, planning and the management of maintenance and repairs of steelmaking
equipment at its Novolipetsk mill.
 Metinvest was forced to temporarily suspend operations at its Yenakievo Iron & Steel
Works due to military action.
 Kazakhstan’s sole integrated steelworks, ArcelorMittal Temirtau, has completed the 12‐
day modernisation of its 1,400mm wide cold strip mill.
 Kuwait’s United Steel Industrial Co. is to modernize its 650,000 tpa rebar mill to produce
material to international standards and improve access to export markets. The upgrade is
due to be completed within this year.
 Saudi Arabia has lifted its ban on rebar exports, conditional on “the availability of sufficient
quantities of this item in the local market”.
EU AND OTHER EUROPE
 Ilvais to temporarily idle Europe’s largest blast furnace, the No.5 at its Taranto works, from
March 19 to carry out works required to comply with the country’s environmental laws.
 The EU has imposed definitive ADD of between 10.1%‐90.6% on imports of certain welded
tubes from Belarus, China and Russia, effective January 28.
 ThyssenKrupp is to supply around 0.3mt of HR wide strip coils to the Trans‐Anatolian
Pipeline, a natural gas pipeline running through Turkey from Azerbaijan due to be
completed in 2019.
 Turkey’s Cemtas has halted production at its meltshop and 230,000 tpa rolling mill for
modernization works until March 5 which will be fully launched in May.
 SSAB will reline the 2.34 mtpa blast furnace at its Luleå works in June‐August this year.
 French special steels producer, Asco Industries, plans to cease production of spring steels
at its Le Cheylas (Allevard) works due to the declining market.
[Source Credit: Steel First, Platts, leading news papers (India news)]
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WORLD STEEL PRICE TRENDS
Global steel price trends in February 2015 were along same lines as in January 2015, weighed
down by a host of factors including low demand, rising imports, volatile iron ore and scrap
prices and regional economic conditions that went on to affect domestic demand-supply
situations in different markets around the world.
Long products
 US scrap prices plunged in early February 2015 forcing rebar prices to move south.
Leading producers like Gerdau Long Steel North America and Nucor have cut rebar prices
(both by $25/t) following slump in scrap prices and rising imports. Average transactions
were reportedly quoted around $600-635/t in February 2015.
 Weak demand (low construction activities courtesy seasonal impact of winter months) and
falling scrap prices impacted European domestic rebar prices in February 2015. Steel First
reports indicate that average assessment for domestically traded rebar in Southern Europe
fell to €415-425/t ($472-483) down by €5 ($6) week-on-week while in Northern Europe,
prices were around €430-435/t ($489-495), compared with €430-445/t ($489-506) earlier.
 After a lull during the countdown to the New Year holidays, Chinese rebar prices moved up
mildly in end-February 2015 as transactions got a boost with return of market participants.
Steel First reports indicate that grade III 16-25mm rebar was quoted at 2,220-2,280 yuan/t
($361-370) in Beijing and at around 2,360-2,400 yuan/t ($383-390) in Shanghai. All prices
are inclusive of VAT.
 Russian rebar prices were stable in February 2015 with Steel First’s reports placing
transactions for Russian domestic 12mm A500C rebar at 29,200-29,500 roubles/t ($435439) cpt Moscow, including VAT, on partial pre-payment terms.
Flat products
 US flat prices slipped in February 2015 under pressure from rising inventories, low raw
materials costs and high imports. Steel First reports indicate that transactions for HRC fell
as low as $500/t, a level last seen in December 2009 during the financial crisis.
 Cheap imports and slow demand dragged down EU rebar prices in February 2015, with
Steel First reports placing average HRC transactions in Southern Europe at around €400410/t ($455-467) ex-works.
 Chinese HRC markets remained quiet in February 2015 owing to impact of the New Year
festivities and slow resumption of trading activities. Steel First reports indicate that
commercial-grade HRC (4.5-12mm) was traded at 2,530-2,560 yuan/t ($411-416) in endFebruary in Shanghai and at 2,440-2,450 yuan/t ($396-398) in Beijing, almost at same
level as last month. All prices are inclusive of VAT.
