This document presents a summer internship project on forecasting steel prices and production in India. It describes using regression analysis to develop a model for forecasting steel wholesale price index (WPI) based on factors like coal, iron ore, power, exchange rates. It shows applying the regression equation to forecast steel WPI for Nov and Dec 2015. It also examines steel production trends over 2006. The goal is to help forecast steel prices and production in India to aid planning and decision making.

1. Summer Internship Presentation
Jindal Steel & Power Ltd.
Angul, Odisha
Zorawar Singh Nandwal

2. Slag Handling System at JSPL
Duration of the Project: 16th May 2016 – 22nd June 2016

3. 1.5 mins
Loading
the
previously
filled Slag
Pot onto
the Kress 3.17 mins
Removal
of filled
Slag Pot
from
under
the EAF
3 mins
Placing the
Empty Slag
Pot under the
EAF
KRESS
Road No. 8
Slag
Atomizing
Plant
Slag
Dumping
Slag
Dumping
Offices
Slag
Dumping
RAMP
Slag Handling Operation by Single Kress Carrier
8.28 mins
Moves
towards
the SAP
5.25 mins
Enters
the Slag
area +
Dumping
in Slag
Crushing
Pit
1 min
Spray of
Lime
1 min
Removes
the
empty
Slag Pot
1.5 min
Loads the
previously
emptied
slag pot
5.23min
Moves
towards
SMS
Slag
Pot
Empty
Slag
Pot
EAF

4. Kress Carrier

5. 30
26
24
25
24
22
21
20
18
17
19
4%
9%
19%
24%
29%
34%
39%
44%
49%
54%
60%
0%
10%
20%
30%
40%
50%
60%
70%
10
15
20
25
30
35
1 2 3 4 5 6 7 8 9 10 11
%ofPSBallGeneration
SlagHandlingCostRs/tonofLs PS Ball Generation Vs Slag Handling price (per ton of liquid steel)
Rate per Ton PS Ball generation%
PRESENT CONDITION
Costs Incurred- ₹5.21cr
As per Contract
Costs Incurred-₹3.27cr
5

6. Road No. 8
Slag
Atomizing
Plant
Slag
Dumping
Slag
Dumping
Offices
Slag
Dumping
RAMP
Slag Handling Operation by Both Kress Carriers
EAF

7. Is EcoMaister beneficial?
PROS CONS
60% slag converted to PS Balls Avg. production of PS Balls is 4% since inception(WHY?)
40% slag crushed which can be used at JSPL More than 95% slag is crushed
Effective use of Slag Incurring losses( paying double amount per ton of Liquid steel)
Slag Dumped (FUTURE USE OF SLAG?) Slag piles up
Production of PS Balls Generates Income No substantial income at present
7

8. EcoMaister
(Slag Handling Contract)
Yes
-Slag Atomizing?
-Future use of Slag?
-Carrying Cost?
No
- New Contract?
- In-house slag
handling?
-PS Balls?
8

9. Problems
• No atomizing possible due to unavailability of Kress Carrier; hence the high costs
• Maintenance of Kress Carrier not done by Certified Mechanics which leads to longer and consecutive
breakdowns
• Road No. 8 and the path of the Kress Carrier is not clear; used by other vehicles
9

10. Alternative-I
• Both the Kress carriers are made available at all times as shown in Animation-II
• This would decrease the losses by almost ₹1.94 crores per year and would also lead to 60% Atomizing &
40% Crushing as per contract
PS Ball Generation
Earnings from PS
Balls
Production of PS Balls
Income
(in crores)
Slag Crushed Slag Crushing Rate
Cost
(in crores)
Difference
(in crores
4% ₹ 125 20145.16 0.25 483483.8 113 5.46 (5.21)
60% ₹ 125 302177.4 3.77 201451.6 350 7.05 (3.27)
10

11. Alternative-II
• Both the Kress carriers are made available at all times as shown in the animation.
• This would decrease the losses by almost ₹1.94 crores per year and would also lead to 60% Atomizing &
40% Crushing as per contract.
• But due to decreasing in-house demand of Crushed slag, the contract may be negotiated to increase the PS Ball
Production(to 80%) which would also increase the income. This would cut the losses by ₹3.82 crores.
PS Ball Generation
Earnings from PS
Balls
Production of PS Balls
Income
(in crores)
Slag Crushed Slag Crushing Rate
Cost
(in crores)
Difference
(in crores
4% ₹ 125 20145.16 0.25 483483.8 113 5.46 (5.21)
60% ₹ 125 302177.4 3.77 201451.6 350 7.05 (3.27)
77% ₹ 125 387794.33 4.84 115834.7 415 4.80 0.4
11

