Page 1 Steel Update - June 2021 J. M. Baxi & Company

MONTHLY REPORT STEEL JUNE 2021 Page 2 Steel Update - June 2021 J. M. Baxi & Company TABLE OF CONTENT

PORT ANALYSIS

STEEL TRAFFIC AT INDIAN PORTS (QTY IN METRIC TONNES) 3

COUNTRY-WISE STEEL IMPORTS TO INDIA MAY - 21 (QTY IN METRIC TONNES) 4

COUNTRY-WISE STEEL EXPORTS FROM INDIA MAY - 21 (QTY IN MT) 4

MAJOR STEEL IMPORTERS MAY - 21 (QTY IN MT) 5

MAJOR STEEL EXPORTERS (QTY IN METRIC TONNES) 6

MARKET OVERVIEW AND TRENDS

JSW Group amalgamates large project divisions of steel & cement businesses 7

ArcelorMittal Nippon Steel charts out 5-millon-tonne expansion in 3 years 8

Iron ore export to China destabilises steel production in India 10

Steel exports must continue to sustain production 12 Page 3 Steel Update - June 2021 J. M. Baxi & Company

PORT ANALYSIS STEEL TRAFFIC AT INDIAN PORTS (Qty in METRIC Tonnes)

PORT APR-21 APR-20 VARIANCE

CHENNAI 85780 95370 -9590

COCHIN 10659 94 10565

DAHEJ 20920 14566 6353

DHAMRA 47616 54424 -6807

ENNORE 41469 25027 16442

GANGAVARAM 150000 61000 89000

HALDIA 34573 68193 -33620

HAZIRA 71000 0 71000

KANDLA 88654 123894 -35240

KATTUPALLI 6300 0 6300

MANGALORE 14271 3950 10321

MORMUGAO 107653 114264 -6611

MUMBAI 245125 182638 62487

MUNDRA 45219 79532 -34313

PARADIP 269775 241325 28450

VISAKHAPATNAM 60200 66200 -6000

GRAND TOTAL 1299214 1163221 135993 Page 4 Steel Update - June 2021 J. M. Baxi & Company

COUNTRY-WISE STEEL IMPORTS TO INDIA MAY - 21 (QTY IN METRIC TONNES)

(QTY IN METRIC COUNTRY TONNES) CHINA 15076 INDONESIA 9567 ITALY 682 JAPAN 9938 SAUDI ARABIA 148 SOUTH KOREA 44208 TAIWAN 14361 U.A.E. 23956 UNITED KINGDOM 7000 UNITED STATES 13371

COUNTRY-WISE STEEL EXPORTS FROM INDIA - MAY - 21 (QTY IN MT)

(QTY IN METRIC COUNTRY TONNES) BELGIUM 80000 CHINA 90700 HONG KONG 29470 ITALY 156932 MALAYSIA 52677 MEXICO 30000 PHILIPPINES 26500 POLAND 14071 SAUDI ARABIA 4482 SINGAPORE 93500 SPAIN 4438 SRI LANKA 57300 TAIWAN 10000 TURKEY 24929 U.A.E. 6400 UNITED STATES 845 VIETNAM 80500 Page 5 Steel Update - June 2021 J. M. Baxi & Company

MAJOR STEEL IMPORTERS MAY - 21 (QTY IN MT)

(QTY IN METRIC IMPORTER TONNES) JINDAL SAW LTD. 41348

ESSAR STEEL INDIA LTD. 27762

ARCELOR MITTAL NIPPON STEEL INDIA LTD. 17336

CHINA STEEL CORPN. INDIA PVT. LTD. 14361

JINDAL STEEL AND POWER LTD. 7035

MARUTI SUZUKI INDIA LTD. 4042

TUBE INVESTMENT OF INDIA LTD. 3123

DMSONS AND METAL PVT. LTD. 2684

SAFI TRADERS 2409

WIRTGEN INDIA PVT. LTD.44 2009

VINAYAGA MARINE PETRO 1555

JFE SHOJI STEEL INDIA PVT. LTD. 1317

INTEGRAL INDUS. PVT. LTD. 1032

SKM IMPEX CO. LTD. 1000

TATA MOTORS LTD. 821

SATO SHOJI INDIA PVT. LTD. 815

INDUSTRIAL METALS 485

METAL ORE LTD. 458

POSCO INDIA DELHI STEEL PROCESSING CENTRE LTD. 443

ASHOK LEYLAND LTD. 357 Page 6 Steel Update - June 2021 J. M. Baxi & Company

MAJOR STEEL EXPORTERS MAY - 21 (QTY IN METRIC TONNES)

