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  • What is compelling Iran to set up its own Graphite Electrodes Plant?

    What is compelling Iran to set up its own Graphite Electrodes Plant?

    Iran’s steel industry has been growing rapidly in recent years in line with the country’s ambitious plan to raise output to 55 million tonnes per year by 2025.The country’s crude steel output in 2018 stood at around 22.8 MnT, registering a surge of 7% y-o-y basis. Also in first five months of 2019 (Jan-May), the same stands at around 10.9 MnT up by 5% against the corresponding period of previous year. The Iranian steel industry is largely based on electric arc furnace steelmaking and with growing steel production and demand, the country is facing difficulties in procuring graphite electrodes (GE) – a key raw material for EAFs amid sanctions imposed by U.S. last year.

    In August 2018, U.S. had announced the first tranche of financial sanctions on Iran targeting the Iranian currency purchase and key industries after pulling out of the 2015 nuclear deal with Tehran. This restricted Iran’s purchase of U.S. dollar which is the most preferred currency to carry out the global trade.

    Later on in November 2018, U.S. imposed a second round of sanctions on Iran targeting country’s oil sector where any oil trade with Iran would result in imposition of secondary sanctions on that country. And if this was not enough, in early May this year, the Trump administration imposed third round of sanctions on Iran’s metal industry including iron and steel, aimed at cutting off revenue to Iran completely. These sanctions are warning to other nations that allowing Iranian steel and other metals into their ports will attract secondary sanctions upon them also.

    Subsequently, with such restrictions in place leading to GE shortage in the country, Iran that has already set up a joint venture with the local companies plans to start the trial production of the plant by March 2020. In 2017, a joint venture called Novin Electrode was set up between Iranian state mines and metals holding company Imidro, Mobarakeh Steel Co and Khorasan for the production of graphite electrodes and the total investment estimated in the same was USD 200 million.The initial plant capacity is around 30,000 tonnes which will be increased to 45,000 tonnes per year in the next phase.

    How Iran is meeting its GE requirements amid sanctions?

    Although before sanctions Iran was completely dependent upon imports from India and China to meet their GE requirements, post sanctions India completely stopped exporting the same to Iran. However, from Iran’s customs data it can be seen that GE is still being indirectly supplied to the country from China.

    In 2018, Iran imported about 109,331 tonnes of GE against 87,480 tonnes in 2017, thus marking an increase of 25% y-o-y basis. If we analyse the country-wise imports, in 2018 GE exports from India to the Iran dropped significantly and almost became negligible post August. However, continuing its trend, China remained the top GE exporter to Iran despite sanctions and in fact during Aug-Dec’18, the country’s GE exports to Iran recorded a surge of 42% against the corresponding period of 2017.

    Looking at the 2019 numbers, during Jan-Apr Iran imported about 51,618 tonnes of GE against 36,615 tonnes in the same period last year, thus registering an increase of 45% y-o-y basis. Now out of the total imports of 51,618 tonnes in first four months of ongoing year, about 85% came from China followed by UAE (8%) and Germany (4%) whereas imports from India were quite insignificant.

    As per the market sources, the circumvention of U.S. sanctions is taking place by the trade participants in collusion with shipping agents in Oman and Turkey. The Chinese exporters are directing their exports to Oman or Turkey in middle-east and after altering the bill of lading where the origin of shipment is changed at the port, the same is directed to Iran thus making evasion of U.S. sanctions possible. As this trade arrangement still involves quite a lot of risk, Iran is eagerly focusing on having in-house GE production facility to have interrupted domestic steel production.

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  • Will the EAF Steel Sector in Southeast Asian Countries Support Graphite Electrodes Demand in Future?

    Will the EAF Steel Sector in Southeast Asian Countries Support Graphite Electrodes Demand in Future?

    The hype around graphite electrodes demand and prices that started in the latter half of 2017 due to supply-side structural changes in China seems to have subsided with GE demand exceeding supply in China and country’s subsequent exports of its produce to various other countries. With no stopping to the price plunge in Chinese as well as global GE prices, let us analyse how the South-east Asia’s EAF steelmaking which requires electrodes as the key raw material will support the GE demand in the coming years ahead:

    Vietnam – Currently, Vietnam’s steel industry is in its stage of development, with most steel producers being small-scale mills. The EAF-based method is widely used in Vietnam (around 80% of steel production) as compared to the BOF process. Many new production lines are coming up and majority of steel makers have concrete plans for capacity expansion while some have plans to more than double their existing capacity.