 Russian flat market remained stable in February 2015 with transactions for 4mm HR sheet
at 29,125-31,100 roubles/t ($509-512) cpt Moscow, stable and marginally up over January
2015.
[Source Credit: Steel First, Platts]
5
SPECIAL FOCUS
India revises its growth numbers
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, has
revised its base year from 2004-05 to 2011-12 and released revised annual estimate of
National Income and other macroeconomic aggregates for 2011-12, 2012-13, 2013-14 which
introduces the concept of Gross Value Added or GVA in sync with international practices. The
new series indicates that the economy grew by 6.6 per cent in 2013-14 (4.7 per cent as per old
series) and by 4.9 per cent in 2012-13 (4.5 per cent as per old series). GDP at factor cost will,
henceforth, be replaced by GVA at basic prices, which is the practice globally (and hence, will
facilitate international comparability of Indian data) while GDP at market prices will henceforth
be referred to as “GDP”.
Revised rates of GDP growth:%yoy changes
GVA at factor cost under new series
GDP at factor cost under old series
4.9
4.5
Item
2012-13
2013-14
Source: CSO
6.6
4.7
The CSO has also revised overall as also quarterly growth figures of GVA for 2014-15 for both
constant (2011-12) and current prices, as shown below.
Revised rates of GDP growth for 2014-15:%yoy changes
Item
Constant prices (2011-12) Current prices
Annual 2014-15(Advance)
7.4
11.5
Q12014-15(April-June)
6.5
12.8
Q2 2014-15(July-Sep)
8.2
12.8
Q3 2014-15(Oct-Dec)
7.5
9.0
Source: CSO
As per the CSO report, growth rates in various sectors during Q3 2014-15 are as follows:
‘agriculture, forestry and fishing’ (-0.4 per cent), ‘mining and quarrying’ (2.9 per cent),
‘manufacturing’ (4.2 per cent), ‘electricity, gas and water supply and other utility services’ (10.1
per cent) ‘construction’ (1.7 per cent), Trade, hotels, transport, communication and services
related to broadcasting ' (7.2 per cent), 'financial, real estate and professional services ' (15.9
per cent), and Public administration, defence and Other Services' (20 per cent).
Besides segment-specific issues, extended coverage and changes effected in estimation of
expenditure side aggregates, the changes introduced in this major revision exercise of the
CSO have been guided by the recommendations of the international guidelines on the subject,
System of National Accounts, 2008. Major changes that have been made in this series have
been outlined by CSO as follows:
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 Comprehensive coverage of Corporate Sector both in manufacturing and services by
incorporation of annual accounts of companies as filed with the Ministry of Corporate
Affairs (MCA) under their e-governance initiative, MCA21. Partnership firms covered
under Limited Liability Partnership Act have also been covered. For the
“manufacturing‟ enterprises, MCA21 database has been used to supplement the
information available in the Annual Survey of Industries.
 Improved coverage of activities of local bodies – both rural and urban – and
autonomous institutions, resulting in better coverage of government activities.
 Incorporation of the results of the recent NSS Surveys, viz., Unincorporated Enterprise
Survey (2010-11) and Employment-Unemployment Survey (2011-12), along with the
adoption of an “Effective Labour Input Method” for unincorporated manufacturing and
services enterprises, giving due weights to different categories of workers, i.e., owners,
hired workers and helpers, for compiling the estimates of these enterprises.
China's GDP growth weakest in 2014
China's GDP grew 7.3% yoy in Q4 2014, the same as in the previous period weighed down by
a subdued property market, slowed investment and unstable exports. Full-year economic
growth in 2014 reached 7.4%, slightly below the government's target of 7.5% and emerging as
the weakest expansion in the last 24 years. Consumption contributed 51.2% of the GDP growth
in 2014, up 3 percentage points from 2013 while Services made up 48.2%, up 1.3 percentage
points. Quarter-on-quarter, Q4 GDP was up by 1.5%, compared with Q3’s 1.9% growth. Fixed
asset investment, a key driver of the economy, grew only 15.7% in 2014. As analysts point out,
more stimulus measures are likely in the pipeline since deflationary pressures persist and the
slowdown in the estate market continues.
