R

CONTENT

INDUSTRY WORLD VIEW

22 Lockdown Easing
06 Mining Sector Reforms Lightens China's Steel
Need Further Detailing Inventory Load

26 ICRA Sees India's Steel

Demand Dropping by over
20% in FY21

32 Mining Policy Needs

Paradigm Shift to Holistic
Approach

EXPERTALK GUEST COLUMN

12 Saptapadi: 7 Biz Mantras in 58 ‘Steel Consumption Likely

Time of COVID-19 to be Driven by India,
China for Next Few Years’

INTERVISTA
TECHNOLOGY
Anil Kumar Chaudhary,
Chairman, SAIL Danieli's Automation Systems ‘Demand may Erode
69 16
Focusing on 3Q Concept 17-20% in H1, but Rebound
in Q3, Q4’

IMPACT

52 Big Challenges for Medium

& Small Steel Units

62 COVID-19, Reverse
Migration Setback for
Construction & Realty

INDUSTRY BUZZ 73 Pankaj Malhan,

CEO, ESL
 COVER STORY
T
By RUCHIRA SINGH he steel industry, after
experiencing an extended
demand drought, was just
beginning to rebound from
November 2019. But the
euphoria was cut short by
COVID-19 in February 2020
with sales drying up from mid-March, although
steel players had to keep producing, the
commodity being a continuous process industry.
With the onset of the lockdown, government
behemoth Steel Authority of India (SAIL) started
operating at a level of 55-60% from end-March
and is looking to further reduce operating
capacity to 40% from May. And, production level
in FY21 is slated to be lower compared to FY20.
Stocks have piled up with all the steel majors, but
SAIL is not worried about its 2 MnT inventory,
Anil Kumar Chaudhary,
Q. What is the current capacity utilisation rate at
Chairman, SAIL
SAIL? As well as the inventory level at present –
is it a worrisome issue?
A. The fortunes of the steel industry fluctuated in 2019.
We thought that things will start improving after the
General Elections were over but the global economic
slowdown followed by the trade wars between developed
countries precipitated the downturn. The domestic
economy also felt the impact of the downturn. An
extended monsoon and then the festive season in October
impeded manufacturing activities and it was only from the
middle of November 2019 that the tide started turning. We
were happy that after a lull of seven months demand
started coming back into the market. SAIL recorded a
growth of 37% in November and again 36% in January
2020.
But the dark shadow of COVID-19 started pursuing us
from February 2020. Normally, February and March are
good months for the steel industry as construction
activities pick up pace and pending infrastructure projects
are taken up. But, sales started slipping in February and
then in March. This goes for all steel producers. By the
middle of March demand dried up wholly but because
steel is a continuous process industry, we operated at a
level of 55-60% towards the end of March.
We are looking to further reduce operating capacity to
40% from May 7 onwards from around 52% capacity
40 JUNE 2020 STEEL 360 INDIA
which, it feels, can be liquidated. In fact,
SAIL Chairman Anil Kumar Chaudhary, in
a tete-a-tete with Steel360, says, in May, the
PSU is trying to achieve 60-70% of the sales
it had registered in the same month last
fiscal. With domestic demand having taken a
hit, integrated producers are focusing on
exports and SAIL is no exception with
volumes touching 1.18 MnT in FY20, a
record 54% rise y-o-y. But prices have hit
rock-bottom and Chaudhary feels, once
domestic demand picks up, it may not be
possible to export at low prices since the cost
of manufacturing will go up mainly on
account of higher contract labour expenses.
SAIL may raise export prices, which, in turn,
will influence domestic prices. Excerpts from
a free-wheeling interview:
utilisation in April amid the prevailing pandemic-
induced nationwide lockdown as inventory pile-up
has been inevitable during March and April. In May,
we are trying to achieve a sales figure of 60-70% of
what SAIL had achieved in May 2019. We are
closely watching how our consumers manage to buy
materials from us with the lockdown choking the
economy.
The current 2 million tonnes (MnT) inventory
with SAIL is not a worrisome issue as most
integrated producers are sitting on sizable
inventories today and those can be liquidated. SAIL
had a record inventory of 2 MnT on October 31,
2019 but we disposed of the material quickly once
demand started picking up in the market. Even
We exported a healthy
quantity of mainly semis in
April and are looking for
robust seaborne sales in
May. Prices have
plummeted by 15-16% over
time and are still quite
volatile.
STEEL 360 INDIA JUNE 2020 41
 INTERVISTA
‘Demand may Erode
17-20% in H1,
but Rebound in Q3, Q4’
By MADHUMITA MOOKERJI
Pankaj Malhan,
CEO, ESL
E
lectrosteel Steels Limited (ESL), which was acquired by the
Vedanta Group through the IBC resolution process, is
operating at 60-65% capacity under the COVID-19 impact.
The company, like many other steel manufacturers, is
looking at the exports market with domestic demand being almost nil
at present. China is the market to watch out for, in terms of exports,
since its emergence from the lockdown. The Chinese government is
giving infrastructure a strong push and steel mills there are stocking
up, especially on long products, while demand for pig iron is rising in
tandem from the mills. Though H1 will see demand erosion, Pankaj
