We at Steel 360 noticed the declining production of Indian Sponge Iron industry. On a brief interview with Deependra Kashiva, Executive Director, SIMA we learned the major concerns and solutions that can be the savior.
The overall production is coming down and as per our half yearly review it is further down by 6-7%. We were expecting JSPL’s Angul and JSW’s Vijaynagar expansions to commission this year but that seems unlikely. Now, majority are of a view that it appears to be difficult to touch 18 MnT production this FY.
I think there is a no future of standalone activities in the Iron & Steel sector in India whether it be cold rolling mill or galvanizing. They are operational only because of the fact that the large steel plants are not coming up. After a few big set up, real problems for standalone units will be visible. For example JSW is selling its long product in Punjab and even Chhattisgarh with their facilities in Karnataka. As a common man, one will prefer long product from SAIL, JSW or Tata as now the consumer is more quality conscious. The standalone units have to go for forward or backward integration and there’s no other way out. But it may not be a viable decision to make such investments considering poor raw material linkages and uncertain market conditions.
In India, JSPL’s Angul plant can turn out to be a game changer. We are very keen to watch how its coal gasification DRI unit will be effective compared to the coal based DRI route.
Iron ore is also a concern but I think Karnataka’s production will improve shortly. They are allowing ‘C’ category mine which were banned. To an extent, our concern also is NMDC’s production which can well be scaled up. However, even if the production grows, transportation of iron is a bigger concern. The KK line is used more transporting from the mine; and it is a single line. Also, poor port facilities at Vizag make Iron ore movement very slow; the concerned authorities must look at these issues closely.
Fortunate for the industry, may be because of the INR depreciation or import duty of 2.5%, Scrap import is not very alarming now. In FY13, India imported about 8 MnT which up to this October, it is 3.14 MnT; so for this year I don’t think we will cross 5 MnT of Scrap imports.
Implementation of BIS on Ingot/Billet is not a big concern for our industry. One can specify the quality of sponge required in the purchase agreement. And there’s a clause if the company is not able to meet those specifications, then there’ll be some penalty. We do not tell buyers to buy inferior quality material when good quality is also available.
Some reports opine that after 2050 or 2060 may be, everywhere the Steel will be produced from recycled Steel i.e. we will have so much of steel that we won’t require Iron ore anymore. On the contrary, we know that there are counties whose Steel requirement will further increase and Scrap route alone will not be able to fulfill those needs.