Saudi Arabia has lifted its ban on rebar exports
Saudi Arabia has lifted its ban on rebar exports, conditional on “the availability of sufficient
quantities of this item in the local market”, according to the domestic steel industry trade body.
The cancellation of the ban, which was introduced in 2008, "would support the national industry
7
and reduce inventory", according to the chairman of the National Committee for Iron, Shuail
Aydh, quoted by the Arab Iron & Steel Union (AISU). As per un-official reports, domestic
capacity was said to be about 10.5 mtpa while consumption hovered about 9 mtpa, taking
excess rebar manufacturing capacity to of "over 1.5 million tpy".
China shuts down 31.1 million tonnes of steelmaking capacity in 2014
As per reports from the Ministry of Industry & Information Technology (MIIT), China phased out
31.1 million tonnes worth of outdated steelmaking capacity in 2014, marginally higher than
original target of 28.7 million tonnes. Analysts however point out that with China’s total annual
crude steel capacity placed at an astronomical level of 1.16 billion tonnes, the Chinese steel
industry faces an uphill task to weed out outdated steelmaking facilities. At the same time
however, they point out that given that China’s new environment protection law came into
effect on January 1, 2015, more steelmakers will be under pressure to close outdated capacity.
INDIAN STEEL MARKET ROUND-UP
The Budgets
February 2015 was the month of the regular forum for key policy announcements viz the
railway budget and the union budget. Both were in sync with the need of the times and offered
a package of policy prescriptions to an economy, still reeling under the impact of a prolonged
slowdown but showing early signs of revival. Some highlights of both the policy exercises, are
presented below.
The Railway Budget 2015-16: Envisaging an investment of Rs. 8.5 lakh crore in next five
years, the Railway Budget laid down nine thrust areas in line with Swachh Bharat, Digital India
and Make in India missions, as listed below:
 Indian Railways to become prime mover of economy once again
 Resource mobilization for higher investments
 De-congestion of heavy haul routes and speeding up of trains: emphasis on gauge
conversion, doubling, tripling and electrification
 Project delivery
 Passenger amenities
 Safety
 Transparency & System Improvement
 Railways to continue to be the preferred mode of transport for the masses
 Sustainability
It also outlined four goals for Indian Railways to transform over next five years:
a) To deliver a sustained and measurable improvement in customer experience
b) To make Rail a safer means of travel
8
c) To expand Bhartiya Rail’s capacity substantially and modernise infrastructure; increase
daily passenger carrying capacity from 21 million to 30 million: increase track length by
20 per cent from 1,14,000 km to 1,38,000 km; grow annual freight carrying capacity
from 1 billion to 1.5 billion tonnes
d) Finally, to make Bhartiya Rail financially self-sustainable: generate large surpluses
from operations not only to service the debt needed to fund capacity expansion, but
also to invest on an on-going basis to replace depreciating assets.
The railway budget in general got a thumbs up from the industry more specifically as analysts
point out that this time around, most of the announcements are in line with the goals and
objectives coupled with substantial increase in the allocation for upkeep of track and bridges
and traffic facility works that reflects railway’s focus and commitment to take the reform process
forward. Moreover, it was also spared of the now-typified announcements on new line projects,
plethora of new trains and new rail manufacturing units. The proposed infrastructure
investment plan (2015-19), which includes network expansion, national projects such as North
Eastern connectivity, high speed rail, elevated corridor, station redevelopment and Logistics
Park – all are steps in the right direction and would aid the process of removal of capacity
constraints and bottlenecks. Wagon makers specially indicated that the provision for
procurement of 16,800 wagons in 2015-16 would act as a major shot in the arm for the
domestic wagon industry, while the proposed incentives of the various schemes for adding to
the fleet on rail network through wagon leasing, liberalized wagon investment scheme and
special freight train operator scheme providing for commodity-specific new design wagons
should help add to the freight carrying capacity. At the same time, however, the target of 1.5
billion tonnes of traffic and 20 per cent increase in track kilometers in five years, though
desirable, will require a paradigm shift in the way the system currently operates, as most
analysts point out. The main issue of contention in railway budget 2015-16 has been the hike in
freight rate (for steel, coal, iron ore, urea, cement) by up to 10 per cent. For steel, while the
steps towards infrastructure development augur well for steel demand growth in the country,
the hike in freight rate – of coal (up by 6.3 per cent), iron ore (up by 0.8 per cent) and items of
iron and steel (up by 0.8 per cent) - all of them together has come as a major dampener as
margins and bottomlines are bound to be hit.
