Changing Profile of the Pig Iron Industry                  What The Economic Downturn                         Is Forcing T...
Changing Profile of the Pig Iron IndustryPrabhash Gokarn           2        Head M&BD FAMD, Tata Steel
Changing Profile of the Pig Iron IndustryPrabhash Gokarn           3        Head M&BD FAMD, Tata Steel
Changing Profile of the Pig Iron IndustryPrabhash Gokarn           4        Head M&BD FAMD, Tata Steel
Changing Profile of the Pig Iron Industry                  Meltdown                   of 2008                       … and ...
Changing Profile of the Pig Iron IndustryPrabhash Gokarn           6        Head M&BD FAMD, Tata Steel
Changing Profile of the Pig Iron Industry              Increased Volatility in Prices                                     ...
Changing Profile of the Pig Iron IndustryPrabhash Gokarn           8        Head M&BD FAMD, Tata Steel
Changing Profile of the Pig Iron IndustryPrabhash Gokarn           9        Head M&BD FAMD, Tata Steel
Changing Profile of the Pig Iron IndustryPrabhash Gokarn           10       Head M&BD FAMD, Tata Steel
Changing Profile of the Pig Iron Industry                    The                  Response                             … a...
Changing Profile of the Pig Iron Industry                                          Operational                            ...
Changing Profile of the Pig Iron Industry   But this makes the business                  - Capital intensive              ...
Changing Profile of the Pig Iron Industry   Go up the value chain                  - low phos, low Si pig iron            ...
Changing Profile of the Pig Iron Industry                    … affecting profitability of the businessPrabhash Gokarn     ...
Changing Profile of the Pig Iron Industry      RM     secu      rity                                    Clamour           ...
Changing Profile of the Pig Iron Industry  Lessons for all businesses :          Secure                         Go up     ...
Changing Profile of the Pig Iron Industry      Background :       About Pig Iron                               &          ...
Changing Profile of the Pig Iron Industry    Pig Iron    • Pig iron is crude form of iron which, after smelting from its o...
Changing Profile of the Pig Iron Industry  Characteristics    • Pig iron is broadly classified into two grades      depend...
Changing Profile of the Pig Iron Industry    Market Analysis of Pig Iron    Demand Analysis    • Pig iron is consumed main...
Changing Profile of the Pig Iron Industry    Pig Iron Production                              Pig Iron Production    6000 ...
Changing Profile of the Pig Iron IndustryApparent Consumption & Exports of Pig Iron    • The apparent consumption of pig i...
Changing Profile of the Pig Iron Industry Major Countries Where Indian Pig Iron Is Exported    Major countries where India...
Changing Profile of the Pig Iron Industry Pig Iron Consumption In India    • Pig iron is being consumed by the foundry ind...
Changing Profile of the Pig Iron Industry    Export Potential    • Japan, Republic of Korea, Taiwan, Thailand,      Indone...
Changing Profile of the Pig Iron Industry    Demand in India – region wise    • The region-wise demand for pig iron is gov...
Changing Profile of the Pig Iron Industry    Supply Scenario    • Presently, there are numbers of pig iron producers in th...
Changing Profile of the Pig Iron Industry    Main Producers of Pig IronPrabhash Gokarn             29           Prabhash G...
Changing Profile of the Pig Iron Industry Production Outlook for Pig Iron • In the recent years, share of secondary produc...
Changing Profile of the Pig Iron IndustryProjected Availability of Pig Iron (In 000 tons)    Availability                 ...
