IRON AND STEEL UPDATE
MARCH 2015
MCILVAINE
COMPANY
Global Steel Output Fell 2.9 Pc in January
ArcelorMittal Reports Fourth Quarter 2014 and Full Year 2014 Results
Arcelormittal’s Indiana Harbor Long Carbon Facility
Idled
U.S. Steel Closing Gary, IN Works Coke Plant
Arcelormittal Readies Feasibility Report for Bellary,
India Steel Plant
Tata Steel Thai Unit Expects Net Loss for 2014/15 on
Weak Demand
Tata Steel Pilot Facility for Specialised Steel Likely
in 2 yrs
SAIL Unit Gets Approval for Producing Ship Building
Steel
India to Raise Railway Freight Rates, Blow To Steel
Firms
Steel Project in Sur, Oman to be Ready by early 2018
Iran Invests USD2.2bn in Steel Industry
Tata Steel to Acquire Nordic Strip Products Service
Centres
Tata Steel to Supply Rails for London's Crossrail
Project
NLMK Generates 425 m ruble Savings through PCI
Implementation at Novolipetsk
ArcelorMittal Sells Its Kuzbass Coal Mines
Egyptian Steel to Launch Two New Plants Next Year
Global Steel Output Fell 2.9 Pc in January
Global steel production declined by 2.9 per cent in January
largely due to 4.7 per cent drop in Chinese output even as Russia, the US and
India contributed more among major producing nations.
Global steel production declined to 133.10 million tonnes
(MT) in January from 137.09 MT a year earlier, data compiled by World Steel
Association (WSA) showed. Even as output in China fell to 65.5 MT from 68.7 MT a
year ago, its contribution remained nearly half of the global production during
the month. Japan's production also fell by 4 per cent to 9 MT and South Korean
production declined by 5 per cent to 5.78 MT. Russia's steel production grew by
the highest rate of 6 per cent to 6.1 MT against 5.78 MT a year ago. It grew by
0.4 per cent in the US. India's production increased by 0.3 per cent during
January to 7.07 MT compared to 7.04 MT a year earlier. Germany produced 3.7 MT,
Italy 1.9 MT, France 1.3 MT and Spain produced 1.3 MT steel in January. Turkey's
crude steel production for January 2015 was 2.6 MT, down by 10.4 per cent
compared to January, 2014, WSA said. Steel production in Brazil was higher by
7.7 per cent to 3 MT. WSA said steel capacity utilisation ratio in January was
72.5 per cent.
ArcelorMittal
(MT (New York, Amsterdam, Paris, Luxembourg), MTS (Madrid)), the world’s leading
integrated steel and mining company, recently announced results for the three
and twelve-month periods ended December 31, 2014.
The Company has made notable progress on its strategic objectives during 2014,
including:
Outlook and guidance:
ArcelorMittal will idle its Indiana Harbor Long Carbon
(IHLC) facility beginning with the electric arc furnace on March 1, 2015,
followed by the rolling mill operation in Q2 2015, pending customer
requirements.
ArcelorMittal U.S.A. is projecting the likely permanent
loss of 300 jobs at the facility in East Chicago, Indiana.
Indiana Harbor Long Carbon was first idled in 2009
following the economic recession and was brought back online in 2010 but has
been challenged by low utilization, scheduling inefficiencies and high costs. As
a result, the facility has incurred losses since 2011.
U.S. Steel plans to close its Gary Works coke plant in May,
displacing about 300 workers. It will mark the end of a coke-making era at the
steel plant that once operated three coke batteries.
U.S. Steel spokeswoman Courtney Boone said recently it was
a strategic decision based on market conditions and the company's long-term coke
strategy.
It's unclear where Gary Works will obtain its coke once the
plant closes.
U.S. Steel applied for a permit last year to construct an
electric arc furnace at its Fairfield Works plant in Birmingham, Ala., to
replace an existing blast furnace. U.S. Steel officials say the electric arc
furnace will improve its operations so it can adapt to global demand, while
reducing its capital spending and maintenance costs related to running a blast
furnace.
Made from crushed coal cooked at extremely high
temperatures, coke is a key raw material in iron-making, providing heat for the
blast furnace. It comes with costly environmental challenges, however, and steel
industry experts say coke-making could become obsolete in the future as the
steel industry turns to cleaner technology.
Last month, U.S. Steel notified state officials it was
idling operations at its East Chicago tin plant and laying off 397 workers. The
layoffs will begin March 22. The company said it was taking the action because
of a significant decline in customer orders due to low-priced imports of tin
mill products.
