India

The Indian government recently imposed import duties, for a term of five years, on stainless steel from China, the US and the European Union. The move has evoked mixed reactions from industry and analysts.

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The anti-dumping duties are an attempt to protect local companies from “unfair competition.”

Anti-dumping duties, on cold-rolled flat stainless steel products, ranged from 4.6 to as high as 57.4%. Along with the above-named countries, imports from South Korea, South Africa, Taiwan and Thailand will also be taxed.

Will the idling of Midland by ATI take a bite out of stainless supply? Only time will tell. Source: Adobe Stock/Jovanning.

India has taken steps to protect its domestic stainless industry from cheap imports.  Source: Adobe Stock/Jovanning.

While a large section of India’s domestic steel industry welcomed the move, some experts opined that the duty did not make much sense, except, of course, for protecting local steelmakers.

In an interview with the Economic Times, N.C. Mathur, director of corporate affairs at JSL Steel and the president of the Indian Stainless Steel Development Association, said that the anti-dumping duties on cold-rolled stainless steel products were “not likely to help the domestic industry in any way.”

That was because they were imposed after the review of an earlier, similar, notification, and all the conditions remained the same in the new tariff structure.

Do These New Dumping Duties Even Matter?

According to Mathur, the duties are restricted in terms of cold-rolled width — from 600 mm to 1250 mm. The same terms and conditions were already in place under the earlier anti-dumping law, yet, importers had been easily circumventing it over the last five years.

How? They would simply import products measuring above 1,250 mm.

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Brazil’s government got more aggressive about penalizing the owners of what it says is its worst mining disaster ever and India wants to unlock the potential of its citizens hoarded gold

Samarco Disaster Lawsuit

Brazil filed a lawsuit on Monday against two of the world’s largest mining companies for 20 billion Brazilian reals (about $5 billion) to clean up what it says was its worst environmental disaster, caused by the collapse of a tailings dam at a joint venture iron ore mine the two operated.

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The governments of Brazil and those of two states hit by the damburst sued iron ore operator Samarco and its co-owners, the world’s largest miner BHP Billiton Ltd. and the biggest iron ore miner Vale SA.

India Wants Citizens To Sell it Their Gold

India is discussing changes to a scheme to unlock the country’s massive stash of gold at a high-level meeting this week, after a muted response to the program in the first month of its launch, according to banking sources.

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Prime Minister Narendra Modi launched the plan on Nov. 5 to lure an estimated 20,000 metric tons of gold hoarded in households and temples into the banking system. But only 400 grams trickled in over the first two weeks as low returns and worries over income tax kept Indians away.

A quiet revolution is going on in India’s defense sector.

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It is set to give an impetus to steel, aluminum and composite materials demand in the country. Recently, US aircraft manufacturer Boeing Co. and India’s Tata Advanced Systems Ltd. (TASL) announced a joint venture to manufacture aerostructures for aircraft beginning with the reputed AH-64 Apache fighter helicopter.

AH-64 Apache

Make in India, in this case, means making Apache helicopters there thanks to a joint venture with Boeing. Source: Adobe Stock / VanderWolf Images

The joint venture, according to media reports, would also then compete for additional manufacturing work packages across Boeing platforms, both commercial and defense.

Burgeoning Private Defense Industry

Currently, as many as 14 Tata companies are providing support to India’s defense and aerospace sector. In addition to TASL. The list also includes Tata Advanced Materials, a company that has delivered composite panels for cabinets and auxiliary power unit door fairings for the P-8I long-range maritime surveillance and anti-submarine warfare aircraft.

Another company, TAL Manufacturing Solutions, has manufactured floor beams out of composite materials for the Boeing 787-9, and provided ground support equipment for the C-17 Globemaster III strategic airlifter. Read more

Last week, two major developments took place in India which are likely to impact global ore production and maybe even prices.

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Vedanta announced it has begun to export iron ore from the Indian province of Goa for the first time since mining was halted there about two years ago. Shipments started to China, one of the biggest buyers of Goa ore. India’s overall ore mining had ground to a halt over three years ago after a Supreme Court imposed ban that was subsequently lifted in phases.

Iron ore has averaged about $60 per metric ton this year. Depressed iron ore prices stabilized recently at about $55 per mt, after a long period of volatility. But Vedanta leadership is of the opinion that iron ore prices were in “freefall.”

Export Duty Falls

For some Indian miners, at least, restarting ore mining may become profitable again following India’s reduction of its export duty from 30 to 10% earlier this year on lower-grade exports of the commodity.

