2. INDEX
1. Steel Industry in India: Global Perspective
2. Steel Production Scenario in India: The Way Forward
3. India’s Steel Consumption Trend and the Growth Drivers
4. India’s Steel Import Export Scenario and Future Prospects
5. Raw Material Supplies for Steel Industry: Is India Self Sufficient?
6. Inadequate Infrastructure: A Major Concern for Steel Industry in India
7. Indian Steel Industry and Increasing Role of Technology
8. Prospective Analysis of Indian Steel Industry
9. BIBLIOGRAPHY
3. 1. Steel Industry in
India: Global
Perspective
- Indian steel industry vs. global steel industry
- Contribution of India’s economy to global GDP
- India & the leading steel producers in the world
- India’s share in global steel consumption
- Competitiveness of the Indian steel industry
8. KEY FIGURES
Global crude steel
production -
2011: 1527 MT
Global crude steel
production
growth during
2007-11: at CAGR
of 3.2 %
India’s crude steel
production -2011:
72.2 MT
India’s GDP
growth:
2010-11= 8.4%
2011-12= 6.5%
2012-13= 5.9%
India’s GDP: 2011
Nominal - $ 1.85
trillion PPP - $ 4.5
trillion
Approximate
share of
infrastructure(8%
E) &
manufacturing
sector(16 % E) in
India’s GDP (FY
12): one fourth
9. Indian steel industry vs. global steel industry
Global crude steel production reached 1527 MT in 2011 showing a 6.8 %
growth over 2010.
India has emerged as a leading player in global steel industry contributing
to about 4.7 % of global crude steel production in 2011.
Large scale infrastructure expansion plans for twelfth five year plan
(FYP:2012-17) and raising per capita steel consumption in India promises
unprecedented growth potential of Indian steel Industry during next 10 years.
10. CONTRIBUTION OF INDIA’S ECONOMY TO GLOBAL GDP
India ranked as the third largest contributor (5.65%) to global GDP in 2011
in terms of PPP ranking, only behind US and China.
India’s economic growth has slacked during past three years due to worldwide
economic slowdown however during next five years it’s GDP is expected to grow
in 6-8 % range.
The sectors with high growth potential like manufacturing and construction
sectors which account for about one fourth(FY 12) of India’s GDP will be
the key growth drivers for the Indian Steel Industry
12. INDIA & THE LEADING STEEL PRODUCERS IN THE WORLD
India is the largest producer of sponge iron and fourth largest producer of crude
steel in the world.
India registered a 5.7 % growth in crude steel production in 2011 against
2010.
Japan was the only nation among top ten crude steel producers in the
world posting negative growth of minus 1.8 % for crude steel production in
2011 against 2010.
Indian steel industry which is not technologically as mature as steel industry
of developed economies is implementing latest technology, adapting
backward integration and improving efficiency in steel production to reduce
cost, increase production and become competitive globally.
13. INDIA & THE LEADING STEEL PRODUCERS IN THE WORLD
Top ten crude steel producers in the world and their steel production
in: 2010 and 2011 (MT)
14. INDIA’S SHARE IN GLOBAL STEEL CONSUMPTION
India’s per capita steel consumption is only 57 kg against global average of 215
kg.
This shows a broad scope for increase in per capita steel consumption in
India and potential unprecedented expansion of steel industry in India.
Global crude steel consumption for 2011 reached about 1373 MT
15. COMPETITIVENESS OF THE INDIAN STEEL INDUSTRY
Abundance of raw materials, iron ore and cheap workforce makes Indian
steel industry competitive.
However dependence on imported coking coal, low production efficiency,
inadequate infrastructure & technology and delays in regulatory clearances
& approvals are major hindrance to growth of Indian steel industry.
16. KEY FIGURES
Global crude
steel
consumption
- 2011: 1373
MT
Global crude
steel
consumption
growth during
2007-11: at
CAGR of 3.04
%
India’s crude
steel
consumption
-2011: 67.8
MT
India’s global
rank: Largest
sponge iron
producer. 4th
Largest crude
steel
producer
Per capita
steel
consumption-
2011:
Global -
215Kg
India’s – 57 kg
17. 2. Steel Production
Scenario in India: The
Way Forward
- Indian steel industry: evolution and growth
- Steel production trend in India
- Leading steel producers in India
- Technology wise steel production
- Category wise steel production
18. INDIAN STEEL INDUSTRY: EVOLUTION AND GROWTH
Steel making in India can be traced back to 400 BC. The foundation of modern steel
industry in India was led down in 1874 by establishment of steel making facility of
Bengal Iron Works (BIW) in Kulti (West Bengal).
Beginning of large scale steel production started with establishment of Tata steel
plant in 1907 in Jamshedpur, which started production in 1912.
Later large steel plants in India were established in Bokaro, Durgapur, Bhilai,
Burnpur and Bhadrawati.