    According to market research, the construction and construction market in Vietnam reached USD 13 billion in 2017, up 9.7% year-on-year. The average annual growth rate in the next 10 years is expected to reach 7.5%, which will play a powerful role in steel consumption. Moreover, the development of Vietnam’s steel industry in the later period is set to meet not only the needs of the country, but also to expand country’s sales to the ASEAN region, resulting which the output of electric furnace steel will continue to rise, supporting GE demand.

    Indonesia – Indonesia is the most populous country in Southeast Asia however its crude steel production is only about 5 MnT and hence is dependent upon imports to meet its steel requirements. Local steel mills are basically electric furnace based enterprises. Due to the instability of scrap resources and high electricity prices, the operating rate of electric furnace steel enterprises is unstable and the capacity utilization rate is low.

    At present, 80% of Indonesia’s steel resources come from imports, while the government’s target for imports is only 30% resulting which there is a high scope for growth in country’s steel production in the coming years ahead. At present, the two major steel mills in Indonesia (such as Kagang and Gunung Steel) have an electric furnace equipment of 120-130 tones, and other steel mills mainly use 20-70 tonnes of small electric furnaces. Thus, although in the long term country’s electrodes requirement may incresae, at present its demand is quite limited.

    Malaysia – In recent years, Malaysia’s economic development has been relatively flat, and its steel industry has many inherent shortcomings. As an upstream industry in the steel industry, its iron ore raw materials, although available locally, are relatively scarce, and are essential for smelting steel. The coking coal is almost zero, and the imported steel has a greater impact on domestic steel production.

    At present, the apparent consumption of steel in Malaysia is around 12 MnT, mainly based on short-process production, of which EAF production capacity of about 8 MnT. The concentration of steel-making enterprises is low, the production level and automation is low, and the actual capacity utilization rate of EAF steel mills is only about 35%. After 2012, the major steel mills including Golden Lion Group and Anyu Steel are basically new blast furnace projects, and new electric furnaces are rare, which means that the electrodes demand from Malaysia is also quite limited.

    Thailand – Thailand’s construction industry and automobile manufacturing industry are relatively developed. The steel consumption capacity is second only to Vietnam in Southeast Asia. In 2018, Thailand’s crude steel output is about 4.5 MnT. At present, there is only one blast furnace ironmaking enterprise in Thailand, and the rest are electric furnace steelmaking plants, mainly producing blanks. At present, the largest electric furnace steel producers in Thailand are G Steel and Tata Steel (Thailand), all of which are electric arc furnace equipment of more than 80 tonnes. Thus, if the domestic steel demand picks up in the country, it is likely that the GE demand will also increase subsequently in the coming years ahead.

    Image Credits: Industrial Heating

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  • Chennai Vehicle Recycling Unit to Start Operations by Q2: Mahindra Accelo

    Chennai Vehicle Recycling Unit to Start Operations by Q2: Mahindra Accelo

    Vehicle recycling is gaining momentum in India. The country’s first vehicle recycling facility was formed by a joint venture between Mahindra Accelo and MSTC Ltd, a Government of India enterprise. SteelMint, caught up with Mr. Vijay Arora, Vice President, Strategy, Operations and Business Development, Mahindra Group Accelo, India, to learn about his views on the present and future vehicle recycling scenario in India. Below are edited excerpts from the interview:

    1. How do we see the changing scenario in the Auto recycling industry in India? What could be the growth potential of this sector in the coming years?

    Recycling is the need of the hour. Talking about vehicle recycling, almost 50,000 new vehicles are put on Indian roads every day. If we take the average life of a vehicle to be 15 years, there are about 26 million end-of-life vehicles in India currently. And this is expected to increase up to 42 million by 2025.

    These numbers are testimony to the tremendous growth potential and necessity for the recycling industry. The market is showing a positive transition as awareness about the benefits of recycling as well as disadvantages of doing it in an unscientific manner are increasing. Deploying state-of-the-art recycling technologies for sorting waste will further improve recycling.

    Awareness about the fact that ‘traditional recycling methods are not sufficient for quality recycling’ will offer great possibilities in this sector in the coming years. Even the government is taking note of these things.

    2. What are the present developments of Mahindra CERO’s ELV processing facility in Noida which was set up in co-operation with MSTC?

