The country&rsquo;s steel industry is at an inflexion point. The industry is given a roadmap by the government to lift crude steel capacity to 150 million tonnes (mt) in the terminal year of the 12th Plan and then to 180-200 mt by 2020 from the present 80 mt. Steel Authority of India Ltd (SAIL) Chairman Chandra Sekhar Verma says to make this happen, &ldquo;We steelmakers will have to embrace breakthrough ideas to be able to run our mills at new efficiency levels, allowing us to make steel with higher strength to weight ratio.&rdquo; Capacity growth here will be sustainable provided the industry makes use of leap-forward technologies occurring periodically, from raw material uses to finishing of steel to utilisation of mill waste, argues Verma.

Steel at an inflexion point

Business Standard

More than anything else, it is the cost of power that defines operational viability of an aluminium smelter. Depending on energy source and whether a smelter is backed by a captive power complex, electricity accounts for 30-50 per cent of aluminium making cost. Power is a relatively small cost component for other metals. Indian aluminium makers with linkages to coal mines but not ownership of coal blocks have time and again experienced irregular supplies, especially during monsoon months, forcing them to import and also buy the fuel through e-auction at a hefty premium.

Aluminium smelters' search for cheap power sources

ArcelorMittal, by far the world's largest producer of steel, had revenues of $94 billion and an output of 91.9 million tonnes (mt) in 2011. But its six per cent share of world steel production could hardly be of comfort when a wrenching combination of low steel prices, drop in product shipments and several one-off charges saw the company making a loss of $1 billion in the final quarter of 2011. For the whole year, ArcelorMittal's net profit took a knock of 22 per cent to $2.3 billion. The company's performance is a testimony to the state of world steel industry.

China's steel riddle

In their quest for raw materials security, leading steelmakers here are breaking away from age-old dependence on coking coal imports from foreign mining majors and trading houses to ambitiously bidding for assets abroad. The country&rsquo;s resources of metallurgical coal unlike thermal variety being highly inadequate &ndash; worse still, the share of good quality hard coking coal in total resources being negligible &ndash; our import dependence on the reductant material used in blast furnaces (BF) is growing in step with rising steel production through BF route.

Outward ho for coking coal

At least in one case, West Bengal found God to be stubbornly anti-industry.

Will steel lift Bengal from investment drought?

Pension and hedge funds managers putting their bets in sugar are in the habit of looking for cues from the eponymous founder of Switzerland based consultancy Jonathan Kingsman and experts Louis Dreyfus and Czarnikow as to how prices of the soft commodity will behave in the days ahead. They mostly benefit by listening to expert views. But in the past sugar year, most investors flipped the coin wrongly, going by highly optimistic surplus forecasts by experts, though revised downward with season&rsquo;s progress. The factor having most significant bearing on prices is how much surplus or deficit the world will have of sugar in a season and the next. Like while this season to end in September 2012 is having a surplus of eight million tonnes (mt), early forecasts for 2012-13 show excess supply from four mt to eight mt.

Collapse of sugar under weight of surplus 

At the zenith of his success in capacity consolidation marked by acquisition of Arcelor in June 2006, and, in the process creating a steel behemoth of over 100 million tonnes (MT) capacity, Lakshmi Mittal, credited with spotting opportunities ahead of his peers, used to say that his squaring the circle would be complete with his setting foot in China and India.

Is ArcelorMittal winning or losing ground in China?

Any fall in crude oil prices brings relief to New Delhi, staggering under an untenable subsidy burden, but perennially meeting with popular resistance against any revision in petroleum product prices. That it is prone to cowering under pressure from opposition parties is again evident in its vacillation to allow the market decide diesel prices. But New Delhi now has reasons to rejoice, at Brent crude last week sinking below $90 a barrel for the first time since December 2010, as New York benchmark West Texas Intermediate crude broke the psychologically important barrier of $79 a barrel. This is primarily because petroleum accounts for more than 32 per cent of the country&rsquo;s total energy consumption and our import dependence on crude is about 80 per cent.

Making sense of Byzantine politics in Opec

Both in terms of the size of proven reserve and its quality, there is little to write home about coking coal here. The domestic supply, as a consequence, will remain such that the import dependence of that portion of the industry making steel through the blast furnace (BF) and basic oxygen furnace (BOF) route will continue to rise as it commissions new capacity at a rapid pace.

Improving steel's coking coal equation

During his recent visit to Delhi, the executive director of the International Sugar Organi-sation, Peter Baron, described India as a &lsquo;wild card&rsquo; in the world market because of cyclicality of cane production and therefore, of the sweetener here. The Indian sugar cycle gives three years of good production in a row followed by consecutive years of bad crop.