Except Tata Steel, steel production in India was confined to public sector
companies under control of SAIL till 1990s.
Post liberalization(1991) large scale development in steel industry was witnessed
due to participation of private players and huge influx of foreign investment in steel
industry of India.
19. STEEL PRODUCTION TREND IN INDIA
Post independence steel production in India showed a considerable growth in
capacity.
Finished steel production increased from 1.1 MT in 1951 to 14.33 MT in 1991-92.
Post liberalization the growth trend continued however at a higher pace and
finished steel production reached 73.7 MT(provisional) for 2011-12.
During the period FY 07 to FY 12 crude steel production has attained growth at CAGR of
about 7.7 %.
While the average capacity utilization remained near 89 percent of the total
production capacity.
During the twelfth five year plan crude steel production is estimated to grow at
CAGR of about 11.3 % due to large scale capacity addition plans for steel production
during this period.
22. LEADING STEEL PRODUCERS IN INDIA
Steel making in India is concentrated along mineral rich belt of India, as vicinity to supply of
raw materials like iron ore and coal provides considerable economic advantage.
Most of the large scale steel making facilities are concentrated in state of Jharkhand,
Orissa, West Bengal, Chhattisgarh and Karnataka.
Steel production in India is leaded by SAIL, Tata Steel, JSW and others, while SAIL
continues to be the largest steel producer in India.
Steel production in India which was primarily reserved for government companies till
liberalization now sees dominance of private companies in terms of production share.
Share of private sector companies in crude steel production raised from 49 % in FY 01
to 75 % in FY 11.
While the share of private sector companies in finished steel production increased from
68 % in FY 01 to 80 % in FY 11.
25. TECHNOLOGY WISE STEEL PRODUCTION
Steel production in India attained a high growth at CAGR of about 5.8 %
during the 11th FYP 2007-11 mostly contributed due to growth in steel
making through electric furnaces route.
While the old method of steel making through oxygen route still remains
dominating and contributes to about 44 % of crude steel production in 2011.
27. CATEGORY WISE STEEL PRODUCTION
Most of the sponge iron produced in India, about 75 % (in FY 11) comes
from coal based units.
Production of sponge iron touched 20.37 MT(P) in FY 12 while the capacity
reached about 32 MT.
India which is a net exporter of Pig Iron produced 5.78 MT(P) of pig iron in FY
12.
30. KEY FIGURES
Modern steel
production facility
started in India
in1874
Post liberalization
(1991) steel
making was made
open for private
co.'s and steel
price was also
deregulated
Finished steel
production in
India:
Year 1951: 1.1 MT
1991-92: 14.33
MT
2011-12:73.7 MT
India’s crude steel
production
growth during
12th FYP 2012-17:
estimated at 11.3
% (CAGR)
Estimated crude
steel volume
India reaches by
FY 17:
Prod.: 125.9 MT
Capacity: 139.9
MT
31. KEY FIGURES
SAIL is the largest steel
producer in India with
13.76 MT crude steel
production in FY 11
Top five steel producers
contribute to almost half
of crude steel production
in India
Steel production
through induction
furnace and electric
arc furnace route
contributes to more
than 50 % of steel
production
Steel production
share- FY 2011:
Crude Steel
Private Sector: 75%
Gov. Sector: 25%
Finished Steel
Private Sector: 80%
Gov. Sector: 20%
32. KEY FIGURES
Steel
production
growth during
11Th FYP 2007-
11: at CAGR of
5.8 %
Sponge Iron
figures for FY 12
(P):
Prod.- 20.37 MT
Capacity- 32 MT
India is the
largest sponge
iron producer in
the world and
contributes
about one third
of the global
sponge iron
production
Production of
pig iron and
sponge
remained
almost flat
during last five
years
Product-wise
growth in steel
production during
11th FYP 2007-11,
in CAGR terms:
Flat Prod.- 4.9 %
Long Prod.- 5.8 %
Alloy Prod.- 16 %
33. 3. India’s Steel
Consumption Trend and
the Growth Drivers
- India’s steel consumption on high growth trajectory
- Steel consumption trend in India
- Category wise steel consumption
- Prime growth drivers of steel demand in India
34. INDIA’S STEEL CONSUMPTION ON HIGH GROWTH
TRAJECTORY
Steel consumption in India has grown substantially since evolving of
modern steel industry during nineteenth century.
During the past two decade steel consumption has grown at a faster pace
driven by liberalization, decontrol of steel industry, growing population,
infrastructure development and changing lifestyle of people.
Per capita steel consumption in India (57kg: 2011) which is considerably low
compared to global average (215 kg: 2011 ) is estimated to grow
substantially during the next five years in proportionate with the growing
economy.
36. STEEL CONSUMPTION TREND IN INDIA
Steel consumption growth during 11 th FYP (2007-11) has outpaced steel
production growth.