    We have set up India’s first state-of-the-art facility at Greater Noida for de-polluting, dismantling, bailing and shearing end-of-life vehicles (ELVs). We operate with an objective of zero tolerance towards unscientific methods of treating ELVs. We have the capability to recycle cars, trucks and buses, 2-wheelers and industrial scrap. We are shortly starting operations at our second collection-cum-dismantling centre at Chennai and will be opening 3 more centres this year.

    3. What are your views on implementation of the ‘Vehicle Recycling Policy’? By when do you feel it’s impact is likely to be felt?

    The Vehicle Recycling Policy, which would make scrapping of end-of-life vehicles mandatory, will have its impact in a big way. The impact would be visible once the policy is in place, but one needs to keep in mind that there exists an elaborate unorganised sector that has grown and become an established system in the country. It will take considerable time for the mind-set to change and an organised recycling industry to become effective.

    4. What is the progress at the other 3 auto recycling facilities which were planned earlier across India? What are the other future initiatives in the pipeline?

    We are starting our operations in Chennai by the end of this quarter. Post-that, we will set up 4 more facilities at Bengaluru, Kolkata, Mumbai/Pune and Hyderabad. We plan to be present in 25 locations in the next 2-3 years, covering all major catchment areas. ELV shredding is also planned and will come up as soon as we have more clarity on the policy.

    5. A few other major companies in India are also eyeing an entry into the recycling space. How is Mahindra likely to withstand this competition?

    Setting up state-of-the art recycling infrastructure pan-India and inclusion of the informal sector within CERO will be Mahindra’s differentiating factor. We would focus on our USPs of utilizing latest recycling technology, developing partnerships with all stakeholders and providing hassle-free process for our customers in scrapping their vehicles by strictly following environmental norms during the process.

    6. How much steel scrap is expected to be generated domestically and how much scrap will India import once these shredding plants come into operation?

    In 2015, India’s domestic demand for steel scrap was about 26 million tonnes (MnT) while domestic supply was about 19-20 tonnes (MT), leading to imports of about 7-8 MnT. By 2030, this demand is expected to grow to 45-50 MnT. Production of steel scrap domestically will help in reducing India’s dependence on steel scrap imports, thereby saving the country’s precious foreign exchange reserves.

    7. What are the challenges this industry is facing and how can these be fixed from your point of view?

    All the stakeholders need to play some role for this industry to prosper. Currently, ELV owners are not aware of the ill-effects of running their old vehicle. Those who want to scrap it, do not have proper channels to do so. We have issues of lack of rules and regulations pertaining to deregistration, GST etc. A government policy that makes scrapping of vehicles mandatory and provides tax incentives or investment promotion subsidies will help formalise this sector. Secondly, following best practices of European and other developed countries of formulating an Extended Producer Responsibility (EPR) for the original equipment manufacturers (OEMs), which will also help as they will be then integrated into the ecosystem

    In order to know more about India’s vehicle recycling, book your seat at SteelMint’s 4th Steel Scrap, Billet & DRI Trade Summit and get a chance to hear insights from Mr. Vijay Arora. The conference is being organised during 27-29th August, 2019 in Bangkok, Thailand.

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  • Indian Domestic Scrap Demand Likely to Double by 2030, Reveals Govt Policy

    Indian Domestic Scrap Demand Likely to Double by 2030, Reveals Govt Policy

    The Ministry of Steel has prepared a draft steel scrap policy, envisaging a framework to facilitate and promote the establishment of ferrous scrap/steel scrapping centres in India. Availability of right quality of scrap, in adequate quantity, is one of the critical factors for future growth of both the EAF/IF sectors and keeping this objective in view and in order to develop a globally competitive steel industry by adopting a state-of-the-art environment-friendly technologies, the ministry has come up with the much-awaited draft policy. All stakeholders are requested to submit comments latest by 14th July, 2019.

    While iron ore remains the primary source of steel making, used or re-used steel in the form of scrap is the secondary raw material for the steel industry. As on March 2019, 1128 EAFs & IFs are operating in the country and largely depend upon scrap as a raw material to produce steel. The use of every tonne of scrap shall save 1.1 tonnes of iron ore, 630 kg of coking coal and 55 kg of limestone, it added.

    Why is there a need for the policy?

    The availability of scrap is a major issue in India and in 2017 the deficit was to the tune of 7 million tons (MnT). The gap between demand and supply is likely to be reduced in the future and the country may be self-sufficient by 2030.

