The metals and mining sector this year was underlined by the consolidation wave brought in by the Insolvency and Bankruptcy Code. And the wave, as we write, is not over yet with two of the biggest insolvency cases - ArcelorMittal and Bhushan Power and Steel - still being fought out in courts.
Here are some of the major events witnessed in the sector:
ArcelorMittal's so-near, yet-so-far situation
The world's largest steelmaker finally seemed to have cracked the fastest growing steel market. Well, nearly. ArcelorMittal's pursuit of Essar Steel has had twists and turns galore. It started with the company selling stake in Uttam Galva Steel to clear the Clause 29A hurdle. But that was not enough, and the company shelled out Rs 8,000 crore just to be eligible to bid. It could yet lose the race to... no, not Numetal, the consortium led by Russian bank VTB, but to the Ruias themselves, who have now offered to pay more than ArcelorMittal. However, banks are not buying the move as yet. The story may eventually find its end in 2019. And we are just saying 'may'.
Tata Steel Europe - Thyssenkrupp JV
It is no secret that the acquisition of Corus hasn't turned out as expected for Tata Steel. The steelmaker has been struggling to turn it around, or find a more definitive solution to the woes plaguing operations in Europe. It may have finally found one in the JV with Thyssenkrupp, the German behemoth. The JV will free up TV Narendran's hands and resources as he focuses on the company's India story.
Hindalco buys Aleris
Hindalco Industries' experience with inorganic expansion with Novelis couldn't be more different from that of Tata Steel's with Corus. And now to cement Novelis' dominant position in the value added space, the Aditya Birla Group acquired Aleris, a US-based company that dominates the building and construction space.
JSW Steel or Tata Steel, who is number one?
For much of 2018, JSW Steel and Tata Steel played the cat and mouse game to emerge on top of the Indian steel sector. As of now, JSW is slightly ahead following the Monnet Ispat acquisition that took the Jindal company's capacity to 19.6 million tons, a million ton more than that of Tata. But the race for Bhushan Power and Steel can change all that.
Vedanta enters the steel sector
Although Anil Agarwal has talked about Vedanta Resources' entry in the steel industry, the group's presence was limited to its iron ore interests. That changed with the acquisition of Electrosteel Steels, and Agarwal made an entry into the sector. But not everyone is convinced that the billionaire businessman would be a long term investor in steel. The answer may be in what he does with Electrosteel.
Events to look forward to in 2019
Steel cycle and the China factor
After enjoying high prices for over a year, the steel cycle may have turned in the last two months of 2018 as prices declined by 20 percent. While most of the industry executives expect prices to recover, given that the liquidity condition in the domestic market has improved, the critical factor will be China. Steel demand in China, the world's largest steel maker, has contracted, although production hasn't matched the trend as yet. The last quarter of the financial year would be crucial to see where the prices are headed.
Insolvency cases of Essar Steel and Bhushan Power & Steel
Both the races, especially that of Essar Steel, have been marked by lengthy court battles. Hopefully, we are now in the home stretch. The court orders will come in the New Year, and that would end the two auctions. Right now ArcelorMittal has its nose ahead in Essar Steel, and JSW Steel in Bhushan Power & Steel.
In March 2018, mining came to a halt in Goa, the country's largest exporter of low grade iron ore. In Karnataka, an issue over premium charges by the state government, saw NMDC suspending mining in the Donimalai mine, crucial for supplying ore to steelmakers in the region. In both the cases, industry players - miners and steelmakers - will be hoping that the bans are lifted in 2019.
With the Trump administration in the US imposing import duties, the risk of dumping has spooked the Indian metals sector. The softening of steel prices and a possible oversupply in China, has made steel players in India wary of dumping products in the domestic market.