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Changing Profile Of Pig Iron Industry & Lessons For All Industries Gokarn

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How the pig iron industry in India is changing

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Changing Profile Of Pig Iron Industry & Lessons For All Industries Gokarn

  1. 1. Changing Profile of the Pig Iron Industry What The Economic Downturn Is Forcing The Indian Pig Iron Industry To Do - and lessons for all industriesPrabhash Gokarn 1 Head M&BD FAMD, Tata Steel
  2. 2. Changing Profile of the Pig Iron IndustryPrabhash Gokarn 2 Head M&BD FAMD, Tata Steel
  3. 3. Changing Profile of the Pig Iron IndustryPrabhash Gokarn 3 Head M&BD FAMD, Tata Steel
  4. 4. Changing Profile of the Pig Iron IndustryPrabhash Gokarn 4 Head M&BD FAMD, Tata Steel
  5. 5. Changing Profile of the Pig Iron Industry Meltdown of 2008 … and other changes in customer expectationsPrabhash Gokarn 5 Head M&BD FAMD, Tata Steel
  6. 6. Changing Profile of the Pig Iron IndustryPrabhash Gokarn 6 Head M&BD FAMD, Tata Steel
  7. 7. Changing Profile of the Pig Iron Industry Increased Volatility in Prices Shorter cycles of higher variationsPrabhash Gokarn 7 Head M&BD FAMD, Tata Steel
  8. 8. Changing Profile of the Pig Iron IndustryPrabhash Gokarn 8 Head M&BD FAMD, Tata Steel
  9. 9. Changing Profile of the Pig Iron IndustryPrabhash Gokarn 9 Head M&BD FAMD, Tata Steel
  10. 10. Changing Profile of the Pig Iron IndustryPrabhash Gokarn 10 Head M&BD FAMD, Tata Steel
  11. 11. Changing Profile of the Pig Iron Industry The Response … and the challenges going forwardPrabhash Gokarn 11 Head M&BD FAMD, Tata Steel
  12. 12. Changing Profile of the Pig Iron Industry Operational EfficiencyPrabhash Gokarn 12 Head M&BD FAMD, Tata Steel
  13. 13. Changing Profile of the Pig Iron Industry But this makes the business - Capital intensive - Less Profitable - More Vulnerable to market conditions and thus less viable.Prabhash Gokarn 13 Head M&BD FAMD, Tata Steel
  14. 14. Changing Profile of the Pig Iron Industry Go up the value chain - low phos, low Si pig iron - forward integration into - Steel Making Go up - Spun Pipes value - Foundry chainPrabhash Gokarn 14 Head M&BD FAMD, Tata Steel
  15. 15. Changing Profile of the Pig Iron Industry … affecting profitability of the businessPrabhash Gokarn 15 Head M&BD FAMD, Tata Steel
  16. 16. Changing Profile of the Pig Iron Industry RM secu rity Clamour for Ore LinkagePrabhash Gokarn 16 Head M&BD FAMD, Tata Steel
  17. 17. Changing Profile of the Pig Iron Industry Lessons for all businesses : Secure Go up Operational Raw value Efficiency Materials chainPrabhash Gokarn 17 Head M&BD FAMD, Tata Steel
  18. 18. Changing Profile of the Pig Iron Industry Background : About Pig Iron & Indian Pig Iron IndustryPrabhash Gokarn 18 Head M&BD FAMD, Tata Steel
  19. 19. Changing Profile of the Pig Iron Industry Pig Iron • Pig iron is crude form of iron which, after smelting from its ore, has been allowed to run off into channels and moulds to solidify in the form of ingots or pigs of about 3 foot long and 3 – 4 inches thick. It is of varied composition, a typical grade of pig iron containing, in addition to iron, about 4 percent carbon and 2 percent silicon together with smaller amount of sulphur, manganese and phosphorus. • Some of this carbon is combined with iron; some of it is dissolved in the iron. If much of the carbon is combined, the metal has a light appearance and is known as White Pig Iron. If majority of the carbon is merely dissolved or free, the metal appears grey and is known as Grey Pig Iron. • Pig iron is not malleable or ductile. It cannot be mechanically worked or welded. It can only be used as feed for the production of cast iron. Pig iron forms the starting point for the manufacture of wrought iron and steel.Prabhash Gokarn 19 Prabhash Gokarn 19 Head M&BD FAMD, Tata Steel
  20. 20. Changing Profile of the Pig Iron Industry Characteristics • Pig iron is broadly classified into two grades depending on the alumina-silica ratio. These are foundry grade and basic grade. Foundry grade pig iron is used to manufacture various types of iron castings and basic grade for steel making. • Low sulphur, low phosphorus pig iron finds extensive use in the foundry industry for the manufacture of Malleable Iron Castings and S.G. Iron Castings.Prabhash Gokarn 20 Prabhash Gokarn 20 Head M&BD FAMD, Tata Steel
  21. 21. Changing Profile of the Pig Iron Industry Market Analysis of Pig Iron Demand Analysis • Pig iron is consumed mainly by the iron foundry industry which serves as backbone of manufacturing and construction sectors. Therefore, demand for pig iron is associated with the growth of the iron foundry industry 6000 4657 4943 4735 3781 4292 4403 5000 3058 3187 Consumption, 3194 2910 4000 2378 3000 GAGR 10% 1652 1703 Export 1438 2000 1000 Import 0 1980-81 1990-91 1993-94 1995-96 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09Prabhash Gokarn 21 Prabhash Gokarn 21 Head M&BD FAMD, Tata Steel
  22. 22. Changing Profile of the Pig Iron Industry Pig Iron Production Pig Iron Production 6000 CAGR 11% 5285 4704 4995 5284 5285 5000 4091 3768 4000 3408 3193 3226 2873 3000 2251 2000 1438 1514 1000 0 The compound average annual growth rate (CAGR) in pig iron consumption in the country over different time period is furnished in table-4.Prabhash Gokarn 22 Head M&BD FAMD, Tata Steel
