SUMMER TRAINING PROJECT REPORT

ON EXPORT POTENTIAL OF STEEL BILLETS AND HOT ROLLED COIL IN MENA AND SOUTH EAST ASIAN REGION

Undertaken at

Submitted for the Partial fulfilment of the requirement Towards the award of Degree of Master of International Business (MIB) Session 2011-13 Submittedby

Under the Supervision of Mr. VINOD KUMAR SINGHAL AGM, (M-ITD), SAIL

CENTRE FOR MANAGEMENT STUDIES JAMIA MILLIA ISLAMIA New Delhi-110025

DECLARATION
I, .., a bonafide student of MIB (Full Time) Programme at the Centre for Management Studies, Jamia Millia Islamia, New Delhi, hereby declare that I have undergone the Summer Training at STEEL AUTHORITY OF INDIA LTD, INTERNATIONAL TRADE DIVISION, India under the supervision of Mr. Vinod Kumar Singhal on export potential of Steel Billets and Hot rolled coil in MENA and South East Asian region

I also declare that the present project report is based on the above summer training and is my original work. The content of this project report has not been submitted to any other university or institute either in part or in full for the award of any degree, diploma or fellowship.

Further, I assign the right to the university, subject to the permission from the organization concerned, use the information and contents of this project to develop cases, case lets, case leads, and papers for publication and/or for use in teaching.

ACKNOWLEDGEMENT

I am heartily thankful to my supervisor Mr. Vinod Kumar Singhal, AGM, (Marketing-ITD), whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the project .It is his support and guidance due to which I remain able to come out with this project report.

I owe the highest sense of appreciation for the talented, Cooperating and hardworking team of SAIL (ITD) especially Mrs. Shanta Rao, DGM (Marketing-ITD) and numerous other officials including Mr. Rohan Singh Meena, Jr. Manager (M-ITD), SAIL and Mr. S.M. Razi, Jr. Manager (M-ITD) SAIL for cooperating during the Internship and for providing me the most valuable comments and suggestions without which this report might not have been complete.

I also wish to express my gratitude to the management of SAIL-INTERNATIONAL TRADE DIVISION, who rendered their help during the period of my project work.

Last but not least I wish to avail myself of this opportunity, express a sense of gratitude and love to my friends and my beloved parents, specially my mother for their immense support, strength, their faith in me and for everything.

EXECUTIVE SUMMARY
Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. SAIL is also among the five Maharatnas of the country's Central Public Sector Enterprises. SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railways products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias second largest producer of iron ore and of having the countrys second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. SAIL's wide range of long and flat steel products is much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) that transacts business through its network of 37 Branch Sales Offices spread across the four regions, 25 Departmental Warehouses, 42 Consignment Agents and 27 Customer Contact Offices. CMOs domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the demands of the smallest customers in the remotest corners of the country. With the total number of dealers over 2000, SAIL's wide marketing spread ensures availability of quality steel in virtually all the districts of the country. SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from S AILs five integrated steel plants. The research has been carried out to Estimate the Export Potential of steel billets and Hot Rolled coil with focus on MENA (Middle East & North Africa) and South East Asian region. The report is based on the desk research methodology .The study covers the annual imports, exports, consumption and future demand of the respective products in the regions. The Middle East and North Africa (MENA) region is considered currently a key growth markets for the steel industry at the consumption and production alike due to the fast-expanding

construction & fabrication sector. It has witnessed major transformations over the past years, as Arabian countries try to emerge from the shadows of the developed world and become more industry oriented. The Middle East and North Africa (MENA) remains a source of high demand for steel, which continues to outpace the rest of the world. Meanwhile, a persistent trend of recycling high gas and oil prices into construction and capital investments in the region continues to serve fast-growing, increasingly wealth populations. These trends have been in place for nearly a decade now as a result supply is being developed to meet the higher levels of demand. Nonetheless, external suppliers remain important players as they fulfil over one-third of demand generated in the MENA region. Over the past couple of years, the steel industry worldwide has been experiencing stunning growth and the Middle East has flourished to become major players in the steel market. The real estate sector has been at the heart of the demand, as this sector witnessed tremendous activity. Consequently, steel companies in the MENA region entered 2008 strongly, pushed by their momentum and massive profits achieved in the previous year. In 2007, Egypt and Saudi Arabia ranked 27th and 35th, respectively, among the worlds steel producing countries and in 2010, Egypt and Saudi Arabia ranked 24th and 28th respectively. And in 2011 Egypt and Saudi Arabia ranked 24th and 27th respectively There are 67 steel plants in the Arab region. The demand for steel is rising at five to six per cent every year.The MENA region is considered to be among the top five locations in the world to establish a steel factory, due to a favourable demand ,congenial environment and relatively cheap energy prices. The Egyptian steel industry represents one of the cornerstones of Egypts economic growth and development, due to its linkages to almost all other industries that stimulate economic expansion. Steel is everywhere, in construction, housing, infrastructure, consumer goods and automotive industry, all rely heavily on the steel industry and so, the importance and development of the steel sector is imperative for the progress of the Egyptian economy in general. Egypt is definitely playing a key role as a major producer of steel in the Middle East & North Africa. In a ranking of 59 countries, "FDI Intelligence" ranks Egypt 2nd in Africa with regard to Foreign Direct Investment (FDI) in FY 2010/11. This affected on the growing of the steel industry in Egypt. The political uprising in MENA region has certainly affected the business but there is a bigger opportunity for Exporters to MENA region as the governments of Kuwait, Kingdom of Saudi Arabia and Republic of Syria has announced the Billions of dollar packages of developments to suppress the dissent in protestors even by distributing cash subsidy and money to buy homes for them

which will boost the demand for housing and infrastructure sectors once again in MENA region. Kingdom of Saudi Arabia has allotted US $ 6 billion for housing projects for enabling people to buy home.

Morocco was ranked 3rd, Sudan 15th and Ethiopia 10th by Grail Research among African nations in Steel producing capabilities. The Sudanese iron and steel industry began contributing to meeting the growing domestic needs of the iron and steel products represented in the reinforcing steel, wire rods and tubes and pipes. This industry has seen its start-up in concurrence with founding Giad industrial city established by the Sudan Master Technology Company. The annual production capacities are estimated by 60 thousand tons of crude steel, 150 thousand tons of long products and 140 thousand tons of pipes. Sudan Master Technologies Company completed the iron and steel complex consisted of two mills, the first specialised in billets production with a capacity of 60 thousand tons per year, which comprises one electric arc furnace, and one Ladle furnace to receive the molten metal with the capacity of 25 tons charge. The second mill is specialised in reinforcing steel production of a range of 8 25 mm diameters, angles of 25 to 50 mm sizes and 34 mm thickness, and flats with 16-60 mm sizes and 3-10 mm thickness. The investment value in this mill is 38 million U.S dollars. It employs 130 workers, engineers and administrative personnel. It extends over an area of 33 km2. The production of crude steel of MENA region has risen by 13% in 2010-2011.This is also due to the upcoming football world cup in 2022 in Qatar and the proposed housing projects by many Arab nations. South-East Asia South East Asias appetite for steel is expanding more rapidly. The region comprises several countries whose economies are growing and changing, and it is well located on major seaborne trade routes. It also has free-trade agreements in place with over half of the worlds population the steel industry in ASEAN registered a double digit growth of 16.8% in 2010, mainly due to the high growth rates in Indonesia, Malaysia and Thailand. The integration of Southeast Asias economies into a single production base, the ASEAN Free Trade Area (AFTA), is yet another attraction of the region as tariff barriers are eliminated among its member countries. As far as the production is concerned the Malaysia was ranked 26 th with production of 5.7 million tonnes of steel in 2010, and in 2011 Malaysia remained at the same position that is 26 th with production of 6.0 million tonnes of steel. Vietnam was ranked 32nd in both the year 2010 and 2011 with the production of 4.3 and 4.6 million tonnes of steel respectively. The position of Thailand was
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changed from 34th to 33rd from 2010 to 2011, with the production of 4.1 million tonnes and 4.4 millions tonnes of steel respectively Indonesia was ranked 37th in both the years that is 2010 and 2011 with production of 3.7 million tonnes and 3.8 million tonnes of steel Preliminary data compiled by SEAISI revealed that apparent steel consumption in ASEAN expanded by 4% y-o-y to 50.5 million tonnes in 2011. Singapores steel consumption surged significantly by more than a million tonnes to 3.8 million tonnes in 2011. Surprisingly, Thailands steel consumption increased by 3% y-o-y amidst the severe flood situation and the economic slowdown in the country. Steel consumption in Indonesia and Philippines rose by 8% to 9.7 milliion tonnes and 4.3 million tonnes in 2011, respectiviely. On the other hand, Malaysia and Vietnam both experienced declines in steel demand. Mal aysias steel consumption of 8.05 million tonnes in 2011 was a decline of 3.2% y-o-y while Vietnams tight monetary and fiscal policies slowed down its domestic steel demand to 10 million tonnes, a decline of 5.4% y-o-y. South east asian region are the net importer of the steel as the production is far less than the demand infact the top 15 net importer of steel in the world, according to world steel association, is comprises of six nation of the south east Asia. In year 2011, Thailand ranked 2 nd largest net importer of the steel in the world with import of 10.9 million tonnes, Vietnam ranked 3rd with net import of 8.3 million tonnes, whereas Indonesia occupied the 5 th position with net imports of 7.3 million tonnes, Philippines 9th with 3.8 million tonnes of net imports, Singapore ranked 10 with 3.1 million tonnes of net imports and Malaysia ranked 15th with 2.6 million tonnes of net imports We can see that a large portion of net importer is occupied by the south east asian region that shows that there is an immense export potential of steel in south east asia

CONTENTS

CHAPTER 1

1.1 Export potential of product: a brief background of issues 1.2 Export potential of product of sail

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1.1 EXPORT POTENTIAL: A BRIEF BACKGROUND OF ISSUES

Export Potential involves studying, analysing the actual potential of a Product in an International Market. Export Potential involves doing a complete market research on a prospective market. It is through International Market Research that a Potential of a product is estimated and then implemented. The techniques or methods of estimating the export potential are, by and large, the same/familiar for different markets but these may have to be varied depending upon the market characteristics, the time and money to be spent and the availability of data or information. Export potential is a highly technical and scientific activity, requiring good planning and methodology to find out the accurate information on the market. EXPORT POTENTIAL COVERS Estimating the Export Potential usually involves the following attributes: A. Exporting Country Trade Regulations. B. Market Access covering tariffs and Quotas, internal taxes, currency restrictions, health and political factors C. Market Size covering production, imports, exports, consumption, derived demand and market segmentation D. Factors affecting demand such as economic , climate, geography, social and cultural factors E. The most important and foremost is the level of Competition F. Product research covering such as packing for shipment and the product pack. G. Marketing Practices covering such as Transport logistics, Sales and Distribution, Pricing etc RESREARCH TECHNIQUES OF ESTIMATING EXPORT POTENTIAL The numbers of research techniques are used for appropriate information for export marketing. Different methodology is employed according to the objective and scope defined for research. Basically there are two methods A. Desk Research or Secondary Research B. Field Research or Primary Research DESK RESEARCH/SECONDARY DATA Desk or secondary research is the search for information from relevant data already available. The data could take the form of information from censuses or information readily available from industry and trade directories. A. Desk Research uses secondary data from:

B. Internal sources i.e. company itself C. External sources using libraries of industry and trade associations, chambers of commerce, export promotion organizations, international bodies such as International Trade Centre, Geneva, CBI, Holland etc D. Internet sites of various agencies/organizations such as ITPO,WTO,IMF,ITC etc E. Publications(books, magazines, journals, newspapers) F. Market study/survey reports G. Trade delegation reports H. Catalogues of MNCs or leading world manufacturers I. Company profiles J. Market intelligence reports FIELD RESEARCH OR PRIMARY RESEARCH Field research is employed to collect primary data by: A. Observation method B. Survey method Field Research focuses on consumer or buyers motives (e.g. Why they will buy your product instead of your competitors product), which forms the basis of the positioning strategy. The process of conducting field research in estimating the export potential includes 1. visiting the researcher own country 2. Visiting potential overseas markets which involves A. Planning of visits B. Seeking /making appointments with target companies/organizations C. Field research in exhibitions/trade fairs which involves Right Timing D. Questionnaire

1.2 EXPORT POTENTIAL OF PRODUCTS OF STEEL AUTHORITY OF INDIA LIMITED: A BRIEF BACKGROUND
Steel Authority of India Limited exports its Steel Products through its International Trade Division. International Trade Division (ITD) of SAIL at New Delhi an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated steel plants.

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SAIL from time to time conducts International Marketing research for estimating Export potential of its Steel Products. SAIL maintains a close liaison with various information agencies, bodies, organizations for extracting a relevant PRODUCT-MARKET match. ITD is vigilant in meeting the demands of its global customers; ITD maintains a close liaison with customers and the production units to cater to the customized requirements of its customers both in terms of quality and sizes. ITD exports its product through Vizag, Vishakhapatnam, Haldia, Paradip ports. ITD exports steel products mentioned below via its joint venture service centre A. Rails, Structurals, Merchant Products, Wire Rods, Re-bars, Plate Mill Plates, Hot Rolled Coils, B. Hot Rolled Plates / Sheets, Cold Rolled steels, Chequered Plates, Slabs, Billets and Pig Iron. JUSTIFICATION OF MARKET RESEARCH SAIL is the largest steel producer in India and has a good presence in International market too. But the total export of SAIL last year was a less than 3% of their total sales (Rs 1100 Cr aprox.) Demand/Imports of steel products in MENA region is 40 Million Ton a year. Exports are not commensurate with the potential that the MENA region possesses. Similar is the case with south east asian region, where there is huge potential for export but also export does not commensurate with the demands, secondly south east asia is highly developing market for steel, shoeing a huge potential for the steel. It is against that background that a Market research has been done to understand the region demand, competition and imports so that appropriate export policies can be framed to increase market share of SAIL product.

1.3 OBJECTIVES OF RESEARCH STUDY

1.3.1 TO STUDY THE EXPORT POTENTIAL OF BILLETS AND HOT ROLLED COILS WITH FOCUS ON MENA REGION AND SOUTH EAST ASIAN REGION

A. To study the world steel market scenario B. To study the Indian steel industry with focus on the plant capacity expansion and future prospects C. To study the SAILs plants details, production, product line, i ndustry performance, capacity expansion and CSR D. To study the role of ITD and CMO E. To study the product (billets and HR coil) information with focus on world steel trends
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F. To study the export potential of billets and HR coil with focus on MENA region G. To study the export potential of billets and HR coil with focus on South EastAsian region

1.4 SCOPE OF STUDY

The research study covers the Export Potential of billets and HR coil in MENA and South East Asian region. The study looks into the competition patterns of both the products globally as well as regionally. The study also covers the duty structure of both the products in prospective markets.

1.5 RESEARCH METHODOLOGY

The data for determining the Export Potential was based on secondary research and was entirely a desk based research. The data was collected in combination of literature search and analysis. Data from secondary sources such as research papers, internet and magazines was collected. The raw data were tabulated, processed and analyzed using the appropriate statistical techniques such as percentage averages, Co-relation values and presented in the form of Bar Chart in the light of clarity obtained in the course of the type of data encountered. DATA COLLECTION The present study has made the use of the following sources of secondary study: 1. Iron and steel bulletins such as Metal Bulletin. 2. Relevant books, Magazines, newspapers such as Hindu, Economic Times 3. Relevant public records and statistics, historical documents and other sources of public information related with iron and steel trade 4. Relevant websites of international organizations such as WTO, IMF, ITC 5. Information from within Steel Authority of India Limited 6. Government websites such as Customs Australia, DGFT India, DGCI&S The sources for unpublished data are many, for example relevant data may be available with scholars and research workers. However, these sources are not easy to access and need a lot of persuasion and lot of time. The researcher has not used such resources given the limitation of time available. The researcher has made used secondary data in formulation of research problem and identification of research objectives. Due care was taken to assess such data for its suitability for the study, because many such secondary data was found to be irrelevant to the research problem as also inadequate in the context of the problem which researcher want to study.

