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Steel Industry In India

India is the 5th largest producer of crude steel in the world and is expected to become the 2nd largest producer by 2015-2016. Steel exports increased by 17.3 per cent as it reached an estimated 2.46 million tonne while steel imports were at an estimated 5.36 million tonne, a growth of 2.8 per cent.

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Definition / Scope

  • It is a commercial iron that contains carbon in any amount up to about 1.7 percent as an essential alloying constituent, is malleable when under suitable conditions, and is distinguished from cast iron by its malleability and lower carbon content
  • There is enormous scope for increasing consumption of steel in almost all sectors in India.
  • Rural India, accounting for 70 per cent of Indian population has low per capita steel consumption which provides huge scope for growth

Market Overview

  • India is the 5th largest producer of crude steel in the world and is expected to become the 2nd largest producer by 2015-2016.
  • Steel exports increased by 17.3 per cent as it reached an estimated 2.46 million tonne while steel imports were at an estimated 5.36 million tonne, a growth of 2.8 per cent. India is net importer of steel.
  • India's Steel Industry has a history of more than a century. Before liberalization, the Indian steel industry was a predominantly synchronized one with the public sector industry. Tata Steel was the only major private player involved in the production of steel. SAIL and Tata Steel have been the major steel industries of India.
  • The liberalization of the Indian economy directed to the opening up of many steel industries, consequently, increased production capacity. Since 1990, a huge investment has been made into the industry.
  • From 1997 to 2001 when the overall global steel industry was facing a depression, Indian Steel Industry also went through a rough phase but improved after 2002. India has now emerged as one of the largest producers of steel in the entire world. Almost all varieties of steel are now being produced in the country.
  • India has also emerged as a net exporter of steel and Indian steel is being increasingly accepted in the global market.

Key Metrics

Metrics Value Explanation
Base Year 2016 Researched through internet


Top Market Opportunities

  • Fourth largest producer of crude steel: Steel production in India has increased at a CAGR of 7.7 per cent over 2005–12. The country is slated to become the second-largest steel producer by 2015 as large public and private sector players strengthen steel production capacity in view of rising demand.
  • Strong Growth Opportunities: 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
  • Technical Advancements: Increased government and corporate sector focus on using innovative production techniques for enhancing operational as well as financial performance is a positive 
  • Rising Domestic and international investments: 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 

Top Application Opportunities in the India

Automotive

  • The automotives industry is forecasted to grow in size by USD122–159 billion by 2016
  • With increasing capacity addition in the automotive industry, demand for steel from the sector is expected to be robust

Capital Goods

  • The capital goods sector accounts for 11 per cent of steel consumption, and has the potential to increase in tonnage and market share. 
  • Corporate India’s capex is expected to grow and generate greater demand for steel 

Infrastructure

  • The government aims to increase infrastructure spending from 8.4 per cent of GDP in FY11 to 10.7 per cent by FY17      
  • Due to such a huge investment in infrastructure the demand for long steel products would increase in the years ahead  

Airports

  • More and more modern and private airports are expected to be set up
  • Development of Tier-II city airports would sustain consumption growth
  • Estimated steel consumption in airport building is likely to grow more than 20 per cent over next few years

Railways

  • The dedicated rail freight corridor (DRFC) network expansion would be enhanced in future
  • Gauge conversion, setting up of new lines and electrification would drive steel demand

Oil & Gas

  • The liquid fuel transportation pipeline network is likely to grow from the present 16,800 km to 22,000 km in 2014
  • This would lead to an increase in demand of steel tubes and pipes, providing a lucrative opportunity to the steel industry 

Power

  • The government aims to add 71,000–1,07,500 MW (Mega Watt) of capacity during the 12th Five-Year Plan
  • Both generation and transmission capacities would be enhanced, thereby raising steel demand from the sector

Rural India

  • Rural India, accounting for 70 per cent of Indian population has low per capita steel consumption which provides huge scope for growth   
  • Policies like Bharat Nirman and Rajiv Gandhi Awaaz Yojna are driving growing demand for construction steel in rural India