ArcelorMittal recently said it has completed a draft
feasibility report (DFR) for its proposed 6 mtpa steel plant in Karnataka that
entails an investment of a whopping $6.5 billion.
"A draft feasibility report for the contemplated steel
plant has been completed and hydrological and environmental impact assessment
studies have been initiated," it said in its latest annual report.
Billionaire L N Mittal-led ArcelorMittal, the largest steel
firm in the world, proposes to invest a whopping $6.5 billion in the Southern
state for setting up the six mtpa steel plant and a 750 MW megawatt power plant
for captive use.
The company has
also received possession certificates for 2,659 acres of private land following
acquisition of 1,827 acres and 832 acres in 2011 and 2012, respectively.
"This leaves a
balance of 136.33 acres of land owned by Karnataka government, which is being
processed for allocation and expected to be completed during the first quarter
of 2015," ArcelorMittal said.
It has also
completed fencing all of the land allotted for the project.
The company had in
June 2010 entered into a memorandum of understanding with Karnataka for setting
up the project. The state has also approved the project's use of water from the
Tungabhadra River.
The world's largest steelmaker also said it was currently
working to set up a three mtpa steel plant in Jharkhand in the first phase and
has sought for "adequate land" under the State Government Consent Award Scheme.
Under this scheme, the state government would facilitate
the legal transfer of land for a project after an investor has secured the
landowner's consent to the sale of the land.
ArcelorMittal had announced its plan to build the plant in
2006, but implementation of the project was delayed due to issues relating to
securing necessary mining rights, land and construction permits and regulatory
approvals.
The company, however, has already scrapped its plan to set
up a steel plant in Odisha.
Bangkok: Tata Steel Thailand PCL, the Thai unit of India's
Tata Steel Group, said recently it expected to post a net loss for the fiscal
year ending March 2015, hit by falling steel prices and weak demand.
But improved domestic demand and better outlook for steel
prices should help it flip to a profit in the next fiscal year, President and
Chief Executive Rajiv Mangal told reporters.
Thailand's domestic steel demand is expected to rise at
least 5 per cent, to about 18.5 million tonnes, in 2015 on the back of an
improving economic outlook, while steel prices have bottomed out and should
gradually increase, he said.
"Outlook for 2015 should be better than this year, given
the country's GDP is forecast to grow 3.5 percent, which should help boost
domestic demand for steel," Mangal said.
Tata Steel also plans to focus on value-added products and
boost the sale proportion to between 40 per cent and 50 per cent of the total
over the next two years from 20 per cent now, he said.
Hit by oversupply both at home and in markets abroad, Thai
steelmakers also faced an increase in imports of wire rods from China on
expectation of the removal of an export incentive. That led to buildup of around
two to three months in the inventory of wire rods, the company said in a
statement.
As the increase in steel imports continued to put pressure
on domestic prices, Tata Steel planned to ask the Thai commerce ministry to take
anti-dumping measures to tax imported high carbon steel rod from Chinese makers,
Mangal said.
An anti-dumping tax of 5 per cent imposed by the ministry
last year is too low to stop Chinese product dumping, he said.
Tata Steel posted a net loss of about 252 million baht
($7.7 million) for the nine months ended December, compared with profit of 4
million baht a year earlier, hit by poor demand and the impact of imports of
steel bar products from China.
Thailand's domestic steel consumption fell 3.5 per cent to
17.3 million tonnes in 2014 on slowing construction activity, Mangal said.
A pilot facility that is being planned to produce a
specialised grade of steel used in transformers and generators may take about
two years to come up, said a senior executive at Tata Steel, which is part of
the Rs 500 crore public-private project. Only a handful of companies globally
manufacture the material - cold-rolled grain-oriented steel, or CRGO steel.
According to industry executives, India spends about Rs
4,000 crore a year to import CRGO steel and its local production will help save
foreign exchange and reduce the cost for Indian manufactures of transformers and
generators.
"The time to set up the entire pilot facility is expected
to be around two years. The development of CRGO will be completed within six
months of completion of the pilot plant," said T Venugopalan, technical adviser
to managing director at Tata Steel.
The plant will be housed in the Jamshedpur campus of the
National Metallurgical Laboratory (NML), which comes under the Council of
Scientific and Industrial Research. Tata SteelBSE 1.01 % and Rashtriya Ispat may
invest about Rs 125 crore each in the project, while the remaining funds would
come from the steel ministry and NML, officials said. A budget of Rs 150 crore
has already been approved for the pilot project, according to a senior official
at the steel ministry.
The proposal for indigenous development had been on the
table for over two years. Currently, pre-feasibility work is being carried out
after which an engineering consultant would be awarded the contract for
preparing the detailed project report. The consultant's report, which is
expected in about four months, will then be submitted to all the partners for
approval, Venugopalan said.