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1.6 SCHEMATIC ACTION PLAN FOR PROJECT PREPARATION

From 24 may onwards the job was to study the INCOTERMS From 1 June onwards the job was to study contracts From 8 june onwards the job was to study UCPDC norms and Export Import documentation
From 17 June onwards the job was to study the RBI regulation, central excise duties etc. As far as report is concerned following plan was followed Consultation of published literature on the subject Tabulation and Data analysis Report writing 18-6-12 25-6-12 10-7-12

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2. WORLD STEEL SCENARIO

The 2009 global downturn and the subsequent recovery have brought to light the increasing importance of China and India to the world steel industry. In 2010, recovery in steel demand was far from consistent across the globe and steelmakers had to work hard to manage their working capital as a result of fluctuating demand. However, while most of the global steel industry continued to feel pressure from the recessionary trends of 2009, steel demand and associated production in the BRICK (Brazil, Russia, India, China and Korea) regions continued to be a key driver in growth. Brazil and South Korea recovered strongly from the economic crisis and are expected to register higher steel production in the medium term. However, the real shining lights on the horizon as far as growth in crude steel production, and the next frontier of growth, can be seen in both China and India. Both countries domestic steel demand not only survived the economic slowdown, but they also grew at a significant rate. As a consequence, China has become the virtual engine of the global steel industry, accounting for 45% of production in 2010, but India too has shown it is rapidly becoming an important part of the international steel market place. Indeed, it was recently confirmed as the fifth largest steel producer in the world, and there are strong predictions it will become the second largest steel producer globally in coming years. In 2012, global steelmakers are hoping for a more stable rate of recovery in demand. This will be dependent on whether there is an increase in consumer spending and business investment, to compensate for the potential lessening of government fiscal stimuli. Due to the sovereign debt crisis of many developed countries, there has been a marked shift from stimuli to austerity. In addition, the massive rise in oil prices inspired by political turmoil in the Middle East, coupled with the recent catastrophic events in Japan, increases the risks of a slowdown in growth during 2011. Global trade is estimated to grow by 5.7% in2011, which is a significant softening from 2010 when global restocking fuelled an 11.5 % increase. The future of both the developed and the developing world will be governed by different sets of factors. The emerging markets of China and India will continue to witness strong growth in their steel industries due to robust demand for construction and civil engineering, automotive and mechanical engineering .The growth of developed market show ever will be more dependent on supply-side response, innovative product offerings and substitutions. The key driving factor for the profitability of all steel players will ultimately depend on more tightly managed operating expenses and capital expenditure. Global Economy projected to grow by 4.4 percent in 2011 after clocking 5.0 percent in 2010. Subdued steel demand in EU, Japan and USA. Restriction on real estate and restructuring of small scale polluting steel units accompanied by infrastructure build up of backward areas inside the
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coastal belt in China maintain a moderate growth in demand in China. Rising trend in Finished Steel prices particularly in flat prices following rise in Coal and Iron Ore prices more backed up by cost of raw materials rather than by effective demand. Steel industry will witness big changes such as less imports, higher domestic production and greater investment in raw material. In 2011, it is expected that imports would consist mainly of raw material and nearly zero semis and finished construction steel. Construction steel is a big sector that gathers many top domestic steel businesses. Demand forecasts of construction steel, steel pipe and galvanized products are optimistic. However, development of pipe and galvanized sections will meet difficulty because of constrained supply of raw material.

2.1 World crude steel output increases by 6.8% in 2011

World crude steel production reached 1,527 megatonnes (Mt) for the year of 2011. This is an increase of 6.8% compared to 2010 and is a record for global crude steel production. All the major steel-producing countries apart from Japan and Spain showed growth in 2011. Growth was particularly robust in Turkey, South Korea and Italy. Figure 1: Annual crude steel production (Mt)

Annual production for Asia was 988.2 Mt of crude steel in 2011, an increase of 7.9% compared to 2010. The regions share of world steel production increased slightly from 64.0% in 2010 to 64.7% in 2011. Chinas crude steel production in 2011 reached 695.5 Mt, an increase of 8.9% on 2010. Chinas share of world crude steel production increased from 44.7% in 2010 to 45.5% in 2011. Japan produced 107.6 Mt in 2011, a -1.8% decrease from 2010. In 2011, South Koreas crude steel production was 68.5 Mt, a 16.2% increase compared to 2010.

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The EU recorded an increase of 2.8% compared to 2010, producing 177.4 Mt of crude steel in 2011. Spain produced 15.6 Mt of crude steel in 2011, a -4.6% decrease on 2010 while Italy produced 28.7 Mt in 2011, an 11.3% increase over 2010. In 2011, crude steel production in North America was 118.9 Mt, an increase of 6.8% on 2010. The US produced 86.2 Mt of crude steel, 7.1% higher than 2010. The CIS showed an increase of 4.0% in 2011, producing 112.6 Mt of crude steel. Russia produced 68.7 Mt of crude steel, a 2.7% increase on 2010 and Ukraine recorded an increase of 5.7% with a year-end figure of 35.3 Mt. Annual crude steel production for South America was 48.4 Mt in 2011, an increase of 10.2% on 2010. Brazil produced 35.2 Mt in 2011, 6.8% higher than 2010. Figure 2: Crude steel production annual growth trend (%)

Figure 3: Share of world crude steel production 2011, 2010

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2.2 World Steel Demand Assessment (In 2011)

2.2.1. Demand by Region Region EU (27) Other Europe CIS NAFTA Central & South America Middle East & Africa Asia & Oceania World Steel Demand, mt 153 33 54 121 46 71 895 1373

Figures above are finished steel product demand estimates for 2011 in millions of metric tonnes. 2.2.2. Demand by Product Shape Steel shape Flat products Long products Tube products World Steel Demand, mt 640 615 118 1373

Figure are indicative finished steel consumption estimates for 2011. Tube data includes welded and seamless tube. For chart, see below. Source: MCI assessments.

Demand estimates by shape indicate estimated world steel consumption analysed by flat products [including plate, hot rolled coil and sheet, cold rolled and coated sheet], long products [including

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rail, heavy sections, bar and wire rod] and tube [welded pipe and seamless tube]. Figures are estimates supplied by Metals Consulting International for year 2011. 2.2.3. Demand by Consuming End-Use Industry

World steel demand by end-use market

Demand estimates by sector are indicative of global 2011 finished steel demand. Transport includes light passenger vehicles and trucks. Oil and gas sector estimate includes steel for large diameter pipe. Steel fabrication includes furniture and components. 'Other' includes packaging, wire, wire rope. Figures are MCI estimates for year 2011 world steel consumption. 2.2.4. Demand by Quality Steel quality Carbon steel Engineering steel Stainless steel Tool steel World Steel Demand, mt 1303 41 28 ~1 1373

Figures are MCI estimates of finished steel consumption by grade for 2011. Engineering steels are often also referred to as SBQ steels (special bar quality steel); these are steels that typically move or rotate whilst in use.

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2.2.5. Demand Forecast Year World steel demand, mt 2009 1140 2010 1301 2011 1373 2012 1422 2013 1486 2014 1538

Figures to 2013 are consistent with World Steel Association [worldsteel] assessments of April 2012. 2014 figure is MCI estimate. All figures are millions of metric tonnes of finished steel.

2.3 World Steel in Figures 2012

The World Steel Association has published the 2012 edition of World Steel in Figures. Table 1: Major steel-producing countries 2011 1. 2. 3. 4. 5. China Japan United States India Russia 683.9 Mt 107.6 Mt 86.4 Mt 71.3 Mt 68.9 Mt China Japan United States India Russia 2010 637.4 Mt 109.6 Mt 80.5 Mt 68.3 Mt 66.9 Mt

Table 2: Top steel-producing companies 2011 1. 2. 3. 4. 5. ArcelorMittal Hebei Group Baosteel Group POSCO Wuhan Group 97.2 Mt 44.4 Mt 43.3 Mt 39.1 Mt 37.7 Mt 6 7 8 9 10 Nippon Steel Shagang Group Shougang Group JFE Ansteel Group 33.4 Mt 31.9 Mt 30.0 Mt 29.9 Mt 29.8 Mt

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Table 3: Countries with the highest apparent steel use per capita 2011 1. 2. 3. 4. 5. South Korea Taiwan, China Czech Republic Japan Germany 1,156.6 kg 784.4 kg 595.7 kg 506.7 kg 479.6 kg 6 7 8 9 10 Austria China Italy Sweden Belgium-Luxembourg 473.1 kg 459.8 kg 459.5 kg 424.5 kg 422.5 kg

Major exporter and importer of steel in 2011

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2.4 Analysis and forecast

The global steel output is expected to hit 1625 mn tons in 2012 , which is up by 5.4% compared to 2011, according to MEPS, leading supplier of steel market information. It predicts that the BRIC countries, together with Turkey and USA, will account for 85 % of the growth in steel.

It is believed that market sentiments are picking up in India and raw materials are becoming easier to source which will push up the annual steel production this year.

Asian steel making industry will expand over 60 mn tonnes this year to reach 1064 mn tonnes, in which China will hold a significant position. Chinese steel output is forecasted to grow by 7.9% year on year.

MEPS predicts that Turkish steel production will be at an all-time high figure this year. However, the rate of growth will be slower than last year due to a moderation in domestic consumption and lower exports.

North American raw steel production in 2012 is expected to rise by 4.7 percent to a figure in excess of 124 million tonnes, while South American steel manufacturing is likely to surpass the 50 mn tonne mark in 2012.

It is believed that steelmakers in Africa should be able to recover approximately half the lost tonnage from last year in 2012.

In the Middle East, the steel output figure will be the fourteenth consecutive rise in production, which will hit 25 mn tonnes

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3. INDIAN STEEL INDUSTRY SCENARIO

Indian steel industry plays a significant role in the countrys economic growth. The major contribution directs the attention that steel is having a stronghold in the traditional sectors, such as infrastructure & constructions, automobile, transportation, industrial applications etc. Moreover, steel variant stainless steel is finding innovative applications due to its corrosion resistive property. India has emerged as the fourth largest steel producing nation in the world, as per the recent figures release by World Steel Association in April 2011. In 2010, India was the 5th largest producer, after China, Japan, USA and Russia had recorded a growth of 11.3% in steel production as compared to 2009. Overall domestic crude steel production grew at a compounded annual growth rate of 8.4% during 2005-06 to 2009-10. The Indian steel industry accounted for around 5% of the worlds total production Total crude steel production in India for 2010-11 was around 69 million tonnes and its expected that the crude steel production in capacity in the country will increase to nearly 110 million tonne by 2012-13. Further, if the proposed expansion plans are implemented as per schedule, India may become the second largest crude steel producer in the world by 2015-16.

The demand for steel in the country is currently growing at the rate of over 8% and it is expected that the demand would grow over by 10% in the next five years. However, the steel intensity in the country remains well below the world levels. Our per capita consumption of steel is around 110 pounds as compared to 330 Pounds for the global average. This indicates that there is a lot of potential for increasing the steel consumption in India.

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POSITION OF INDIA IN WORLD STEEL PRODUCTION IN 2010-11 YEAR RANK 1 2 3 4 5 6 7 8 9 10 COUNTRY China Japan U.S.A. Russia India South Korea Germany Ukraine Brazil Turkey 2010 PRODUCTION* 627.7 109.6 80.6 67 66.8 58.5 43.8 33.6 32.8 29 COUNTRY China Japan U.S.A. India Russia South Korea Germany Ukraine Brazil Turkey 2011 PRODUCTION* 695.5 107.5 86.2 72.2 68.7 68.5 44.3 35.3 35.2 34.1

Note * production in million tonnes ANALYSIS The India has occupied 4th position in the world steel production in year 2011 from 5 th in 2010. It is believed that the it will occupy the second position in world steel production very soon. In 2011 India has not only increased the production but also defeated Russia though Russia too has increased its production. The increased production of steel is mainly compounded by the increased capacity of plants derived by the technological upgradations and higher labour productivity

3.1 PRODUCTION OF CARBON STEEL

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The growth was driven by capacity expansion from 47.99 million tonnes per annum (MTPA) in 2004-05 to 72.2 MTPA in 2011-12. The crude steel production grew at CAFR of 8.4% during the past five years that is 2005-2010, in further year growth is expected to grow at the rate of 10%. The total production of finished carbon steel in country has been 2010-11 as compared to 42.64 million tonnes in 2005-06. Indias steel production trends
80 70 60 50 40 30 20 10 0 finished carbon steel pig iron DRI 2004-05 40.05 3.23 10.3 2005-06 42.64 3.86 12.5 2006-07 55.15 4.93 18.35 2007-08 58.23 5.31 20.37 2008-09 63.45 6.21 21.09 2009-10 65.46 5.8 20.74 2010-11 66.01 5.54 26.7 2011-12 66.8 5.8 22.5

The high share of the secondary sector in finished steel production is largely due to substantial supplies of semis, the basic feed material from the main producer for conversion to needed shape by rolling

3.2 PRODUCTION, CONSUMPTION AND GROWTH OF STEEL INDUSTRY IN INDIA

The rapid pace of growth of the industry and the observed market trends called for certain guidelines and framework. Thus was born the concept of National steel policywith the aim to provide the roadmap of growth and development for the Indian steel industry. India is one of the few countries where the steel industry is poised for rapid growth.

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Total finished steel (Alloy+Non alloy) ('000 tonnes)

70000 60000 50000 40000 30000 20000 10000 0 production of sale imports exports consumption 2005-06 46566 4305 4801 41433 2006-07 52529 4927 5242 46783 2007-08 56075 7029 5077 52125 2008-09 57164 5841 4437 52351 2009-10 60892 7296 3235 57675 2010-11 47296 5396 2462

Indias share in world production of crude steel increased from 1.5% in 1981 to around 3.5% in 2004, presently our share in world steel market is 4.7%. While plant closure and privatisation are rare in India, the private sector is considered to be engine of growth in steel industry and technological changes and modernisation are taking place in both the public and private sector integrated steel plants in India.

3.3 TRENDS IN PRODUCTION OF CRUDE STEEL IN PRIVATE AND PUBLIC SECTOR

Traditionally, Indian steel industry has been classified into main producers (SAIL plants, Tata steel and Vizag steel/RINL), major producers (plants with crude steel making capacity above 0.5 million tonnes-Essar steel, JSW steel, Jindal steel and power and Ispat industries) and other producers.

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Trends in production of crude steel by public and private sector

70 60 50 40 30 20 10 0 public sector private sector total 2005-06 16.964 29.49 46.46 2006-07 17.003 13.814 50.817 2007-08 17.091 36.766 53.857 2008-09 16.372 42.065 58.437 2009-10 16.714 48.161 64.875 2010-11 12.579 38.015 50.594

The latter comprises of numerous steel making plants producing crude steel/finished steel (long products/flat products), pig iron, sponge iron are spread across the different states of the country. The following table highlights the total as also the contribution of private and public sector in crude steel production in the country.

3.4 PROCESS WISE PRODUCTION

The process route-wise production of crude steel in the country during 2005-06, 2009-10 and AprilDecember 2010-11 are shown in the table below and indicate the emergence of the electric route of production compared to the oxygen route:
Crude steel production by Process Route 2005-06 2010-11 Basic Oxygen Furnace (BOF) 47 Electric Arc Furnace (EAF) 26 Induction Furnace (IF) 27 Total 100 100 100 30 31 18 24 52 45 Percentage share (%) 2009-10

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Indias current steel production capacity is 72.2 million tonnes per year including both pu blic and private producers. According to the ministry of steel by 2011-12,the capacity is expected to increased to 124 million tonnes per annum on the back of major expansion plans announced by steel producer. According to the steel ministry, around 222 MoUs have been signed with various states for planned capacity of around 276 million tonnes. Majorly investment plans are in states of Orissa, Jharkhand, Chhattisgarh, West Bengal, Karnataka, Gujarat and Maharashtra

3.5 CAPACITY EXPANSION PLANS ANNOUNCED BY STATES

3.6 IMMENSE GROWTH POTENTIAL IN INDIAN STEEL SECTOR

Domestic crude steel production grew at a compounded annual growth rate of 8.4% in the last few years.