Budget Estimates 2015-16:
 The intention is to capture increased revenues and ensure appropriate investments so
as to decongest the system and enhance line-capacity.
 Passenger earnings growth pegged at 16.7 per cent and target budgeted at Rs. 50,175
crore.
 Freight traffic is pegged at an all time high incremental traffic of 85 million tonnes,
anticipating a healthier growth in the core sector of economy; Goods earnings
proposed at Rs. 1,21,423 crore which includes rationalisation of rates, commodity
classification and distance slabs.
 Other coaching and sundries are projected at Rs. 4,612 crore and Rs. 7,318 crore.
 Gross Traffic Receipts estimated at Rs 1,83,578 crore , a growth of 15.3 per cent.
9
 Ordinary Working Expenses proposed to grow at 9.6 per cent over RE 2014-15.
Traction fuel bill anticipated to shrink further.
 Higher provisions made for safety maintenance and cleanliness. Lease charges,
interest component of the current and previous market borrowings, at a growth of 21
per cent.
 Appropriation to Pension Fund proposed at Rs 35,260 crore and appropriation to DRF
at Rs 8,100 crore. Appropriation of Rs 7,616 crore proposed to be made to Capital
Fund for payment of principal component of lease charges to IRFC.
The Union Budget 2015-16: Indicating the betterment of economic situation in the country,
Union Budget 2015-16 placed a realistic target of fiscal deficit at 3.9 per cent of GDP for 201516 and increased allocation for capital expenditure (to go up by 25.5 per cent to Rs. 2,414
billion). As a share of GDP, capital expenditure will increase from 1.5 per cent in 2014-15 to 1.7
per cent in 2015-16. Analysts have also hailed the budget’s focus on public investments,
expected to have large impact on growth provided effective implementation of the same.
Despite pressure on fiscal consolidation, room has also been created for infrastructure
spending. The stress on strengthening transportation infrastructure is also expected to boost
manufacturing. Higher government allocations coupled with increase in funding availability for
the infrastructure sector through National Infrastructure Investment Fund, higher fuel cess for
roads and rationalisation of tax on Infrastructure Investment Trusts are expected to provide
significant opportunity for construction and capital goods companies. At the same time,
inclusion of NBFCs under the SARFAESI Act and new bankruptcy code will provide a boost to
recovery efforts and help rein in asset quality problems over the long run. The setting up of
autonomous bank board bureau for public sector banks is also deemed as a step in the right
direction. Skill building too has received significant thrust. On the direct tax front also, the
budget has provided a path towards lowering of corporate tax rate and simultaneously doing
away with multiple exemptions to simplify the tax administration and reduce disputes. The
reduction in corporate tax, though for a limited period, has also brought some cheers to the
industry. However, the hike in service tax, though a sure-shot revenue mop-up tool, is expected
to impact overall expenditure levels for households, business and sectors like tourism. Overall,
the budget emerges as growth-enhancing but carries warning signs for ex: even though tax
collection targets look achievable, there are chances of slippage in capital (disinvestment)
receipts.
For steel, the investment in infrastructure (including thrust on rural infrastructure) emerges as
the sole (long-run) plus factor and apart from this, there are little takeaways otherwise. While
the increase in basic excise duty (to 12.5 per cent) will marginally raise steel prices, the hike in
clean energy cess is also expected to have a mild impact on the raw material sector (coal,
sponge iron). The doubling of customs duty (from 2.5 per cent to 5 per cent) on metcoke is
expected to impact the operational cost of steel plants as this a highly-import dependent
activity. In contrast, the reduction in Special Additional Duty (SAD) on iron & steel scrap from 4
per cent to 2 per cent is expected to ease the pressure to quite an extent. Similarly, the
reduction of basic customs duty on bituminous coal to 10 per cent from 55 per cent offers relief
to the metal companies including steel. Excise duty on rails for manufacture of railway or tram
way track construction material exempted retrospectively from 17-03-2012 to 02-02-2014, if not
10
CENVAT credit of duty paid on such rails is availed. However, it is in the area of import duty
that industry has been felt let down as duties remain unchanged with the budget hiking only the
peak rate to 15 per cent, which gives it a power to charge at that rate, if import continues to
grow.