Market Drivers

  • Backed by the liberalized government policies, the Indian steel sector is going through an expansionary phase. The prospects for the
  • Demand is excellent driven by high investment rate, accelerated growth in the manufacturing industry and expansion in physical infrastructure creation.
  • Liberalization in the foreign trade has had a favorable effect on Indian exports. Exports have grown fast and at a rate exceeding 25% per annum between 1991-92 and 2002-03.
  • Demand for steel has been worked out on the basis of observed relationship between steel consumption and selected macro economic variables under four scenarios of GDP growth (i.e., of 7%, 8%, 8.5% and 9%) by 2011-12 as envisaged in the Draft Approach paper for the Eleventh Five Year Plan. In the ‘Most Likely’ scenario of 9.0% GDP growth, demand for steel works out to be 70 Million Tonnes by 2011-12.  Therefore, it is envisaged that in the next five years, demand will grow at a considerably higher annual average rate of 10.2% as compared to around 7% growth achieved between 1991-92 and 2005-06.
  • India has necessary resources and capabilities to become a global supplier of quality steel. Also there exists ample market opportunities in the neighboring regions of Asia, Africa and the Middle East. Recognizing this potential, the National Steel Policy, 2005 has estimated an annual growth of around 13% in of steel in the next decade and a half.
  • There are many technological developments, which have been commercialized to reap the benefits in both equipments and processes. However, these are yet to be adopted widely in India. The Indian Steel Industry has to come forward and adopt these technologies on priority basis to make their products competitive internationally.
  • Driving Forces:
    • Companies are increasing their focus on downstream and solutions driven products for their higher value add. Example: SAIL produce 40% value added steel.
    • An Technology improvement : 
      • Boiler project expected to generate 350000 pounds of steam/Hour, produce 38 mw on site.
      • COREX: don’t require coking coal use thermal coal directly (coking & sintering plant not required)
      • FINEX :molten iron is produced directly using iron ore fines and non-coking coal (sintering and coke making not required)
  • Even though India is now one of the world‘s top ten steelmakers its domestic output is insufficient to meet the demand in all segments
    • Low steel prices smooth the way for imports from Russia, Ukraine and Kazakhstan
    • The geographical proximity of Japan, South Korea and China makes them important suppliers as well.
    • India is not expected to be self-sufficient in many segments over the medium term. There are several reasons for this :
      •  Firstly, steel consumption is rising very fast as a consequence of the prospective dynamic economic growth
      • Secondly, there is demand for high-quality products which India will not be able to supply in sufficient quantities for the foreseeable future.
Key Steel Plants in India

Other Key Market Trends

Evolution of the Steel Sector in India

  • 1907-1918
    • Production of steel started in India (TISCO was setup 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 setup in 1954 and 1964, respectively
    • In the early 1990s, the public sector dominated steel production 
    • Private players were in downstream production mainly producing finished steel using crude steel products
  • 1973- 1992
    • SAIL was created in 1973 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- 2012
    • Foreign players began entering the Indian steel market
    • No license requirement for capacity creation
    • Imposition of export duty on iron ore, to focus more on catering growing domestic demand 
    • Decontrol of domestic steel prices 
    • Launch of Scheme for promotion of Research and Development in Iron & Steel sector

Market Outlook

  • National Steel Policy (NSP) announced on 3rd November, 2005 aims at building a modern and efficient domestic steel industry of global standards
  • India has the potential to emerge as global player in steel making if its inherent advantages of availability of quality iron ore, cheap labor, technical manpower and growing domestic demand are properly leveraged
  • The Indian steel industry is currently going through an expansionary phase backed by a liberalized policy environment
  • Prospects of domestic demand appear to be excellent driven by high investment rate, accelerated growth in the manufacturing industry and expansion in physical infrastructure creation
  • Crude steel production grew at the rate of 6.4%
  • Indian crude steel production will grow at a CAGR of around 10% during 2010-2013
  • India is the fifth largest steel producer at the global front and struggling to become the second largest producer in the coming years
  • Construction, infrastructure, automobile, and power will drive the steel industry in future
  • Per capita finished steel consumption is far less than its regional counterparts
  • Future potential of various vertical industry segments, including automotive, aerospace, marine, consumer durables, power, railways, telecom, and housing