Crude steel production capacity of the country is projected to be around 110 million tonne by 201213.

222 Memorandum of Understandings (MOU) have been signed with various states for planned capacity of around 276 million tonnes by 2019-20.

Investments at stake are to the tune of $187 billion in the Steel sector. Increase in the demand of steel in India is expected to be 14% against the global average of 5-6% due to its strong domestic economy, massive infrastructure needs and expansion of industrial production.

Demand of steel in the major industries like infrastructure, construction, housing, automotive, steel tubes and pipes, consumer durables, packaging and ground transportation.

Target for $ 1 trillion of investments in infrastructure during the 12th Five Year Plan. Infrastructure projects (like Golden Quadrilateral and Dedicated Freight Corridor) will give boost to the demand in the steel sector in near future.

Projected New Greenfield & up-gradation of existing Airport shall keep the momentum up. Increased demand of specialized steel in hi-tech engineering industries such as power generation, automotive petrochemicals, fertilizers etc.
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4. Steel Authority of India Limited - A MAHARATNA

Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. SAIL is also among the five Maharatnas of the country's Central Public Sector Enterprises. SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias second largest producer of iron ore and of having the countrys second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. SAIL's wide range of long and flat steel products is much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) that transacts business through its network of 37 Branch Sales Offices spread across the four regions, 25 Departmental Warehouses, 42 Consignment Agents and 27 Customer Contact Offices. CMOs domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the demands of the smallest customers in the remotest corners of the country. With the total number of dealers over 2000, SAIL's wide marketing spread ensures availability of quality steel in virtually all the districts of the country. With technical and managerial expertise and know-how in steel making gained over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines are under the control
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of the Raw Materials Division in Kolkata. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified. SAIL traces its origin to the formative years of an emerging nation - India. After independence the builders of modern India worked with a vision - to lay the infrastructure for rapid industrialisation of the country. The steel sector was to propel the economic growth. Hindustan Steel Private Limited was set up on January 19, 1954. VISION To be a respected world Class Corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction. CREDO We build lasting relationships with customers based on trust and mutual benefit. We uphold highest ethical standards in conduct of our business. We create and nurture a culture that supports flexibility, learning and is proactive to change. We chart a challenging career for employees with opportunities for advancement and rewards. We value the opportunity and responsibility to make a meaningful difference in people's lives.

4.2 PRODUCTS OF SAIL

LONG PRODUCTS FLAT PRODUCTS RAILWAY PRODUCTS 1. Rails 1. HR Coils, Sheets & Skelp 2.Crane Rails 3. Z-Section Centre Sill 4. Z-Type Sheetpiling Section 4. GP Sheets & 3. CR Coils & Sheets 2. Plates

SEMIS

OTHER PRODUCTS

1.Structurals

1.Blooms

Pig Iron

2. Wheels, Axles & Wheel Sets

2.Billets

3.Slabs

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 6. Bars, Rods & 5. M S Arch

Coils, GC Sheets: SAIL JYOTI Tin Plates Electrical Steel

Rebars: SAIL TMT 7. Wire Rods 5. PIPES

4.3 PLANTS OF SAIL

SAIL Integrated Steel Plants Rourkela Steel Plant (RSP) in Orissa set up with German collaboration (The first integrated steel plant in the Public Sector in India, 1959) Bhilai Steel Plant (BSP) in Chhattisgarh set up with Soviet collaboration (1959) Durgapur Steel Plant (DSP) at Durgapur, West Bengal set up with British collaboration (1965) Bokaro Steel Plant (BSL) in Jharkhand (1965) set up with Soviet collaboration (The Plant is hailed as the countrys first Swadeshi steel plant, built with maximum indigenous content in terms of equipment, material and know-how) IISCO Steel Plant (ISP) at Burnpur, West Bengal

Special Steel Plants Steel Authority of India Limited (SAIL), Kanpur, Uttar Pradesh Alloy Steels Plants (ASP), Durgapur, West Bengal Salem Steel Plant (SSP), Tamil Nadu Visvesvaraya Iron and Steel Limited (VISL), at Bhadravathi, Karnataka

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Subsidiaries Maharashtra Elektro-smelt Limited (MEL) in Maharashtra

4.4 MAIN ACTIVITIES

A. It produces both basic and special steels for domestic construction, engineering, power,

railway, automotive and defence industries and for sale in export markets. B. SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanized sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels

C. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. D. SAIL's wide range of long and flat steel products is much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) that transacts business thorough International trade Division. E. SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated steel plants. F. With technical and managerial expertise and know-how in steel making gained over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide.

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G. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry.

4.5 OWNERSHIP AND MANAGEMENT

Steel Authority of India Limited is a public sector Undertaking. The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its Maharatna status, enjoys significant operational and financial autonomy.

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33

4.6 INTERNATIONAL TRADE DIVISION

International Trade Division (ITD) of SAIL at New Delhi an ISO 9001:2000 accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated steel plants. Ever ready to meet the exacting demands of its global customers, ITD maintains a close liaison with customers and the production units to cater to the customized requirements of its customers both in terms of quality and sizes. Its major products are also covered by stringent certifications such as CE marking, TUV and U mark required by sophisticated end uses in European markets. ITD has. The critical function of ensuring efficient shipment of export materials is performed by Transport & Shipping Division (T&S) Headquartered at Kolkata. T&S has branch offices at Haldia, Paradip and Vizag ports. ITD exports steel products mentioned below via its joint venture service centre Rails, Structurals, Merchant Products, Wire Rods, Re-bars, Plate Mill Plates, Hot Rolled Coils, Hot Rolled Plates / Sheets, Cold Rolled steels, Cold Rolled Non Oriented (CRNO) coils, Chequered Plates, Slabs, Billets and Pig Iron.

Steel Authority of India Limited has successfully implemented its Export potential in the following markets: Japan, P.R. of China, Korea, Taiwan, Vietnam, Philippines, Singapore, Malaysia, Nepal, Bangladesh Thailand, Sri Lanka Indonesia,

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Australia, Europe

4.7 SAIL CORPORATE PLAN 2012

SAILs newly announced Corporate Plan 2012 sets out the blueprint for this growth plan. According to an official of the company, a major factor that prompted formulation of Corporate Plan 2012 was the continual improvement in operating efficiency achieved by the company. As pointed out by the Chairman in many forums, exceeding rated shop capacity has become more of a norm rather than exception in the SAIL plants, he says. Also, the culture of cost reduction and improvement in business processes has helped the company build up its internal resources which will contribute to achievement of the growth plan. For realistic accomplishment of targets set, the plan has been split into two stages Stage 1 pertaining to the period up to 2006-07 and Stage 2 up to 2011-12. The plan defines the following key strategic goals for SAIL: To continue in the business of steel and steel-related activities To enhance market share in growth segments To improve profits by cost reduction and high value added products To achieve excellence in quality across the value chain To secure availability of key raw materials, and alleviate infrastructure bottlenecks which may constrain long-term growth To build customer-centric processes, systems, structure and procedures A significant feature of the plan is that it covers the 11th Five-year Plan period.

4.7.1 PRODUCTION
Corporate Plan 2012 envisages production of hot metal from the integrated steel plants of SAIL reaching an aggregate level of about 20 MT per annum by 2011-12 against the current level of 13 MT. This would be achieved through optimal utilization of assets coupled with marginal capacity expansion. Plant-wise breakup of hot metal production would be as follows: The envisaged growth in volumes is to be achieved by: Realisation of full potential of existing assets Do-bottlenecking Linked facilities for value addition Capacity enhancement in growth segments

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Based on the above, crude steel production by SAIL is planned to reach a level of 18.7 million tonnes per annum (MTPA) by 2012 from the current level of 11.83 MT, leading to saleable steel production of 17.38 MTPA against the level of 10.73 MT achieved in 2003-04. In view of emerging market requirements, SAIL has also planned to raise its output of finished steel to 16.6 MTPA by 2011-12 from the current level of 8.6 MT, and reduce generation of semi-finished steel from 20% of saleable steel to 5%. This will enable inclusion of more value-added products in the companys product basket. Broadly, this would enable SAIL to achieve 30% market share in flat products and 23% in longs by 201112.

4.7.2 INVESTMENT
SAIL has estimated that the measures to be taken to achieve the targeted levels of growth and sustain higher levels of cost and quality competitiveness will require investment in the region of Rs.25, 000 crore by 2011-12. The immediate priority schemes, to be taken/completed by 2006-07, have been estimated to be around Rs.4, 300 crore. The capital expenditure envisaged will be financed mainly through internal accruals, and will be supplemented by market borrowing if the need arises. Care will be taken to ensure that the companys debt-equity ratio attains, and is maintained at, a level of 1:1. The plan for capital expenditure covers up gradation/modernization of some existing assets as well as installation of some new facilities. The areas broadly identified for investment pertain to: Development of iron ore mines Rebuilding Coke Oven Batteries as BSP, DSP and RSP Revamping of iron & steel making facilities at BSP, DSP and BSL Installation of one blast furnace at RSP Installation of auxiliary fuel injection systems in all blast furnaces in a phased manner Installation of new finished mills Among new finished mills planned to be set up are: BSP: Thin slab casting/inline Hot Strip Mill (1.1 MT), Bar & Rod Mill (1MT), Pipe Plant (0.2 MT) DSP: Bar & Rod Mill (1.4 MT), Structural Mill (0.4 MT) RSP: Plate Mill (0.7 MT), CRNO Mill (0.075 MT) BSL: Hot Strip Mill (2.5 MT), CRM Line (0.6 MT)

4.7.3 RAW MATERIALS

The growth plan and achievement of quality/cost competitiveness of SAIL to a significant extent will hinge on the availability, quality and cost of key inputs like coal and iron ore. SAIL has the largest iron ore mining operations in India. To enable production of around 20 MT of hot metal by 2012, substantial development of mines to increase the iron ore production to a level of around 33

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MT, including 6-7 MT of lump ore, will have to be taken up, sources said. To meet the requirement, SAIL has planned to adopt following strategies: Development new blocks/mines Increased production from existing mines to their potential Improving the quality of iron ore by suitable beneficiation Achieving operating efficiencies by economic scale of operations

4.7.4 IMPLEMENTATION
Corporate Plan 2012 has considered the following major risk factors in achievement of the targeted growth have been identified as Declining global steel demand and prices Constraints in availability, and cost of critical raw material like coking coal, iron ore, etc. Infrastructure constraints, viz. ports, railways, etc. These factors will be reviewed proactively and timely interventions will be ensured. Steel being a universal intermediary, its demand is driven by economic growth and the expansion trajectory of the industrial sector. The growth trajectory (reflected in terms of percentage of GDP growth) is essentially a range based on macro-economic parameters, government policies and global economic trends. While drawing up Corporate Plan 2012, conservative market growth projections have been considered. However, while the growth trends and macro indicator present opportunities for the companys higher growth potential; major risk factors have also been taken into consideration like decline in global steel demand and prices, nonavailability/cost of major input materials like coal, etc. Therefore, in any case, SAILs plans may have to be revised from time to time, depending on the market growth, competition, international situation, change in countrys policies, resources availability, etc.

4.8 JOINT VENTURES AND MOU

SAIL has promoted joint ventures in different areas ranging from power plants to e-commerce:
A. NTPC SAIL Power Company Pvt. Ltd (NSPCL) A 50:50 joint venture between Steel Authority of India Ltd. (SAIL) and National Thermal Power Corporation Ltd. (NTPC Ltd.); manages the captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 314 megawatts (MW). It has installed additional capacity by implementation of 500 MW (2 x 250 MW Units) power plant at Bhilai. The commercial generation of 1st Unit has commenced in April2009 and the 2nd Unit in October 2009

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B. Bokaro Power Supply Company Pvt. Limited (BPSCL) This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in January 2002 is managing the 302-MW power generating station and 660 tonnes per hour steam generation facilities at Bokaro Steel Plant. BPSCL has proposed to expand its capacity by installing 2x250 MW coal based thermal unit at Bokaro. In addition, construction activities are underway for installation of 9th Boiler (300T/Hr) & 36 MW Back Pressure Turbo Generator (BPTG) project at Bokaro. C. Mjunction Services Limited A 50:50 joint venture between SAIL and Tata Steel formed in 2001. This company promotes e-commerce activities in steel and related areas. Newly added services include e-Assets sales, Events & Conferences, Coal Sales & Logistics, Publications etc... D. SAIL-Bansal Service Centre Ltd. SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a service centre at Bokaro with the objective of adding value to steel. E. SAIL&MOIL Ferro Alloys (Pvt.) Limited SAIL has incorporated a joint venture company with M/s Manganese Ore (India) Ltd on 50:50 basis to produce Ferro-manganese and silico-manganese required for production of steel: MOU POSCO to establish strategic alliance for cooperation in a wide range of business & commercial interest areas. Pursuant to this, another MoU has been signed for joint venture initiative in the area of (a) manufacture & commercialization of CRNO; & (b) Exploration of upstream & downstream opportunities in utilizing FINEX technology by both the companies. Rashtriya Ispat Nigam Ltd. (RINL) - To jointly explore and develop low silica Limestone mines in the Sultanate of Oman. . Shipping Corporation of India Ltd (SCI) To set up a joint venture which will provide shippingrelated services to SAIL for imported coking coal and also participate in worldwide dry bulk shipping trade. Government of Kerala (GOK) To revive the existing facilities at Steel Complex Ltd in Calicut owned by the state government, and also set up, develop and manage a TMT rolling mill of 65000 MT capacity along with balancing facilities and auxiliaries. Larsen & Toubro Ltd (L&T) To jointly set up, develop, manage and own captive/independent power plant(s) at suitable location/s to meet future power requirements of SAIL including opportunities to own captive thermal coal blocks to cater to the power plants requirements..

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4.9 SAILs FINANCIAL PERFORMANCE FY 2010-11

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4.9.1. NET SALES (Rs. Crore)

The net sales have been fell down in year 09-10 after a fair growth in year 08-09, but as per the recent scenario is concerned, the net sales 4.9.2 EARNING BEFORE INTEREST, DEPRECIATION AND TAX (in Rs. Crore)

The earnings before interest, tax and depreciation is showing the declining trends in the recent years, after a good uprising in year 08-09 4.9.3 EARNING AFTER TAX

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Earnings after tax is declining is well like earnings before tax, after an uprising in the year 09-10 4.9.4 EARNING PER SHARE

The earnings per share is declining as far as recent financial years are concerned, FY 04-05 showing the best growth rate whereas FY 08 showing moderate growth rate.

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4.10 PLANT AND PRODUCTION WISE PRODUCT MIX

The following figure is showing the plant and production wise product mix, showing the capacity of each plant to produce each product

IISCO is having the largest capacity to produce the long products, followed by Bhillai steel plant Rourkela steel plants and Bokaro steel plant are the largest producer flat products followed by Bhillai steel plant Durgapur steel plant have the largest capacity to produce semis followed by IISCO steel plant.

