Flat Steels- Focus on HR Coils
Upswing in production, consumption
-By K R Vaidyanathan
With the spurt in
demand for consumer products such as cars, refrigerators, washing machines and so on the
domestic consumption of steel has picked up after nearly two year stagnation, boosting
demand for flats which exceeded that of longs by a big margin.
Over the past decade or so, the flat steel
products segment in the country has witnessed a significant expansion, both in production
and consumption. The segment is likely to see more developments, which will pose
challenges characteristic of a highly competitive market place, according to Mr B.
Muthuraman, Executive Director (Special Project), Tata Steel, and its Managing
Presenting a paper titled Flat Steel products in India-A new era at a seminar
held in Kolkata under the aegis of Indian Institute of Metals and Joint Plant Committee,
Mr Muthuraman observed that as much as 88 percent of the new capacities since the
1990s is accounted for by flat steel products--hot-rolled (HR) coils/sheets/plates
as well as cold-rolled (CR) coils/sheets.
Just over a decade ago, flat steel accounted for less than 40 percent of the total
domestic usage; whereas in the developed countries, because of the increasing higher-end
applications, the proportion of steel usage was tilted in favour of flat products, in the
ratio of 60:40, the latter being the share of long products.
Through the 1990s the situation changed in India, thanks to the spurt in the demand for
high-end consumer products such as cars, refrigerators and washing machines. This resulted
in the share of flat products in total steel usage moving up to more than 50 percent. It
would certainly increase further, Mr Murthuraman predicted.
With the domestic demand for steel products, particularly hot rolled (HR) coils, steadily
rising, SAILs Bokaro Steel Plant (BSL), with the modernisation of its hot strip
mill(HSM) completed in 1998-99 is aiming to exceed capacity to meet the growing market
-time production record
The plant achieved an all- time production record of over 3lakh tonnes of HR coils,
clocking an impressive growth of 25percent over average monthly production in 1999-2000.
BSLs progressive stepping up of HR coil production is expected to result in higher
price realisation, coupled with lower cost of production of HR coils. Moreover, the
improved quality pf HR coils from BSLs hot strip mill has enabled SAIL to make
inroads into sophisticated international markets such as US and Europe.
With the Rs 4,469.18 crore modernisation of the Rourkela Steel Plant (RSP) complete, the
plant is expected to produce among other items such as plates, HR plates etc, 3.81 lakh
tonnes of HR coils.
In the private sector, Essar Steel has increased its hot rolled (HR) coil capacity from
two million tonnes to 2.2 million tonnes. The company has also plans to increase this
further through a debottlenecking exercise which is underway.
As of today, Essar Steel has a market share of 20 percent in the HR flat products market
comprising cold rolling/ galvanising (30 percent), LPG sheets (38 percent), plates and
sheets (14 percent) pipes and tubes (5 percent) and other (13 percent) It has also emerged
as the leading supplier to the railways, electrical equipment manufacturers and automobile
Among other units that produce HR coils, the Rs 4,138 crore Jindal Vijaynagar Steel Plant
commissioned the first phase of its hot strip mill over two years back. The HR mill has a
capacity of 1.65 million tonnes a year.
In 1999-2000, the production of finished steel increased to 27.17 million tonnes from
23.82 million tonnes in 1998-99, recording a 14 percent growth during the year. While
integrated steel plants, namely SAIL and Tata Steel improved their performance by 13.7 per
cent and SAIL clearing its huge inventory , the secondary steel producers such as Essar,
Jindal and Ispat performed even better, improving their production performance by 14.3 per
Consumption picks up
Among the Flat products - hot rolled (HR)
Coils, cold rolled (CR) coils and galvanised plain and galvanised corrugated sheets, the
product that was prominent in 1999-2000 was HR coils. At the same time, the domestic
consumption of steel picked up after nearly two years stagnation.
According to the Performance Review of the Iron and Steel, 1999-2000 by the Joint Plant
Committee, the demand (or apparent consumption, namely production + imports - exports) for
steel recorded an increase of 7 per cent between 1998-99 and 1999-2000. The growth in
domestic demand for flats exceeded that of longs by a big margin.Between 1996-97 and
1999-2000, the demand for flats increased by 23 per cent while longs improved 7.5 per
of Flat products
(In million tonnes)
|Source : Joint Plant
Currently, the principal commodities exported
are not only pig iron, sponge iron and semis, but also higher value added commodities,
such as HR Sheets, Coils and Plates. In 1999-2000, there has been a 50 per cent increase
in export of finished steel products from India. Most significant aspects during the last
year export performance was the HR coils / sheet growth of 111.84 percent over the
previous year as shown in the following table:
HR Coil sheet
Producing HR coils of
JPC Bulletin on Iron & Steel - Volume V
January-March 1999, in its feature, "Promotion of Steel Consumption in India"
refers to some of the new technologies that have been developed for producing some
prominent items of flat and long products and indicate their impact on production
qualities, product prices and customer satisfaction.