  23. 23. Changing Profile of the Pig Iron IndustryApparent Consumption & Exports of Pig Iron • The apparent consumption of pig iron has increased from 1.7 Mt in 1990-91 to 4.9 Mt in 2008-09 with an average annual growth of about 6 percent. • India has been a net exporter of pig iron since 1993- 94.Prabhash Gokarn 23 Prabhash Gokarn 23 Head M&BD FAMD, Tata Steel
  24. 24. Changing Profile of the Pig Iron Industry Major Countries Where Indian Pig Iron Is Exported Major countries where India exported pig iron during recent years are; China, Indonesia, Japan, Korea, Malaysia, Singapore, Taiwan, Thailand and UAE.Prabhash Gokarn 24 Prabhash Gokarn 24 Head M&BD FAMD, Tata Steel
  25. 25. Changing Profile of the Pig Iron Industry Pig Iron Consumption In India • Pig iron is being consumed by the foundry industry which is producing different varieties of iron cast products. These iron cast products are used in the manufacture of a number of machineries including automobiles under capital goods industry. • The Indian foundry industry ranks among the topmost in the world along with USA, China, Japan, Russia and Germany. In terms of number of units and the workforce employed, it stands next only to China. • There are about 4500 recognized foundry units of which around 90 percent are in the small scale sector. These foundry units are located in clusters in Batala, Jalandhar, Rajkot, Agra, Belgaum, Chennai, Coimbatore, Pune, Howrah, Kolhapur and Ludhiana.Prabhash Gokarn 25 Prabhash Gokarn Head M&BD FAMD, Tata Steel
  26. 26. Changing Profile of the Pig Iron Industry Export Potential • Japan, Republic of Korea, Taiwan, Thailand, Indonesia and Malaysia are major importers of pig iron. • Exports of pig iron from India have been ranging from about 6 percent to 18 percent of apparent consumption during the recent past.Prabhash Gokarn 26 Prabhash Gokarn 26 Head M&BD FAMD, Tata Steel
  27. 27. Changing Profile of the Pig Iron Industry Demand in India – region wise • The region-wise demand for pig iron is governed by the presence of foundry industry and their operating capacity in these regions. Foundry units are developed in clusters in various states since inception in India and the demand for pig iron in these regions is attributed to these clusters of foundries.Prabhash Gokarn 27 Prabhash Gokarn 27 Head M&BD FAMD, Tata Steel
  28. 28. Changing Profile of the Pig Iron Industry Supply Scenario • Presently, there are numbers of pig iron producers in the secondary sector in the country. A few of these secondary units are not operating due to various reasons whereas a few pig iron producing units are under execution. • The producer like NINL and a few small pig iron producers are planning to install downstream facilities to produce steel products. • Further, Integrated Steel Plants viz. BSP, DSP, RSP, BSL, ISP and RINL in primary sector also produce pig iron for sale after meeting their captive requirement of hot metal for steel making. However, presently the integrated steel plants are left with only a small quantum of pig iron for sale.Prabhash Gokarn 28 Prabhash Gokarn 28 Head M&BD FAMD, Tata Steel
  29. 29. Changing Profile of the Pig Iron Industry Main Producers of Pig IronPrabhash Gokarn 29 Prabhash Gokarn 29 Head M&BD FAMD, Tata Steel
  30. 30. Changing Profile of the Pig Iron Industry Production Outlook for Pig Iron • In the recent years, share of secondary producers in production of pig iron has increased and has already achieved more than 85 percent during 2008-09 while that of primary producers has been declining. • The major contributor towards production of pig iron in India in the secondary sector are Nilanchal Ispat Nigam Ltd., Jayaswal Nicco Ltd., Usha Martin Ltd, Tata Metallics Ltd., Sesa Industries Ltd., Southern Iron & Steel Company Ltd., Kirlosar Ferrous Industries Ltd., Kalyani Ferrous Industries Ltd., Electrosteel Castings Ltd. • Presently, total installed capacity of pig iron from secondary sector is assessed as about 6.5Mt. • Capacity utilization of secondary producers of pig iron is estimated as about 72 percent during 2008-09. Most of the merchant pig iron producers do not have captive coke ovens and as such they have to depend on the metallurgical coke available in the open market. Thus the availability of metallurgical coke is a major constraint in the utilization of their full capacity.Prabhash Gokarn 30 Prabhash Gokarn 30 Head M&BD FAMD, Tata Steel
  31. 31. Changing Profile of the Pig Iron IndustryProjected Availability of Pig Iron (In 000 tons) Availability 2011-12 2016-17 Primary Producers 1000 1000 Secondary Producers 4880 5200 Total 5880 6200 • The projected availability of pig iron for the milestone years 2011-12 and 2016-17 are of the order of 5.9 Mt and 6.2 Mt respectively. In view of the expected growth potential of capital goods and automotive industry in India, the demand is expected to surpass the supply of pig iron the Indian foundry industry is geared up to utilize the immense opportunity of becoming an Asian hub for supply of high quality castings for automotive, auto ancillary and other capital goods industries. • The quality of castings mainly depends upon the pig iron quality, therefore the pig iron producers need to pay attention on supply of suitable foundry grade pig iron to ensure that the foundry products are globally competitive with respect to quality and cost.Prabhash Gokarn 31 Prabhash Gokarn 31 Head M&BD FAMD, Tata Steel

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