(QTY IN METRIC EXPORTER TONNES) ARCELOR MITTAL NIPPON STEEL INDIA LTD. 127000

ASIAN COLOUR COATED ISPAT LTD. 15605

BHUSAN POWER & STEEL LTD. 63500

INDIANA GRATINGS PVT. LTD. 410

ISMT LTD. 297

JINDAL SAW LTD. 4620

JINDAL STEEL AND POWER LTD. 123478

JINDAL STEEL INDIA PVT. LTD. 21000

JINDAL STEEL WORKS LTD. 284827

JSW STEEL COATED PRODUCT LTD. 24418

JSW STEEL LTD. 25500

KREDENCE MULTI TRADING LTD. 4438

RASHTRIYA ISPAT NIGAM LTD. 80000

STEEL AUTHORITY OF INDIA LTD. 32100

TATA STEEL BSL LTD. 20000

TATA STEEL LTD. 151885

TURAKHIA INTL. PVT. LTD. 965

VEDANTA ALUMINIUM LTD. 54929 Page 7 Steel Update - June 2021 J. M. Baxi & Company

JSW GROUP AMALGAMATES LARGE The $12 billion JSW Group will now have a single group interface for all its PROJECT DIVISIONS large project divisions in the steel and OF STEEL & CEMENT cement businesses. BUSINESSES Following the successful integration of its retail trade across Steel and Cement into JSW One in the East, the $12 billion JSW Group will now have a single group interface for all its Large Project divisions in the Steel and Cement businesses. The Indian conglomerate has created Aikyam, a technology platform where details can be accessed by the Managers of Large Project Divisions from both these businesses to capitalize on the potential opportunities. Aikyam will digitize the end-to-end institutional sales processes at JSW Group by integrating data across the two business entities to create a single 360 degree view of the large project customers. This will enable its group of Client Managers to elevate their interactions with large clients and identify opportunities to cross sell, thereby offering an enhanced customer experience to these clients, the company said in a statement. Commenting on the integrated offering for Large project Businesses, Parth Jindal, Director of JSW One said, “JSW Group has the unique advantage of providing an integrated offering to its large customers in the Infrastructure & Building industries space. We have leveraged the JSW One advantage for our retail customers successfully in the Eastern part of India and are now extending it to our Large Project clientele through our Aikyam initiative. “I expect Aikyam to fundamentally change the way JSW works with its large clients, while ensuring that our relationships continue to get stronger through a single Group interface, bolstered by strong internal collaboration. In the near future we plan to offer other group products such as paints, construction chemicals, RMC and many others to our large institutional customers through the Aikyam interface.” The Aikyam integration is expected to unlock opportunities for the Steel and Cement businesses of JSW Group across key States of , Gujarat, Karnataka, Telangana & Andhra Pradesh. It is expected to unlock new demand for JSW Steel and JSW Cement as well as other group companies going forward. The Group has already onboarded MMRDA, MHADA, MCGM, DMRC, Afcons Infra, BG Shirke, CapaciteInfraprojects, DilipBuildcon, ITD Cementation, J Kumar Infra, JMC Projects, L&T, L&W, Navayuga Engineering, NCC, Rajapushpa Realty, Shapoorji Pallonji & SNC during the pilot run of the integrated service.