Malhan, CEO, ESL, tells Steel360 that it will definitely pick up in Q3
and Q4. The government's stimulus measures will have to be geared
towards tackling liquidity issues.ESL,on its part, instead of focusing
on its previous proposal of doubling capacity of the Bokaro plant, is
now stressing on business continuity plans with a two-pronged growth
target of de-bottlenecking assets and adding 20-25% to existing
nameplate capacity and, secondly, significantly increasing capex.
Excerpts from an interview:
Technology
Danieli's Automation
Systems Focusing
on 3Q Concept
By NIRMALYA DEB
A
utomation and advanced process control techniques are the
building blocks of Industry 4.0. With the objective of
optimising productive volumes, captains of the global steel
industry are embracing automation to ensure efficient control
of the process flow. Advanced instrumentation and state-of-the-art
electrical solutions are an integral part of the automation revolution that is
ushering in a new era in the industry. Digitisation and data analytics are
bringing about fundamental changes in the industry at a time when
innovation has become inevitable for manufacturers looking to retain their
competitive edge.
Smart Manufacturing
As a leading global technology provider, Danieli Automation offers a
range of process control and instrumentation techniques for the metals
industry which cover a wide spectrum of technology, ranging from
refining iron ore to processing long and flat products. Danieli designs and
supplies complete electrical distribution systems up to turnkey solutions
for the steel industry, with installation engineering based on extensive
experience.
It also produces special instruments and sensors, designed and engineered
to meet the demand for sophisticated controls, quality certification, cost
optimisation and quick adaptation to the latest technologies.
Explaining the characteristic features of a “smart steel factory”, Ranjit
Deshmukh, Sales Head (Automation Division), Danieli India Ltd, tells
Steel360: “A smart factory is operated from a single pulpit, where a few
operators supervise the fully automatic production process. Monitors in
the pulpit show all the main technical parameters and the reports are
generated by a huge amount of data and variables, coming from the
automation systems and from smart sensors, highlighting possible quality
or process issues and suggesting corrective actions.”
CCTV camera images are used for visual monitoring. “Machines are
designed to avoid manual operations and robots are used in dangerous
areas or wherever operations are repetitive and frequent. Cranes are, as
much as possible, unmanned and supervised from a single pulpit. Danieli's
Condition Monitoring System helps in the detection of mechanical
anomalies and suggests preventive maintenance. The production
programme is optimised in order to process the orders with a schedule
which allows the best machine utilisation and the....
Impact
COVID-19, Reverse
Migration Setback for
Construction & Realty
By SHUBHAM RAI
Ongoing construction work stopped due to nationwide lockdown. Photo by Shubham Rai
T
hey packed the little they had with them and set off with their families
towards their hometowns under the scorching summer sun. These were
beleaguered men and women who decided to come to the big cities to earn a
living so that they could offer a slightly better life to their loved ones in the
villages. Most of them are stuck amidst this ongoing nationwide lockdown and have
been abandoned by their employers to fight the COVID-19 outbreak on their own, with
a bare minimum of wages in their raggedy pockets. Yes, we are talking about the
labourers who help build our houses, offices, complexes and whatever building
structure that we see around us and a lot more. Their absence is going to deal a heavy
blow to the construction and real estate sectors. Let's try to analyse how deep this
impact can be and what are the other factors that are creating disruption in the industry.
Construction Conundrum
One of India's biggest job creator industries, the construction sector, is facing an acute
shortage of labour while there is record unemployment observed at the national level.
As India begins to gradually ease stay-at-home restrictions across the country, the top
issue will be the labour shortage and slack demand. Builders are living with the threat
that their projects will be shut down for several weeks if a single infection is detected,
forcing them to proceed with caution.
Ajay Kedia, Director, Kedia Commodity Comtrade Pvt Ltd, tells Steel360, “Almost
half of India's workforce is returning to their villages after some restrictions have been
lifted to ease the national lockdown. The labourers have chosen to return home because
of the hunger and uncertainty they are facing in the big cities. While the skilled labour
segment like carpenters, welders, fitters, plumbers, electricians and riggers may
demand wages higher by 20-25%, general unskilled and semi-skilled labour could
demand a wage increase of 10-15%.”.....
 WORLD VIEW Impact Industry

Mining Sector
CHINA

Lockdown Easing Big Challenges

Lightens China's Steel for Medium & Small Reforms Need Further
Inventory Load Steel Units Detailing
By NIRMALYA DEB
By STEEL360 BUREAU By MADHUMITA MOOKERJI

