India

Everything about India’s growth script is gigantic.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Take the Indian Railways (IR) expansion drive, for example.

The IR a few days ago floated a global tender to procure rails, and, get this – 700,000 metric tons of it.

Two things unique about this development – the quantity and the fact that for the first time the IR has decided to invite private parties to supply the rails.

The Indian government has earmarked about $132 billion to upgrade a creaking network, established when the British ruled India, which includes huge track-laying projects to modernize passenger and freight movement.

So far, the state-run steel supplier Steel Authority of India Limited (SAIL), held a monopoly of supplying rails to IR. But now, with the Ministry going in for a global tender, not only foreign players but even domestic steel companies — such as Jindal Steel & Power Ltd., one of the biggest non-state steelmakers — could benefit.

The additional rail tracks will help the railways towards clearing the track renewal backlog.

Some important notes:

  • Indian Railways is the country’s largest employer with 1.4 million personnel.
  • The carrier has a track length of around 115,000 kilometers, making it the world’s largest railway network under a single management.
  • It runs around 20,849 trains daily and transports 23 million passengers and 3 million tons of freight.
  • It operates 10,773 locomotives, 63,046 coaches and 245,000 wagons.

Going forward, IR is contemplating a mega-renovation in partnership with state and central administrations. The plan includes constructing elevated corridors for Indian cities like Mumbai and Delhi, alongside existing rail tracks, for which a portion of the new rails will be used.

SAIL, according to a report by news agency Reuters, has failed to supply rails to Indian Railways.

India’s steel ministry, said the news report, had asked SAIL to make sure it met its target of 1.14 million tons of supplies in 2017-18. Reuters earlier reported the upgrade for the IR was at risk because of rail shortages from SAIL. Between April and August, SAIL could supply only 70% of its monthly targets set for Indian Railways.

For 2017-18, SAIL has committed to providing only 1.14 million tons, against a requirement for 1.46 million tons.  SAIL, which has posted losses for nine straight quarters, is targeting capacity additions of 2 million tons a year.

Free Sample Report: Our Annual Metal Buying Outlook

IR expects annual demand for steel rails to rise to 1.5 million tons in the year ending March from about 800,000 tons in the prior 12-month period.

If there’s one success story being written in India, it’s that of renewable energy.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

By the government’s own reckoning, despite India’s energy needs likely to double over the next seven years (going by the current rate of economic growth), the nation is likely to meet two-fifths of its electricity needs with renewable sources by 2030.

Power and Renewable Energy Minister R K Singh told reporters recently that the efficiency of solar panels itself had already reached 30%, and prices were likely to reduce due to an increase in usage.

The government’s stipulated target is of 175 Gigawatt (GW) of renewable generation by 2022, which includes 100 GW of solar and 60 GW of wind generation, up from the current total renewable energy generation capacity of about 59 GW (with wind already now at about 33 GW).

What’s more, a report this month by the International Energy Agency (IEA) said India’s renewable energy capacity would more than double by 2022, which would be enough to overtake renewable expansion in the European Union for the first time.

India’s present-day renewable energy installed capacity is about 59 GW. “By 2022, India’s renewable capacity will more than double. This growth is enough to overtake renewable expansion in the European Union for the first time,” IEA said in its latest renewables market analysis and forecast.

The IEA added that the solar photovoltaic (PV) and wind together represented 90% of India’s capacity growth, as auctions yielded some of the world’s lowest prices for both technologies.

India needs an investment of around U.S. $100 billion to meet the target of 175 GW of renewable energy capacity by 2022.

As of now, China was the undisputed leader of renewable electricity capacity expansion over the forecast period, with over 360 GW of capacity coming online. China, as per the IEA, had already exceeded its 2020 solar PV target three years ahead of time and is set to achieve its onshore wind target in 2019.

China, India and the U.S. will account for two-thirds of global renewable expansion by 2022, according to the IEA report. The total solar PV capacity by then would exceed the combined total power capacities of India and Japan today, it added.

The power consumption of electric vehicles — including cars, two- and three-wheelers, and buses — was expected to double over the next five years. Renewable electricity is estimated to represent almost 30% of their consumption by 2022, up from 26% today.