    The efficient use of scrap for steel production becomes very crucial for India as 35-40% share has been envisaged from scrap-based steel production in the journey of 300 million TPA by 2030. This shall increase requirement of steel scrap from the present level of around 25 MnT to more than 50 MnT by 2030. This is mainly because with the increase in consumption of steel in the recent past and ELVs, the generation of scrap is likely to be increased considerably. This scrap has to be channelized so that the same can be utilized for steel production in an environmental-friendly manner.

    What are the objectives of the Indian steel scrap policy?

    · To promote circular economy in the steel sector

    · Processing and recycling of products in an organized, safe and environment-friendly manner.

    · To produce high quality ferrous scrap for quality steel production, thus minimizing the dependency on imports.

    · To decongest the Indian cities from ELVs and reuse of ferrous scrap.

    · To create a mechanism for treating waste streams and residues produced from dismantling and shredding facilities in compliance with the Hazardous & Other Wastes (Management &Transboundary Movement) Rules, 2016 issued by MoEF&CC.

    · To promote 6Rs principles of Reduce, Reuse, Recycle, Recover, Redesign and Remanufacture through scientific handling, processing and disposal of all types of recyclable scraps, including non-ferrous scraps, through authorized centres /facilities.

    How will the working model be?

    The increased production of vehicles and increased use of consumer durable and white goods in the last two decades and their rapid obsolescence shall generate large quantities of end-of-life products. This shall result in the generation of a continuous flow of large ferrous scrap for recycling in steel production.

    The collection and/or dismantling centre should either set up by or be associated with a scrap processing centre.

    Logistics may be one of the main challenges for safe and cost-effective transport system for inbound unprocessed products/scrap and outbound processed scraps to the melting shops. Thus, scrapping centres (collection-cum-dismantling centre and recycling centre) need to be supported by an adequate logistic facility in consonance with the National Logistic Policy.

    In order to know more on Indian steel scrap demand-supply scenario, domestic generation & imports, book your seat at SteelMint’s 4th Steel Scrap, Billet & DRI Trade Summit being organised during 27-29th August, 2019 in Bangkok, Thailand.

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  • India: Graphite India Likely to Slash Production Amid GE Market Slump

    India: Graphite India Likely to Slash Production Amid GE Market Slump

    It seems that the slowdown in steel demand and plunge in graphite electrode (GE) prices over the past few months are hitting Indian electrodes manufacturers as, according to some market sources, there is news that Graphite India is contemplating production cuts.

    GE prices in India have been falling since the beginning of 2019, recording a plunge of 35-50%. Graphite India is amongst the largest GE manufacturers in India. With an eye on the weak global GE market scenario, especially in South-east Asia and Europe, and sanctions on Iran by the US, which has resulted in zero exports from India to the Islamic Republic, Graphite India, according to sources, is considering a cut in production unless demand picks up towards the end of this year, which is very unlikely.

    Although the company has not disclosed the quantity of production cuts that may happen, its management might well believe that there is no point in piling up inventory and blocking working capital.

    Graphite India’s annual production is to the tune of 80,000 tonne, and this is primarily from its existing facilities in Durgapur and Nashik. Additionally, it produces another 18,000 tonne at its facility in Germany. The company’s Bangalore unit has suspended operations following environmental concerns. However, the company’s production capacity remains unaffected as it has ramped up production in Durgapur.

    GEs used in electric arc furnaces (EAFs) to manufacture steel witnessed a significant surge in demand in the latter half of 2017 amid supply-side structural changes in China. The country closed all polluting GE units and, at the same time, announced targets to increase the percentage of EAFs in total crude production. This led to a sudden increase in GE demand and shortage in supplies ultimately leading to dramatic rise in prices. With this, the GE prices ex-China also surged, benefiting Indian manufacturers.

    Now, when Chinese GE prices started falling in Nov’18, market participants thought it was a short-term price correction. However, since then the downtrend in electrodes prices has continued and it’s been almost nine months with absolutely no uptick in Chinese GE prices. The key reasons behind this are GE oversupply and tepid domestic steel demand in China. Given the poor in-house market situation, Chinese GE manufacturers have started exporting to the global market, giving tough price competition to Indian manufacturers.

    Will the global GE market witness a lessening of production levels and prices start rising by the end of 2019? Make sure you keep abreast of all upcoming trends by attending the 2nd Global Graphite Electrode Conference to be organized by SteelMint Events from 27-29 August, 2019 in Thailand.

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