Source: Business Standard Page 8 Steel Update - June 2021 J. M. Baxi & Company

ARCELORMITTAL NIPPON STEEL CHARTS The two phases of expansion at Hazira, Gujarat, along with OUT 5-MILLON-TONNE downstream, are expected to cost EXPANSION IN 3 YEARS Rs 50,000 crore ArcelorMittal Nippon Steel India’s play in the steel market is set to get bigger. The company is busy making plans that would increase its capacity by five million tonnes in the next three years while laying building blocks for the phase after. Dilip Oommen chief executive officer ArcelorMittal Nippon Steel India (AM/NS India), said the groundbreaking for the expansion to 14 million tonnes was expected this year. “In the next phase, we will take it up to 18 million tonnes,” he added. The two phases of expansion at Hazira, Gujarat, along with downstream, are expected to cost about Rs 50,000 crore. Hazira has a capacity of about 9 million tonnes. For the expansion at Hazira from 9 to 14 million tonnes, AM/NS India has land. Acquisition of land for the second phase is underway. “We have made very good progress with the Gujarat government,” said Oommen. However, he pointed out that logistics would have to be in place for the second phase. That would entail enhancing port facilities, getting the railway line into the plant and improving road logistics. “Lot of work has already started,” he said. The first phase would be completed in three years. For the second phase, AM/NS India has an option of taking up Hazira or starting construction of a new plant in . “We will have to decide appropriately. There are many options and we will have to select the right option,” explained Oommen. In March, AM/NS India had signed­ an MoU for a 12-million tonne integrated steel plant at an investment of Rs 50,000 crore, in the presence of ArcelorMittal executive chairman Lakshmi Mittal and Odisha Chief Minister Naveen Patnaik.­ Oommen said, “In Odisha, we are in active discussions with the government for setting up a 12 million tonne plant. We have specialists from all streams working on this right now and land acquisition process is on.” Even as the major growth plans are being charted, an investment of Rs 14,500 crore is underway at Hazira and Odisha. Growth plans would also entail inorganic opportunities. AM/NS India has submitted an expression of interest for Neelachal Ispat Nigam Ltd (NINL), which is being privatized by the government. “We are open to all opportunities that may come up in the future. We are very Page 9 Steel Update - June 2021 J. M. Baxi & Company closely studying opportunities and we will participate,” said Oommen. Clearly, the joint venture of world’s leading steel companies – ArcelorMittal and Nippon Steel – is betting big on India. The companies jointly acquired under the insolvency code for Rs 42,000 crore in 2019. Last week, AM Mining India’s resolution plan for – a downstream unit – was approved by the committee of creditors and the resolution plan has been filed with the National Company Law Tribunal (NCLT). Oommen said that there could be mothballed assets in the plant that need to be put back on line. “The plant has done well, but there is scope for improvement and potential for capacity to go up,” he explained. The last one year has worked out well for steel companies as demand improved and prices surged. All major domestic steel producers are restarting expansion plans and by FY24, 29 million tonnes of additional capacity is expected to go onstream, excluding AM/NS India’s expansion. Oommen, however, reminded that steel was a cyclical industry. “Right now, it’s a good market. But it has also seen bad times,” he said. He also said that Indian steel prices were the lowest in the world. Steel companies increased prices this month, but there is still a gap of about Rs 8,000 a tonne for hot rolled coil – a benchmark for flat steel – with landed cost of imports.

Source: Business Standard Page 10 Steel Update - June 2021 J. M. Baxi & Company

IRON ORE EXPORT TO CHINA DESTABILISES In the first four months (January-April), iron ore exports from India increased by STEEL PRODUCTION 66 per cent to 22.42 million tonne (MT). IN INDIA About 90 per cent of the export goes to China

Spike in iron ore export, largely to China, has made the lives of Indian steel makers miserable. Though global steel prices have been high in the first four months of this year, producers are struggling to supply as there is a huge shortage in raw material, iron ore. In the first four months (January-April), iron ore exports from India increased by 66 per cent to 22.42 million tonne (MT). About 90 per cent of the export goes to China. The country, which is the world’s largest steel producer, imported 20.28 MT of iron ore from India in the first four months compared to 12.24 MT in the same period last year. The price of hot rolled coil (HRC) increased to Rs 70,000 per tonne as compared to Rs 45,000 at the same time last year. On the other side, NMDC’s iron ore price jumped 156 per cent to Rs 6,560 a tonne in April-beginning, compared to Rs 2,560 a year back Due to economic disruptions post Covid-19 outbreak, iron ore production fell sharply by almost 44 million tonne (MT) to 202 MT in 2020-21 vis-a-vis 246 MT in the previous year. However, the country’s exports increased by 62 per cent to 60 MT against 37 MT. It created an overall short supply of around 70 MT after adjusting incremental exports and drop in production. Because of huge volumes of iron ore exports, Indian companies are not able to evacuate their share of raw material from eastern India, especially Odisha, the major iron ore exporting state, say industry sources. The logistic congestion had recently disturbed production of JSW Steel’s Dolvi plant in Maharashtra. Steelmakers in the country have demanded an iron ore export ban as the shortage resulted in a spike in prices of raw material as well as steel. Union Minister Dharmendra Pradhan a few months ago had said the government was considering imposing a short-term ban on exports of iron ore in the wake of domestic shortage. But the government did not take any steps. Big steelmakers with captive Page 11 Steel Update - June 2021 J. M. Baxi & Company iron ore mines like Tata Steel, JSW Steel and ArcelorMittal Nippon are largely unaffected by the rise in raw material cost, but are getting the benefits of the resultant rise in steel prices. It is largely the small secondary steel players that have witnessed huge losses because of a steep rise in iron ore prices. The secondary steel units contribute 50 per cent of steel production in India.

