CHAPTER 1
Introduction
INTRODUCTION:
The Iron and steel industry is an important basic industry of the national economy and Steel
is considered to be the backbone of the human civilization. Steel is one of the most important
products of the modern world and is of strategic importance for any industrial nation.
Historically, all nations during their industrialization phase have been supported by a strong
steel industry of their own. From construction, industrial machinery to consumer products,
steel finds a wide variety of applications. It is also an industry with diverse technologies
based on the nature and extent of use of raw materials. The growth of the steel industry is
essential for the development and growth of other industries. The industrial growth of the
country depends, to a great extent, on the growth of steel sector. Being a core sector, steel
industry tracks the overall economic growth in the long term. Also steel demand , being
derived from other sectors like automobiles , consumer durables and infrastructure, its fortune
is dependent on the growth of these user industries. Steel is most recycled and important
material in world economy. Its versatile range of physical and chemical properties makes it
the most suitable structural and engineering material today. India’s economic growth is
contingent upon the growth of the Indian steel industry. Consumption of steel is taken to be
an indicator of economic development. While steel continues to have a stronghold in
traditional sectors such as construction, housing and ground transportation, special steel is
increasingly being used in engineering industries such as power generation, petrochemicals
and fertilisers. India occupies a central position on the global steel map with the
establishment of new state-of-the-art steel mills , acquisition of global scale capacities by
players, continuous modernization and up gradation of older plants, improving energy
efficiency and backward integration into global raw material sources.
Indian steel utilization rate 2001
The story of Indian Steel Industry is rooted down the years , as far as back in 1907, with the
foundation of TISCO. Tata Iron and Steel Company (TISCO) was established by Dorabji
Tata in 1907, as part of his father's conglomerate. By 1939 it operated the largest steel plant
in the British Empire. The company launched a major modernization and expansion program
in 1951.
Prime Minister Jawaharlal Nehru, a believer in socialism, decided that the technological
revolution in India needed maximization of steel production. He, therefore, formed a
government owned company, Hindustan Steel Limited (HSL) and set up three steel plants in
the 1950s.
The Indian steel industry began expanding into Europe in the 21st century. In January 2007
India's Tata Steel made a successful $11.3 billion offer to buy European steel maker Corus
Group. In 2006 Mittal Steel (based in London but with Indian management) merged with
Arcelor after a takeover bid for $34.3 billion to become the world's biggest steel
maker, ArcelorMittal (based in Luxembourg City), with 10% of the world's output.
Over the years , particularly after the introduction of five years plan, it has grown to become
the 3rd largest producer of crude steel in the world today. Indian steel industry is dominated
by the public sector steel plants, besides TISCO , and it is managed by SAIL.
[PDF]Iron and Steel Industry in India - [Link]
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The Indian iron and steel industry is nearly a century old, with Tata Iron & Steel Co ...
sector, steel industry tracks the overall economic growth in the long term.}}
SAIL was created as a holding company in the mid 1970’s following the amalgamation of
HSL ( Hindustan Steel limited) tonnage plants at Bhilai, Rourkella , Durgapur and Bokaro.
Subsequently, IISCO which had earlier been nationalized was brought in as a subsidiary of
SAIL. The three tonnage plants of HSL was constructed in the late 1950’s and completed
well in time. A decade later, these plants were producing steel at a cost (exchange rate: Rs.
7.50 to 1US$) which was competitive globally on full cost [Link] the late 60’s an d early
70’s some capacity expansion and the new plant at Bokaro marked the second round of
capacity creation in public sector steel. Domestic steel was still cheaper than imports and
import equalisation fund was visualised and operated for over a decade in order to subsidise
imported steel by placing levies on domestic steel. The oil crisis in 1973 shifted the epicentre
of steel manufacture and competitive pricing to east Asia from the developed Western
countries.
The Indian Iron and Steel Industry consists of primary and secondary sector. The primary
sector comprises seven integrated steel plants, out of which Rourkela, Bhilai, Bokaro and
Durgapur are the major public sector steel plants under SAIL.