The other, more important development, though, is that India’s Tata Steel is reportedly reaching an agreement with New Millennium Iron Corp., its Canadian iron ore joint venture partner, to hike its stake in the JV to 94% from its current 80%.

Canadian Investments

New Millennium declined to make further investments in the JV’s projects at this time, something that Tata Steel accepted. Tata Steel will invest $401.39 million ($524.5 million Canadian) to continue as the lead investor in the JV, Tata Steel Minerals Canada Ltd.’s (TSMC). After the deal, New Millennium will end up holding only a 6% stake.

TSMC is pursuing a direct shipping ore project (export of iron ore fines) in Canada’s sub-arctic region. Shipments from the DSO project began supplying Tata Steel’s European facilities in 2013. The project has yet to be fully commissioned, but its capital cost has already increased beyond the $428 million ($560-million Canadian) announced in October 2012. Tata Steel entered into an entire off-take agreement with TSML at the project’s outset. The initial production for the DSO project was aimed at 1 million tons.

The DSO project license area contains 64.1 million metric ton of proven and probable mineral reserves at an average grade of 58.8% iron (Fe).

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Tata Steel is also reviewing its future commitment on developing New Millennium’s two other inferior grade (taconite) projects – Lab Mag and Key Mag – in Canada.

This is part 2 of a series on World Steel Association Short Range Outlook figures that recently showed only India and South Korea beat the global trend of falling steel production. The WSA report is based on data collected from 65 countries, representing about 98% of the global steel production. Check out part 1 if you missed it.

Indian steelmakers have beaten the global trend of slowing production, documented by the World Steel Association, because the Indian government initiated several measures in order to protect local industry.

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  • The imposition of anti-dumping duties on foreign competitors
  • Quality control norms
  • The government also imposed a 20% provisional safeguard duty for 200 days

The WSA also said India was 1 of the few countries to remain a “resilient” economy in the face of a  the global slowdown because of its commitment to “reforms.”

While the WSA pinned its hopes on a Chinese recovery next year and India, with its infrastructure growth story, the WSA added in its Short Range Outlook (SRO) forecast that developed Asian nations such as Japan and even South Korea were expected to show negative growth due to adverse structural forces weighing on their economies.

Tracing the history of the current global steel crisis, the WSA report pointed out that the performance of some key emerging and developing economies had started to deteriorate in 2012 due to “internal structural issues, lower commodity prices associated with China’s economic slowdown, and escalating political instability.”

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Some nations, such as Russia and Brazil, were experiencing a severe contraction in steel demand. Geo-political tensions and political instability in the Middle East, Africa and Ukraine continued to negatively impact global steel consumption. On the other hand, steel demand in India and Mexico and other countries in the Association of Southeast Asian Nations (ASEAN) and Middle East and North Africa (MENA) regions was expected to maintain growth momentum despite the adverse external environment due to positive domestic demand and progress in reform.

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.

The Department of Commerce initiated anti-dumping duty and countervailing duty investigations of imports of welded stainless pressure pipe from India yesterday. Commerce alleged the imports are being dumped in the US at a margin of 32.06% and subsidies above the minimum rate are helping the pipe imports.

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In 2014, imports of welded stainless pressure pipe from India were valued at an estimated $36.9 million. Dumping occurs when a foreign company sells a product in the US at less than its fair value. For the purpose of countervailing investigations, countervailable subsidies are financial assistance from foreign governments that benefit the production of goods from foreign companies and are limited to specific enterprises or industries.

ITC Determination Next

The US International Trade Commission (ITC) is scheduled to make its preliminary injury determination on or before November 16.

If the ITC determines that there is a reasonable indication that imports of welded stainless pressure pipe from India materially injure, or threaten material injury to, the domestic industry, the investigations will continue and Commerce will be scheduled to make its preliminary CVD determination in December 2015 and its preliminary AD determination in March 2016, unless the statutory deadlines are extended. If the ITC’s preliminary determination is negative, the investigations will be terminated

The investigation includes circular welded austenitic stainless pressure pipe not greater than 14 inches in outside diameter. References to size are in nominal inches and include all products within tolerances allowed by pipe specifications. This merchandise includes, but is not limited to, the American Society for Testing and Materials (ASTM) A-312 or ASTM A-778 specifications, or comparable domestic or foreign specifications. ASTM A-358 products are only included when they are produced to meet ASTM A-312 or ASTM A-778 specifications, or comparable domestic or foreign specifications.