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4.11. CATEGORY WISE SALE VOLUME (%)

ANALYSIS The largest share of sale volumes is taken by the HR coil, HR plates/sheets, Skelps which has been increased in year 2011 to 37% from 34% in 2010, Followed by PM plate whose share is remained same that is 14% for both the year 2010 and 2011. The share of semis has been fallen down from 11% in 2010 to 9% in 2011, whereas share of Round and TMT as well as railways products is static at 11% and 8% respectively in both the years. 4.12 SAIL EXPANSION PLAN

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4.13 SAIL CORPORATE SOCIAL RESPONSIBILITY

Health care

Education

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5. EXPORT POTENTIAL OF BILLETS AND HOT ROLLED COILS WITH FOCUS ON MENA AND SOUTH EAST ASIA

MENA (MIDDLE EAST AND NORTH AFRICA)

The term MENA, for "Middle East and North Africa", is an acronym often used in academic and business writing. The term generally covers an extensive region, extending from Morocco in northwest Africa to Iran in southwest Asia. It generally includes all the Arab Middle East and North Africa countries. Gulf Cooperation Council (GCC), officially Cooperation Council for the Arab States of the Gulf, organization (est. 1981) promoting stability and economic cooperation among Persian Gulf nations. Its members are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In 1991 the GCC countries joined with Egypt and Syria to create a regional peacekeeping force. An aid fund was also established to promote development in Arab states; it was used to help liberate Kuwait in 1991. In 2003 GCC members eliminated tariffs on trade between member nations and established common external tariffs. They have agreed to establish a broader economic union (including a single market and currency; Oman and United Arab Emirates have opted out); a common market was established in 2008. Middle East & North Africa Steel Market at a glance The Middle East and North Africa (MENA) region is considered currently a key growth markets for the steel industry at the consumption and production alike due to the fast-expanding construction & fabrication sector. It has witnessed major transformations over the past years, as Arabian countries try to emerge from the shadows of the developed world and become more industry oriented. Over the past couple of years, the steel industry worldwide has been experiencing stunning growth and the Middle East has flourished to become major players in the steel market. The real estate sector has been at the heart of the demand, as this sector witnessed tremendous activity. Consequently, steel companies in the MENA region entered 2008 strongly, pushed by their momentum and massive profits achieved in the previous year. In 2007, Egypt and Saudi Arabia ranked 27th and 35th, respectively, among the worlds steel producing countries. These positions reflect the substantial improvements that both countries underwent over the years to enhance their steel making capabilities.

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Steel production in the MENA region has been steadily increasing over the past two decades to meet the Arab countries ever growing demand for steel. In 1990, total steel production in the Arab countries amounted to approximately 4mn tons. In 2008, steel produced by Arab countries in the Middle East and North Africa amounted to 15.5mn tons. Steel manufacturers in Arab countries are exerting efforts to integrate and consolidate their position in the face of a growing worldwide industry trend of mergers and acquisitions. There are 67 steel plants in the Arab region. The demand for steel is rising at five to six per cent every year. It is predicted that half of the world's steel production will be done in Arab countries by 2012 and Arab countries succeed in keep up with worldwide development in the steel industry. The MENA region is considered to be among the top five locations in the world to establish a steel factory, due to a favorable environment and relatively cheap energy prices.

5.2 STEEL SCENARIO IN MENA

World Steel Association data shows that Global Crude Steel Production fell by 7% in 2009, or by 21% with Chinese growth excluded. Production in the Middle East increased by 6% in 2009, driven by a 9% increase in Iranian output while production in North Africa fell 12% leading to production across the region as a whole remaining unchanged. 2010 saw output in the Middle East increase by 11% while that in North Africa rose by 18% with 2011 seeing Middle Eastern production rise a further 7% with North African output falling by 15% following extensive unrest.

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5.2.1 MENA crude steel production

ANALYSIS The annual production of the crude steel in MENA is rising at the faster rate, showing the increased demand of the steel 5.2.2 Export of steel to MENA Combined exports of Steel Mill Products (semis, long & flat products, tubes) to the MENA region reached a record 48 million tonnes in 2008. While exports to the countries of the Middle East fell 22% in 2009 those to North African countries rose by 35% leading to only a 9% fall in the total shipped to the region as a whole. 2010 saw exports to the MIddle East rise just 7% on 2009 levels while exports to North Africa fell back 30% meaning that total exports to the region decreased a further 6%. 2011 saw exports to the region fall a further 6% to 40 Mt, including those to North Africa down by 13%.

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ANALYSIS The year wise analysis shows that the export of the steel mills to Middle East has been declined as compared to year 2008 Similarly the year wise analysis shows that the export of steel mills has been declined as compared 2009 in north African region. The quaterly analysis of the year 2011 shows that the export of the steel mills products is increasing gradually in both in middle east and north African region. The growth of the export potential in middle east is growing at more faster rate than north africa

5. PRODUCT INFORMATION
Before going into the export potential we should be clear about the product, its manufacturing process, its types, and its performance in the world steel industry

5.1 BILLETS
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Raw steel cannot be of use while in its pure form, thus it has to be cast into shape. The freshly made steel, which is still in the form of a metal bar or rectangle, is called steel billet . Steel billets became popular in the early 1800s, just after the British colonization of the United States ended and American entrepreneurs began to manufacture brass and bronze billet, which later became one of the fast-rising industries in the new country. Copper and iron were almost not to be found in the United States back then, as the British transported all American copper to Britain for further molding and processing. Steel billets have distinct characteristics as compared with already furnished steel bars and products. Billets have a specific grain structure, which enables the metal to be processed more intricately. Steel billets are also known for their malleability and ductility, especially when exposed to varying temperatures during shaping and molding. Billets or ingots are not of practical use until they have been formed into more functional shapes and sizes. While they have already been put in the furnace, they still require a series of shaping and molding procedures such as hot and cold working, milling and cutting before they are sold in hardware stores, or used for different applications. The unformed billets, however, can be used in striking currency such as coins and as reserves, similar to gold bars. Steel billets are considered fresh and raw, and they must undergo a series of manufacturing processes before they can be used for various purposes. Billets are made by means of freezing molten liquid, and are later exposed to extremely low temperatures in order to allow the metal to take shape and solidify in chemical structure. The temperature manipulates the metal's physical properties, and tones its strength and durability. The subsequent processes provide the metal's curved mold design so that it can fit the allotted space provided by other machines, which complete the finishing procedures Steel billets result from the second stage of the steel production process. They are hot-rolled or forged from an ingot or strand cast. Smaller and longer than a bloom, billets are usually a square cross section less than 36 square inches. They are used for the manufacture of all 'long' steel products such as bars, rods, pipes, tubes, wire and wire products.

5.1.1 MANUFACTURING PROCESS

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1. Ladle 2. Stopper 3. Tundish 4. Shroud 5. Mold 6. Roll support 7. Turning zone 8. Shroud 9. Bath level 10. Meniscus 11. Withdrawal unit 12. Slab A. B. C. D. E. Liquid metal Solidified metal Slag Water-cooled copper plates Refractory material

Molten metal (known as hot metal in industry) is tapped into the ladle from furnaces. After undergoing any ladle treatments, such as alloying and degassing, and arriving at the correct
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temperature, the ladle is transported to the top of the casting machine. Usually, the ladle sits in a slot on a rotating turret at the casting machine; one ladle is 'on cast' (feeding the casting machine) while the other is made ready, and is switched to the casting position once the first ladle is empty. From the ladle, the hot metal is transferred via a refractory shroud (pipe) to a holding bath called a tundish. The tundish allows a reservoir of metal to feed the casting machine while ladles are switched, thus acting as a buffer of hot metal, as well as smoothing out flow, regulating metal feed to the molds and cleaning the metal. Metal is drained from the tundish through another shroud into the top of an open-base copper mold. The depth of the mold can range from 0.5 to 2 metres (20 to 79 in), depending on the casting speed and section size. The mold is water-cooled to solidify the hot metal directly in contact with it; this is the primary cooling process. It also oscillates vertically (or in a near vertical curved path) to prevent the metal sticking to the mold walls. A lubricant can also be added to the metal in the mold to prevent sticking, and to trap any slag particles including oxide particles or scalethat may still be present in the metal and bring them to the top of the pool to form a floating layer of slag. Often, the shroud is set so the hot metal exits it below the surface of the slag layer in the mold and is thus called a submerged entry nozzle (SEN). In some cases, shrouds may not be used between tundish and mold; in this case, interchangeable metering nozzles in the base of the tundish direct the metal into the moulds. Some continuous casting layouts feed several molds from the same tundish. In the mold, a thin shell of metal next to the mold walls solidifies before the middle section, now called a strand, exits the base of the mold into a spray-chamber; the bulk of metal within the walls of the strand is still molten. The strand is immediately supported by closely spaced, water cooled rollers; these act to support the walls of the strand against the ferrostatic pressure (compare hydrostatic pressure) of the still-solidifying liquid within the strand. To increase the rate of solidification, the strand is also sprayed with large amounts of water as it passes through the spray-chamber; this is the secondary cooling process. Final solidification of the strand may take place after the strand has exited the spray-chamber. It is here that the design of continuous casting machines may vary. This describes a 'curved apron' casting machine; vertical configurations are also used. In a curved apron casting machine, the strand exits the mold vertically (or on a near vertical curved path) and as it travels through the spray-chamber, the rollers gradually curve the strand towards the horizontal. In a vertical casting machine, the strand stays vertical as it passes through the spray-chamber. Molds in a curved apron casting machine can be straight or curved, depending on the basic design of the machine. In a true "Horizontal Casting Machine", the mold axis is horizontal and the flow of steel is horizontal from liquid to thin shell to solid (no bending). In this type of machine, either strand oscillation or mold oscillation is used to prevent sticking in the mold. After exiting the spray-chamber, the strand passes through straightening rolls (if cast on other than a vertical machine) and withdrawal rolls. There may be a hot rolling stand after withdrawal, in order to take advantage of the metal's hot condition to pre-shape the final strand. Finally, the strand is

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cut into predetermined lengths by mechanical shears or by travelling oxyacetylene torches, is marked for identification and either taken to a stockpile or the next forming process. In many cases the strand may continue through additional rollers and other mechanisms which might flatten roll or extrude the metal into its final shape.

5.1.2 WORLD BILLETS SCENARIO

The world steel asscociation have collected the data for the billets production export and import from all over the world on the regional basis. The following graphs are revealing the billet trade trends

A. World production of billets

production of billets (in 000' metric tonnnes)

100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 EU(27) 2007-08 2008-09 2009-10 2010-11 8209 6875 3922 5192

Other Europe 34 31 14 18

CIS 46568 40353 25607 26675

North South America America 3446 2969 1745 2270 2894 2369 1139 1509

Africa 221 187 38 43

Asia 33270 35944 26753 35212

Ocenia 62 65 57 52

World 94705 88794 59276 70971

ANALYSIS Asia is holding the leading position in billet production followed by CIS and Europe The annual production of billet in CIS has been declined in year 2008-10 followed by slight increase in production in year 2010-11 The world production of billets was showing declining trends since year 2007-10, but increased fairly in year 2010-11

B. IMPORT OF BILLETS AND SEMIS

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Import of billets and semis (000'metric tonnes)

80000 70000 60000 50000 40000 30000 20000 10000 0 EU(27) 2007-08 2008-09 2009-10 2010-11 21700 20449 10668 14741 Other Europe 4818 4662 4144 2754 CIS 520 507 299 596 North America 8328 7604 2924 5717 South America 862 1111 660 961 Africa 2641 3404 3425 1664 Middle east 6518 8370 7011 8434 Asia 21162 22664 25225 22172 World 66589 68880 54368 57094

ANALYSIS Asia is leading importer of billets followed by Europe and Middle East. But the annual import of billets in Asia have been declined in year 2010-11 Though Europe is the second largest importer of billets after Asia, the annual import of billets is showing a fair growth, making the region attractive for the billets export The world imports of billets though have declined sharply in year 2009-10 but have increased slightly in year 2010-11. C.EXPORTS OF BILLETS AND SEMIS Export of Billets and semis (in 000' metric tonnes)
80000 70000 60000 50000 40000 30000 20000 10000 0 EU(27) 2007-08 2008-09 2009-10 2010-11 15684 15075 9104 10815 Other Europe 292 2652 2632 3902 CIS 28272 30367 26133 28222 North South America America 3897 4739 2479 4168 5689 5943 4994 5361 Africa 220 143 462 245 Middle east 27 56 48 69 Asia 13844 9727 8466 7812 World 67928 68719 54350 60619

ANALYSIS
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The CIS countries are the leading exporter of the billets followed by Europe and Asia. The net export of the billets has been increased in CIS and Europe but declining in Asia in year 2010-11 The world export of the billets has declined in year 2009-10, but has recovered fairly in year 201011

5.2 HOT ROLLED COIL

Hot rolled coils are a kind of FLAT steel product produced by the hot rolling process. Generally hot rolled flat product are categorised in three forms Hot rolled sheets Hot rolled plates Hot rolled coils

5.2.1 MANUFACTURING PROCESS

Hot rolling is a metalworking process that occurs above the recrystallization temperature of the material. After the grains deform during processing, they recrystallize, which maintains an equiaxed microstructure and prevents the metal from work hardening. The starting material is usually large pieces of metal, like semi-finished casting products, such as slabs, blooms, and billets. If these products came from a continuous casting operation the products are usually fed directly into the rolling mills at the proper temperature. In smaller operations the material starts at room temperature and must be heated. This is done in a gas- or oil-fired soaking pit for larger workpieces and for smaller workpieces induction heating is used. As the material is worked the temperature must be monitored to make sure it remains above the recrystallization temperature. To maintain a safety factor a finishing temperature is defined above the recrystallization temperature; this is usually 50 to 100 C (90 to 180 F) above the recrystallization temperature. If the temperature does drop below this temperature the material must be re-heated before more hot rolling. Hot rolled metals generally have little directionality in their mechanical properties and deformation induced residual stresses. However, in certain instances non-metallic inclusions will impart some directionality and workpieces less than 20 mm (0.79 in) thick often have some directional properties. Also, non-uniformed cooling will induce a lot of residual stresses, which usually occurs in shapes that have a non-uniform cross-section, such as I-beams and H-beams. While the finished product is of good quality, the surface is covered in mill scale, which is an oxide that forms at high-temperatures. It is usually removed via pickling or the smooth clean surface process, which reveals a smooth surface. Dimensional tolerances are usually 2 to 5% of the overall dimension.

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Hot rolled mild steel seems to have a wider tolerance for amount of included carbon than cold rolled, making it a bit more problematic to use as a blacksmith. Also for similar metals, hot rolled seems to typically be more costly. TYPES OF HOT ROLLED COILS Hot Rolled Oiled Coils: Hot Rolled Coils are provided with a special oil treatment to avoid scaling and rusting.Hot Rolled Oiled Coils having a high coating ability, weld-ability and a glossier finish. Hot Rolled Skin Pass Coils: Skin-passed rolling process is done after the steel coils are hot rolled. The skin passed process produces a smooth surface, and makes the thickness of the coil uniform, reducing the yield-point phenomenon. Hot Rolled Black coil: These coils are made from quality mild steel and having black texture Hot Rolled Heavy Thickness Coils: Hot rolled heavy thickness coils are the coils having the thicker dimension ranging from 6mm to 20 mm. Hot Rolled Pickled Coils: The pickling process of HR coils involves a 4 stage acid bath to remove the oxidized scratches and improve the surface quality of steel. HR Pickled Coils have increased formability, coating ability and weldability than regular HR Coils.