Tata Steel's board has given an in-principle approval to
the project, but a formal approval may take about three to four months, he said.
"After the grade is developed, commercialisation of the grade may take about
24-36 months, which may be the time needed to establish the cold-rolling complex
suitable enough for the production of CRGO."
CRGO steel is silicon-based metal sheet used in the core of
transformers and generators and has a complex manufacturing process. Globally,
14-15 companies, such as Japan's Nippon steel, JFE Steel, US-based AK Steel and
Korean major Posco have the technology to manufacture the variety. India
requires about 250,000 tonnes of the commodity annually and the entire demand is
met through imports.
Rourkela Steel Plant (RSP), a unit of the state-run Steel
Authority of India Limited (SAIL), recently said it has received international
approval for producing ship building grades of steel.
The American Bureau
of Shipping (ABS) and Det Norske Veritas-Germanischer Lloyd (DNV-GL) - ship
building classification societies for certification of materials - have granted
the approval for producing both ordinary as well as high-strength grades of
steel, a company statement said.
Approval from these
societies is mandatory for producing such steel. The process of approval
included plant audit by Indian office of the societies to assess the plant
process and testing capabilities and witnessing the testing of samples of
different grades selected by them. After the audit, all the test reports,
documents and required information was sent to their head office.
The RSP in Odisha's Sundergarh district, 514 km from
Bhubaneswar, is India's first integrated steel plant in the public sector.
India to Raise Railway Freight Rates, Blow To Steel Firms
India will raise railway freight rates on coal, iron ore
and steel from April 1 to help fund an expansion of its well-worn network, a
move that threatens to raise costs for local steel makers at a time when demand
is weak and imports are surging. Over the next five years, India will raise
investment in its overloaded railway network to 8.5 trillion rupees ($137
billion), the government said recently.
The government plans to increase its annual freight
carrying capacity to 1.5 billion tonnes from 1 billion tonnes, in part with the
funds from the higher rates, railways minister Suresh Prabhu said in a speech
presenting his ministry's budget for the fiscal year starting on April 1. Prabhu
did not say by when the expansion would be completed.
The rates for coal transport will rise by 6.3 percent,
while those for iron ore and steel will increase 0.8 percent. Charges for the
transport of urea and grains will also go up 10 percent. But there will be no
change in passenger fares.
Steel companies said the new rates will increase their
costs and squeeze already anemic margins. "We are helpless because customers may
not be able to absorb the increase," said R.K. Goyal, managing director of
Kalyani Steels Ltd (KLSL.NS). "Demand is very weak." Companies like Kalyani
Steels, JSW Steel (JSTL.NS) and Jindal Steel and Power (JNSP.NS) have been
struggling with rising steel shipments from countries like China and Russia,
forcing them to seek government help.
A 2.5 million tonne per annum-steel plant is expected to
start operation by early 2018 in Sur, Oman, said P T Sivarajan, director of
operations at Sun Metals, which is developing the project.
"If everything goes well, the plant will be operational in
the first quarter of 2018," he told Al Shabiba, the sister Arabic daily of Times
of Oman.
"In the absence of a port to handle a 2.5 million tonnes
steel plant in Sur, a proSper logistic study is to be carried out to make a
decision on site location," noted Sivaraj.
The company has done a lot of work in Sur and it is the
favourable site for the project. However, the company will be forced to move to
Duqm if mid-sea discharging is not considered.
The plant will produce TMT bars, which are used in
construction industry, and also value added special quality round bars for
engineering and automobile applications. The proposed products include 1.2
million tonnes of commercial grade rebar for catering to Mena region in general
and Oman in particular. In fact,
1.133 million tonnes of specialty steel for automobile industry in Mena region
in particular and in European and global market.
The Sur project will be the first special steel and TMT
rebar production facility in the entire Middle East region, according to the
promoters.
The pre-engineering cost of the project is estimated in the
region of $400-450 million and it has the lowest capital expenditure per tonne
of finished product in the region. The project does not have to pay taxes and
duties in Oman.
For this type of volume, a jetty and mid-sea unloading
practice has to be adopted, similar to Dolvi Steel Plant of Jindal. An
additional capital expenditure of $20 million will be needed for the company, if
Public Establishment for Industrial Estates (PEIE) does not set up a jetty at
Sur. This additional $20 million will be taken care in contingency provided in
the capital expenditure.
As far as the present status of the project is concerned,
the promoters have already signed contract with POSCO E&C, Korea, for PEPCOM
(planning, engineering, procurement, construction, operation and maintenance)
services. Also, another agreement signed with Sojitz Corporation, Japan, for
support of in-take, off-take and co-development. A feasibility study was also
completed by the company in house.