The decade following liberalisation was a period of robust economic growth, increased
liquidity and low interest rates. As the resultant manufacturing boom was also maintained
during the tenth plan, the steel industry prospects on the eve of eleventh plan (2007-12) were
largely optimistic. These expectations were also justified by the initial plan performance but
the unexpected global turmoil of 2008 triggered by the sub-prime debt crisis was to prove the
spoilsport leading to substantial scaling down of operations and profit margins. However
thanks to Indian economy‘s inherent resilience these reverses were only temporary and even
the domestic steel sector managed to make a recovery helped by a resurgence in sectors like
automotive appliances, capital goods and construction. 2. Today as the 11th plan draws to a
close, the growth indicators for the
Background
The Indian iron and steel industry is nearly a century old, with Tata Iron & Steel Co (Tata
Steel) as the first integrated steel plant to be set up in 1907. It was the first core sector to be
completely freed from the licensing regime (in 1990-91) and the pricing and distribution
controls. The steel industry is expanding worldwide. For a number of years it has been
benefiting from the exceptionally buoyant Asian economies (mainly India and China). The
economic modernization processes in these countries are driving the sharp rise in demand for
steel. The New Industrial policy adopted by the Government of India has opened up the iron
and steel sector for private investment by removing it from the list of industries reserved for
public sector and exempting it from compulsory licensing. Imports of foreign technology as
well as foreign direct investment are freely permitted up to certain limits under an automatic
route. This, along with the other initiatives taken by the Government has given a definite
impetus for entry, participation, and growth of the private sector in the steel industry. While
the existing units are being modernized/ expanded, a large number of new/green-field steel
plants have also come up in different parts of the country based on modern, cost effective,
state of-the-art technologies. Soaring demand by sectors like infrastructure, real estate, and
automobiles, at home and abroad, has put India's steel industry on the world map.
Dominating the Indian horizon is steel giant Tata Steel, whose takeover of the UK-Dutch
steel company Corus is the country's biggest buyout. Meanwhile, the LN Mittal-owned Mittal
Steel acquired French steel company Arcelor to create the world's number one steel company,
Arcelor Mittal; and Korean steel giant POSCO is pumping money into mines and steel plants
in Orissa to emerge as one of the biggest steel plants in the state.
Current Scenario
Steel production capacity of the country expanded from about 75 million tonnes per annum
(MTPA) in 2009-10 to about 101.02 million tonnes (MT) in 2013-14, when output was 81.7
MT. In 2014-15, production for sale of total finished steel (alloy + non alloy) was 91.46 mt, a
growth of 4.3% over 2013-14. India produced 7.07 MT of steel in January 2015 reporting the
fourth highest production level globally which was 1.7 per cent higher than the country's steel
production in the same month last year. The steel sector in India contributes nearly two per
cent of the country’s gross domestic product (GDP) and employs over 600,000 people. The
per capita consumption of total finished steel in the country has risen from 51 Kg in 2009-10
to about 60 Kg in 2013-14.
Consumption
Currently, the steel consumption in India is second only to China. However, with the steel
consumption in China expected to moderate at around 3%, India is likely to emerge as the
fastest growing steel consuming nation. India's current per capita finished steel consumption
at 52 kg is well below the world average of 203 kg. With rising income levels expected to
make steel increasingly affordable, there is vast scope for increasing per capita consumption
of steel. Being a core sector, steel industry tracks the overall economic growth in the long
term. Also, steel demand, being derived from other sectors like automobiles, consumer
durables and infrastructure, its fortune is dependent on the growth of these user industries.
The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap
labour. Iron ore is also available in abundant quantities. This provides major cost advantage
to the domestic steel industry.
Industry Structure
Indian Iron and steel Industry can be divided into two main sectors Public sector and Private
sector. Further on the basis of routes of production, the Indian steel industry can be divided
into two types of producers.
Integrated producers
Those that convert iron ore into steel. There are three major integrated steel players in India,
namely Steel Authority of India Limited (SAIL), Tata Iron and Steel Company Limited
(TISCO) and Rashtriya Ispat Nigam Limited (RINL)
Secondary producers
These are the mini steel plants (MSPs), which make steel by melting scrap or sponge iron or a
mixture of the two. Essar Steel, Ispat Industries, and Lloyds steel are the largest producers of
steel through the secondary route.
Production Scenario
Steel industry was de-licensed and de-controlled in 1991 & 1992 respectively. Today, India is
the 3rd largest producer of crude steel in the world. In 2014-15, production for sale of total
finished steel (alloy + non alloy) was 91.46 mt, a growth of 4.3% over 2013-14. The high
share of the Majors and Other Producers in total finished steel production for sale is largely
due to substantial availability of raw materials like sponge iron as well as due to the
expansion of capacities and emergence of new units in these segments.
