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‘India can not afford to lose 4 per cent of GDP to corrosion’
Demand for stainless steel for the entire Hydrocarbon spectrum, ranging from onshore to offshore, has been growing as requirements on high-end materials of construction used in hydrocarbon exploration and processing are increasing. Yatinder Pal Singh Suri, Country Head, Outokumpu India Pvt Ltd, details about the manifold applications for stainless steels and high performance alloys across the whole hydrocarbon value chain with an exclusive talk with Offshore World.

How has the demand of new materials of construction changed across the entire hydrocarbon value chain? What are the core strengths of Outokumpu in terms of services for the entire Hydrocarbon spectrum?
There are manifold applications for stainless steels and high performance alloys across the whole hydrocarbon value chain:
  • From oil & gas upstream applications such as well head equipment, X-mas trees, wire lines, flexible and rigid pipes, long products for drilling applications, hanger and packer.
  • Over topside application areas – blast & fire walls, structural components, cable trays, stairs, tread plates, pipe supports, process piping, oil & gas coolers, heat exchanger units, manifolds, seawater systems, etc.
  • To onshore applications such as storage tanks, refinery heat exchangers and coolers, burners, chimneys and flaring systems, distillation columns and internals, either as solid solution or cladded / overlay welded.

This is continued in the process industry where our alloys are used for any kind of process equipment such as vessels and pressure vessels, reactors, columns, tanks, tubes and pipes, fittings and flanges, heat exchangers, filters, centrifuges, pumps.
The demand for high performance stainless steels and high performance alloys in these applications is growing as requirements on materials used in hydrocarbon exploration and processing are increasing:
  • Oil reserves in our oceans are deeper and deeper going along with increasing demands on mechanical properties in combination with corrosion resistance.
  • Life cycle cost considerations and finding sustainable solutions are drivers for our development in high strength in duplex and lean duplex sales which offer very competitive solutions in comparison to standard stainless steel or coated carbon steel solutions.
  • Our high performance stainless steels and our high performance alloys such as nickel base alloys, titanium and zirconium are coping with harshest demands in terms of corrosion resistance in most demanding downstream processing operations.
  • Improving the efficiency of chemical process usually goes along with increasing process temperatures, this is where our heat resistant steels and alloys come in.
What is the total stainless steel demand in India and how is Outokumpu positioned in the market against the competition especially from the domestic players?
There are over 400 grades of stainless steel which can be used for the diverse range of applications depending on the operational environment. In India, the dominant demand comes from the utensils and kitchenware application segment which is as high as 65 per cent. This is the lowend application being catered to by over three dozen induction melting route manufacturing units as well as the four integrated manufacturing plants. Outokumpu is not catering to these segments.

The industrial and infrastructure applications constitute 35 per cent of the overall demand (around 700,000 tonnes per annum). Since the range of production capability of domestic integrated plants is rather limited at this point of time, imports are vital to meet demand for high-end advanced materials for the accelerated infrastructure growth. Outokumpu presence in India is primarily relevant for the high-end grades and higher dimensions.

Being the oldest and largest stainless steel player in the world, we have positioned ourselves as the wise stainless men who are educating the domestic end-users on new grades and applications and also giving new opportunities to the domestic mills to learn from us and upgrade their capabilities.

Post-acquisition of Inoxum, what kinds of opportunities are available for Outokumpu globally & in India?
Outokumpu and Inoxum are highly complementing – Outokumpu having been a leader in high performance stainless steels and running the most efficient mill for austenitic standard grades is now complemented by Inoxum’s strong position in ferritic, martensitics, and high-quality surface finishes for different applications such as architectural or white goods. We now have the full range of high performance stainless steel and alloys.

The new Outokumpu is the global leader in advanced materials. We are helping the world to reduce the pace of consumption of our planet and thus make the world last forever.

What kind of future do you see for Outokumpu in India when many EPC companies are now looking at the Middle East & other international markets for oil & gas?
For projects abroad, Outokumpu can be an ideal partner due to our global presence, a wide range of high-end grades for oil & gas applications with successful track record of reliable performance in various projects abroad. In fact, we would fit into the scheme very well since the EPC company will not face problems either on product knowledge and availability or any adverse forex effect since export projects involve buying and selling in foreign currency.