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The petitioners asking for Commerce to investigate are domestic producers Bristol Metals, LLC; Felker Brothers Corporation; Outokumpu Stainless Pipe, Inc.; and Marcegaglia USA Inc.

This is part-2 of a series on India’s climate change plan. If you missed part 1, see yesterday’s post.

India is the world’s fourth-largest carbon emitter – after China, the US and the European Union – but, so far, it has resisted attempts to limit its energy use, asking developed nations, which it largely blames for the greenhouse gases, to fix the problem themselves.

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So, in that sense, yes, India’s recent Intended Nationally Determined Contribution (INDC) for 2030 was indeed “path-breaking.”

Development + Emissions Cuts

Economists, as well as industry analysts, are trying to figure out how the country will juggle development of its infrastructure and industry, especially in the light of the ‘Make In India’ campaign, and keeping pollution levels down.

The INDC mentioned some big-ticket infrastructure projects such as the dedicated rail freight corridor to shift away from road transportation. Researchers such as Navroz Dubash, senior fellow at the Centre for Policy Research, New Delhi, has dubbed this section as “somewhat vague.” But in the same breath, analysts and environmental groups have welcomed it because it brings a climate perspective to a huge portion of the economy, including energy, transportation, water, forests, agriculture.

Unlike countries such as China and the US, the Indian plan does not commit to an absolute reduction or peak level for carbon emissions, acknowledging, tacitly, that India’s pollution will continue to grow, although maybe at a slower pace.

Is Industrialization Possible Without Coal-Fired Power?

On another front, analysts have found India’s continued commitment to expanding coal power capacity quite perplexing. In the submitted plan, coal continues to dominate India’s power generation.

Reacting to this, Greenpeace was quoted in a Bloomberg report that expansion of coal power would hamper India’s development prospects by worsening the problems of air quality and water scarcity as well as contribute to the destruction of forests and the displacement of communities.

Clearly, there seems to be some measure of conflict between India’s energy use and its desire to keep the climate clean. In the past, India has often mentioned its growth plans — providing electricity to over 50% of Indians, the construction of roads and infrastructure, all of which will require energy-intensive processes like steel and automobile production, as well as natural resource mining. India is the fastest-growing region of the world, most of it powered by fossil fuels.

Reconciling Growth and Green

A research paper drawn up by the Brookings Institution, earlier in the year, articulates this well. It asks: how can India thread the needle between climate disaster and premature economic stagnation?

Though the challenge was great, it said, India will be an important enough partner at the upcoming climate talks to articulate a set of red and green lines. India, said the institute, would find it difficult to accede to any deal that would make its ongoing industrialization “the first industrial revolution in history to be nipped in the bud by international restrictions.”

There are others like former climate adviser to the UN climate secretariat, Mukul Sanwal, who predicted that by 2030, India was likely to use less coal than China and the US. People are discounting hydro-electric power in India, slated to be a big area of development.

Others, like Arunabha Ghosh, founder of the Council for Energy Environment and Water, have pointed out that the government was already spending on combating the adverse effects of climate change through its renewables program. Given India’s 300 million-plus people lacking access to electricity and the many development challenges industrialization poses, committing to more emissions cuts in the absence of support could risk its development imperatives.

For now, at least, the Indian government seems to be making all the popular choices. It recently announced an increased renewable energy target of 175 gigawatts by 2021-22, from the earlier predicted 38 GW. Of this, 100 GW was planned from solar, 60 GW from wind, 10 GW from biomass energy and 5 GW from hydro-electric. If these targets were realized, renewable energy was expected to contribute about 20% of electricity generation by 2021-22.

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The targets have been revised because India wanted to get more electricity from renewable energy, said Ashvini Kumar, Managing Director of Renewable Energy Corporation of India.

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.

Recently, when Indian Environment Minister Prakash Javadekar referred India’s plan for tackling climate change as “a huge jump” for the country, he was not far off the mark, really.

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It’s been only a few days since India submitted its Intended Nationally Determined Contribution (INDC) for 2030 with a focus on clean energy to the United Nations (UN). The plan was presented about a month ahead of a major global warming conference in Paris, with India being the last of the 140 nations in the conference to submit a strategy.