Indian steel industry : Production for Sale (in million tonnes)
Catagory 2010-11 2011-12 2012-13 2013-14 2014-15
Total Finished 68.62 75.70 81.68 87.67 91.46
steel (alloy+non
alloy)
Profile of Major Players Network
Tata Steel (earlier known as Tata Iron & Steel Company or Tisco) represents
the country's single largest, integrated steel plant in the private sector.
The company has a wide product portfolio, which includes flat and long
steel, tubes, bearings, ferro-alloys and minerals as well as cargo handling
services. While in terms of size, Tata Steel ranks 34th in the world; it was
ranked first (for the second time) among 23 world class steel companies
by World Steel Dynamics in June 2005. Recent overseas acquisitions are
Tata Steel buying Anglo-Dutch firm Corus for over 12 billion dollars With
its plant located in Jamshedpur (Jharkhand) and captive iron ore mines
and collieries in the vicinity, Tata Steel enjoys a distinct competitive
advantage. The main plant at Jamshedpur manufactures 5 MTPA of flat
and long products, while its recently acquired Singapore-based company,
NatSteel Asia
manufactures 2 MTPA of steel across Singapore, China, Philippines,
Malaysia and Vietnam.
Steel Authority of India Limited (SAIL)
Steel Authority of India Limited (SAIL) is a leading Public Sector Undertaking (PSU) in
which the Government of India owns about 86 per cent of equity. It is a fully integrated iron
and steel maker, producing both basic and special steels for domestic construction,
engineering, power, railway, automotive and defence industries and for sale in export
markets. It is ranked amongst the top ten public sector companies in India in terms of
turnover. They manufactures and sells a broad range of steel products, including hot and cold
rolled sheets and coils, galvanized sheets, electrical sheets, structural’s, railway products,
plates, bars and rods, stainless steel and other alloy steels. SAIL have five integrated plants
and three special steel plants, located principally in the eastern and central regions of India
and situated close to domestic sources of raw materials, including the Company's iron ore,
lime-stone, and dolomite mines. The company has the distinction of being India’s largest
producer of iron ore and of having the country’s second largest mines network. This gives
them a competitive edge in terms of captive availability of iron ore, limestone, and dolomite
which are inputs for steel making.
Bhushan Power & Steel Ltd
Bhushan Power & Steel Ltd., an ISO 9002 certified company, is a merged entity of Bhushan
Industries Ltd., Bhushan Metallic’s Ltd. and Decor Steel Ltd. Bhushan Steel has a turnover of
more than USD 540 Million and is a leading manufacturer of Flat, Round and value added
products in Steel. Bhushan have 7 World class and state of art plants at Chandigarh,
Derabassi, Kolkata, and Orissa in India. A completely integrated plant is commissioned under
Phase I in Orissa and Phase II is all set for takeoff. In Orissa plant, technology and
equipments are procured from world-renowned Companies like Luirgi from Germany, ABB
Ltd., SMS Demag, Siemens etc. It is selling its Value added range of products in Secondary
Steel through a large distribution network in India (comprising more than 25 sales offices)
and abroad.
Jindal Steel and Power Limited (JSPL)
Jindal Steel and Power (JSPL), part of the US$4 billion Jindal Organization, has business
interests in steel production, power generation, mining iron ore, coal and diamond
exploration/mining. The current turnover of the company is over Rs. 30 billion and on a path
of catalyzing economic development of the country through its contribution to the
infrastructure sector. JSPL with its obsession for excellence is increasing its portfolio of
value-added products, bringing the world's best to India and making an international mark.
Production Capabilities expanded to serve the infrastructure sector, catalysing economic,
development and growth. JSPL has the integrated steel plant (as approved by Joint Plant
Committee) at Raigarh in the state of Chhattisgarh, India. The facilities include world's
largest coal-based Sponge Iron Plant with a capacity of 1.37 million TPA using ten
indigenously developed rotary kilns. The company has achieved complete
backward
integration with its captive iron & coal mines making it one of the lowest-cost
producers of sponge iron .The steel making capacity has been expanded from
400,000TPA to 1.15 million TPA.
JSPL today is the largest private sector investor in Chhattisgarh with a total investment of
Rs.100 billion. JSPL has recently signed an MoU with the State Government of Orissa to set
up a 2 million tonne steel plant with an investment of Rs.13.5 billion which would be
expanded to 6 million tonne and another MoU has been signed with the State Government of
Jharkhand to set up a 5 million steel plant with an investment of Rs.120 billion.