E
People wearing face masks wait for a subway train in Wuhan.
ven as the primary steel sector in India was partially crippled
Source: Reuters Photo CIL will have an edge in terms of logistics infrastructure
during the lockdown triggered by the global outbreak of the compared to the commercial miners. Source: Pexels

T
otal steel stocks tracked by the China Iron & Steel Association (CISA) coronavirus, medium and small steel producers in the country

T
across the country's five major steel categories of hot rolled coils were gasping for breath, trying to stay afloat by all means he Government of India recently announced an INR 20 lakh crore stimulus
(HRCs), cold rolled coils (CRCs), medium plates, wire rods and possible. Operations at hundreds of units across the country had to be package that is aimed to act as a strong booster dose for the economy
rebars in 20 key cities halted as government guidelines required workers at factories return home suffocating in the COVID-19-induced lockdown. In tranche IV of this
amounted to 14.03 million tonnes and manpower scarcity was just one of the many problems besetting package, the government notably brought in wide-ranging structural reforms
(MnT) in mid-May In mid-May, hot rolled 2020, down producers. across eight sectors that include coal, minerals, power distribution companies along
with Defence production, airspace management, social infrastructure projects, space
950,000 tonnes coils (HRCs) (MT) or 6.3% Supply chains had been severely disturbed with close to 350,000 trucks
sectors and atomic energy.
from the levels seen in early stuck at highways in the second week of April and, even now, with the
May. This was a registered the largest 70-days government somewhat easing restrictions imposed in the last of week of
sustained decline. stocks drop and the The figure is March – resulting in tardy resumption of operations at different units – Mineral Reforms
6.18 MnT or 30.6% sharply manufacturers, saddled with despatch-related concerns, are running kilns ln minerals, the government announced a composite exploration-cum-mining-cum-
down from the other four categories levels recorded and furnaces on extremely low load. production regime under which 500 mining blocks will be offered through the open and
in early March but also saw stocks 7.21 MnT or However, the government, on its part, is undertaking measures. Rasika transparent auction route through amendments to the Mines and Minerals
105.7% up from the stock levels Chaube, Additional Secretary, Ministry of Steel, Government of India, (Development and Regulation) Act.
seen early this declining to various year, as per speaking exclusively to Steel360, says: “The secondary steel sector has to Transfer of mining leases will be allowed to ensure ease of doing business.
CISA. levels from volumes Steel360's grapple with problems related to capital and labour and the Ministry of The introduction of such a seamless regime will bring many more mineral blocks
sources in China put this May Steel is well acquainted with the issues involved. The sector is also into auction, it is understood. The blocks having the potential for mineral production
decline in seen in early May. inventory down bothered about raw materials availability as well as disruptions in will be auctioned for composite licences wherein the successful bidder will complete
to two reasons. One is the logistics. The government has come up with the concept of Purvodaya, the the exploration and start production seamlessly, the government said.
increased consumption because the government is focusing more on integrated steel hub for the eastern region. Our objectives are to bring Importantly, the distinction between captive and non-captive mines will be removed
infrastructure projects after the pandemic-induced lockdown started easing and about capacity addition for steel plants, setting up steel clusters, especially to allow transfer of mining leases and sales of surplus unused mineral blocks.
second, the pent-up demand during the lockdown is being released now, leading for secondary steel players (both downstream and ancillary units) and also Amendments will be made in the MMDR Act to remove the distinction between
to heightened purchases.... logistics which will be helpful for the steel.... captive and non-captive mines, it is learnt...
COVER STORY Flashback

Steel Breathes WAKE UP ODISHA’S

RNI: CHHBIL/2013/53990 | Postal Regn No CG/RYP DN/87/2018-20

Uneasy COAL IRON ORE
AUCTIONS:
APR 2020 |Issue 10 MAR 2020 |Issue 9 Feb 2020|Issue 8

COAL FEELS
THE HEAT
Met coal in price coma; thermal coal
fights back; power demand dims amidst Crysteel Rewind Carbon
COVID-19 Lockdown Gazing 2019! Captured!

May 2020 |Issue 11 Jan 2020 |Issue 7 Dec 2019 |Issue 6 Nov 2019 |Issue 5

The Auto Iron Ore Bull Topsy-Turvy in What Steel Industry 300 MnT BY 2030
Graph is Down Run in Bear China’s GE Wants! - A SCORABLE
Territory Industry GOAL?
OCT 2019 |Issue 4 SEP 2019 |Issue 3 AUG 2019 |Issue 2 JULY 2019 |Issue 1 JUN 2019 |Issue 12

YEARLY SUBSCRIPTION PLANS (12 ISSUES)

PRINT INR 5,000
COMBO INR 7,000