This year’s renewable forecast was 12% higher than last year, mostly because of solar PV traction in China and India.

Zerophoto/Adobe Stock

For the longest time, India has been one of the largest global importers of scrap steel, behind only Turkey.

That could change in the coming years if a recent policy announcement is any indication.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Chaudhary Birender Singh, India’s minister of steel, recently said his ministry proposed to set up steel plants with scrap as the raw material in various parts of northern and western India.

What the government expects is that in the next few years, 44% of the total scrap available in the country would be generated in various locations in the states of Jammu and Kashmir, Punjab, Haryana and Delhi. The main use for the scrap would be steel production.

The minister said the Indian government’s efforts to recycle waste products for productive purposes would save of 65% of iron ore, which is currently the main raw material for steel production.

For some time now, the Indian government has been toying with the idea of using scrap instead of iron ore for use in steel plants. One must remember that the supply of ore was disrupted due to a ban on mining for a few years.

Such scrap-based steel plants could go some way in helping meet the government’s steel production target of 300 million tons by 2030. According to the minister, the Indian government was adopting a 360% holistic approach wherein the recycling industry can help in achieving the production target by providing raw material for the steel industry.

India imports approximately 6 million tons of scrap steel every year, though the figure has come down a bit since last year. In November 2016, India imported 482,000 tons of scrap. However, combined imports during the initial 11-month period in 2016 were down considerably when matched with the corresponding period in 2015.

The government’s plan to set up the five scrap-based steel plants may happen within the next year. A Press Trust of India report quoting Aruna Sharma, India’s steel secretary, had said all the scrap will be reused to make steel, which could be about 40 million tons of steel. The first such plant would come up next month in Noida, Uttar Pradesh, followed by one in southern India.

State-run metal scrap trading firm MSTC signed a joint venture agreement with Mahindra Intertrade for setting up the first such plant. As of now the JV is between MSTC and Mahindra. Mahindra Intertrade is a part of Mahindra Partners Division of the $17.8 billion diversified Mahindra Group.

Free Download: The October 2017 MMI Report

According to the same report, Hyundai had also shown interest in setting up the southern India plant.

misunseo/Adobe Stock

Before we head into the weekend, let’s take a look back at the week that was.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

  • Holidays in India mean an uptick in gold buying — our Sohrab Darabshaw covered India’s holiday gold surge.
  • The fourth round of renegotiation talks focused on the North American Free Trade Agreement (NAFTA) concluded earlier this week. We covered the latest round of talks, which by all accounts have the three negotiating teams at an impasse.
  • As the fallout continues from Kobe Steel’s quality data falsification scandal, our Stuart Burns wrote about what exactly might have gone wrong at Japan’s third-largest steelmaker.
  • The World Steel Association’s Short Range Outlook came out this week, predicting solid, albeit moderated growth for the global steel market.
  • Precious and base metals have been behaving similarly, our Irene Martinez Canorea wrote this week.
  • The U.S. International Trade Commission launched a new Section 337 probe related to automation systems.
  • The value of the U.S. dollar has a significant impact on the fortunes of a number of metals, our Stuart Burns explained.
  • And how about palladium? Burns also touched on the rise of the platinum group metal and its leapfrogging of platinum (for the time being).
  • It’s third-quarter earnings report time. Alcoa and Nucor were among the latest companies to announce their earnings for the latest quarter.

Free Download: The October 2017 MMI Report

If you were in India right now, someone is bound to tell you that it’s that time of the year.

He or she would be referring to the almost-three months of festivals and wedding season, which India sees starting from sometime late August and continues until early September. More specifically, just under a week remains before that “mother of all Indian festivals” — Diwali, the fest of lights.

All this also means an uptick in shopping, but, more specifically, gold shopping.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Indians love their gold, and any excuse is enough to buy some more of the yellow metal. But Dusshera (a major Hindu festival preceding Diwali) and Diwali are special occasions, reserved for buying as much gold as possible. All of this makes India the second-largest gold-consuming market in the world.

This year, there was a slight damper on Indians’ demand for gold.