ESSAR Steel
Essar Steel Limited (the "Company") is the flagship Company of the Essar Group and looks
after the Group’s interest in the steel business. The Company was incorporated in June 1976
under the name of Essar Construction Limited and was engaged primarily in core sector
activities, including marine construction, pipeline laying, dredging and other port-related
activities. In 1984, the Company ventured further into other core sectors mainly the field of
exploration and development, drilling onshore and offshore oil and gas wells for Indian
Public Sector oil exploration companies. In view of this the Company’s name was then
changed to Essar Offshore and Exploration Limited in May 1987. In August 1987, the
Company’s name was changed to Essar Gujarat Limited, to reflect its highly diversified
business interest. In 1988, the Company made an initial public offer for its shares, which
are now listed on Bombay Stock Exchange, National Stock Exchange of India and 2 other
Indian Stock Exchanges. The Company diversified into the steel business in late 1980s with
the purchase of an HBI manufacturing plant in Emden, Germany, which was dismantled and
relocated to Hazira, on the west coast of India. The HBI plant with a capacity of 0.88 MPTA
was completed in March 1990 and commenced commercial production in August 1990.
As part of its business strategy of focusing on the iron and steel sector, the Company hived of
its unrelated businesses to a series of different companies (each of which form a part of the
Group and operate at arm’s length relationship) - Offshore and energy operations were
transferred to Essar Oil Limited in May 1992, Civil and mechanical construction
businesses were transferred to Essar Projects limited in March 1993.
Being a core sector, steel industry tracks the overall economic growth in the long term. Also,
steel demand, being derived from other sectors like automobiles, consumer durables and
infrastructure, its fortune is dependent on the growth of these user industries. The Indian steel
sector enjoys advantages of domestic availability of raw materials and cheap labour. Iron ore
is also available in abundant quantities. This provides major cost advantage to the domestic
steel industry
The Indian steel industry is largely iron-based through the blast furnace (BF) or the direct
reduced iron (DRI) route. Indian steel industry is highly consolidated. About 60% of the
crude steel capacity is resident with integrated steel producers (ISP). But the changing ratio
of hot metal to crude steel production indicates the increasing presence of secondary steel
producers (non integrated steel producers) manufacturing steel through scrap route,
enhancing their dependence on imported raw material.
India continues to hold its position as the 3rd largest steel making nation in the World in the
current calendar year. During FY 15, domestic crude steel production was 88.1 MT,
registering a growth of around 7.9% over the previous year. Further, finished steel production
registered a growth of 3.3% in FY15. Due to adverse Global conditions, there has been a
large inflow of imports, which surged by more than 70% while overall domestic consumption
registered a growth of 3.1% only. In case of carbon steel, the consumption growth remained
almost flat at 0.5%. This has also manifested in a series of price cuts for the domestic steel
industry during the year, leading to a squeeze on margins earned by steel producers.
China in the last decade built substantial steelmaking capacity to meet its manufacturing
growth and consumption requirements. This resulted in, China's share of global steel
production to double to 50%. The global steel capacity utilisation continues to remain at
around 75%, while, utilisation levels in China remained lower than global average and
around 70% of the total global excess capacity resides in China. This coupled with declining
domestic steel consumption led to rise in steel exports from China. Chinese steel exports
surged to an all-time high of over 100 MT in FY 2015 creating a cascading effect on other
steel producing nations.
Steel prices are now increasingly aligning to global export prices as markets strike a balance
between imports and domestic demand. China’s waning demand and resultant rise in exports
poses a risk to leveraging improving domestic demand in South Asia and Europe. Further,
movement of currencies against USD would also have a significant impact on the movement
of global steel and raw material prices.
Financial Year 15
Indian steel industry faced several challenges during the year. On the other hand the finished
steel imports surge by 70% especially from the surplus economies of China, Korea, Japan and
Russia. Korea & Japan enjoys reduced the import tariffs under the Free Trade Agreement
(FTA) with India. At the same time finished steel exports from India also decreased by 8.1%
YOY to 5.5 MT. Resultant steel trade dynamics, subdued demand and declining raw material
prices have driven global steel prices lower and impacted profitability of steel companies.
During the FY 15, the performance of the Indian companies operations was adversely
impacted by the regulatory uncertainties in the mining sector. For the first time, several of its
critical mines remained closed for varying periods, causing immense stress on operations.