Please apprise us of Outokumpu’s association with German pipe manufacturer in supplying Natural gas pipe for the dock loading facility in Port of Ras Laffan in Qatar? (Please comment on how Duplex Steel has replaced the conventional MOC and how has the gas company benefited from this)
Pipes in duplex are used for gas transportation but not for LNG. The benefits b y using duple x are:
  • Higher corrosion resistance than carbon steel (both uncoated and coated).
  • Higher strength than standard austenitic grades and carbon steel
  • Thinner gauges
  • Less weight
  • Less welding consumables
  • Withstand higher pressures (if not down gauging)
  • Lower price volatility

As the E&P activities are moving towards difficult areas, what kind of opportunities do you see for yourself in India?
Corrosion is a serious issue in the oil and gas sector and the consequences of corrosion failures are going to be more and more unaffordable as we go forward into the future. As a developing nation which is resource crunched, we can not afford to lose 4 per cent of our GDP to corrosion. In India, historically, there has been a tendency to keep the initial investment at lower levels. Through this approach, we are willingly sacrificing the life-cycle cost advantages which can be accrued through proper material selection to achieve much longer maintenance free life of the investments made.

Life-cycle cost is a well understood and known concept to the designers and consultants and there will be enhanced pressure to go for high-end products to keep the plants running uninterrupted sw for a long time. As we go to sub sea applications, the cost of repair and maintenance can be ten times the cost of initial investment. Thus there is a big opportunity for Outokumpu to educate the EPC sector participants about the life-cycle cost advantages through advanced materials and support them in creating investments with higher productivity and lower life cycle cost structure.

Please apprise us of Outokumpu’s technical application in Subsea drilling since it’s ever deeper and even greater demands will be placed on the materials used for the unit in minimizing overall lifecycle cost?
As already explained earlier in first question, we reiterate that as oil reserves in our oceans are going deeper, there is a high focus on robustness in design and material selection. The deep waters have more challenging environments with increased temperatures and pressures. As Outokumpu has a very wide product portfolio including advanced materials we can offer the most optimal solution for almost all kind of applications.

May we have your comments on the risks and challenges associated with working in India at present due to brief hiatus on implementation of projects and how are you mitigating the risks?
India is definitely not a preferred destination for investments due to a variety of policy gaps and multiplicity and uncertainity of clearance procedures. There are project cost escalations due to delays in project implementation leading to many conflicts and defaults in contractual obligations across the supply chain. We have been supporting many budgetary enquiries for various important projects but the take off is so slow.

We feel that the risks are minimum for Outokumpu since we follow the partnership approach by being honest and transparent in our dealings from a budgetary enquiry level to final order and supplies. By offering reliable services even during the tough times of a customer, we aim to earn the trust for the long term. It is tough but mutual trust pays ultimately.

Domestic stainless steel production has been on an upward swing during the last quarter and some of the steel have already planned indigenous capacity expansions. Further with an antidumping duty that is imposed on steel imports, how do you plan positioning yourself strongly in the Indian market?
There is overcapacity in the domestic sector in the low-end and vanilla grades of stainless steel. Since stainless steel is the fastest growing metal in consumption (about 10 per cent annual growth in India), it is hoped that the over capacity will get filled up in the next four years. This means the fixed cost element for the new plants is high due to low capacity utilization. There is a tendency to drop prices to chase a demand which is much smaller than the supply and this downward spiral hurts everyone in the long run.

Since landed steel is dollar denominated, what impact has the depreciation of rupee made on the imports? How do you intend to further curb this challenge as the analysts have predicted further slide in the rupee value?
The devaluation impact currently is definitely beneficial to domestic players providing them with an opportunity to improve their domestic selling prices and also a greater opportunity in export markets.

Unfortunately, despite the devaluation of rupee by over 40 per cent in past one year, the domestic players continue to indulge in downward spiral and make losses. The domestic players surely need to follow a pricing strategy to improve their bottom lines. Seeking higher import duties and anti >> There are huge investments in pipeline for infrastructure which includes Energy, Oil & Gas, chemical process, storage tanks for oil and chemicals, etc in India. It is the right time for Outokumpu to work together with local partners and make India stainless in line with our vision – A world that lasts forever!! dumping duties despite the 40 per cent advantage is not a strategy since it hurts the downstream segments badly.

What is the kind of challenge you see from the EPC companies with integrated steel capacities in terms of opportunities and market penetration?
There is just one EPC company who has integrated stainless steel melting and forging capability. We do not see any challenge there but see an opportunity to support them in manufacturing advanced materials so as to use their installed capacity profitably.

How do you plan to steer the growth of the company in India and scaling up the operations?
There are huge investments in pipeline for infrastructure which includes Energy, Oil & Gas, chemical process, storage tanks for oil and chemicals, Railways coaches, wagons and bridges, ports, water effluent treatment, desalination, storage and distribution of potable water, food processing and grain storage to name a few of critical areas.

Our extremely long coastal line adds yet another dimension to big challenges due to its corrosive environment. Tackling corrosion means using more high-end stainless steel grades and that is an opportunity for Outokumpu. It is the right time for Outokumpu to work together with local partners and make India stainless in line with our vision – A world that lasts forever!!