As part of the new tax reforms, the government included jewelers in the Prevention of Money-Laundering Act (PMLA) in August. This meant a compliance requirement on part of the buyer for any purchase above US $760 (Rs 50,000), including providing their income tax identity.

Incidentally, gold and real estate are the two investment opportunities that were often misused by hoarders of cash or those dealing in the black economy.

For some time, then, there were no “high value” deals as jewelers across the country, their associations and potential customers protested.

So, while September import figures of gold (in the month of Dusshera) were robust, they could have been even higher if the PMLA was not in effect, some associations claimed.

According to a report put out by news agency Reuters, India imported 48 metric tons, equivalent to $2 billion at today’s prices, in September. But since Dusshera fell in September instead of October this year (it follows the lunar calendar), the import figures compared to September 2016 were up, though on a month-on-month basis, it was lower, because of the uptake being down due to the PMLA.

But a decision by the government a few days back has brought back the cheer in the lives of gold consumers in India.

The PMLA has been put on hold for now, which means people can go ahead and buy gold without providing any of the previously required documents. Jewelers are hopeful the gold-buying spree, normally seen during these festive months, will at least revive in October, especially around Diwali. Imports are expected to go up to about 70 metric tons per month.

Just to give readers an idea of Indians’ love of gold, Indian households have the largest private gold holdings in the world, standing at an estimated 24,000 metric tons. That figure reportedly surpasses the combined official gold reserves of the United States, Germany, Italy, France, China and Russia.

This year, even the Indian government wants to take advantage of the festive gold bonanza.

Showing impeccable timing, it has announced the launch of new sovereign gold bond schemes. Never before has such a scheme been announced around festival time.

Free Download: The October 2017 MMI Report

The bonds issue opened Oct. 9 and remain so until Dec. 27, covering the festivals of Diwali and Christmas.

The government has also made important changes to attract high-value investors, raising the annual investment limit per person from 500 grams to 4 kilograms. For trusts and similar entities, the limit was raised to 20 kilograms. This higher limit will make the scheme attractive for high-net-worth individuals who had not participated in earlier schemes, as they found the 500-gram limit to be too low.

gui yong nian/Adobe Stock

This morning in metals news, steel production through Oct. 7 is up for the year, the Kobe Steel scandal continues and India’s steel capacity could more than double by 2030.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

U.S. Steel Production Outpaces 2016 Levels

According to data from the American Iron and Steel Institute (AISI), U.S. steel production through Oct. 7, amounting to 69,545,000 net tons, is up 3.7% compared with the same time frame last year.

Production in the week ending Oct. 7 amounted to 1,741,000 net tons, up 5.2% from the same period in 2016 and up 2.1% from the week ending Sept. 30.

Kobe Steel in Hot Water

Kobe Steel’s troubles could be extending beyond aluminum and copper.

The data falsification scandal is now touching iron powder products, according to the Nikkei Asian Review.

Earlier this week, Kobe Steel admitted it altered inspection certificates to falsely show that certain aluminum and copper components had satisfied client specifications for strength, the Review reported.

India Steel Capacity Rising

According to the Economic Times, India’s steel capacity will more than double by the end of 2030.

Free Sample Report: Our Annual Metal Buying Outlook

Steel Secretary Aruna Sharma said capacity, currently at 126 million tons, is expected to hit 150 million tons by 2021 and 300 million tons by 2030.

Zerophoto/Adobe Stock

Like “electricity for all,” the Indian government’s latest ambitious plan is for a complete transformation of its auto segment and move towards all electric vehicles (EVs) by 2030.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Toward this goal, the government has started making the right moves, but the question on every one’s mind is simple: Is the plan possible?

The political will is there, but to have all vehicles on the road running on battery by 2030 seems like a pretty impossible dream.

Nitin Gadkari, India’s road transport minister, made the government’s intentions clear, rather forcefully, when he said recently, “We should move towards alternative fuel … I am going to do this, whether you like it or not.” He was addressing delegates of India’s automobile lobby group, SIAM. Gadkari made it clear he would “bulldoze the plan through.”

It’s really all about numbers, say the experts. After all, how does a country of over 1 billion people, where over 20 million vehicles are sold annually, embark on such an ambitious drive?