This led to supply and production disruptions and impacted the cost structure.
World crude steel production grew at 1% reaching 1,665 MT in 2014, as per World Steel
Association (WSA). The global steel industry continues to face problems of large surplus
capacity. This meagre demand growth was also recorded only due to some pickup in the
demand from the advanced economies. The growth in production is coming mainly from
Korea which grew by 7.5%. China’s crude steel production increased merely by 0.1% YoY to
822.7 MT in 2013. The EU and US recorded a growth of 1.7% compared to 2013.
In FY15, the consumption of finished steel grew to 76.99 MT while the CAGR increased to
5.74 per cent during FY08-15 .
Driven by rising infrastructure development and growing demand for automotives, steel
consumption is expected to reach 104 MT by 2017.
It is expected that consumption per capita would increase supported by rapid growth in the
industrial sector, and rising infra expenditure projects in railways, roads & highways, etc.
For FY15, per capita consumption of steel in India was 60 kg against the world average of
222 kg
Government Initiatives
The Government of India is aiming to scale up steel production in the country to 300 MT by
2025 from 81 MT in 2013-14.
The Ministry of Steel has announced to invest in modernisation and expansion of steel plants
of Steel Authority of India Limited (SAIL) and Rashtriya Ispat Nigam Limited (RINL) in
various states to enhance the crude steel production capacity in the current phase from 12.8
MTPA to 21.4 MTPA and from 3.0 MTPA to 6.3 MTPA respectively.
The Minister of Steel & Mines, Mr Narendra Singh Tomar, has reiterated commitment of
Central Government to support the steel industry to reach a production target of 300 Million
Tonne Per Annum (MTPA) in 2025.
The Ministry of Steel is facilitating setting up of an industry driven Steel Research and
Technology Mission of India (SRTMI) in association with the public and private sector steel
companies to spearhead research and development activities in the iron and steel industry at
an initial corpus of Rs 200 crore (US$ 31.67 million).
Some of the other recent government initiatives in this sector are as follows:
Government of India plans to auction eight coal blocks with reserves of 1,143 million
tonnes to steel and cement firms in January 2016, as per coal secretary Mr Anil
Swarup.
Government has planned Special Purpose Vehicles (SPVs) with four iron ore rich
states i.e., Karnataka, Jharkhand, Orissa, and Chhattisgarh to set up plants having
capacity between 3 to 6 MTPA.
SAIL plans to invest US$ 23.8 billion for increasing its production to 50 MTPA by
2025. SAIL is currently expanding its capacity from 13 MTPA to 23 MTPA, at an
investment of US$ 9.6 billion.
A Project Monitoring Group (PMG) has been constituted under the Cabinet
Secretariat to fast track various clearances/resolution of issues related to investments
of Rs 1,000 crore (US$ 152 million) or more.
To increase domestic value addition and improve iron ore availability for domestic steel
industry, duty on export of iron ore has been increased to 30 per cent.
Prospects
Global economic growth indicators are moderately positive, but the volatility in energy
prices, currency adjustments, swings in capital flows can potentially impact emerging
economies. The IMF forecasts world economy to expand at 3.5% this year and 3.8% in 2016,
terming global growth prospects as moderate and uneven in its latest April 2015 World
Economic Outlook. The growth in advanced economies, aided by fall in oil prices, is
projected to strengthen, for the third year in a row, to 2.4% in CY 2015 compared to 1.8% in
CY 2014.
The global steel demand in CY 2015 is expected to increase by 0.5% to 1,544 MnT, while in
CY 2016 it is projected to grow by 1.4% to 1,566 MnT. Steel demand in the developed
economies is projected to grow by 0.2% in CY 2015 and by 1.8% in CY 2016. Chinese steel
demand is projected to record a negative growth of 0.5% in CY 2015 as well as in CY 2016.
ndian steel demand is expected to reflect improving macro-economic environment. Steel end
use sectors are expected to perform better compared to previous financial year. Infrastructure
projects like dedicated freight corridor etc., are gaining momentum and the steady decline in
stalled projects coupled with hike in import duty in both flat and long products should
stimulate steel demand. Recent weakness in Indian rupee has also helped competitiveness of
domestic steel players. However, steel prices are expected to remain under pressure from
Chinese exports and increased domestic competitiveness.