A Vague ‘Plan’

While the plan, overall, received a thumbs up from a vast section of domestic and international environmental groups, the question on everyone’s mind is will India be able to pull this balancing act between development and climate control? Before going into that, let’s just understand some of the salient points of the INDC:

  • India intends to produce about 40% of its electricity in 2030 from “non-fossil fuel based sources” like solar, wind or hydroelectric power, with help from international funds and technology advances.
  • It pledged to reduce the emission intensity of its GDP by 35% over 2005 levels by 2020.
  • It will plant more trees by 2030 to absorb 2.5 to 3 billion tons of carbon dioxide.

The INDC mentioned some big-ticket infrastructure projects such as the dedicated rail freight corridor to shift the population from fossil-fuel-intensive road transportation. Researchers such as Navroz Dubash, senior fellow at the Centre for Policy Research in New Delhi, has dubbed this section as “somewhat vague.”

Environmental Community Still Embraces It

Yet, in the same breath, researchers have welcomed it because the plan will bring a climate-influenced perspective to a huge portion of the economy, including energy, transportation, water, forests and agriculture.

Unlike countries such as China and the US, the Indian plan does not commit to an absolute reduction or peak level for carbon emissions, acknowledging, tacitly, that India’s pollution will continue to grow, although (maybe) at a slower pace.

“India, even though not a part of the problem, has been an active and constructive participant in the search for solutions,” was one of the remarks in the 38-page INDC. Thus, the country made it clear that though its contribution to causing global warming is “relatively small as compared to the developed nations,” it was game to mitigate its adverse impacts, something that was expected to cost anything between $1 and $2 trillion.

Responsibility for Emissions

India, incidentally, is the world’s 4th-largest carbon emitter – after China, the USs, and the European Union. It has, so far, resisted attempts to limit its energy use, asking developed nations, which it largely blames for the greenhouse gases, to fix the problem. So, in that sense, yes, India’s INDC was indeed “path-breaking.”

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Economists as well as industry analysts were trying to figure out how the country would juggle its 2 responsibilities – development of India’s infrastructure and industry, especially in the light of the Make In India campaign, and trying to keep the pollution levels down.

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner. This is part 1 of a 2-part look at India’s climate blueprint.

This is part 2 of a 2-part series on scrap recycling in India, check out part 1 if you missed it yesterday.

The overall Indian recycling rate is about 25%. Compare this to the US – which is a net exporter of scrap with recycling rates of 80 – 90% and Europe, which has recycling rates in excess of 70%.

India’s annual scrap consumption is about 21 million metric tons while its imports are about 7 mmt a year, making it the world’s third-largest importer of scrap. A Frost & Sullivan report claimed India’s metal recycling industry had the potential to grow 11.4% per year until 2020 – but that comes with a big rider. Growth can only happen once the import duty and other free trade hurdles have been removed.

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India, incidentally, is perhaps the only country in the world to impose an import tax on steel scrap. This happened 2 years ago. The Metal Recycling Association of India has been on the forefront of a campaign to get the import tax stricken, with the current political administration even agreeing to look at the demand favorably.

So, while semi-finished products can be imported duty-free into the country, there is a 5% import duty on steel scrap, thus impacting the profitability of recyclers.

But the story on aluminum scrap is the exact opposite. India’s aluminum demand has been growing at an annual rate of about 11%, compared to a global growth of 6%. Part of the growth is fueled by imports including of aluminum scrap, especially from China.

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Indian Commerce Minister Nirmala Sitharaman recently told parliament that the government was considering a request for doubling the duty on aluminum imports to 10%, following representations that imports of aluminum scrap, especially from China, and the metal’s decreasing global prices were adversely impacting the industry in India.

What India Must Do to Increase Scrap Recycling

Essentially, for the Indian recycling sector to get an impetus and turn into a net earner, analysts including Frost & Sullivan, recommended the Indian Government initiate the following:

  • Removal of  the basic scrap import duty
  • Offer Special Economic Zones, the benefits of which will enable industry status for the metal recycling sector
  • Subsidize lending rates which will add more financial muscle in this sector

India’s aluminum producers are struggling, in spite of being credited with some very competitively priced smelter capacity and having recently invested in new technology.

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Indian aluminum mills, unlike the steel industry that is sheltered behind import tariffs and a dominance of domestic producers, the aluminum industry is not so protected, leaving the producers with little pricing power in the face of intense competition from China and West Asian semi-finished product producers. Steel imports account for only 12% of the domestic market, yet for aluminum a massive 56% is met by imports as they surged from the 40% level just a few years ago. Read more