5.2.2 WORLD HOT ROLLED COIL SCENARIO

The given graph, as per the data collected by the world steel association, is showing the production scenario of the hot rolled flat products, including hot rolled coils, hot rolled sheets and hot rolled strips. The approximate production of the hot rolled coil can be estimated by looking at the overall production of hot rolled flat products

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A.production of hot rolled flat product

production of hot rolled flat product (in 000'tonnes)

800000 700000 600000 500000 400000 300000 200000 100000 0 EU(27) 2008-09 2009-10 2010-11 104992 73673 84073 North America 78536 49994 70072 South america 20148 16338 19572 Africa 5439 1152 1637 Asia 448142 437779 523646 Ocenia 4308 3021 4399 World 665381 581957 703399

ANALYSIS Asia is the leading producer of the hot rolled flat products, followed by Europe and North America. Asia is showing remarkable growth in hot rolled flat production in year 2010-11, where as North America is showing fair and Europe is showing slight growth in the same. World production of hot rolled flat products have been increased in 2010-11 after deline in the year 2009-10

B. EXPORT OF HOT ROLLED COILS AND SHEET The world export of the hot rolled coils and sheets is shown in the given graph. The approximate share of the hot rolled coils can be estimated by looking at the total export of the hot rolled coils and sheets

Export of hot rolled coils and sheets (in 000' tonnes)

70 60 50 40 30 20 10 0 2006-07 2007-08 2008-09 2009-10 2010-11

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ANALYSIS Since year 2006, the export of the hot rolled coil and sheet showing the declining trends till year 2009-10, but has increased in year 2010-11. From the above graph, we can conclude that the overall export of the export of the hot rolled coil has been increased in year 2010-11

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6. EXPORT POTENTIAL OF BILLETS AND HOT ROLLED COILS WITH FOCUS ON MENA
MENA (MIDDLE EAST AND NORTH AFRICA)
The term MENA, for "Middle East and North Africa", is an acronym often used in academic and business writing. The term generally covers an extensive region, extending from Morocco in northwest Africa to Iran in southwest Asia. It generally includes all the Arab Middle East and North Africa countries. Gulf Cooperation Council (GCC), officially Cooperation Council for the Arab States of the Gulf, organization (est. 1981) promoting stability and economic cooperation among Persian Gulf nations. Its members are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In 1991 the GCC countries joined with Egypt and Syria to create a regional peacekeeping force. An aid fund was also established to promote development in Arab states; it was used to help liberate Kuwait in 1991. In 2003 GCC members eliminated tariffs on trade between member nations and established common external tariffs. They have agreed to establish a broader economic union (including a single market and currency; Oman and United Arab Emirates have opted out); a common market was established in 2008. Middle East & North Africa Steel Market at a glance The Middle East and North Africa (MENA) region is considered currently a key growth markets for the steel industry at the consumption and production alike due to the fast-expanding construction & fabrication sector. It has witnessed major transformations over the past years, as Arabian countries try to emerge from the shadows of the developed world and become more industry oriented. Over the past couple of years, the steel industry worldwide has been experiencing stunning growth and the Middle East has flourished to become major players in the steel market. The real estate sector has been at the heart of the demand, as this sector witnessed tremendous activity. Consequently, steel companies in the MENA region entered 2008 strongly, pushed by their momentum and massive profits achieved in the previous year. In 2007, Egypt and Saudi Arabia ranked 27th and 35th, respectively, among the worlds steel producing countries. These positions reflect the substantial improvements that both countries underwent over the years to enhance their steel making capabilities.

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Steel production in the MENA region has been steadily increasing over the past two decades to meet the Arab countries ever growing demand for steel. In 1990, total steel production in the Arab countries amounted to approximately 4mn tons. In 2008, steel produced by Arab countries in the Middle East and North Africa amounted to 15.5mn tons. Steel manufacturers in Arab countries are exerting efforts to integrate and consolidate their position in the face of a growing worldwide industry trend of mergers and acquisitions. There are 67 steel plants in the Arab region. The demand for steel is rising at five to six per cent every year. It is predicted that half of the world's steel production will be done in Arab countries by 2012 and Arab countries succeed in keep up with worldwide development in the steel industry. The MENA region is considered to be among the top five locations in the world to establish a steel factory, due to a favorable environment and relatively cheap energy prices.

6.2 STEEL SCENARIO IN MENA

World Steel Association data shows that Global Crude Steel Production fell by 7% in 2009, or by 21% with Chinese growth excluded. Production in the Middle East increased by 6% in 2009, driven by a 9% increase in Iranian output while production in North Africa fell 12% leading to production across the region as a whole remaining unchanged. 2010 saw output in the Middle East increase by 11% while that in North Africa rose by 18% with 2011 seeing Middle Eastern production rise a further 7% with North African output falling by 15% following extensive unrest.

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6.2.1 MENA crude steel production

ANALYSIS The annual production of the crude steel in MENA is rising at the faster rate, showing the increased demand of the steel 6.2.2 Export of steel to MENA Combined exports of Steel Mill Products (semis, long & flat products, tubes) to the MENA region reached a record 48 million tonnes in 2008. While exports to the countries of the Middle East fell 22% in 2009 those to North African countries rose by 35% leading to only a 9% fall in the total shipped to the region as a whole. 2010 saw exports to the MIddle East rise just 7% on 2009 levels while exports to North Africa fell back 30% meaning that total exports to the region decreased a further 6%. 2011 saw exports to the region fall a further 6% to 40 Mt, including those to North Africa down by 13%.

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ANALYSIS The year wise analysis shows that the export of the steel mills to Middle East has been declined as compared to year 2008 Similarly the year wise analysis shows that the export of steel mills has been declined as compared 2009 in north African region. The quaterly analysis of the year 2011 shows that the export of the steel mills products is increasing gradually in both in middle east and north African region. The growth of the export potential in middle east is growing at more faster rate than north africa

6.3 EXPORT POTENTIAL IN MENA

The supply-demand imbalance between finished steel output and apparent consumption in the Middle East & North Africa (MENA) region is expected to widen in the next few years. MENAs apparent steel consumption was stagnant in 2011 due to political unrest in North Africa but should grow 8% in 2012, according to Abu Dhabi based galvanised sheet producer Al Ghurair Iron & Steel (AGIS). The Middle East has become a highly diversified market, with 74% of the UAE and 89% of Bahrains GDP being generated by non-oil sectors.

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The shortage of finished steel output against apparent steel consumption is even greater and this is expected to grow. In 2013, the regional shortage of crude steel and finished steel will be 7mt and 14.2mt respectively; this shows that there is room for expansion in these areas. Facts and Opportunities: By 2013, the regional finished product demand is forecast to grow to 85.5mn tons with raw steel production projected at over 50mn tons. This massive imbalance between supply and demand therefore means that the business opportunities for those involved in the region's steel sector is immense. Middle East and Africa Oil and Gas Pipeline Industry outlook to reach $15bn by 2012. New investments in the Arab's pipes, tubes and steel industries are expected to exceed by $20 billion between now and 2015.

The Middle East's construction sector is expected to grow at an annual rate of 3.5% through 2015, surpassing growth rates in the European and North American markets, , As more and more investment is poured into buildings, real estate and infrastructure developments

6.4 A FOCUS ON BILLET AND HOT ROLLED COIL

Before going into the details of the billet and HR coil export let us first have a look over the respective products market. As we know that the billet belong to the semi finished steel product and HR coil belongs to long product, the graph here is showing the export trends of overall long, semis, flat and tubes product

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ANALYSIS The year wise analysis shows that the overall export of the long product since 2008 has been declined in MENA, but quarterly analysis is showing the growing trends in export of the long products in 2011. The exports of the flat products showing the fluctuating trends throughout the period of 2008-11 but quarterly analysis shows the increasing trends. Similarly the overall demand of the semis has been declined as compared to the year 2008 quarterly analysis reveals that the export of semis is growing as well. 6.4.1 BILLETS Billets are the key export product to both Middle East and North Africa due to its potential to be recasted into various other finished steel products like rebar and others. Hence billets along with other semi finished steel shows a great export potential, particularly in MENA where infrastructure is on the boom. The given graph is showing the annual billets and semis imports to MENA.

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9000 8000 in (000' metric tonnes) 7000 6000 5000 4000 3000 2000 1000 0 2008-09 2009-10 2010-11 North Africa 2967 2905 1409 Middle East 8370 7011 8434

ANALYSIS The import of billets and semis has been increased in year 2010-11 in Middle East, where as imports of billets and semis has been declined sharply in North Africa Hence Middle East could be a potential destination for the exports of billets and semis in MENA. MAJOR BILLET AND SEMIS IMPORTING NATIONS IN MIDDLE EAST Though most of the countries in the Middle East are the billet importer but some of the them are showing the relatively higher share, similarly in North Africa major importing nations are few, though others are showing smaller share. Major billet and semis importing nations in MENA
3500 3000 (in 000'metric tonnes) 2500 2000 1500 1000 500 0 Algeria 2009-10 2010-11 118 1 Egypt 1315 116 Libya 158 213 Morocco 1020 664 Iran 2230 3163 Lebanon 1305 1334 SaudiArabia 527 1152

UAE 1267 1336

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6.4.2 HOT ROLLED COILS Hot rolled coil are the one of the major element in the construction, machinery, technical equipments, automobiles and other infrastructural developments The demand of HRC is increasing in the MENA region which is getting fulfilled by their own production and imports. The production trends of the flat steel products can be used as the indicator to judge the production of the hot rolled coils PRODUCTION OF HOT ROLLED FLAT PRODUCTS (in metric tonnes) Region/year Middle East North Africa 2009-10 3185 1152 2010-11 3820 1637

ANALYSIS The production of the hot rolled flat products has been increased in MENA region as compared to the year 2009-10 In north Africa also, the production of the hot rolled flat products has been increased. The data shows that the overall production is increased in MENA region, satisfying the increased demand of the hot rolled flat products including hot rolled coils. 6.4.2. (A) IMPORT OF HOT ROLLED COILS The import of the hot rolled coils can be guessed by the data given below, which shows the total import of the flat products in MENA

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import of flat products (in million tonnes)

16 14 12 10 8 6 4 2 0 2008 2009 2010 2011

ANALYSIS year 2010 shows a fair growth in the imports of the flat products, showing that the imports of the coils are growing as well. But just in 2011, the import of the flat product declined, probably due to the expansion of their plant capacity The overall import of the coils has been declined last year but grew as compared to the year 2008 6.4.2. (B) MAJOR IMPORTER OF COILS IN MENA The region which are the largest importer of the coils shown in the graph, which represent the import of the flat products in MENA. Middle east import of flat product (in metric tonnes)
2500 2000 1500 1000 500 0 Iran UAE Saudi Arabia 500 400 300 200 100 0 Algeria Eygpt Morocco

North Africa import of flat product (in metric tonnes)

ANALYSIS

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Iran is major importer of the hot rolled coils in MENA, whereas Eygpt is largest importer in North Africa in year 2009-10 These regions could serve as a great importer of the hot rolled coil as they showing growing export potential. 6.4.2. (C) EXPECTED NET IMPORT OF THE STEEL PRODUCT IN MENA

The Middle East has traditionally had a very small ratio of capacity to demand, relying heavily on imported steel to meet the demands of the construction and oil and gas sectors. However due to capacity enhancement in the steel sector (in MENA region), led a satisfactory level of production for the internal consumption. In near future MENA region will produce enough to satisfy their internal demand at least. In MIDDLE EAST the capacity/demand ratio could rise significantly in the future, as many mini-mill projects come on stream. This would foster a reduction in the regions wide steel trade deficit

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6.4.2. (D) MENA STEEL CAPACITY AND DEMAND

ANALYSIS In Africa, capacity has been greater than demand in recent years, but due to difficulties in bringing production on stream, steel output has remained lower than consumption. In the future, demand is projected to reach the regions capacity, but production will probably continue to lag and the region will remain a large net importer.

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ANALYSIS The Middle East has traditionally had a very small ratio of capacity to demand, relying heavily on imported steel to meet the demands of the construction and oil and gas sectors. However due to capacity enhancement in the steel sector (in MENA region), led a satisfactory level of production for the internal consumption. In near future MENA region will produce enough to satisfy their internal demand at least. In MIDDLE EAST the capacity/demand ratio could rise significantly in the future, as many mini-mill projects come on stream. This would foster a reduction in the regions wide steel trade deficit

6.5 SOME OF THE MAJOR INFRASTRUCTURAL PROJECTS IN THE MENA REGION

A. $4.3trn to be spent on MENA construction sector to 2020
A total of $4.3 trillion is forecast to be spent on construction in the Middle East and North Africa region over the next decade, representing growth of 80 percent. The report, sponsored by PricewaterhouseCoopers and carried out by Global Construction Perspectives and Oxford Economics, predicts growth in global construction will outpace world GDP growth over the next decade. The report, Global Construction 2020, forecasts that global construction will grow by 67 percent from $7.2 trillion to $12 trillion annually by 2020. The MENA region is expected to outpace the global growth rate, driven by population increases, economic growth, the desire for diversification and, in some cases, preparations for global sporting events, particularly the 2022 World cup in Qatar. Meanwhile, Qatar is looking to spend $70-billion to host the FIFA World Cup in 2022 as part of its wider investment to achieve its 2030 Vision. The report highlights Qatar as the fastest growing construction market. Important facilitators of construction growth in the region are expected to include changes to mortgage laws in Saudi Arabia, driving residential construction, and more private participation in infrastructure investment across the region. Mohammad Dahmash, PwC's leader of real estate, construction & engineering for the Middle East said: "Particular emphasis will be placed on social and affordable housing to meet the needs of the growing indigenous populations. "The procurement process is also getting sophisticated and many countries within the Middle East have started applying 'Build Operate Transfer' and 'Public Private Partnership' schemes which not only help in financing projects but also ensure the efficient implementation and execution to international standards."

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Charles Lloyd, PwC's head of capital projects and infrastructure for the Middle East and North Africa added: "This report shows that the MENA region is likely to continue to be a major source of growth in the global construction market. "Demographic factors, economic growth and regional Governments' pursuit of more balanced economies will all be powerful stimuli of construction demand."

B.Worlds tallest tower to be built for $1.2 bn in Saudi Arabia

Kingdom Holding , owned by Saudi billionaire Prince Alwaleed bin Talal unveiled plans on Tuesday to build the worlds tallest tower in the Red Sea port city of Jeddah, signing a 4.6 billion riyal ($1.23 billion) The proposed tower will stretch a kilometre high and include a hotel, serviced apartments, luxury condominiums and offices, Kingdom said in a statement. The tower is part of the first phase of Kingdom City, which is being built north of the Red Sea port city. The Kingdom Tower and Kingdom City, estimated to cost 75 billion riyals and to take around 10 years to complete, are among other projects to transform Jeddah into a city with high rise buildings to rival Dubai. It is said that an elevator ride from the ground to the top takes about 12-minutes, but we didnt know that the entire structure would include 59 elevators with five of those being double-deck elevators. Prince Alwaleed, a nephew of Saudi King Abdullah, said the Jeddah tower would eventually top 1,000 metres, but the final height is a closely guarded secret. Building this tower in Jeddah sends a financial and economic message that should not be ignored, Prince Alwaleed told reporters. It has a political depth to it to tell the world that we Saudis invest in our country despite what is happening around us from events, turmoil and revolutions even. When completed, the tower would replace Dubais 828-metre Burj Khalifa as the tallest tower in the world. The Burj Khalifa was built by Emaar Properties for a total cost of $1.5 billion. The Kingdom Tower is still an impressive skyscraper to look at, but well reserve judgment for when we actually see it break ground and as its floors reach into the sky.

C.Dubai-Palm like $500m resort planned off Qatar coast

Plans are afoot to build a semi-submerged extravagant resort project on the Qatar coast that will cost a massive $500 million. The Amphibious 1000, which will be built in the middle of a marine reserve, is designed by the Italian firm Giancarlo Zema Design Group. The project will feature both land and sea developments including four giant hotels with underwater rooms that resemble super-yachts.

There will also be 80 "jellyfish" self-contained floating suites, with each having four floors and an underwater "aquarium lounge". Hydrogen-powered 20 metre aluminium yachts with underwater viewing areas will transport guests around the resort. It will extend horizontally for one kilometre and it has a striking

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similarity to Dubai's Palm Island.

"It is like a big aquatic animal stretching out from the land into the sea and extends horizontally for one kilometre thanks to two long wide arms," Giancarlo Zema said. On land there will be a museum, floating walkways, a restaurant with panoramic views, exhibitions, aquariums and a glass tunnel that will lead to the underwater observatory in the centre of the marine park.

D. Dubai 2024
Dubai's bid to host the Olympics in 2024 is completely in line with the emirate's efforts to raise its international profile and emerge as a vibrant global city capable of hosting major events. Hosting the Olympics is seen as the ultimate stamp of approval and shows that a city is capable of hosting a complex global event, across multi-disciplines that bring together the city's political, economic, social and leisure capabilities to the fore. For the duration of the event, the host city would have the entire world as a captive audience and it is a once-in-a-lifetime opportunity for the city to put all its greatest attractions and capabilities on display. That sounds like something Dubai would thrive in. But while the event may give the emirate just the fillip it needs, it would also raise interesting questions on how the emirate will fund its Olympic-related investment needs. Hosting the Olympics is as much about 'hard' infrastructure and economic acceleration as it is about 'soft' stuff such as national pride and raising the host city's profile on the global scale. Dubai's decision to bid for the 2024 Olympics is bold and ambitious - and suggests that after a couple of years of lack of self-confidence, the city is once again looking to regain its status as the region's most dynamic city.