Read more

India has bucked the global trend where non-ferrous metals are concerned.3

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

A recent report by professional services agency KPMG has said demand for non-ferrous metals, including aluminum and copper was likely to grow around 8% over the next five years.

Titled “India Non-ferrous metals industry: Building the future,” the report added that the expected demand growth in the non-ferrous metals industry would be even better than the “healthy trend” observed in the last five years.

“Over 2016-17 to 2021-22, the demand for these metals is expected to grow by around 8% in line with strong economic prospects, thrust on manufacturing sector, healthy growth in key end-use segments further aided by rising usage intensity,” the report states.

What’s more, the report said India had also registered strong growth in recycling of metals, a major step forward for an otherwise unregulated sector. It said over time, the share of recycled metals had increased considerably and was almost equivalent to the global level.

But KPMG added a note of caution, saying legislative intervention was required to contain the level of scrap imports that still dominated the globe.

It’s no secret that globally, the non-ferrous metal industry faced a turbulent time owing to a number of factors, including the global economic growth slowdown at large, as well as the slowdown of the Chinese economy, in particular, along with the high raw material prices.

But India went the other way.

The KPMG report added that “strong resilience in the Indian economy” had resulted in its non-ferrous metal industry outpacing the global trend. Apart from a strong demand base and future potential, India was rich in terms of raw material reserves coupled with a relatively low-cost structure of production, thereby providing huge opportunity for the development of non-ferrous metals industry in India.

That said, downstream products, such as copper wire and aluminum foils, were still being dominated by imports, as the downstream industry is relatively undeveloped in India.

China, with its sheer population as well as advancement of manufacturing, was the largest consumer of non-ferrous metals and majorly influences the dynamics of the industry. But the recent slowdown in that country has significantly impacted the global industry in terms of supply and demand, trade, prices and profitability. The country accounts for 52% of the global aluminum consumption. In Asia, consumption showed a declining trend in Japan, but was counteracted by higher demand from India and the Middle East. The report said North America had also firmed up since the global financial crisis. Prices had recovered because of supply cuts in China and a healthy demand growth.

In India, with steady growth in demand, non-ferrous metals were being consumed in several emerging applications offered by defense, aerospace, hybrid and electric vehicles, railways, and more, requiring complex design (be it large aerostructure parts or miniature structural components). However, lately there has been technological disruption in multiple industries, including metals, such as metal additive manufacturing or 3D printing, which offered the possibility of complex parts production at a faster pace and lower cost, the report observed. There were a number of industries which were increasingly using these technologies to revolutionize the manufacturing process.

A well-developed non-ferrous metals industry is vital for any developing country, as it provides important raw material to many industries that are the pillars of economic development. With the increasing usage of these metals in several existing and emerging applications, coupled with new technologies, there is a paradigm shift that can change the way non-ferrous metals are consumed in the future.

The KPMG report provides a glimpse of opportunities that are available for the development of the non-ferrous metals industry in India, which is riding strong economic growth momentum.

With a slew of reforms undertaken by the government, the end-use sectors of non-ferrous metals —automotive, electricals, packaging, consumer durables, railways, ports and inland waterways, roadways and renewable energy  — were expected to experience a strong growth trajectory.

However, certain metals were characterized by import, especially downstream products such as copper wire and aluminum foils, because of various reasons, including the undeveloped downstream industry, global competition and quality availability.

Aluminum

During 2011-12 to 2016-17, the demand for aluminum posted a CAGR of 5.4% led by a healthy growth recorded by the electrical and automotive sectors, which constitutes 60-65% of the total consumption of aluminum.

Primary aluminum demand was generally met through domestic supply, but there was considerable import of downstream products from China and the Middle East. Many players in the aluminum downstream industry were suffering from a lack of proper infrastructure and technology to efficiently process the raw material into high-quality products.

Significant capacity addition has taken place over the past five years due to implementation of various capacity addition plans by the major players. During 2011-12 to 2016-17, capacity has increased from 1.9 million tons per annum to 4.1 million tons per annum.

Copper

Demand for primary copper grew at a CAGR of 14% over the past five years, owing to the robust growth in the electrical sector and consumer durables.

