Download the Annual Report 2012-13. - kiocl limited

4.3 Despatches in terms of quantity (in thousand dry metric tonnes) during the last three years are represented in graphic formbelow:-4.4 During the year, 24 shipments of Pellets with around1.058 Million tons were sold through New MangalorePort as compared to 38 during 2011-12. The balance0.178 million tons of Pellets were sold through Road.4.5 Market Scenario:4.5.1 Global Steel production which has been on an upwardtrend from 2009, continued with an annual increaseof 4% to 1548 million tons in 2012. However globalsteel consumption growth was lower at 1.2% to1436 million tons and is expected to grow only by2.9% to 1454 million tons in 2013. Year 2012 was achallenging period for the Steel industry when demanddeclined, mainly due to the Euro zone crisis whichpersisted throughout 2012. On top of this, correctiveeconomic measures in major emerging economiesalso contributed to a slowdown globally.4.5.2 China’s Steel production touched 716 million tons in2012, an increase of 3% over last year. However theSteel consumption increased only by 1.9% to 645million tons, as the Chinese government controlledinvestments in an effort to rebalance the economy.4.5.3 Indian Steel production showed an increase of 4.5%to 76.7 million tons in 2012 but with a slower demandgrowth of 3.3% to 71.6 million tons. The demand isexpected to pick up and grow by 5.9% to 75.8 milliontons in 2013, as monetary easing is expected to supportinvestment activities. In 2014, growth in Steel demandis expected to further accelerate to 7.0% due to thereform measures taken by Government for narrowingthe fiscal deficit and improve foreign direct investment.4.5.4 For global Steel industry, year 2013 has started ona tough note. Supply continues to outpace demand,leading to low capacity utilization rates, poor pricingpower and continued weak margins. Despite increaseddemand for Steel and the removal of some of theoutdated Steelmaking capacity in 2012, the level ofexcess capacity has increased, due to the continuedgrowth in new Steelmaking facilities. However theIndian Steel market is expected to show increasein demand due to the impact of the reforms andinvestments being carried out by Government of Indiaduring the year 2013.4.5.5 The global production of Iron Ore is estimated toshow an increase of 2.5% to 3000 million tons during2012. Iron Ore prices which declined during 2012 areexpected to continue the decline over the next yearalso, with slowing Chinese demand, and additionalglobal supply of around 200 million tons during nexttwo years. With Pellet market moving in tandemwith Iron Ore market, lower international prices arepredicted during the coming year.4.5.6 In Indian market, the Supreme Court’s order banningthe mining in Karnataka, Goa & Odisha due to violationof environmental norms, led to scarcity of Iron Ore.This led to a firm demand for Pellets having higherquality during the year. However, the oversupply ofPellets in the market caused prices to slide by around1000/Mt during 2012. With the recent decision ofSupreme Court, permitting ‘B’ category mines to startmining, the availability of Ore is expected to improve37th Annual Report 2012 - 1321 KIOCL