Doha's winning bid - though not without its controversy - also shows Dubai that it can be done. No Middle East country had ever hosted the Football World Cup before - the greatest single-sport event in the world and now Dubai's 2024 bid could well make it the first Middle East country to host the Olympics - the biggest sporting spectacle on earth.

Dubai needed a stimulus and a higher aspiration for the city to revive its glorious years of can-do, will-do attitude and this bid will be a leaf from the old Dubai book.

Hopefully though, this time it will not be a mad frenzy with poor legal and financial frameworks and uncoordinated financing that led to the almost-scandalous downfall in real estate and other sectors in Dubai.

A PriceWaterHouseCoopers study on Dubai's bid concludes that as much of 70% of the 'hard' infrastructure was already in place or planned, noted a National Olympic Committee of the United Arab Emirates.

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E. North Africa, a Market worth More than 30 Billion Euros

The development policies adopted by governments in the area envisage massive investments in infrastructures and tourism. The construction of more than 1 million homes is scheduled. North Africa is a market experiencing net growth and the development policies adopted by governments in the area envisage major investments in infrastructures roads, railways and tourism, not only with villages and hotels but also new ports and airports. Construction is envisaged of more than 1 million homes, business activities, prisons, schools and much more. All this creates enormous opportunities for Italian construction companies. In 2008 the construction market in Africa as a whole was worth about 167 billion Euros; in the same year, the Italian market came to around 180. In the area of French-speaking countries Algeria, Morocco and Tunisia the 2008 figure was 30.5 billion. The most recent analysis indicates growth of 4.9% in 2009 and 2010: distinctly against the trend world-wide. Algeria alone has invested 145 billion dollars over the last three years in infrastructures and a growing number of Italian companies are present on the market. The Government in Algiers recently approved a plan that will be implemented between 2010 and 2014 for the construction of popular homes, schools, hospitals, roads and railways involving an investment of 286 billion dollars. The list of projects indicated by the Government envisages the construction of schools, health facilities, popular homes, the extension and modernisation of the road and railway network in the country, ports and airports and major efforts to upgrade the water distribution and procurement network. These projects are envisaged: construction or modernisation of 5 thousand schools and 1 million university rooms, the construction of 1,500 health facilities, 2 million new homes, 80 stadiums and 400 swimming pools. 220,000 new connections to the natural gas network, especially in rural areas of the country. 35 new dams, 25 large pipelines, 34 new water depuration stations, 8 new desalination plant. 2 new urban arteries (Rocades) in Algiers, an interior motorway (Autoroute des Hauts Plateaux) parallel to the East-West motorway, of about 1,200 km, a further 830 km of motorway connections, as well as 3,000 km of new roads, modernisation and renovation work on another 8,000 km of roads. Production of 20 new fishing ports, re-qualification of 25 commercial ports and container terminals, extension of the countrys 4 main ports. Modernisation and restructuring of 10 airports. In Morocco, the development of several important infrastructural projects is well underway: construction of ports and airports, railways, roads and motorways for a state investment estimated at 10 billion. The construction of roads and motorways will see ADM (Autoroutes du Maroc) set aside 3 billion by 2015 to ensure by that date the construction of 1,500 Km of new sections of road. The railway sector, managed by ONCF (Office National des Chemins de Fer), has envisaged for its coming business plan (2009-2013) about 3 billion, a large portion of which will go to the construction of the Knitra-Tangiers high-speed section. Moreover, an investment of 1.8 million is envisaged for the development the tram system in Casablanca, Rabat-Sal and the RER line between Mohammedia and

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Nouacer. A further sum of 320 million is envisaged for the airports serving Fs, Rabat and Oujda (ONDA, Office National des Aroports).

This rapid development in the construction of homes and urban re-qualification creates enormous potential in the sector, where Italy can play a major role. Italian technology is held in very high regard and products have a good quality/price ratio. Bearing in mind the numerous projects to be completed 2010-2012, the sectors where Italy could well improve its penetration are property with new materials and the hotel field. The latter segment enjoys a cardinal role in the economic development of Morocco, given the need to meet growing demand for homes, offices and tourism facilities, as well as to develop and enhance infrastructures. The constant development of the building sector in recent years should inasmuch maintain the same rhythm for the next decade.

Libya has also seen authorities in Tripoli launch a huge infrastructural development programme (funded to a great extent by petroleum income accumulated in recent years) that is by now vital for a country recently re-opening its doors to international markets and called upon to tackle the challenges of a globalised and extremely dynamic economy. On the other hand, the recent normalisation of diplomatic relationships between Libya and the European Union continues to arouse growing interest among international investors, which is further stimulated by the encouraging economic performance.

North Africa is a promising market, yet much is still to be done for alignment with European standards. Labour is one of the discussion themes and training programs have also already been launched in these countries for the construction sector. The way ahead is long since trainers themselves have to be trained. Yet in the future it may be possible for Italian companies to operate in Morocco or Tunisia, for example, and rely on already qualified local labour aware of the safety and quality standards of Italian companies.

F. Mena Holding Group plans bond sales to fund $24bn project

Mena Holding Group, a Kuwait-based construction company, plans to take loans and sell bonds to help finance a $24.2 billion satellite city it aims to build in Egypt. The Ayaat City will be built on an area of 1.9 million sq m in October City, about 38km southwest of Cairo, and will cost us about 140 billion Egyptian pounds ($24.2 billion) over 20 years, chief executive officer Nasser Mogawer said. The city will include universities, an airport, malls, hospitals and light industries amongst many other utilities. Since this is a huge project, we cannot and will not rely solely on bank loans for financing. A number of alternatives will be used to finance including issuing bonds, selling sukuks, offering shares to the public of newly formed companies as well as forming partnerships. Some facilities, such as the airport, will be constructed in the form of a build-operate-and-transfer agreement, Mogawer said. Mena Holding, a unit of International Holding Projects Group, directly and indirectly holds about 33 percent of Egyptian Kuwaiti Holding Co., which owns the Ayaat City project.

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G. Qatar leads GCC infrastructure projects Qatar is on course to lead the Middle East Gulf region in terms of infrastructure projects for the next four years, despite a massive 22 percent drop in construction jobs last year. By 2014, Qatar would have outperformed all other GCC countries. Over the past three years, Qatar has seen massive growth that was hampered by a drop in construction last year with the sector's value falling to $7 billion. However, despite that, it is still one of the most prosperous markets in the Middle East.
The Q3 Infrastructure Report stated that "despite these figures, BMI is still optimistic that Qatar will outperform other countries in the region - in the short term, the low base effects from 2009 will drive high growth in 2010 (forecast at 17 percent year-on-year). "Over the next five years, growth is expected to average 9.9 percent between 2010 and 2014." Business Monitor International also added that its belief in Qatar stemmed from government investment plans that would see 36.9 percent of the 2010/2011 fiscal budget ($11.9 billion) allocated to major capital projects. Major infrastructure projects would include the $9 billion New Doha International Airport, the $7 billion New Doha Port project, the $13 billion Qatar-Bahrain Causeway, the $17 billion development of a national rail network, as well as a handful of power and water plants. "The country's comfortable fiscal position will enable it to continue to allocate large sums to the infrastructure sector," the report said. "Strong project finance and infrastructure business environment ratings means the country will continue to attract private investors to its infrastructure sector." The BMI noted that it was the government's support for infrastructure projects that was almost solely responsible for Qatar's growth in the sector.

6.6 MAJOR STEEL COMPANIES IN THE MENA REGION

1. EZDK - (EGYPT) EZDK (Al-Ezz Dekheila Steel Co.) is the largest steel company in Egypt and the Middle East. It lies in Dekheila, West of Alexandria, the second biggest city of Egypt and its main port. 2- Emirates Steel Industries (ESI) Emirates Steel Industries (ESI) is a wholly-owned government factory located in the Industrial City of Abu Dhabi (ICAD). It uses rolling mill technology to produce rebar for the construction industry. Established in 2001, the mill currently operates at its full design capacity of 600,000 tonnes of rebar per year. It sells 100% of its products within the UAE.ESI has achieved Quality System
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Certification from the UK Certification Authority and produces rebar conforming to BS4449/97 Grade 60 in sizes from 10m to 32mm, in lengths of 12m. The firm is on a major expansion push to increase its rolling capacity and establish the factory as a fully integrated plant.

3- Qatar Steel (QASCO) Qatar Steel was formed in 1974 as one of the first integrated steel plants in the Arabian Gulf. Commercial production began in 1978 and the company became wholly owned by Industries Qatar in 2003. Qatar Steel now has a 707,000m facility located in Mesaieed Industrial City, which includes a continuous casting plant and rolling mills with the latest automated technology. An adjacent 375,000m plot is reserved for future developments. The firm also operates a UAE-based subsidiary to meet the growing demand for high-quality steel wire-rod products within the GCC. It operates two primary facilities at its 60,000m Jebel Ali Free Zone site: an upgraded wire rod mill with an installed annual capacity of 240,000 metric tonnes and a rebar mill.

4- RAK Steel RAK Steel is a joint venture between Ras Al Khaimah Investment Authority and Middle East Traders group. The second largest rebar manufacturing mill in the UAE, it has a design capacity of 500,000 tonnes per year. RAK Steel rebar are made from pure steel billets, hot rolled in a highly automatic rolling mill and subjected to an online thermo-mechanical treatment called Quenching and Self Tempering (QST). The mill produces: 8mm, 10mm, 12mm, 14mm, 16mm, 20mm, 25mm and 32mm diameter steel deformed reinforcement bars (Rebars) to international British and American standards according to client requirements. The firm is aiming to increase its capacity by 50% by the end of this year to cater to increased local demand.

5- Sabic Metals Sabic is one of the largest and most profitable non-oil companies across the Middle East and one of the worlds five largest petrochemicals manufacturers. It is a leading steel producer in the Middle East, and the firms metals business has played a vital role in the c onstruction, development and industrialisation of the region. A number of flat and long steel products are manufactured at its production facilities. Sabic is a public company with its headquarters in Riyadh. The Saudi Arabian government owns 70% of its shares, while the remaining 30% are held by private investors across the GCC.

6- United Gulf Steel United Gulf Steel is one of the largest producers of medium section steel products in the GCC. It has a 450,000 tonnes per annum capacity facility located at Jubail Industrial City, Saudi Arabia. An ISO 9001:2000 certified companies; it manufactures medium section structural steel products. The firms product range includes a wide variety of structural steel such as IPE beams; UPE channels; equal angles; flat, square and round bars in various sizes. 7- Zamil Steel Zamil Steel Structural Steel Division is one of the largest steel fabricators in the GCC. The firm fabricates steel structures and plate works for a number of applications including high-rise

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buildings, with products including structural steel, pipe racks, ducting and equipment support structures. Saudi Arabia-based Zamil has achieved ISO 9001:2000 certification for its quality systems, plus ISO 14001 & OHSAS 18001 certifications, which have resulted in the improvements of process efficiencies and workforce safety. The Zamil Structural Steel Division is also certified by the American Society of Mechanical Engineers. 8. HADEED SABIC (SAUDI ARABIA) 9. LISCO (LIBYA) 10. SONASID (MOROCCO) 11. ARCELOR MITTAL ANNABA (ALGERIA)

6.7 INDIA- GCC FTA

India and the Gulf states are moving in the right direction to conclude a free trade agreement (FTA) for boosting comprehensive economic cooperation between the two sides. The pact covering goods, services and investment sectors will take economic ties between India and the GCC (Gulf Cooperation Council) nations to a higher level. Al-Rabeeah said businesses have to take the lead and work with the government. Investment and business opportunities from India in the areas of education, IT, tourism, health care, biotechnology, telecommunications and automobiles and components should be explored, While the India-GCC FTA is expected to open a billion-strong consumer market for the Gulf countries, it will also benefit India substantially as the six-member bloc controls over 45 percent of the world's recoverable oil wealth and 20 percent of gas resources. The bloc also accounts for about a fifth of the global crude output. The free trade deal, which will remove restrictive duties and push down tariffs on goods trading, is expected to provide Indian pharmaceutical and chemical industries a boost in their presence in the Gulf region. Items having export potential from India to GCC countries include food products, pharmaceuticals, machinery and transport equipment, ceramic products, apparels and clothing, cotton and woven fabrics, plastic and rubber products, essential oils, perfumery and cosmetics besides iron and steel articles. The potential sectors for investments by Indian entrepreneurs include information technology, software development, telecommunications, education, training and health care services, tourism and hotel industry, banking and financial services, oil, gas and petrochemicals, electricity, housing, road and rail network. Two-way trade between India and the GCC could exceed $130 billion by 2013-14, up from $100 billion in 2009-10,. While India-Saudi bilateral trade stood at to $21 billion in 2009-10, Indias exports to the Gulf

nation rose to $3.90 billion in 2009-10.

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Saudi Arabia pumped in FDI worth $31.5 million between April 2000 and August 2010 into the Indian economy. The main sectors that attracted the investments were electrical equipment, food processing, automobile, computer software and hardware, and telecommunications.

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7. EXPORT POTENTIAL OF BILLETS AND HOT ROLLED COILS IN SOUTH EAST ASIA
SOUTHEAST ASIA
Southeast Asia or Southeastern Asia is a sub region of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic and volcanic activity. Southeast Asia consists of two geographic regions: Mainland Southeast Asia, also known as Indochina, comprises Cambodia, Laos, Burma (Myanmar), Thailand, Vietnam and Peninsular Malaysia, and Maritime Southeast Asia, comprises Brunei, East Malaysia, East Timor, Indonesia, Philippines, Christmas Island, and Singapore

ASEAN The Association of Southeast Asian Nations is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. Its aims include accelerating economic growth, social progress, cultural development among its members, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully

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7.2 STEEL SCENARIO IN SOUTH EAST ASIA

Before going into the details of the billets and HRC trade, let us first hve a look over the steel industry of the south East Asia 7.2.1 annual crude steel production

Annual crude steel production

7000 6000 in 000' metric tonnes 5000 4000 3000 2000 1000 0 2008-09 2009-10 2010-11 Indonesia 3915 3501 3664 Malaysia 6423 5354 5694 Myanmar 25 25 25 Philippines 711 824 825 Singapore 764 664 728 Thailand 5211 3646 4145 Vietnam 2250 2700 4314

ANALYSIS Malaysia is the largest producer of the crude steel followed by Vietnam, Thailand and Indonesia. After Malaysia, Thailand was the major producer of the crude steel in year 2009-10, but the position of Thailand fell to third, caused by Vietnam in year 2010-11 In year 2008-09, almost every nation of the south East Asia is showing the fall in the crude steel production except for Vietnam and Philippines, which are showing growth. 7.2.1. (A) IMPORT OF STEEL according to the world steel associations yearbook, the south East Asian nations are in list of top 15 net importing nations, thats means that south East Asian region could be the fair destination for the steel export. Their demand for steel is increasing along with their own production of steel shows that there consumption of steel is increasing making them the net importer of the steel. The graph is showing the net import of the steel as per the year 2011

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net importof the steel 2011( in million tonnes)

12 10 8 6 4 3.8 2 0 Thailand Vietnam Indonesia Philippines Singapore Malaysia 3.1 2.6 10.9

8.3 7.3

ANALYSIS Thailand is the major steel importer in the south East Asia on current scenario basis, followed by the Vietnam, Indonesia and Philippines .Thailand is supposed to be major consumer of steel in south East Asia as the import of the steel is increasing along with the domestic production

7.3 A FOCUS ON THE BILLETS AND HOT ROLLED COILS 7.3.1 BILLETS
The import of the billets can be estimated by looking at the data for the import of the billet and semis collectively, which is presented by the world steel association. The billets and semis import to south East Asia is shown by this graphical representation 7.3.1. (A) IMPORT OF THE BILLETS AND SEMIS
4500 4000 in 000' metric tonnes 3500 3000 2500 2000 1500 1000 500 0 2008-09 2009-10 2010-11 Indonesia 2598 2093 1791 Malaysia 229 132 134 Myanmar Philippines Singapore 135 45 52 1103 914 1190 10 41 44 Thailand 3566 3837 4010 Vietnam 2276 2283 1986

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ANALYSIS Thailand is the largest importer of the billets followed by Vietnam and Indonesia. It is Thailand, among the major three billet importing nation, which is showing the growth in imports, rest are showing the declining trends Vietnam is proving itself a tough competitor of Indonesia in imports of billets 7.3.1. (B) EXPORTS OF BILLETS AND SEMIS
800 700 600 in 000' tonnes 500 400 300 200 100 0 2008-09 2009-10 2010-11 Indonesia 36 2 11 Malaysia 707 647 118 Philippines 9 2 2 Singapore 3 18 14 Thailand 182 145 220 Vietnam 396 4 1

ANALYSIS On current scenario basis Thailand is the largest exporter of the billets followed by Malaysia Singapore but in year 2008-09 Malaysia was the largest exporter of billets, and was the net exporter. Malaysia lost its position of net exporter of the billet currently by exporting only 118 mt of billets and semis The export of billets have been declined sharply in Vietnam. Whereas the billets export have been increased in Thailand.