Iran says it has invested more than two billion dollars in
its steel industry as the country plans to build new facilities to boost steel
production capacity.
USD2.2bn has been allocated to funding seven new steel
projects across the country, Iran's Minister of Industry, Mine and Trade
Mohammad Reza Nematzadeh was quoted by the Iranian daily Ebtekar as saying.
Nematzadeh gave assurances that Iran’s steel output will
increase and predicted that the Islamic Republic will be able to produce 55
million tons of crude steel per year within 10 years.
Meanwhile, Iranian Mines and Mining Industries Development
and Renovation Organization (IMIDRO) unveiled a comprehensive plan aimed at
increasing steel production capacity in southern Iran. According to IMIDRO, new
steel-producing plants will be established in Chabahar, Qeshm and Bandar Abbas
port cities. Under the comprehensive plan, Iran’s steel production capacity will
expand by 11.6 million tons per year.
Back in January, Iran announced that it had started talks
with South Korean companies to invest in steel projects in the country’s south.
Mehdi Karbassian, the board chairman of the Iranian Mines and Mining
Industries Development and Renovation Organization said Iran is currently
negotiating with POSCO – which is among the world’s top five steel producers –
over this and specifically wants it to bring an advanced steel-making technology
named as Finex into Iran.
Tata Steel, Europe's second largest steel producer,
recently announced the acquisition of three service centres in Sweden, Finland
and Norway to strengthen its offering to manufacturers in the Nordic region.
Tata Steel in Europe has reached an agreement with steel
producer SSAB to buy its strip products service centres at Halmstad in Sweden
and Naantali in Finland. Tata Steel will also acquire from SSAB the remaining
50% stake it does not already own in Norsk Stål Tynnplater AS, another strip
products service centre based in Fredrikstad, Norway.
Karl Koehler, chief executive of Tata Steel in Europe,
said: "Tata Steel's European operations have served customers in the Nordic
steel markets for many years. These acquisitions will strengthen our strip
products offering to manufacturers in this region."
The three centres process strip products offering services
such as cutting-to-length, slitting and recoiling. They supply steel to
manufacturers in the automotive, construction and electrical supplies
industries, as well as to heavy and light engineering companies.
About 180 people are employed at the three centres - 50 at
Norsk Stål Tynnplater, 70 people at Naantali and 60 at Halmstad.
The European Commission has approved the sale of these
service centres to Tata Steel. SSAB was required to sell them as a condition of
its takeover of Rautaruukki. The transactions remain subject to approval from
competition authorities in Norway, Sweden and Finland, and their implementation
will follow these approvals.
Tata Steel is also retaining its 50% stake in Norsk Stål
AS. The other 50% of the company is being acquired from SSAB by Leif Hübert Stål
AS which, like Norsk Stål, is a Norwegian steel distribution business. Norsk
Stål employs 240 people across Norway.
Tata Steel to Supply Rails for London's Crossrail Project
London Tata Steel has signed a contract to supply
wear-resistant rails for the Crossrail project beneath the heart of London. The
Crossrail route will serve 40 stations and travel more than 100km from Reading
and Heathrow in the west, through new twin-bore 21km tunnels below central
London to Shenfield and Abbey Wood in the east.
In a statement issued recently, the company said it has
already commenced deliveries to the Crossrail project, and will ultimately
supply the project with more than 57km of its heat treated, wear-resistant rail.
"In total 7,000 tonnes of Tata Steel rail will be used to create one of Europe's
largest railway and infrastructure projects," the statement added.
Gerard Glas, Tata Steel's Rail Sector Head, said: "Our
premium heat-treated rail is produced using a unique patented process which
ensures it has exceptional wear resistance.
"Rather than using traditional methods of heating and
cooling, Tata Steel has developed a system where the rail moves through an
induction furnace which uses an electromagnetic field to heat the steel to
950°C. The rail is then rapidly cooled using compressed air. The resulting
uniquely low residual stresses provide further protection against risk of rail
failure compared to other in-line heat treatment processes," he added.
The steel will be manufactured at Tata Steel's Scunthorpe
site in the UK before being rolled at the company's Hayange mill in northern
France.
NLMK Group (LSE: NLMK), the largest steelmaker in Russia
and one of the most efficient in the world, made a saving of 425 million rubles
in 2014 through the use of pulverized coal injection (PCI) technology at two
blast furnaces at its Novolipetsk production site in Lipetsk.