12. Alternative-III
• No PS Balls Generation. Only Slag Crushing done at the rate of ₹113 per ton.
• This alternative would lead to piling up of slag and would not generate income.
Slag Crushed Slag Crushing Rate
Cost
(in crores)
503629 ₹ 113.00 5.69
12

13. Alternative-IV
• Proposing new Slag Crushing rates upon negotiation so as to achieve equal cost (per ton of liquid steel) at each
rate.
Slag Crushing Rate(Actual)
113
113
131
154
168
183
200
221
245
273
308
Slag Crushing Rate(Proposed)
60
77
104
118
135
155
175
205
238
273
308
Difference
53
36
27
36
33
28
25
16
7
0
0
Rate Per Ton
17
17
17
17
17
17
17
17
17
17
15
Rate Per Ton
26
26
24
25
24
22
21
20
18
17
15
PS Ball
generation%
4%
9%
19%
24%
29%
34%
39%
44%
49%
54%
59% 13

14. Options?
• EcoMaister turns out to be the least expensive out of all 3. Also these are 2012(for Vista Mining and M/S K.Rao)
costs and would have increased in today’s date.
• The new contracts will include expenses and would also take considerable time to begin operations
Contractors
Slag Qty(tons/year) 5,03,629 5,03,629 5,03,629
Slag Crushing Rate(₹/ton) @90-100% 113 220 286
Remarks: Additional
monthly charges
of ₹ 37lacs
₹14.4 cr
M/S K.Seshagiri Rao & Co.
₹5.69 cr ₹11.07 cr
EcoMaister Vista Mining
14

15. Current Status of Ecomaister Operation in Angul
• Average generation of PS ball is only 4% of slag generated against 60% forecasted
• JSPL incurring Higher cost per ton of Liquid Steel due to lower amount of PS ball generation
• Currently we are paying approx. Rs 30 per ton of LS whereas it can be Rs 19 per ton if we make 60% PS Ball (We
are considering only Slag Crushing & PS ball Generation costs).
15

16. Why Less generation of PS Ball?
• Kress Carrier non availability, Frequent Break down of Kress carrier
• Due to Double Slag pot operation they are not getting time for making PS Ball
• AC of Kress in not working due to which Kress operators are not willing to make PS Ball
• With Single Slag Pot Operation, Slag Pot are filled 100% with Slag & there are chances of reactions in slag which
can spill & can damage the Kress. So we wait to cool down the slag.
• Due to Crushed Slag Requirement in Phase 1- B, We stopped PS Ball generation for some time
• Most of the time single Kress carrier in operation
16

17. Is it possible to Make PS Ball in current
situation?
• It is possible to make the PS ball with current single Slag Pot operation provided Kress carrier is properly
maintained. Will try to make PS ball during next campaign.
• With BF operation, we don’t know whether the PS Ball generation is possible or not. Currently at Raigarh we are
not able to make PS ball from BF slag.
17

18. Operations with Ecomaister Operation with 100% Slag Crushing (Other than Ecomaister)
60% slag converted to PS Balls & 40% slag crushed
which can be used at JSPL.
We have made 22% PS ball in the month of June’15,
17% in July’15 & will try to maximize in next
campaign.
Total Slag quantity to be crushed
Ecomaister will buy back PS ball from JSPL @ 225 per
Ton
PS Ball not Available for Sale
Converted PS Ball Ecomaister will buy back & only
crushed quantity to be handled/disposed
No PS ball generation. 95% Slag to be disposed
In case we are doing 100% crushing & no PS ball
generation then we have to pay Rs 113 per ton for
Crushing as per current contract with Ecomaister
Offers received in 2012 from M/s Vista Mining (Rs 220 per Ton + 37
Lacs/month fixed Cost) & from M/s K.Seshagiri Rao (Rs 286 Per Ton) for
Slag Crushing. Cost are Higher as compared to Ecomaister. Current
rates may be higher than above mentioned rates
All ready in operation
If we go for new contract, we need to do civil & Structural work which
may require CAPEX. Also Mobilization time would be atleast 4 to 5
month
18
Operations