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7.3.1.(C) FINAL ANALYSIS ON BILLETS MARKET OF SOUTH EAST ASIA south east Asia is the net importer of the billets and semis, except for Malaysia which was earlier the net exporter of the billets and semis, but currently it is also turned into the net importer. Thailand is the emerging market for billet and semis , which is showing great demand of billets and semis Indonesia is showing the declining market trends and less import, making itself less attaractive for the export.

7.3. 2 HOT ROLLED COIL

The hot rolled coil demand is increased in south east asia, but the production is declined as the need of the hot rolled coil and many of the flat products are fulfilled by the imports. 7.3.2.(A) PRODUCTION OF HOT ROLLED FLAT PRODUCTS (in metric tonnes)

4500 4000 3500 3000 2500 2000 1500 1000 500 0 2009-10 2010-11 Indonesia 2430 2407 Malaysia 1409 1366 Philippines 102 96 Thailand 3351 3820

ANALYSIS Every region except for Thailand, is showing decline in the production of the hot rolled flat products that shows the overall production of hot rolled coil is declined in the south east Asia

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7.3.2.(B) IMPORT OF FLAT PRODUCTS The trends in the import of flat products are showing that the production deficit caused by the lesser amount of the HR coil is fulfilled by the imports.

import of flat products

7000 6000 in metric tonnes 5000 4000 3000 2000 1000 0 2009-10 2010-11 Indonesia 2280 2286 Malaysia 2432 2636 Myanmar 202 225 Philippines 1182 1185 Singapore 1404 1717 Thailand 3845 6307

ANALYSIS It is very clear that the demand of the hot rolled coil is increasing as the demand for flat products is increasing in the south East Asian region Almost every region is showing increasing trends in the import of the hot rolled coils.

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7.4 MAJOR INFRASTRUCTURE PLANS IN SOUTH EAST ASIA

Despite the 1997 East Asian financial crisis which slowed down infrastructure projects all over the region, ASEAN member countries remain committed to the development of regional infrastructure. The Ha Noi Plan of Action in 1998 called for adopting the policy framework and implementation modalities by 2004 for the early realisation of the trans-ASEAN energy networks covering the ASEAN Power Grid and the Trans-ASEAN Gas Pipeline Projects. The Seventeenth ASEAN Ministers on Energy Meeting, held in Bangkok on 3 July 1999, adopted the ASEAN Plan of Action for Energy Cooperation, 1999-2004. This action plan serves as a guide to the identification, formulation and implementation of specific projects and activities in the ASEAN energy sector. The ASEAN Vision 2020, adopted in Kuala Lumpur in December 1997, lists as one of its goals the development of an integrated and harmonised trans-ASEAN transportation network. The Ha Noi Plan of Action calls for intensifying cooperation in the development of the trans-ASEAN transportation network as the trunkline or main corridor for the movement of goods and people in ASEAN, consisting of major road and railway networks, principal ports and sea-lanes for maritime traffic, inland waterway transport and major civil aviation links. At the Sixth ASEAN Transport Ministers Meeting, held in Bandar Seri Begawan on 4-5 October 2000, the ministers reviewed the progress of the transport agenda and of the sectoral negotiations for air transport and maritime transport under the ASEAN Framework Agreement on Services. ASEAN has four long-term flagship projects for integrating the regions infrastructure: the ASEAN Power Grid, the Trans-ASEAN Gas Pipe-line, the ASEAN Highway Network and the Singapore-Kunming Rail Link Projects.

ASEAN Power Grid Having rich energy resources-mainly coal, hydroelectric and gas-ASEAN offers opportunities for its member countries to develop a borderless electricity industry. This would be built by establishing electrical interconnections in an ASEAN Power Grid. ASEAN countries are speeding up the restructuring, privatisation and liberalisation of the energy sector, particularly the power-supply industry. Many ASEAN countries are progressively deregulating their electricity sectors and privatising utility assets. This activity gives them the opportunity to tap
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private funds for the huge capital requirements. A regional power grid provides considerable benefits for each ASEAN member. Among them: Improvement in the reliability and quality of electricity. This will be achieved because one ASEAN country can tap, through the interconnection, generation reserve margins, whenever these are needed. The generation reserve margin is the capacity a power plant needs to have-beyond what it needs to supply day-to-day demand-to ensure the continuous supply of electricity with the required quality. Inter-connection between ASEAN countries would allow them to tap each others power supply in emergencies and disturbances. Economic benefits. Interconnection will also enable ASEAN countries to share reserve margins. Consequently, one specific ASEAN state can defer capital investment for new generating facilities, because it can operate at a lower reserve margin but still meet the load demand at a high reliability and security of supply. Interconnection will also allow the use of large or small generators because power is distributed over a much larger system. Such economies of scale can be used to optimise investment. The cost of generating electricity will also be reduced, since the interconnection can provide the energy requirements at peak loads. Without such source of power at peak periods, a country would have to build expensive peaking plants, or generators that can start up quickly but which produce expensive power. Since the peak load can be met by power bought through the interconnection, a countrys production plants can run on the base load scheme, which gives a more efficient energy output, and consequently a lower generating cost. Interconnection will also allow commercial export and import of power among the interconnected countries. The beginning of an ASEAN Power Grid preceded ASEANs establishment in 1967, when the Lao Peoples Democratic Republic and Thailand agreed in 1966 to exchange electric power. This was followed by bilateral agreements for power exchange among Thailand, Malaysia and Sing-apore in 1978. The agreements involved two major interconnections. One was between Thai-lands Electricity-Generating Authority and Malaysias Tenaga Nasional Berhad (TNB). The other was between TNB and Singapores Power Grid, Ltd. ASEAN made the first big push for developing power grid in 1981, when it set up its forum of the Heads of ASEAN Power Utilities/ Authorities (HAPUA) to study interconnection projects. This led to the formation in 1982 of the ASEAN Co-operation Project on Interconnection. In its

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yearly meetings since 1981 HAPUA has gradually firmed up the plan for an ASEAN Power Grid, especially at its fifteenth meeting in April 1999. The Seventeenth ASEAN Energy Ministers Meeting, held in Bangkok on 3 July 1999, adopted the ASEAN Plan of Action for Energy Cooperation, 1999-2004, which set as a major goal the eventual establishment of the ASEAN Power Grid. HAPUA is now working on 14 interconnection projects to initiate the regional grid system. To this end, HAPUA has considered establishing a joint-venture company to provide equity investment and carry out ASEAN interconnection projects. An ASEAN Interconnection Master Plan Study Task Force within HAPUA is working on the technical aspects of the ASEAN Power Grid that will result from these interconnections. Two of these projects have been carried out and are operating: Peninsular Malaysia-Thailand Interconnec-tion. Commissioned in 1981, the interconnection is between Malaysias Tenaga Nasional Berhads Bukit Ketri substation in Northern Peninsular Malaysia and Thailands Electricity-Generating Authoritys Sadao substation in Southern Thailand. The interconnection allows a maximum power transfer of 80 megawatts, which has optimised both power systems production costs. It has also enabled the two power firms to help each other during emergencies on several occasions. In 1988 the Malaysian power firm and its Thai counterpart did a feasibility study for upgrading this connection. In 1994 the two firms agreed to install a more modern form of interconnection (the HVDC technology) that would raise power transfer from 80 megawatts to 300 megawatts, upgradeable to 600 mega-watts. This project is being carried out and is expected to be finished this year. The Peninsular Malaysia-Singapore Interconnection. Commissioned in 1985, the interconnection is between Singapores Power Grids Senko Power Station and Malaysias Tenaga Nasional Berhads Plentong substation in Southern Peninsular Malaysia. The interconnection has improved the resilience of the two power systems and has enabled them to help each other on several occasions. Encouraged by its experience of these two projects, ASEAN has identified criteria for future connections:

The interconnection should not completely replace the capacity of each countrys own

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generation, unless its plan is to undertake long-term supply contracts.

Although the interconnection is oriented toward the present status of the system, it must provide for a rise in future demand.

The interconnection should safeguard against the spread of a disturbance in one system to the other.

What would have been one of the biggest projects for the ASEAN Power Grid was the interconnection between Sarawak and Peninsular Malaysia, through the Baukun Hydroelectric Project. Deferred due to the economic downturn in 1997, the Baukun project is now being revived. The 11 other interconnection projects that would make up the ASEAN Power Grid still require feasibility studies or identification of funding sources. These are the interconnections between Singapore and Batam Island in Indonesia; Sarawak and West Kalimantan; southern Philippines and Sabah; Sarawak, Sabah and Brunei Darussalam; Thailand and the Lao Peoples Democratic Republic; Lao PDR and Viet Nam; Thailand and Myan mar; Viet Nam and Cambodia; Lao PDR and Cambodia; and Thailand and Cambodia. The Trans-ASEAN Gas Pipeline The Trans-ASEAN Gas Pipeline is one of ASEANs most important infrastructure projects. In July 1999 the Senior Officials Meeting on Energy and the Se venteenth ASEAN Energy Ministers Meeting approved a plan of action to establish the Trans-ASEAN Gas Pipeline. The project is part of ASEANs Plan of Action on Energy Cooperation for 1999 -2004. The two major aims of the Trans-ASEAN Gas Pipeline are: 1. To ensure the reliability of gas supply for ASEAN member countries. This is important because of estimates that ASEANs gas demand will treble from the year 2000 to 2010. 2. To encourage the use of environment-friendly fuel. 3. Experts on energy note that abundant gas resources in the ASEAN region remain to be explored or developed. The development of a Trans-ASEAN Gas Pipeline will attract multinational companies to invest in gas exploration.

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4. The availability of gas made possible through a Trans-ASEAN Gas Pipeline would reduce the regions dependence on crude oil. As a first step in building a Trans-ASEAN Gas Pipeline (TAGP), ASEAN has organised a TAGP Task Force under the ASEAN Council on Petroleum (ASCOPE). Malaysia has been designated the overall lead coordinator of the task force, to be supported by country coordinators and leaders of expert working groups. The TAGP would gradually build up and then link each ASEAN countrys gas pipeline. The ASEAN Council on Petroleum has agreed on a Plan of Action for the task force. The final draft of a master plan for the Trans-ASEAN Gas Pipeline will be finalised by 2001.

The ASEAN Highway Network Project The Fifth ASEAN Transport Ministers meeting in Ha Noi in September 1999 signed the Ministerial Understanding on the Development of the ASEAN Highway Network Project and spelled out a plan of action for this goal. And at their sixth meeting in Bandar Seri Begawan in October 2000 the ministers reviewed the progress being made. Counting each member countrys roads, ASEAN has identified the highway network: The network consists of 23 designated routes totalling 38,400 km. As a first step in transforming these highways into a network, ASEAN will come up with a route numbering system to identify each highway in the network. As embodied in the Ministerial Under-standing, the Transport Ministers agreed on a timetable to develop the ASEAN Highway Network:

Stage 1 to be completed this year: network configuration and designation of national routes.

Stage 2 to be completed in 2004: installation of road signs for all designated national routes, and their upgrading to at least Class III standards. Building missing links in the national routes and designating cross-border points.

Stage 3 to be completed in 2020: upgrading to at least Class I of all designated national routes, although Class II standards would be acceptable for low-traffic nonarterial routes.

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An ASEAN Highway Infrastructure Development Plan is being prepared to guide project preparation and the building and upgrading of priority roads over the next five to ten years.

Singapore-Kunming Rail Link Project The Singapore-Kunming Rail Link Project is the core project under the ASEAN Mekong Basin Development Cooperation initiative. A Special Working Group, chaired by Malaysia, carries out this project, which was first proposed at the Fifth ASEAN Summit in Bangkok in December 1995. The Ha Noi Plan of Action again underscored importance of this Project. With 2 million ringgit of funding support from Malaysia, a team of consultants commenced services in March 1997. At the Second Informal Summit in Kuala Lumpur, in Dec-ember 1997, the ASEAN leaders agreed that the proposed rail link should be implemented on a consortium basis, involving all ASEAN countries and that an early decision be made about its implementation. The leaders also agreed that non-ASEAN countries such as the United States and those in Europe and Japan should be invited to take part in its construction. The Feasibility Study of the Singapore Kunming Rail Link project has been completed. The study examined six routes to link Singapore with Kunming as identified by the Special Working Group on the Singapore-Kunming Rail Link Project, which met in June 1996 in Kuala Lumpur. The study covered the technical, economic and financial feasibility of the routes, environment impact, prioritised routes based on set criteria, financing options, and the appropriate implementation schedule. The consultants had recommended Route 1, as it has the shortest missing links, the highest social and economic impact and a positive internal rate of return of 6%. The consultants recommended the development of part of Route 6 that would integrate Myanmar into the rail network. The ASEAN Transport Ministers at their sixth meeting in October 2000 in Bandar Seri Begawan supported the route recommendations. This route configuration would cover seven ASEAN member countries and China. It would include the spur line from Thailand to Lao PDR to Vietnam and a link to Myanmar from Thailand. The Twenty-second ASEAN Railways General Managers Conference in October 2000 in Yangon also supported the route recommendations.

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The second Steering Committee Meeting of the ASEAN Mekong Basin Development Cooperation in October 2000 in Kuala Lumpur agreed that Malaysia would report to the Fourth Informal Summit and the ASEAN-China Summit in Sing-apore on the outcome of the feasibility study and the ASEAN Transport Ministers endorsement of the route configuration in order to seek endorsement of the ASEAN and Chinese leaders.

Other Transport Initiatives ASEAN has also undertaken initiatives to integrate its member countries other transport systems:

To complement infrastructure development and to support the implementation of the ASEAN Free Trade Area, ASEAN countries have concluded a framework agreement on the facilitation of goods in transit. Two of the nine implementing protocols have been signed-those on types and quantity of road vehicles and on technical requirements of vehicles. The ASEAN transport ministers expect to adopt and sign the final drafts of the following agreements at its seventh meeting in Malaysia next year:

ASEAN Framework Agreement on Multimodal Transport; The remaining transport-related protocols on designation of transit transport routes and facilities, railway border and interchange stations, and dangerous goods for the ASEAN Framework Agreement on the Facilitation of Goods in Transit; and

ASEAN Framework Agreement on the Facilitation of Inter-State Transport. Adoption of the ASEAN-wide network of 51 designated airports and 46 designated ports to form integral parts of the trans-ASEAN transportation network envisaged in the Ha Noi Plan of Action.

The ministers are also pushing for an ASEAN Multilateral Agreement on Air Freight Services for possible signing at their seventh meeting next year. They are eager to develop the regional framework and guiding principles for liberalising air services in ASEAN.

