Constraints in the availability of domestic iron ore, consistent large imports at concessional duty from Japan and Korea under CEPA-FTA and rising imports of boron-added steel from China, and growing imbalance of global steel supply and demand remain the major challenges for the Indian steel industry, JSW Steel Ltd noted in a release announcing the second quarter and half-year results for 2014-15.
“Indian crude steel production increased by 2.6 per cent QoQ during the second quarter. The domestic steel industry has battled against a surge in imports, especially from China and Korea. This, coupled with a seasonal weakness and subdued economic activities, has resulted in the country’s steel consumption remaining flattish, growing by 0.9 per cent QoQ during the quarter,” the company said.
According to JSW Steel Ltd, the International Monetary Fund has revised its global economic growth estimates for CY14 downward to 3.3 per cent amidst fresh signs of weakness in Euro area and moderation in Japanese and Chinese growth expectations. The global economic recovery has weakened and is now hinged upon US consumption, policy support in Europe and China. Besides, global economic moderation has affected the demand prospects for most of the commodities including metals.
On the other hand, property slump and moderation of industrial production in China has adversely influenced Chinese steel demand. The World Steel Association has cut CY14 Chinese steel demand growth forecast from 3 per cent (April 2014) to 1 per cent and consequently has revised its forecast of global steel demand growth for CY14 to 2 per cent. Regional steel prices have softened thereby reflecting continued softness in raw material prices, low demand and surging exports from China.
“The Indian economy posted a moderate recovery in Q1 of FY15; however, improvement in overall activity levels seems to be getting right-shifted with weaker monsoon, subdued industrial growth in Q2 FY15, and elevated interest rates. While medium-term business sentiment remains strong, expected revival of the investment cycle now appears likely in FY16,” the company stated.
Meanwhile, JSW Steel Ltd announced that it had started its second bar mill of 1.2 million tpa capacity at its Vijayanagar works in Karnataka. The implementation of other ongoing projects like CAL-2, modernisation of BF-L and electrical steel complex at Vijayanagar, and capacity expansion project from 3.3 million tpa to 5 million tpa were progressing satisfactorily and were likely to completed on schedule.
The JSW Steel Vijayanagar plant, located in the Bellary-Hospet iron ore belt of north Karnataka, is the first integrated steel plant to reach 10 million tpa capacity in a single location. It is the first plant in India to use Corex technology for hot metal production. The existing steel complex has infrastructure capability to handle up to 16 million tonnes of projects.