Key Market Players

  • Tata Steel:
    • Annual crude steel making capacity of 6.8 million tonne
      • TATA Steel is continuing with its program of expansion of hot metal and steel making capacity by 3 million tonne to reach 10 million tonne
      • Massive expansion of its capacities through various greenfield projects at Saraikela (Jharkhand), Kalinganagar (Orissa) and Bastar(Chhattisgarh)
  • Steel Authority of India Ltd:
    • Produced 3.2 million tonne of hot metal, 3.2  million tonne of crude steel by achieving 2%, 1% & 1% growth over the corresponding period of the previous year
    • SAIL and M/s Rail India Technical and Economic Services (RITES) have entered into a Joint Venture Agreement for setting up of a wagon manufacturing facility in Kulti, Bardhman Dist. of West Bengal
  • JSW Steel:
    • One of the lowest cost steel producers in the world
    • Formed a joint venture for setting up a steel plant in Georgia
    • Acquired a controlling stake in Ispat Industries Ltd. 
    • Acquired mining assets in Chile, USA and Mozambique
    • Entire gamut of steel products - Hot Rolled, Cold Rolled, Galvanized, Galvalume, Pre-paintedGalvanised, Pre-painted Galvalume, TMT Rebars, Wire Rods & Special Steel Bars, Rounds & Blooms 
  • Jindal Steel & Power Ltd.:
    • One of the fast growing major steel units in the country
    • Raigarh plant of JSPL has a present capacity of 1.37 MTPA sponge iron plant 
    • 2.40 MTPA Steel Melting Shop (SMS), 1.0 MTPA Plant Mill, 2.30 sinter plant, 0.8 MTPA coke oven and a 330 MW captive power plant
    • Capacity addition plan at Raigarh to enhancement the present steel capacity from 2.4 million tonne to 6.0 MT in a phased manner by 2011
    • The Company has also commenced hot trials of its 0.6 MTPA Wire Rod Mill at Patratu,  Jharkhand
  • Essar Steel Ltd. :
    • Essar produced 3.39 MT flat product and achieved a sales of 3.24 MT showing an improvement of 8% and 6% respectively over the last fiscal
    • Transportation by the slurry pipe line from Kirandul to Vizag 
    • Expanding its production capacity at its Hazira plant to a capacity of nearly 10 million tonnes 
    • Essar has plans to set up steel units in other parts of the country for 
      • 6.0 million tonnes at Paradip in Orissa
      • 3.0 million tonnes in Jharkhand
      • 3.2 million tonnes in Chhattisgarh and 
      • 6.0 million tonnes in Karnataka 
  • Ispat Industries Ltd. :
    • IIL has set up one of the largest integrated steel plants with a capacity to manufacture 3 million TPA of Hot Rolled Steel Coils
    • The integrated steel plant uses the Converter cum Electric Arc Furnace Route (CONARC process) for producing steel
    • IIL has the state-of-the art technology called compact strip  production (CSP) process, installed for the first time in India 
    • Produces high  quality and specifically very thin gauges of Hot Rolled Coil 
  • Rashtriya Ispat Nigam Ltd. :
    • First shore based integrated steel plant at Visakhapatnam in Andhra Pradesh
    • Started with a capacity of 3 million tonnes per annum (MTPA) of liquid steel
    • International standards with state-of-the-art technology, incorporating extensive energy saving and pollution control measures 
    • Doubled it's capacity to 6.3 MTPA of liquid steel and the new units are set to come on stream progressively from 2011-12
    • RINL-VSP is the first PSE & first in Steel sector in India to get BS EN 16001   (Energy Management system) certification on 28.12.10 
  • Bhushan Power & Steel Ltd.:
    • Units in Chandigarh & Derabassi, one in Kolkata and the group owns three overseas plants in Nepal, Nigeria & Sudan
    • The company is further expanding the capacity from 1.80 MTPA to 2.30 MTPA
    • The Company is also setting up Galvanising, Galvolume, Colour Coating, Precision Tube, Black Pipe & GI Pipe
    • The company is going one step backward and planning to set up Iron Ore Beneficiation Plant of 6.50 MTPA, Pellet Plant of 3.8 MTPA and further value added products both flat and long

References


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