Budget Estimates
 Non-Plan expenditure estimates for the Financial Year are estimated at Rs 13,12,200
crore.
 Plan expenditure is estimated to be Rs 4,65,277 crore, which is very near to the R.E. of
2014-15.
 Total Expenditure has accordingly been estimated at Rs 17,77,477 crore.
 The requirements for expenditure on Defence, Internal Security and other necessary
expenditures are adequately provided.
 Gross Tax receipts are estimated to be Rs 14,49,490 crore.
 Devolution to the States is estimated to be Rs 5,23,958.
 Share of Central Government will be Rs 9,19,842.
 Non Tax Revenues for the next fiscal are estimated to be Rs 2,21,733 crore.
 Fiscal deficit will be 3.9 per cent of GDP and Revenue Deficit will be 2.8 per cent of
GDP.
Indian Steel Industry Performance: April-February 2014-15
The following is a report on the performance of Indian steel industry in terms of total finished
steel during April-February 2014-15 based on provisional data released by JPC. All growth
comparisons are with regard to same period of last year.
Total Finished Steel
Performance Highlights (prov)
(alloy + non-alloy) April-February April-February %yoy change
2014-15 (mt)
2013-14 (mt)
Production for sale
82.811
79.433
4.3
Import
8.481
5.012
69.2
Export
4.99
5.41
-7.7
Real Consumption
69.202
67.191
3.0
Source: JPC
Production for sale
 During April-February 2014-15, production for sale stood at 82.811 mt, a growth of 4.3
per cent compared to same period of last year, in which contribution of the non-alloy
steel segment stood at 74.257 mt (2.8 per cent rise), while the rest was the contribution
of the alloy steel segment (including stainless steel), where production for sale was up
by 19 per cent.
 Analyzing by broad divisions, in the total production for sale of finished non-alloy steel,
contribution of the non-flat segment stood at 36.686 mt (up by 10 per cent) while that of
the flat segment stood at 37.571 mt (decline of 3.2 per cent).
11
 Analyzing by segments, one finds that in the non-flat, non-alloy segment, production for
sale of bars & rods, structurals and railway materials stood respectively at 29 mt (up by
11 per cent), 6.8 mt (up by 5 per cent) and 0.75 mt (down by 6 per cent) as compared
to same period of last year.
 On the other hand, for the flat segment, production for sale declined for CRC (6.5 mt,
down by 8 per cent), GP/GC Sheets (6.1 mt, down by 2.2 per cent) but was up for
other items like plates (3.6 mt, up by 4 per cent) and HRC (19 mt, up by 1.5 per cent).
Export
 During April-February 2014-15, export of total finished steel was 4.99 mt, down by 7.7
per cent compared to same period of last year.
 Contribution of the non-alloy steel segment stood at 4.337 mt (down by 13 per cent)
while the rest was that of alloy steel (including stainless steel) segment, where exports
were up by 59 per cent, due largely to low base effect.
 In the total export of finished non-alloy steel, export of non-flat was at 404 thousand
tonnes (down by 35 per cent) and that of flat steel was at 3.93 mt (down by 10 per
cent).
 In the non-alloy, non-flat segment, in volume terms, major contributor to export was
bars & rods (336 thousand tonnes, down by 40 per cent) while growth in exports in the
non-alloy, flat segment was led by GP/GC sheets (1.49 mt, down by 8 per cent).
Import
 With import of total finished steel during April-February 2014-15 at 8.481 mt (up by 69
per cent compared to last year) and remaining well above exports, India remained a
net importer of total finished steel during 2014-15 so far.