Source: Business Today Page 12 Steel Update - June 2021 J. M. Baxi & Company

STEEL EXPORTS MUST CONTINUE China had rolled out 375 MT of crude steel in the period (56.5%) that exceeds last year’s level by TO SUSTAIN 16%. PRODUCTION

During the first four months of 2021, the global steel industry has produced 663 MT of crude steel which is around 14% more than last year. China had rolled out 375 MT of crude steel in the period (56.5%) that exceeds last year’s level by 16%. Production growth of a critical commodity signifies a positive outlook for the metal sector. It is reported that both the US and the EU are passing through some sort of supply shortage as both these markets have restricted steel imports, the former with the help of additional duties on import of steel and aluminium (25 and 10%, respectively) under Section 232 of the US trade Act and the EU by imposing tariff-cum- quota system against traditional import sources of South Korea, Japan and Turkey. Backed up by increased Government spending on Infrastructure (President Biden’s recent announcement of $2 trillion Federal investment) with emphasis on Buy America policies and stimulus expenditure in France and Italy, the practice of augmenting inventory in a rising market by merchant traders, service centres and OEMs fired the fuel. As a result the daily affected rate of Covid in India, along with the daily mortality rate have shot up. Nationwide lockdowns are now replaced by localised lockdowns with allowance for the industry to continue operation with limited number of employees. This trend is indicative of a growing advanced countries on one side and subdued economies of the emerging developing countries (excluding China) pulling up its resources to fight the menace on another side.

China is presenting a curious scenario. In an effort to curb air pollution and CO2 emissions, the Chinese Government is limiting steel production. Although the production growth in the first four months of 2021 does not indicate that the industry is falling in line with the government line of thinking, the domestic demand is showing a rising trend (rising inventory accumulation by traders and construction companies, more capital spending by Page 13 Steel Update - June 2021 J. M. Baxi & Company industrial companies and more residential construction by households). Based on March’21 production in China, the annualised level of Crude steel production for China has been assessed as 1.107 billion tonne in 2021 which is 5% more than the production level of 2020. Rising steel production by China necessitated a growing demand for raw materials, scrap, iron ore and semi-finished steel. Chinese domestic market prices of steel have been on a northbound journey. In response to the requests made by project authorities and a few major OEMs, the Chinese government has advised the steel producers strongly to curb steel production. Two recent measures announced by Chinese government are interesting. With effect from 1st May’21, all export rebates applicable (9-13% VAT rebates) is withdrawn which means that Chinese export offers for HRC, rebar, rounds would go up. The HRC SS 400 ex Chinese port was $ 881/t in last week of April’21 and reached $ 898/t I on 29th May’21 before rising to $1018 in third week of May’21.This has helped Indian exporters to raise their offers for HRC for Vietnam. Second, the booming Chinese economy (GDP to grow by 7.5-8.5% over 2020) is exhibiting all signs of growing steel demand as merchandise exports are up, consumer spending is on the rise and capex is substantial. The crude steel production by India during April’21 was 8.3 MT which is significantly higher compared to last year’s level when the country was knee-dip in the Covid crisis with a total lockdown and thus this monthly growth needs to be sustained throughout the year and need not be once-in-a-year type. It appears that partial lockdowns in different pockets in May’21 would result in a subdued demand phase in June;21, likely to be over by Mid July’21. It depends on the intensity of 3rd and 4th wave of the Covid in influencing he domestic demand. The export efforts in steel must get strengthened in the coming months with the above changes in Chinese policies which would surely make export offers higher. It is the right time for steel exporters from India to widen the export basket, outreach many other spaces hitherto unexplored and improve necessary quality upgradation in the product range to establish an export-oriented steel industry.

Source: Financial Express Page 14 Steel Update - June 2021 J. M. Baxi & Company

REPORTS FOR JUNE 2021

J. M. Baxi & Co. Monthly Agri Products Update

J. M. Baxi & Co. Monthly Automotive Logistics Update

J. M. Baxi & Co. Monthly Cement Update

J. M. Baxi & Co. Monthly Chemical Update

J. M. Baxi & Co. Monthly Coal Update

J. M. Baxi & Co. Monthly Container Update

J. M. Baxi & Co. Monthly Cruise Shipping Update

J. M. Baxi & Co. Monthly Edible Oil and Extractions Update

J. M. Baxi & Co. Monthly Fertilizer Update

J. M. Baxi & Co. Monthly LPG & LNG Update

J. M. Baxi & Co. Monthly Mineral and Metal Update

J. M. Baxi & Co. Monthly Oil and Petroleum Update

J. M. Baxi & Co. Monthly Port Update

J. M. Baxi & Co. Monthly Project Cargo Update

J. M. Baxi & Co. Monthly Seafarer Insights Update

J. M. Baxi & Co. Monthly Steel Update Page 15 Steel Update - June 2021 J. M. Baxi & Company Research Cell, Contact Details:

J. M. Baxi & Co., Godrej Coliseum, Tel: 022 61077100 Ext 161/145, Office No. 801, 8th floor, “C” wing, Mob: 091-7506004224 / Behind Everard Nagar,Off. Somaiya 7045659111 Road, Sion. E-mail: [email protected], Mumbai - 400022 INDIA Website: www.jmbaxi.com