Breaking cyclicality in sugar production 

It is saying the obvious that the size of steel development capacity in the pipeline and the growing demand for special products like high-strength steel sheets and superior grades of electrical sheets will demand of this country a more focused approach to research and development (R&amp;D). If this is not going to be the case, then our import dependence on high-technology products, like cold rolled grain-oriented steel (CRGO) sheets, primarily used in the making of electric transformers and other high-strength sheets, such as Trip (transformation-induced plasticity) steel and dual phase steel, can only rapidly grow. Car makers are showing preference for the latter kinds of steel to be able to cut automobile weight, leading to economy in fuel use.

In search of R&D direction for steel

It used to be the case prior to the scorching 2008-09 recession that if the US sneezed, the rest of the world would catch a cold. What is now to be figured out is the precise impact a sneezing China could have on the broader world commodities market.

Disappointing Chinese data rile copper market

There is much value in a large range of solid and gaseous waste materials generated in the process of making steel. Their scientific recycling offers multiple benefits to steelmakers, as it helps keep the environment clean. Commercial gains from waste recycling and the privilege of wearing a &lsquo;friends of environment&rsquo; badge are reasons for progressive steelmakers like SAIL and Tata Steel to pursue zero waste target. In an era of high cost of raw materials and energy and the government ever raising the bar on clean environment norms, the steel industry remains under pressure to invest in technologies for reduction in waste generation and optimum recycling of metallics derived from slag and sludge.

Virtues in optimum steel waste recycling

Toyota Tsusho Corp of Japan, which is in the process of commissioning a rare earths plant in Odisha is lucky to have been spared agitations by hairshirted environmental groups that are the fate of similar smelters built elsewhere in the world. Agitations are because any smelter engaged in production of rare earths elements is fraught with harming the environment. Undeniably, mining and processing of rare earths will leave in their wake many toxic and radioactive by-products.

China plays truant with rare earth metals

New Delhi cannot be faulted for exercising utmost caution while permitting export of foodgrain and a sensitive commodity like sugar. The same discretion is exercised while extending the ban on exports of pulses, in which demand is perennially ahead of supply. The government does not mind any criticism for the time it will take to arrive at an export decision. For its priority is to ensure food for a population of 1.2 billion. Ideally, at any point it would like to have wheat and rice in FCI and state-owned godowns well in excess of 'minimum buffer norms' and comfortable stock of sugar in factory warehouses. All this is more in the nature of an insurance against setback in farm production in a difficult monsoon year.

Caution, the hallmark in foodgrain exports

It will be unfair if we in India are asked to pay more for vanilla ice cream this summer though wholesale vanilla prices in the world market are up from $25 a kg to $35-40 a kg in the past two months. This marks a break of a six-year price drought for the spice.

Indian crop setback causes vanilla cornering

India&rsquo;s rice production in 2011-12 increased 7.1 per cent to 102.75 million tonnes (mt), which, according to the UN Food and Agriculture Organisation, is part of the &ldquo;good performance in Asia&rdquo;. In fact, the improvement in the production of this foodgrain has been widespread in the continent, with China making major gains and Indonesia, Vietnam, Cambodia and the Philippines reporting higher output. Pakistan, too, has seen a recovery in production after the earlier year&rsquo;s floods caused damage to the crop.

Focus on sustainability in Indian rice exports 

The symbiotic relationship between crude oil and sugar prices should still be at work. In fact, any rally in oil will prove to be an incentive for Brazil where cars are designed to use up to 100 per cent ethanol to commit a much larger portion of cane crop for production of the fuel during the new season to start next month (for India and most other cane-based sugar producers, the season starts in October.

Surplus burden to hit sugar

The rapidly growing Indian steel industry has been nursing fears of the local market getting swamped by low-priced imported material, leaving it with idle capacity. No less damaging for local steel mills will be the way such imports, often backed by hidden and not so concealed subsidies, could deny them real price realisation for their products. Fortunately, the industry has managed to get finance minister Pranab Mukherjee&rsquo;s ear.

Steel firms manage to get government's ear

Steel czar Lakshmi Mittal was underlining a virtue of owning mills in more than one geography when he once said the knowledge bank thus getting automatically created allows the group to quickly put a team together, drawing resources from different centres to set things right if anything goes wrong anywhere. Not very well known is the fact that for Mittal, the inspiration to grow the steel business through takeovers was what Rama Prasad Goenka was doing earlier within the country.

Expansion by steelmakers: Value accretion or erosion?

India, which continues to surprise the world with its appetite for gold jewellery, saw demand for the adornment slipping 26 per cent to 125.3 tonnes in the third quarter of 2011. Even then, the managing director of Gitanjali Gems Mehul Choksi said in an interview with Reuters that last year closed with Indian gold jewellery demand rising between five and seven per cent.

Kunal Bose