 In total finished steel import, contribution of the non-alloy steel segment was 6.135 mt
(55 per cent rise) while the rest was the contribution of alloy steel (including stainless
steel) segment, which was up by 122 per cent over same period of last year, due
mostly to low base effect.
 In the import of total finished non-alloy steel, non-flat imports were at 877 thousand
tonnes (up by 167 per cent) and flat imports were at 5.258 mt (up by 45 per cent).
 In the non-alloy, non-flat segment, major contributor to import was bars & rods (812
thousand tonnes, up by 187 per cent) while for the flat segment, import was led by
HRC (1.76 mt; up by 74 per cent).
Real Consumption
 During April-February 2014-15, real consumption (or simply consumption) of total
finished steel stood at 69.202 mt, a growth of 3 per cent compared to last year.
 For non-alloy steel, contribution of the non-flat segment stood at 36.097 mt, up by 8.5
per cent over same period of last year and that of the flat segment (after accounting for
double counting) stood at 25.767 mt, down by 8.4 per cent over same period of last
year, taking total non-alloy consumption (after double counting) to 61.864 mt, up by 0.8
per cent. The remainder was the contribution of the alloy segment, which reported a
growth of 27 per cent during this period.
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 In the non-alloy, non-flat segment, the major contributor to consumption was bars &
rods (29 mt; up by 10 per cent) whereas for the flat segment, consumption was led by
HRC (19 mt, up by 5.4 per cent).
JPC Market Prices (Retail)
Delhi market prices: Compared to both February 2014 and January 2015, average (retail)
market prices in Delhi market in February 2015 declined for both long products (represented by
TMT 10 mm) and flat products (represented by HRC 2 mm), largely in response to domestic
demand-supply conditions (including impact of raw materials) and partly global influence. The
situation in February 2015 with regard to February 2014 is shown in the table below for TMT 10
mm and HRC 2.0 mm.
Trends in JPC market price (retail) in Delhi market in February 2015
Item
Delhi market prices (Rs/t) % change over February 2014
TMT, 10 mm
41775
-14.1
HRC, 2.0 mm
40333
-18.2
Source: JPC
All markets: Compared to both February 2014 and January 2015, average (retail) market prices
in all four metro cities (Kolkata, Delhi, Mumbai and Chennai) in February 2015 declined for both
long products (represented by TMT 10 mm) and flat products (represented by HRC 2 mm),
largely in response to domestic demand-supply conditions (including impact of raw materials)
and partly global influence. The situation in February 2015 with regard to February 2014 is
shown in the table below for TMT 10 mm and HRC 2.0 mm.
Trends in JPC (retail) market price: %change in February 2015 over February 2014
Item
Kolkata
Delhi
Mumbai
Chennai
TMT 10mm
-12.3
-14.1
-16.0
-12.3
HR Coils 2.00mm
-8.8
-18.2
-14.9
-10.8
Source: JPC
Quarterly trends: The quarterly price trends in case of long and flat steel products in the
domestic market since the start of the current fiscal is shown below separately for TMT 10 mm
and HRC 2.0 mm and indicates a declining scenario. This is not surprising given a) the rising
trend in imports in both cases, b) the prevailing domestic situation regarding domestic demand
(or consumption) and supply (production for sale) and c) the impact of global trends during the
reference period.
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INDIAN ECONOMY – HIGHLIGHTS OF PERFORMANCE
GDP: The Central Statistics Office (CSO), Ministry of Statistics and Programme
Implementation, has revised its base year from 2004-05 to 2011-12 and has also revised
quarterly growth figures of GVA for 2014-15 for both constant (2011-12) and current prices. As
per the CSO report, while the overall Q3 2014-15 GVA is expected to register a growth of 7.5
per cent, the growth rates in various sectors during Q3 2014-15 are as follows: ‘agriculture,
forestry and fishing’ (-0.4 per cent), ‘mining and quarrying’ (2.9 per cent), ‘manufacturing’ (4.2
per cent), ‘electricity, gas and water supply and other utility services’ (10.1 per cent)
‘construction’ (1.7 per cent), trade, hotels, transport, communication and services related to
broadcasting ' (7.2 per cent), 'financial, real estate and professional services ' (15.9 per cent),
and public administration, defence and Other Services' (20 per cent).