19. Conclusion
• We recommend to continue with Ecomaister contract
• In case we want to go with 100% Crushing of Slag then also cost per ton for Ecomaister will be lower than other
two contractors in considerations. Kindly also note that for crushing we have not taken any current offers.
• We are able to make 22% PS ball in the month of June’15 (2nd Month of Ecomaister commissioning) & most of
the reasons for low production of PS Ball attributes to JSPL
19

20. Forecasting the Price & Production of Steel in
India
Duration of the Project: 23rd June 2016 to 10th July 2016
20

21. Methodology
• Determine the purpose of Forecast
• Establish a Time Horizon
• Select a forecasting technique
• Gather and Analyze Data
• Prepare the Forecast
• Monitor the Forecast
21

22. Steel WPI
22

23. Data Set of Year 2006
Month Coal WPI Ore WPI Power WPI Exchange Rate OIL (/barrel) SteelWPI GDP Growth Rate Oxygen WIP
Jan-06 117.6 139.7 116.1 43.925 60.61 92.7 2.50% 105.1
Feb-06 117.6 133.8 116.9 44.275 58.95 93.7 2.50% 105
Mar-06 117.6 132.4 117.3 44.5 60.01 95.3 2.50% 105
Apr-06 117.6 159 117.6 44.9 67.06 102.6 2.50% 104.2
May-06 117.6 168.6 118.5 46.305 67.33 96.8 2.50% 104.2
Jun-06 117.6 170 121.5 45.88 66.90 95 2.50% 104.1
Jul-06 117.6 171.6 122.5 46.5 71.29 97 1.40% 101.4
Aug-06 117.8 177.2 122.9 46.48 70.87 96.9 1.40% 101.4
Sep-06 117.8 176.3 123.6 45.91 60.94 98.7 1.40% 101.4
Oct-06 117.8 178.3 123.4 44.92 57.26 101.6 3.30% 101.4
Nov-06 117.8 178 122.6 44.6 57.80 100.2 3.30% 101.2
Dec-06 117.8 173.2 120.3 44.115 60.34 99.3 3.30% 101.4
23

24. Correlation Analysis
CoalWPI Ore WPI OIL (/barrel) Oxygen WIP SteelWPI Exchange Rate GDP Growth Rate Power WPI
Coal WPI 1
Ore WPI 0.912167 1
OIL (/barrel) 0.477987 0.618205332 1
Oxygen WIP 0.313904 0.21759252 -0.230769345 1
SteelWPI 0.916126 0.911594943 0.650676775 0.191298209 1
Exchange Rate 0.72184 0.654145884 -0.006383516 0.708318552 0.588240789 1
GDP Growth Rate -0.24189 -0.241024359 -0.127596292 -0.049824481 -0.326560474 -0.177815847 1
Power WPI 0.878741 0.883481282 0.464592324 0.492227941 0.848830135 0.848800878 -0.168619866 1
24

25. SUMMARY OUTPUT
Regression Statistics
Multiple R 0.949227
R Square 0.901032
Adjusted R Square 0.897589
Standard Error 8.997077
Observations 120
ANOVA
df SS MS F Significance F
Regression 4 84750.81658 21187.70415 261.7465586 9.19983E-57
Residual 115 9308.951336 80.94740292
Total 119 94059.76792
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 47.02339 7.383412548 6.368787928 4.05826E-09 32.39826945 61.64850796 32.39826945 61.64850796
Coal WPI 0.520472 0.071653545 7.263733399 4.83452E-11 0.378540367 0.662404133 0.378540367 0.662404133
Ore WPI 0.040212 0.015014634 2.678209979 0.008485795 0.010471242 0.069953441 0.010471242 0.069953441
Power WPI 0.372332 0.084142979 4.424993628 2.20425E-05 0.205661098 0.539003192 0.205661098 0.539003192
Exchange Rate -1.20426 0.214326405 -5.618802717 1.36076E-07 -1.628797145 -0.779718427 -1.628797145 -0.779718427
Regression Statistics
Strength of
the Linear
Relationship
The points
that fall on
regression
line
Adjusts the
number of
terms in the
model
Estimate of
the error
25

26. Forecast
Regression Equation
Month Coal WPI Iron Ore WPI Power WPI Exchange Rate$ Steel WPI Real WPI Variance
Nov-15 189.8 340.1 177.9 66.462 145.68 139.9 -0.0413
Dec-15 189.8 306.8 176.8 66.208 144.24 137 -0.0528
26