New technological developments in the flat steel products segment are in the areas of
developing and designing of new products, processes and machinery, for producing sheets
and coils of thinner gauges. Till recently HR coil mills existing in the country could not
produce HR sheets of less than 2.5 mm thickness, but modern HR coil mills can produce HR
coils with thickness ranging from 0.9 to 1.5 mm.
This, together with technological developments relating to strict monitoring and control
of quality at different stages of HR coil production, makes it possible to replace the
commodity grade CR coils in many end-use applications large capacity steel drums, steel
tanks, barrels etc, by thinner gauge HR coils.
Apart from this, it is possible to produce HR coils, which facilitate production of
thinner gauges through the recently developed technologies like thin slab casting. A
combination of technologies like those which enable use of sponge iron in the production
of basic metal, a high degree of automation which permits close monitoring and control of
quality at different stages of production, vacuum de-gassing, continuous annealing etc
permits manufacturing of HR coils, which are equivalent in performance to many of the
commodity grade CR coils in use in number of end use applications. This new technological
developments also permit production of HR coils, which can yield sophisticated types of CR
Coils, like Deep Drawn and Extra Deep Drawn varieties of CR coils with thinner gauges and
high impact resistance.
Growth in value-added HR
With a number of oil and gas pipeline
projects coming up value added segments within the hot rolled coil sector are growing up.
The steel consumed in these sectors - which use API-grade (American Petroleum Institute)
submerged arc welded pipes- has risen steadily over the past few months, according to an
Economic Times report. While growth in the base grade HR coils has been slow for the past
two years, that in the API grade segment is now rising at a rate of 10 per cent.
India transports only 45 percent of its petroleum products through pipes. As the cost of
such transportation is one-sixth of that by road or rail, the potential for new pipe lines
is considered good. More pipe lines are also expected on the west coast in view of the
number of LNG terminals that have been planned there.
OP Jindal group's Saw pipes, Man industries and Welspun Gujrat Stahl Rohren are the major
Indian manufacturers of saw pipes. They make longitundinal pipes used to make pipelines
for the oil sector. Welspun also has the capacity to make spiral pipes.
Indian Oil Corp is currently executing orders worth around Rs 1000 crore for its various
oil and gas pipeline projects. Petronet Central India (PCIL) also plans to spend over Rs
600 crore for pipeline project. The total length of the proposed pipeline is 1,850 km All
this have increased the expectation of saw pipe manufacturers.
Government move to
restrict second-hand steel imports
The government is reported to be planning to
tightern the norms of import of second-hand and defective steel products commonly referred
to as seconds. The move is intended to reduce the share of these items in the import of
flat rolled steel products like hot rolled coils (HRC), cold rolled coils (CRC),
galvanised sheets and others.
Under the advanced licensing scheme, goods can be imported duty free, if they are used as
inputs for manufacturing products that are subsequently exported. The proposed new norms
may allow import of prime grade steel only, for use as inputs into exports.
According to the Joint Plant Committee (JPC), for the nine-month period between
April-December 00, imports of seconds and defectives grew to 2.3 lakh tonne, from
1.1 lakh tonne in the same period during the previous year. The total HRC imports into the
country for the same period was 4.6 lakh tonne. Imports from Russia and Ukraine accounted
for a major portion of the total.
Imports of seconds and defectives were allowed for re-export in the past, for meeting
shortage of steel in the country. However, with the entry of new players and after large
scale modernisation and upgradation, Indian flat products have been well accepted. Hence
there is no justification for allowing use of imported seconds which could only spoil the
image of Indian products, according to the ministry sources.
Hike in customs duty
Moreover, bowing to demands from the steel
industry, the finance minister, Mr Yashwant Sinha, has proposed to hike the customs duty
on seconds and defective HR coils from 25 per cent to 35 per cent in the finance Bill,
This is expected to slow down the inflow of these products, which have been flooding the
domestic market adversely affecting major steel producers, in particular SAIL, Tata Steel
and Essar Steel Ltd.
The steel industry however had sought total ban on the imports of such products. The
differential rate of duty on seconds/ defectives, at 10 per cent more than on prime HR
coils, is not enough, they contend.
In fact, the trend over the past five years indicate that seconds and defective HR coils
accounted for just 5.2 per cent of the total imports of the product in 1995-96. But by
1999-2000, it jumped to 28.4 percent and is estimated to be much greater this fiscal.
Recently, the DGFT made it mandatory for all shipments of defective steel products to
comply with quality standards, putting them on par with domestic producers. Further, it
has allowed the import of seconds and defective items only through the designated ports of
Mumbai, Chennai and Calcutta. Moreover, all import consignments of the seconds/defective
of steel items have to be accompanied by a preshipment certificate regarding description
of material, material quality, Chemical analysis, visual inspection, thickness and width
of material and ITC (HS) code No from any of the official inspection agencies. But the
inflow of seconds / defective HR coils has been continuing at the same pace.
of HR Coils ('000 tonnes)
|HR coils\Skelp strips
|Main producers plant
wise / category -wise production April 98-March 99
|HR coils / skelp