India’s GDP growth rate in q4 FY 2012 has slumped to 5.3% on a year-on-year basis, manufacturing and latest government data shows manufacturing and engineering sectors have been hit by slowdown in the economy.
However, a compiliation of upcoming projects in steel and iron ore by Commodity Online shows that industry majors are going ahead with their capacity expansion projects in 2012-13. Tata Steel Ltd expects Indian steel industry to grow at 6.9% in 2012 and steel prices may remain at elevated levels due to structural tightness in domestic raw material market.
Kalyani Steels - a Bharat Forge Group company proposed an investment of Rs.150 billion to set up a 3 million tonne carbon and alloy steel unit at Yadgir, Karnataka. The project has received an approval from the State High Level Clearance Committee (SHLCC) and is expected to be completed by May 2015.
NMDC Ltd with Rashtriya Ispat Nigam Ltd (RINL) proposes to invest Rs.10 billion for an iron ore pellet plant at Visakhapatnam, Andhra Pradesh. The unit would have a capacity of 4 million tonnes.
Tata Steel Performance has completed its 2.9 mn tonnes brownfield expansion project in Jamshedpur in Q4FY 2012 and trial production ahs begun. The company expects production to be boosted in FY’13 on start-up of brownfield expansion , while expansion of Greenfield project in Odisha is on track.
Tata Steel expects The Kalinganagar Greenfield Integrated Steel Plant, Odisha to supplement the production capacities of the Jamshedpur Works, producing flat products in premium, value-added steel grades. The project will comprise major facilities like the Sinter Plant, Pellet Plant, Coke Plant, Blast Furnace, Steel Melt Shop, Hot Strip Mill, Cold Rolling Mill and Raw Material Handling units. Tata Steel informs that preliminary work on the 6 million tonne per annum capacity Greenfield steel plant at Kalinganagar, Odisha(to be constructed in two phases) is in progress, focusing on land acquisition, rehabilitation and resettlement work.
SAIL Ltd, the leading public sector steel company in India, made a capital expenditure of Rs 11,000 cr for modernization and expansion and in 2012-13 several new major production facilities will become operational at SAIL’s IISCO Steel Plant at Burnpur, including Raw Material Handling System, Sinter Plant, COB-11, Blast Furnace, SMS and casters, Power Blowing Station and Wire Rod Mill, paving the way for full-fledged operations to start in this greenfield plant.
Sesa Goa Ltd, a leading iron ore producer belonging to the Vedanta Group, has recently reported that expansions of the pig iron capacity to 625 ktpa and metallurgical coke capacity to 560 ktpa are progressing well and will be commissioned in the current quarter.
CMIE View
Fiscal 2011-12 is likely to turn out to be a year of record completion of investment projects. As of mid-May, a total of Rs.3.8 trillion worth of projects were commissioned during the year. This is shade better than the previous year's Rs.3.4 trillion but still a short, by a whisker, of the Rs.3.85 trillion completion achieved in 2009-10, according to an assessment by Centre for Monitoring of Indian Economy (CMIE).
The rise of completion again in 2011-12 indicates that the capex growth has not petered out. 2011-12 was a particularly difficult year. Availability of coal, gas and iron ore were highly constrained, interest rates were high, inflation was high and growth had slowed down. The general economic environment had turned sombre. Yet, capacities of key industries such as electricity, steel and petroleum refining increased handsomely, CMIE said.
Source: Commodity Online