27. Trend Analysis
Month January February March April May June July August September October November December
SteelWPI 92.7 93.7 95.3 103 97 95 97 96.9 98.7 101.6 100.2 99.3
Month
SteelWPI
27

28. Production of Steel
28

29. Data Set of Year 2006
Month Coal Production Iron Ore DRI Per Capita Consumption SteelWPI Steel BFI
Jan-06 38.32 15.18 1.12 0.0037491 92.7 4.05 2.47
Feb-06 36.9 14.00 1.04 0.0035413 93.7 3.83 2.26
Mar-06 43.82 16.74 1.22 0.0038974 95.3 4.22 2.5
Apr-06 31.53 14.572 1.28 0.0037360 102.6 4.05 2.19
May-06 33.23 14.741 1.31 0.0037778 96.8 4.10 2.31
Jun-06 31.92 12.625 1.25 0.0037458 95 4.07 2.3
Jul-06 30.7 11.149 1.27 0.0038150 97 4.15 2.27
Aug-06 29.2 10.767 1.22 0.0037463 96.9 4.08 2.26
Sep-06 29.2 11.655 1.29 0.0036870 98.7 4.02 2.25
Oct-06 33.59 13.342 1.39 0.0039026 101.6 4.26 2.44
Nov-06 36.4 14.882 1.3 0.0038798 100.2 4.24 2.4
Dec-06 39.49 17.526 1.35 0.0040033 99.3 4.38 2.59
29

30. Correlation Analysis
Coal Production Iron Ore BFI Per Capita Consumption SteelWPI Steel
Coal Production 1
Iron Ore 0.002283031 1
BFI 0.534169775 -0.443777514 1
Per Capita Consumption0.622289042 -0.459039294 0.858798884 1
SteelWPI 0.563059929 -0.396906758 0.737148741 0.870459764 1
Steel 0.623620448 -0.470126798 0.878543526 0.997893463 0.878297942 1
30

31. Regression Statistics
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.999106061
R Square 0.99821292
Adjusted R Square 0.998107798
Standard Error 0.042920619
Observations 109
ANOVA
df SS MS F Significance F
Regression 6 104.9569931 17.49283218 9495.726235 9.9327E-138
Residual 102 0.187902309 0.001842179
Total 108 105.1448954
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -1.139630765 0.048677698 -23.4117638 8.11181E-43 -1.236182747 -1.043078782 -1.236182747 -1.043078782
Coal Production 0.001528748 0.000685771 2.229237877 0.027991285 0.000168523 0.002888972 0.000168523 0.002888972
Iron Ore -0.005423609 0.001654337 -3.278417297 0.001428158 -0.008704979 -0.002142238 -0.008704979 -0.002142238
BFI 0.129239564 0.013028938 9.919424312 1.22796E-16 0.103396727 0.1550824 0.103396727 0.1550824
DRI 0.029752951 0.015156437 1.963057051 0.052362718 -0.00030977 0.059815672 -0.00030977 0.059815672
Per Capita Consumption 1265.240636 20.00996738 63.23051968 1.22473E-83 1225.550961 1304.930312 1225.550961 1304.930312
SteelWPI 0.001405903 0.000286964 4.899231641 3.62801E-06 0.000836711 0.001975095 0.000836711 0.001975095
31

32. Forecast
• Regression Equation
Month Coal(MT) Iron Ore(MT) BF(MT) DRI(MT) PerCapitaConsumption(/MT) SteelWPI Steel(MT) RealProduction Variance
Dec-15 58.37 11.52433 4.78 1.71 0.005724 162.20 7.0241 7.07 0.006496
Jan-16 62.9 11.55000 4.76 1.51 0.005605 144.8 6.8468 7.41 0.076009
Feb-16 60.1 11.60650 4.78 1.50 0.005590 139.90 6.8182 6.94 0.01755
32

33. Trend Analysis
3.7
4.2
4.7
5.2
5.7
6.2
6.7
7.2
7.7
8.2
Steel(MT)
Month
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Month January February March April May June July August September October November December
Steel 4.05 3.83 4.22 4.1 4.1 4.1 4.2 4.08 4.02 4.26 4.24 4.38
33

34. Questions?
34

35. Thank you!
35