PCI technology involves the co-injection of natural gas and
fine thermal coal particles into the blast furnace resulting in lower natural
gas and coke consumption. Replacing the expensive feedstock, i.e. natural gas
and coke with the cheaper alternative, i.e. steam coal, reduces the cost of pig
iron production; and subsequently that of steel manufacturing; while maintaining
high quality and efficiency.
NLMK demonstrated its commitment to bringing innovative
technological solutions to Russia when it began implementing the resource-saving
PCI technology at the Lipetsk site in 2013. To date, the plant has successfully
completed guarantee tests and moved on to commercial operation of PCI systems at
two blast furnaces: No.5 (with a capacity of 3 million tonnes per year) and No.4
(with a capacity of 2 million tonnes per year).
Even during the PCI testing period coke consumption at
these blast furnaces decreased by 10% and natural gas consumption decreased by
40%.
Sergey Filatov, Novolipetsk Managing Director, said: "More
than a third of Novolipetsk blast furnaces have been fitted with PCI systems. We
continue to work on enhancing the efficiency and cutting the cost of pig iron
production. With this in mind, we plan to equip almost all Novolipetsk blast
furnaces (which produce over 12 million tonnes of pig iron per year) with PCI
systems. We are currently preparing to implement this technology at the plant's
two largest blast furnaces: No.6 (with a capacity of 3.2 million tonnes per
year) and No.7 (with a capacity of 4.2 million tonnes per year). As a result,
coke consumption at these furnaces will reduce by 20%, and natural gas
consumption will reduce by 60%."
Productivity of all blast furnaces in 2014 was increased as
a result of improved pig iron smelting technology; mastering pulverized coal
injection; and increased operational efficiency. Daily output increased by 2.3%
year-on-year to reach an average of 36,000 tonnes of pig iron. The average daily
production of Blast Furnace #7, the most modern blast furnace in Russia,
increased by 15.1% to 11,900 tonnes per day.
Novolipetsk is the main production site of NLMK Group,
Russia's leading manufacturer of steel and high value added rolled products, and
one of the most efficient steelmaking companies in the world. Novolipetsk is the
nucleus of NLMK Group's single production chain, with assets in Russia, the EU
and the USA. Novolipetsk produced 12.56 million tonnes in 2014, with capacities
running at 100%.
ArcelorMittal recently announces the sale of its interest
in the Kuzbass coal mines in the Kemerovo region of Siberia, Russia, to Russia’s
National Fuel Company (NTK).
The assets include
the coal mines of Berezovskaya and Pervomaskaya, which together produce 700,000
tonnes of coal a year.
ArcelorMittal
acquired the Kuzbass mines in 2008 as part of the company’s strategy to secure
delivery of coal to ArcelorMittal steel operations in Ukraine.
Bill Scotting, CEO
of ArcelorMittal Mining, said: "The decision to dispose of the Kuzbass coal
mines follows a strategic review of the assets. As our Ukraine steel operations
now source coking coal from ArcelorMittal’s mines in Kazakhstan, Kuzbass is no
longer a strategic asset for ArcelorMittal.
We are pleased to have agreed the sale to NTK as Kuzbass is an important
employer in the region and this offers a sustainable solution for employees and
other stakeholders."
Egyptian Steel expects to open two new factories by the
middle of 2016, raising capacity to 3.5 million tonnes per year and boosting its
market share, chairman Ahmed Abou Hashima told Reuters.
In addition to its plants in Alexandria and Port Said, it
aims to launch a 3.5 billion Egyptian pound ($460 million) facility in the Nile
city of Beni Suef this July or August with an annual capacity of 1.36 million
tonnes.
It also hopes to start a factory in Ain Sukhna on the Red
Sea by mid-2016, said Abou Hashima.
He said Egyptian Steel currently claims 10 percent of the
market, and is seeking to acquire 20-25 percent of market share after production
starts in all of these factories
Egyptian Steel currently produces 800,000 tonnes of steel
per year and aims to raise capacity to 3.5 million tonnes annually once its new
projects are completed.
Abou Hashima said it was looking at a feasibility study for
a fifth factory that would be powered by coal.
He also said he was involved in organising an investment
conference in the Red Sea resort of Sharm el-Sheikh in March that the government
hopes will attract billions of dollars of cash.
Egyptian Steel was established in 2010 as a joint venture
between Egyptian and Qatari interests that brought together three existing
firms. Egyptian Steel now has capital of about 2.2 billion Egyptian pounds ($290
million) and plans to raise a further 350-400 million.
McIlvaine Company
Northfield, IL 60093-2743
Tel:
847-784-0012; Fax: 847-784-0061
E-mail: editor@mcilvainecompany.com
Web
site: www.mcilvainecompany.com