Although India was a net exporter of copper, there was a significant proportion of import of downstream products. Many players in the copper downstream industry faced challenges such as outdated technology, improper infrastructure, high set-up cost, high funding cost and lack of skilled professionals.

During 2011-12 to 2016-17 copper imports, constituting mainly downstream products and alloys, grew at a CAGR of 15.4%.

Zinc

Demand for primary zinc in India was based on the growth of the steel market, which accounts for 70% of the total demand. It was mainly used in galvanizing and coatings of iron and steel to protect it from corrosion.

Free Download: The September 2017 MMI Report

During 2011-12 to 2016-17, demand for zinc grew at a CAGR of only 3%, mainly because of a surge in imports of galvanized steel.

In order to control imports, the government imposed a minimum import duty on certain steel products, in addition to a safeguard duty and anti-dumping duty.

In 2016-17, India’s imports of galvanized and coated steel fell by 47% compared to the previous year as a result of these supportive government policies.

Other government initiatives, such as the Smart Cities Mission, modernization of railways and the construction of highways were expected to boost the infrastructure industry, which uses galvanized steel for durability and endurance.

Argus/Adobe Stock

The Department of Commerce issued a preliminary affirmative determination Tuesday in the countervailing duty investigation of cold-drawn mechanical tubing from China and India.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

“The Trump Administration will not sit back and watch as American companies and workers are harmed by unfair government subsidies,” Secretary of Commerce Wilbur Ross said in a prepared statement. “The United States is committed to free, fair and reciprocal trade, and will continue to validate the information provided to us that brought us to this decision.”

The Department of Commerce determined that the form of tubing from China benefited from countervailable subsidies of 33.31-35.69%, and that Indian tubing benefited from subsidies of 3.04-8.09%.

In 2016, cold-drawn mechanical tubing from China and India were valued at an estimated $29.4 million and $25 million, respectively, according to the Department of Commerce.

The petitioners in the case were ArcelorMittal Tubular Products (OH), Michigan Seamless Tube, LLC (MI), PTC Alliance Corp. (PA), Webco Industries, Inc. (OK), and Zekelman Industries, Inc. (PA).

The Department of Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of cold-drawn mechanical tubing from China and India based on the aforementioned preliminary rates. The department collected $1.5 billion in duties on $14 billion of imported goods found to be underpriced, or subsidized by foreign governments, according to the department’s release.

Free Download: The September 2017 MMI Report

The Department of Commerce is scheduled to announce its final determinations in the case on Dec. 4.

Zerophoto/Adobe Stock

India’s recent decision to impose an additional import tax on a number of stainless steel flat products from China for five years has generally been welcomed by the Indian steel industry and trade bodies.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The tax, said the Government of India, was to curb the influx of cheaper foreign imports.

A countervailing duty of 18.95% has been imposed on some hot-rolled and cold-rolled stainless steel flat products. This is aimed at helping local steelmakers benefit when there is a surge in imports, the government said.

A statement by the government said Chinese imports “were distorting the domestic market, which was under huge stress and led to financial stress in the industry.”

In the past, too, India has imposed a slew of anti-dumping duties on imports of steel and stainless steel products from China, Japan and South Korea.

According to a Reuters report, the U.S. Department of Commerce also said it would be looking into possible dumping and subsidization of stainless steel flanges from China and India.

Steel producers in India have welcomed the move.

According to Jindal Stainless Vice-Chairman Abhyuday Jindal, the decision will encourage production of the metal within the country and will provide some relief to the domestic industry.

India’s apex stainless steel industry body, the Indian Stainless Steel Development Association (ISSDA), has also welcomed the imposition of countervailing duty, President KK Pahuja said.

Due to the subsidized imports from China, the domestic players were facing huge losses. Industry experts have claimed several MSME segment businesses were forced to shut down due to subsidized imports from China. The imposition of a countervailing duty would help revive the industry, regain lost ground and create jobs, the Pahuja added.

Free Sample Report: Our Annual Metal Buying Outlook

The CVD investigation was initiated on April 12, 2016, by the Directorate General of Anti-Dumping and Allied Duties (DGAD) in response to a surge in subsidized imports of stainless steel flat products from China.