Telecommunications With the phenomenal growth of telecommunications in Asia, ASEAN is seeking to en-sure

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that its member countries systems help in the development of a regional infrastructure. ASEAN is working on broadband interconnectivity to ensure the interconnectivity and interoperability of the national information infrastructures of ASEAN countries. Work covers the policy and regulatory environment, universal access, technical standardisation and harmonisation, data security, intellectual property rights and cooperative applications. The aim is to ensure the seamless roaming of telecommunications services and to ease intraASEAN trade in telecommunications equipment and services. ASEAN is pursuing the development of e-ASEAN, which would pull together and integrate ASEAN members efforts in information and communications technology. The project would involve interconnectivity, with its own high-speed backbone. It would seek to harmonise policies, regulations and standards in information and communications technology within ASEAN. In October 2000 the ASEAN Telecommuni-cations Regulators Council finalised the sectoral Mutual Recognition Arrangement (MRA) for Telecommunications Equipment-to put in place the regionwide acceptance or recognition of conformity assessment procedures of telecommunications and telecommunications equipment. This sectoral MRA will be made operational after the endorsement of the ASEAN Telecommunications Ministers at their first meeting sometime in April 2001 in Malaysia. ASEAN member countries are embarking on cooperative programmes to develop telecommunications and information technology (IT) as a major growth sector for ASEANs competitiveness and to create an ASEAN Information Society, where its citizens are able to work, communicate and re-create a knowledge-based economy. More specifically, ASEAN is cooperating in policy development and programme implementation in the following areas:

Establishment of the ASEAN Information Infrastructure in the further advancement of the e-ASEAN initiative;

Facilitation of intra-ASEAN trade and investment; Coordination and harmonisation of policies and programmes; Promotion and development of indigenous content; Promotion of private-sector participation and enhancing collaboration between the public and private sectors on regional programmes and activities; and

Bridging Digital Divide within ASEAN by encouraging capacity building and human

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resource development and enhancing access to and use of telecommunications and IT.

Outlook Much remains to be done in building an integrated infrastructure system in ASEAN. But, ASEAN has laid the groundwork and the regional institutions for realising this aspiration. AUTOMOTIVE INDUSTRY The automotive industry in Thailand has shown robust growth in spite of the political turmoil in the country. It has been successful in retaining its position as the Detroit of Asia. Ford Motors insists on opening a plant in Thailand in spite of the unrest, a clear indication of continued support from the auto industry. Thai car sales increased 53.4 percent from 2009, further proving true that it is indeed Southeast Asias biggest car market. The country has a large, skilled automotive workforce besides having associated industries for auto-motive parts and components. Thai Automotive Industry Association announced a leap in domestic demand. Also the automotive and auto parts industry was responsible for a huge increase in export revenue less than only that of computer and electronic parts. This contributed considerably towards the nations GDP.

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7.5 PLANT CAPACITY AND EXPANSION

South East Asia Iron & Steel Institute said that steelmaking in the ASEAN region is basically done via the electric arc furnace route. At the moment, there is only one blast furnace plant in operation, which is in Thailand. As for iron making, Indonesia and Malaysia are the only countries in the region that have iron making facilities with combined capacity of 6 million tonnes of DRI / HBI per annum. Country Indonesia Malaysia Philippines Singapore Thailand Vietnam Total Capacity 6 1 7.9 DRI/HBI 1 3 Slab 1 1 Billet 17 7 9 1 15 >15 24.7 6 1 17.3 3 5 9.8 9 10 7.2 HRP/C 4 3 1 CRC 5 3 3 Coated 19 11 15 Long 58 30 26 1 >46 >40 49.7

In tonnes The installed capacity for roll making in ASEAN is much higher than that for steelmaking. As a result, significant quantities of billets, hot-rolled and cold-rolled coils are imported yearly as feedstock for rolling activities. In addition, the bulk of the regions requirements for high grade steel are still being met by imports, mainly to serve the automotive and electrical and electronics sectors. The region is a major importer of steel products, with total imports in 2008 amounting to 42.8 million tonnes.

In view of the above imbalance and also the good potential for steel consumption growth, the region has attracted much interest from both the regional and international iron and steel players in setting up new projects to cater for the shortfalls in supply. Many of the investment plans were, however, shelved when the global economic crisis worsened in the latter part of 2008. Nevertheless, with the world economy slowly returning to growth path, many of the projects are being reactivated and new projects planned. The followings are a summary of some of the new developments in the region.

1. Indonesia

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The construction of the iron making plant of PT MJIS (Meratus Jaya Iron Steel) in South Kalimantan, with a capacity of 315,000 tonnes per year, is in progress. It is expected to commence production in 2012. The construction of a blast furnace by PT Indofero with a capacity of 500,000 tonnes per year.

2. Malaysia Vale SA plans to establish a distribution centre for iron ore fines and palletizing plant at Teluk Rubiah in Malaysia. With deep seaport and ship size of 400K DWT, it expects to be able to handle 30 million tonnes of iron ores shipment each year and aims to expand to 90 million tonnes in the future. It aims to cover the markets in China, Middle East and to compete with Rio Tinto and BHP Billiton. It is expected to be completed by the first half of 2013.

Ann Joo Steel is in the process of building a blast furnace with a capacity of 500,000 tonnes. The process would enable the charging of hot metal into the current EAF mill and is expected to be in production by the end of this year.

A JV between Hiap Teck and Jikang Dimensi to construct a new blast furnace with a capacity of 700,000 tonnes per year. This also includes slab caster with capacity of 700,000 tonnes and a 350,000 tonnes per year capacity hot strip mill. It is expected that the first phase (blast furnace) will be completed by 2012.

A USD 1.6 billion stainless steel plant which will be 67% owned by Acerinox of Spain and 33% by Nisshin Steel of Japan. Company is registered in the name of Bahru Stainless Steel Sdn Bhd and project will be implemented in three phases. When completed in 2020, it is expected to be the largest stainless steel plant in ASEAN with 1 million tonnes melting capacity and 600,000 cold rolling capacity.

Malaysia recently saw the establishment of electro galvanized production with the commissioning of two plants namely POSCO Malaysia and Nippon Egalv Steel. The two plants have combined capacity of 250,000 tonnes.

Perwaja Steel will restart its Concast AC furnace which has a capacity of 750,000 tonnes per year and will also upgrade its CCM capability and DR plant.

3. Philippines Treasure Steelworks Corporation, a billet steelmaking plant in Mindanao Island, is constructing a

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mini blast furnace with an annual capacity of 400,000 tonnes.

4. Thailand Thailands Mill Con Steel Industries plans to invest THB 2.9 billion in a melting shop to support its long product rolling operation. Both MCSI and BRP are re rollers that do not have their own steelmaking capacity. The new EAF will provide MCSI with cost savings, increase its competiveness and reduce the risk of raw material shortages.

Japanese invested long product maker, Siam Yamato Steel, formally started commercial operation at its No 2 sections mill with 400,000 tonnes per year capacity in eastern Thailand on March 1st 2010.

TATA Steel Thailand will raise its long product capacity with the start up of a new 500,000 tonnes per year mini blast furnace plant in Chonburi, east of Bangkok. The hot metal will provide energy savings to the 70 tonnes EAF at Chonburis steel plant located adjacent to the blast furnace, while two sister plants at Rayong and Saraburi will be fed with pig iron from the mini blast furnace. The three steel plants have a combined 1.3 to 1.4 million tonnes per annum melting capacity.

5. Vietnam Shengli (Vietnam) Special Steel Company Limited, established by Shengli (Fuzhou) Group Corporation and Guangdong Metals and Minerals Import & Export Corporation (China) is located in Cau Nghn industry, Quynh Phu district, Thai Binh province, Vietnam. Total investment is USD 100 million. The steel making with capacity of 500,000 tonnes billets per year was put into operation in 2009 and the 600,000 tonnes per year bar & wire rod plant will be put into operation in 2010. The equipment include a 2 x 50 tonne EAF, 1 x 60 tonnes LF, 5 flow billet CCM and bar & wire rod hot rolling line.

POSCO VIETNAM is located at Phumy in Ba Ria Vung Tau province. The first stage of the plant has been completed and operation started in 2009. It has a capacity of 700,000 tonnes per year for cold rolled steel products and 500,000 tonnes per year for cold rolled full hard steel products used for automobile and motorbike production and construction. The second stage is the hotrolling steel plant with a capacity of 3 million tonnes per year, which is expected to be operational in 2011. As for long product, POSCO Special Steel in Phu My Industrial Park of Ba Ria Vung Tau province is investing in 1 million tonnes capacity billet centre, 700,000 tonnes per year heavy section mill and 300,000 tonnes per year bar mill.

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The Hoa Phat Integrated Steel Complex, in Hiep Son commune, Kinh Mon district, Hai Duong province, has a designed capacity of 1 million tonnes per year using traditional furnace. The main products of the Complex include steel billet and construction steel made from iron ore and coke raw materials. The project is divided into two phases with total investment of around VND 8,000 billion. The first phase, put into operation in 2009, is for production of bar and wire rod with a capacity of 350,000 tonnes per year. The second phase, with an additional 650,000 tonnes per year capacity, is for the production of steel bar, round wire rod and formed steel and is expected to start in 2010.

Thep Viet Steel Corporation, a new bar mill with a capacity of 450,000 tonnes per year, started operation in Ba Ria-Vung Tau province in 2009. Lotus Groups project at Phu My I Industrial Zone, Ba Ria Vung Tau, with total investment of up to VND 2,321 billion, consists of a production line for thick galvanizing with a capacity of 450,000 tonnes per year, a painted line capacity of 180,000 tonnes per year and five cold rolled steel production lines with a combined capacity of 1,000,000 tonnes per year. The production line of thick galvanized NOF technology will be put into commercial production in 2010.

A two million tonnes per year hot strip mill joint-venture project by VnSteel and Danieli in Phu My Industrial Park of Ba Ria Vung Tau province.

A project by Thai Trung Company to set up a 500,000 tonnes per year rolling mill for bars and wire rods.

A joint project by VnSteel and Kunming Corp. to set up a 500,000 tonnes per year billet centre in Lao Cai province.

China Steel Corporation and Sumitomo Metal is setting up a1.6 million tonnes per year cold rolling mill and 400,000 tonnes per year CGL in My Xuan A Industrial Park Ba Ria Vung Tau province.

A 700,000 tonnes per year billet centre and 500,000 tonnes per year rolling mill by VinaKyoei Steel Co Limited in Phu My Industrial Park, Ba Ria Vung Tau province.

Kobe Steel plans to set up a 2 million tonnes per year iron nugget production facility (based on ITmK3 technology) in Nghe An province.

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7.6 ASEAN INDIA FTA

ASEAN and India signed the ASEAN-India Trade in Goods (TIG) Agreement in Bangkok on 13 August 2009, after six years of negotiations. The ASEAN-India TIG Agreement entered into force on 1 January 2010. The 7th ASEAN-India Summit in Cha-am Hua Hin, Thailand on 24 October 2009 agreed to revise the bilateral trade target to 70 billion USD to be achieved in the next two years, noting that the initial target of USD 50 billion set in 2007 may soon be surpassed. ASEAN and India are currently working towards the early conclusion of the ASEAN-India Trade in Services and Investment Agreements. ASEAN and India are also working on enhancing private sector engagement. Details on the reactivation of the ASEAN-India Business Council (AIBC), the holding of the ASEAN-India Business Summit (AIBS) and an ASEAN-India Business Fair (AIBF), are being worked out by officials. On 27 April 2010, India informed the ASEAN Secretariat that the Federation of Indian Chambers of Commerce and Industry (FICCI) would be organising the ASEAN Trade and Industrial Exhibition at the Pragati Maidan in New Delhi on 8-11 January 2011, at the sidelines of the AIBF. The Fourteenth ASEAN Transport Ministers (ATM) Meeting on 6 November 2008 in Makati, Metro Manila, Philippines adopted the ASEAN-India Aviation Cooperation Framework, which will lay the foundation for closer aviation cooperation between ASEAN and India. The ASEAN-India Air Transport Agreement (AI-ATA) is being negotiated with the implementation timeline of 2011. In tourism, the number of visitor arrivals from ASEAN to India in 2006 was 277,000, while the number of visitor arrivals from India to ASEAN in 2008 was 1.985 million. At the Sixth ASEANIndia Summit held on 21 November 2007 in Singapore, India proposed to set a target of 1 million tourist arrivals from ASEAN to India by 2010. The 2nd Meeting of ASEAN and India Tourism Ministers (ATM +India) held on 25 January 2010 in Bandar Seri Begawan positively responded to Indias proposal to develop an ASEAN-India Tourism Cooperation Agreement and requested the ASEAN-India Tourism Working Group to further discuss and prepare the draft agreement. The Ministers also supported the establishment of the ASEAN Promotional Chapter for Tourism in Mumbai as an important collaborative platform for ASEAN National Tourism Organisations (NTOs) to market Southeast Asia to the Indian consumers and, at the same time, create mutual awareness between ASEAN Member States and India

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RESULTS AND FINDINGS

World crude steel production is increasing with faster pace and reached 1,527 megatonnes (Mt) for the year of 2011. This is an increase of 6.8% compared to 2010 and is a record for global crude steel production.All the major steel-producing countries apart from Japan and Spain showed growth in 2011. Growth was particularly robust in Turkey, South Korea and Italy. India has emerged as the fourth largest steel producing nation in the world, as per the recent figures release by World Steel Association in April 2011. The world production of billets was showing declining trends since year 2007-10, but increased fairly in year 2010-11. Asia is holding the leading position in billet production followed by CIS and Europe World production of hot rolled flat products have been increased in 2010-11 after deline in the year 2009-10 Asia is the leading producer of the hot rolled flat products, followed by Europe and North America. Production in the Middle East increased by 6% in 2009, driven by a 9% increase in Iranian output while production in North Africa fell 12% leading to production across the region as a whole remaining unchanged. 2010 saw output in the Middle East increase by 11% while that in North Africa rose by 18% with 2011 seeing Middle Eastern production rise a further 7% with North African output falling by 15% following extensive unrest. The import of billets and semis has been increased in year 2010-11 in Middle East, where as imports of billets and semis has been declined sharply in North Africa Iran and UAE are the largest importer of the billets and semis The production of the hot rolled flat products has been increased in MENA region as compared to the year 2009-10 but in 2011, the import of the flat product declined, probably due to the expansion of their plant capacity. Iran is major importer of the hot rolled coils in MENA, whereas Eygpt is largest importer in North Africa in year 2009-10 In Africa, capacity has been greater than demand in recent years, but due to difficulties in bringing production on stream, steel output has remained lower than consumption. In the future, demand is projected to reach the regions capacity, but production will probably continue to lag and the region will remain a large net importer. The Middle East has traditionally had a very small ratio of capacity to demand, relying heavily on imported steel to meet the demands of the construction and oil and gas sectors. However due to capacity enhancement in the steel sector (in MENA region), led a satisfactory level of production for the internal consumption. In near future MENA region will produce enough to satisfy their internal demand at least. In MIDDLE EAST the

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capacity/demand ratio could rise significantly in the future, as many mini-mill projects come on stream. This would foster a reduction in the regions wide steel trade deficit South east asia is highly emerging steel market, After Malaysia, Thailand was the major producer of the crude steel in year 2009-10, but the position of Thailand fell to third, caused by Vietnam in year 2010-11 currently Malaysia is the largest producer of the steel. the south East Asian nations are in list of top 15 net importing nations, Thailand is the major steel importer in the south East Asia on current scenario basis, followed by the Vietnam, Indonesia and Philippines .Thailand is supposed to be major consumer of steel in south East Asia as the import of the steel is increasing along with the domestic production south east Asia is the net importer of the billets and semis, except for Malaysia which was earlier the net exporter of the billets and semis, but currently it is also turned into the net importer. Thailand is the emerging market for billet and semis , which is showing great demand of billets and semis Indonesia is showing the declining market trends and less import, making itself less attaractive for the export. Every region except for Thailand, is showing decline in the production of the hot rolled flat products that shows the overall production of hot rolled coil is declined in the south east Asia. the demand of the hot rolled coil is increasing as the demand for flat products is increasing in the south East Asian region

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Bibliography
Websites www.sail.org www.livemint.com www.alibaba.com www.metalbulletin.com www.worldsteel.org www.misif.org www.arabsteel.org www.jpc.org www.steelmint.com www.wsd.org

Newspaper/ Magazines

Economic Times Mint

4Ps Business & Marketing Business World Business Outlook Metal Bulletin

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