Indian economy is among a few economies globally for which economic growth forecast has
been raised by the IMF. The IMF has raised its India GDP growth estimates for FY 2015-16
to 7.5%. In 2015-16, steel demand is expected to grow by 6% to 7%. However, a much
sharper than expected increase in inflation and higher than budgeted fiscal consolidation are
the key downside risks to the outlook.
Total finished steel production in India has increased at a CAGR of 7.45 per cent
over FY11–15 to 91.46 million tonnes per annum (MTPA). The country has become
the third- largest crude steel producer in 2015, as large public and private sector players
strengthen steel production capacity in view of rising demand. Moreover, capacity is
also expected to increase from 100 million tonnes (MT) to 112.5 MT by FY16 while in
the coming 10 years the country is anticipated to produce 300 MT of steel.
During FY 15, total steel production was 91.46 MT.
Huge scope for growth is offered by India’s comparatively low per capita
steel consumption and the expected rise in consumption due to increased infrastructure
construction and the thriving automobile and railways sectors.
In 2015, India’s per capita consumption of steel was ~60 kg, which is close to one
fourth of the international average, indicating strong growth opportunity.
National Mineral Development Corporation is expected to increase the iron ore
production 75 MTPA until2021 indicating new opportunities in the sector.
Increased government and corporate sector focus on using innovative
production techniques for enhancing operational as well as financial performance is a
positive.
Domestic players’ investments in expanding and upgrading manufacturing facilities
are expected to reduce reliance on imports. In addition, the entry of international
players would provide benefits in terms of capital resources, technical know how and
more competitive industry dynamics.
Road ahead
India is expected to become the world's second largest producer of crude steel in the next 10
years, moving up from the third position, as its capacity is projected to increase to about 300
MT by 2025. Huge scope for growth is offered by India’s comparatively low per capita steel
consumption and the expected rise in consumption due to increased infrastructure
construction and the thriving automobile and railways sectors.
Evolution of Indian Steel Sector :
1907-1918- Production of steel started in India (TISCO was set up in 1907).IISC was
set up in 1918 to compete with TISCO.
1923-1948- Mysore Iron and Steel Company was set up in 1923. According to the new
Industrial policy statement (1948),new ventures were only undertaken by the central
government.
1954-1964- Hindustan Steel Ltd. and Bokaro Steel Ltd were set up in 1954 and 1964
respectively. In the early 1990s, the public sector dominated steel production. Private
Sectors were in the downstream and producing finished steel using crude steel
products.
1973-1992- SAIL was created as a holding company to oversee most of India’s Iron
and Steel Production. In 1989, SAIL acquired Vivesvata Iron and Steel Ltd . In 1993,
the Government set plans in motion to partially privatise SAIL.
1993-2014-Foreign players began to enter the Indian Steel Market. No licence was
required for capacity ereation. Impositio of export duty on Iron Ore to focus more on
catering growing domestic demand. Decontrol of domestic steel prices. Promoting
Research and Development in Iron and Steel Sector.
2015- Reduction in basic custom duty on the plants and equipments required for initial
setup or expansion of Iron ore pellets plants and Iron ore benefication plants to
encourage benefication and pelletisation of Iron Ore fines in the country. Government is
mplementing many infra projects such as construction of Ports, Freight Corridors etc.
which would boost Steel demand in the country.
In 2015, India ranked as the third largest crude steel producer in the world leaving
behind United States. The total finished steel production in FY16 is------------MT.
During FY 16, Indian Steel Industry imported a total of ------------------million tonnes of
Finished steel.
FY15 (April-
December)
STEEL PRODUCTION IN INDIA
In 2015, crude steel production was 62.39 (April to December) .Total crude
steel production rose at a CAGR of 5.54 per cent over the last five years to
reach 81.69 MT in FY14
Private sector’s production of crude steel grew at a CAGR of 7.22 per cent between
2010-15
Finished steel production increased 7.35 per cent from 81.68 MT to 87.68 MT
in FY14; analysts expect production figures to improve rapidly over the next
74.24
55.82
five years, with the Ministry of Steel forecasting production levels at 115.3 MT
by FY17
The steel sector contribute 2% to the GDP of the nation and provides 6 lakh
jobs in the country
Total Crude Steel Production (million tonnes)
Public Sector Private Sector Total
FY10 16.71 49.13 65.84
68.86
63.18
FY11 16.99 53.68 70.67
FY12 16.48 57.81 74.29
FY13 16.48 61.94 78.42
FY14 16.77 64.92 81.69
FY15
FY13
Total Finished Steel Production (million tonnes)
Public Sector Private Sector Total
FY10
FY11 13.25 55.37 68.62
FY12 12.52 63.18 75.70
FY13 12.82 68.86 81.68
FY14 13.44 74.24 87.68
FY15
DEMAND HAS OUTPACED SUPPLY OVER THE LAST FIVE YEARS
FY14
In FY15, the consumption of finished steel grew to 76.99 MT while the CAGR increased to
5.74 per cent during FY08-15.