Industrial Production: Provisional CSO data show that the Index of Industrial Production (IIP)
with 2004-05 as the base year was up by 2.1 per cent yoy in both January 2015 and also in
April-January 2014-15. Excepting Consumer Durables which remained in the red, growth was
noted for all the leading sectors like Electricity, Mining & Quarrying, Manufacturing, Other
Transport Equipment, Basic Goods, Intermediate Goods and Capital Goods.
Inflation: The annual rate of inflation, based on monthly WPI, stood at (-) 2.06 per cent
(provisional) for February 2015 (over February 2014) as compared to (-) 0.39 per cent
(provisional) for the previous month. Build up inflation rate in the financial year so far was (-)
2.5 per cent compared to a build up rate of 5.53 per cent in the corresponding period of the
previous year. The all India CPI inflation (combined) for February 2015 stood at 5.37 as
compared to 5.19 of January 2015.
Infrastructure Growth: During January 2015, the yoy growth rate of the eight core
infrastructure industries stood at 1.8 per cent and at 4.1 per cent during April-January 2014-15,
weighed down by the decline in growth rates in the production of crude oil, natural gas and
fertilizers.
Monetary: Upto February 27, 2015, Reserve Money increased by 10.8 per cent yoy. Upto
February 20, 2015, Bank Credit and Non-Food Credit were up by 10.4 per cent and 9 per cent
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respectively. As on February 28, 2015, Bank Rate was 8.75 per cent, CRR 4.00 per cent and
prime lending rate, 10.00/10.25 per cent. The rupee appreciated against the US dollar, Euro
and Japanese yen in February 2015, by 0.3 per cent, 3.3 per cent and 0.4 percent respectively
and depreciated against Pound sterling by 0.5 per cent over the previous month of January
2015. As a proportion of Budget estimats, fiscal deficit and revenue deficit during 2014-15
(April-January) was 110.8 per cent and 121.8 per cent respectively.
Trade: Provisional figures from DGCI&S show that during April-February 2014-15 in dollar
terms, overall exports were up by 0.88 per cent and imports were up by 0.71 per cent, both on
yoy basis. During April-February 2014-15, oil imports were valued at US$ 130848.36 million
which was 12.24 per cent lower than that in same period of last year while non-oil imports were
valued at US$ 280955.29 million which was 8.14 per cent higher than that in same period of
last year. The trade deficit for April-February 2014-15 was estimated at US$ 125220.94 million
which was higher than the deficit of US$ 124844.53 million during April-February 2013-14.
Policy:
 The government has decided to set up four steel plants in Chhattisgarh, Jharkhand,
Odisha and Karnataka which will add 20-24 mtpa of steel producing capacity.
 The Union Minister of Roads, Transport and Shipping has announced 800-km road
projects worth Rs 18,000 crore in the state. The projects would make Punjab the first
state in the country to have connectivity to all major cities, with four-six-lane roads in
the next two years.
 The government will stop collecting tolls on roads with investments of up to Rs.100
crore, where the cost of construction has been recovered and tolling has become
unviable.
 The Cabinet Committee on Economic Affairs gave approval for the six-laning of
National Highway of the Chakeri-Allahabad section (U.P.), Baleshwar-Chandikhole
section (Odisha), Handia-Varanasi section (U.P.) and four/six laning of the RaipurBilaspur section of National Highway–30/NH-130 (old NH-200) in Chhatisgarh.
 The Indian Insurance Companies (Foreign Investment) Rules, 2015 have been notified
by the Government of India. These Rules incorporate the recent amendments in the
law with respect to the treatment of foreign investment in Indian Insurance Companies.
 Government of India accepted the recommendations of the 14th Finance Commission
(FFC). With regard to vertical distribution, FFC recommended that the States’ share in
the net proceeds of the Union tax revenues be 42 per cent compared to 32 per cent
recommended by the 13th Finance Commission.
Prepared by Joint Plant Committee
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