Total real consumption of steel grew to 74.1 MT in FY14 against 73.5 MT in FY13; over
FY08–14, consumption has expanded at a CAGR of 6.04 per cent.
Driven by rising infrastructure development and growing demand for automotives, steel
consumption is expected to reach 104 MT by 2017.
It is expected that consumption per capita would increase supported by rapid growth in the
industrial sector, and rising infra expenditure projects in railways, roads & highways, etc.
For FY15, per capita consumption of steel in India was 60 kg against the world
average of 222 kg
1.73
DEMAND SUPPLY GAP LEADS TO RISE IN INPORTS
With growth in demand for steel outpacing growth in domestic production over
the last few years, import dependency has increased
India was a net importer of steel till FY13, but turned a net exporter of the
same in FY14. In FY 15, India imported 9.32 MT of Steel while exports
declined to 5.59 MT in FY15 from 5.98 MT during FY 14
During FY11-15, import of steel grew at a compounded annual rate of 9.01 per cent,
whereas, exports increased at a CAGR of 11.32 per cent
Total domestic demand for steel is estimated at 113.3 mtpa by 2016-17
GROWTH IN MARKET VALUE OF THE INDIAN STEEL SECTOR
In 2014, the Indian steel sector’s total market value was USD81 [Link] sector has
benefitted from the hike in prices and production, especially since the beginning of the
millennium. Over 2007–16(E), the sector’s market value is estimated to have posted a strong
CAGR of 13.7 per cent.. Market value of Indian steel sector is expected to reach
USD95.3 billion by FY16
KEY PLAYERS OF THE INDUSTRY
Company Products
Tata Steel Ltd Finished steel (non-alloy steel)
SAIL Finished steel (non-alloy steel)
JSW Steel Ltd Hot-rolled coils, strips and sheets
Jindal Steel & Power Ltd Iron and steel
Ispat Industries Ltd Hot-rolled coils, strips and sheets
Welspun-Gujarat Stahl Rohren Ltd Tubes and pipes
Bhushan Steel Ltd Cold-rolled coils, strips and sheets
Visa Steel Ltd Ferro Chrome, coke and special steel
CONSTRUCTION AND INFRASTRUCTURE-KEY STEEL CONSUMERS IN INDIA
Consruction is India’s largest steel consumer accounting for 35 percent of total consumption
in FY 14. Infrastructure and automobile are the next largest consumer with 32 percent of
total consumption.
CONSTRUCTION – 35%
INFRASTRUCTURE-20%
AUTOMOBILES-12%
PIPES AND TUBES-10%
CAPITAL GOODS-8%
OTHERS- 15%
NOTEABLE TRENDS IN THE INDIAN STEEL INDUSTRY
[Link] enhance capacity by 488.66 million tonnes, 301 MOUs have been signed .
2. Additional steel capacity would attract an investment of USD83 to USD166 billion
3. Mostof the companies in the industry are undertaking modernisation and expansion of
plants to be more cost efficient.
[Link]
production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPA in
2025 with the total investment of USD24.88 billion.
[Link] by the growth potential of the Indian steel industry, several global steel players
have been planning to enter the market.
[Link] steel companies have now started benchmarking their facilities and processes
against global standards, to enhance productivity.
[Link] steps are expected to help Indian companies improve raw material and energy
consumption as well as improve compliance with environmental and pollution yardsticks
[Link] are attempting coal gasification and gas-based Direct-Reduced Iron (DRI)
production. Other alternative technologies such as Hlsmelt, Finex and ITmk3 being
adopted to produce hot metal.
[Link] of Steel has issued necessary direction to the steel companies to frame a strategy
for taking up more R&D projects by spending at least 1 per cent of their sales turnover on
R&D to facilitate technological innovations in the steel sector
[Link] has adopted energy efficiency improvement projects for mills operating with
obsolete technologies