Steel consumption growth during this period was at CAGR of 8.8 %
compared to production growth at CAGR of 5.8 %.
We have estimated finished steel demand growth during 12th FYP (2012-17)
in two scenarios.
For scenario- 1 we assumed finished steel demand to grow at CAGR of 9
% while in more optimistic case of scenario-2 we assume demand growth
at CAGR of 11 %, with respect to FY11 as base year.
38. CATEGORY WISE STEEL CONSUMPTION
Steel consumption in India though maintained healthy growth during the
11th FYP (2007-11) but demand of steel in long product category remained
sluggish.
Slow paced infrastructure and industrial projects development due to
worldwide recession was the major cause for sluggish demand of long
product.
While the demand of flat product posted high growth (12.1% CAGR) driven
by robust domestic demand of consumer durables and utility items.
40. PRIME GROWTH DRIVERS OF STEEL DEMAND IN INDIA
Steel demand has been proportionate with the GDP growth of the country.
Housing & real estate, construction & infrastructure and manufacturing
segment are the prime consumers and drivers of steel demand in India.
41. PRIME GROWTH DRIVERS OF STEEL DEMAND IN INDIA
Steel demand drivers and their potential effect on steel demand growth during
next 5 year time frame
42. KEY FIGURES
Per capita steel
consumption
growth (CAGR
in%) 2006-2011:
World Avg.- 2.75
%For India- 6.71
%
Steel
consumption
growth during
11th FYP (2007-
11): at CAGR of
8.8 %
Finished steel
demand for India
by FY 17:
Scenario-1: 105
MT (Estimated)
Scenario-2: 107
MT (Estimated
Increasing
urbanization and
infrastructure
growth to propel
per capita steel
consumption in
India
43. KEY FIGURES
Product-wise growth in
steel consumption during
11th FYP 2007-11, in CAGR
terms:
Flat Prod.- 12.1 %
Long Prod.- 5.9 %
Alloy Prod.- 9 %
India’s steel sector growth
is primarily driven by
domestic demand as
export volume is low
Factors contributing to
steel demand growth in
India
-Economic growth
- Construction
- Infrastructure dev.
- Population growth
- Manufacturing
44. 4. India’s Steel Import
Export Scenario and
Future Prospects
- Steel import trend and future scenario
- Steel export trend and future scenario
45. STEEL IMPORT TREND AND FUTURE SCENARIO
India has been a net importer of steel, primarily of high grade steel and
special steel products.
Deregulation and reduction in import duties on steel imports has favoured steel
imports.
Steel imports has increased during the past decade due to surge in domestic
demand and reduction in price differential between imported steel and
domestic steel.
Import volumes have been fluctuating during the past five years and as per
working group estimates steel imports during 12th FYP is estimated to be in 5-6
MT range.
47. STEEL EXPORT TREND AND FUTURE SCENARIO
Liberalization and free trade policy helped growth of steel exports from India.
Most of the steel exports from India consists of value added steel products with
higher margins.
To remain competitive globally India needs to grow share of value added and
sophisticated steel product in its export basket.
Steel exports from India declined during 2008-11 period due to subdued demand of
steel globally.
Steel export is expected to regain momentum as the global economy revives.
Steel exports is estimated to grow gradually from about 4 MT during FY 13 to 7 MT
by FY 17.
49. KEY FIGURES
India is net
importer of
steel. India
primarily
imports as well
as exports
value added
and special
steel products
Steel import in
India touched
7.38 MT in FY
10
Working
groupon Steel
estimates steel
imports in
range of 5-6 MT
during 12th FYP
During 11th FYP
steel import
posted negative
growth of
about 9 %
Working group
on Steel
estimates steel
exports to
reach 7 MT
during 12thFYP
50. 5. Raw Material
Supplies for Steel
Industry: Is India Self
Sufficient?
- Assessing raw material supply scenario for India
- Raw material demand by steel industry
- Initiatives that will improve & secure raw
materials supply
51. ASSESSING RAW MATERIAL SUPPLY SCENARIO FOR INDIA
Raw material accounts for about 30-50% of the total cost of steel production in India.
Raw materials for steel making includes iron ore, coke, lime, Ferro-alloys and
refractories etc.
India has a huge iron ore reserve of about 28.52 billion tons.
About 60-70 % of the iron ore produced is consumed domestically and remaining
(mostly fines) is exported.
India lags in coking coal reserves and have only 5.3 billion tons of coking coal
reserves.
India meets more than 50 percent of coking coal demand through imports and imports
will grow in parallel with increasing steel production capacity.
52. RAW MATERIAL DEMAND BY STEEL INDUSTRY
About 2.5 to 3.5 ton of raw materials is required per ton of crude steel
production in India.
With increasing crude steel production capacities demand for main raw
materials like iron ore and coking coal by steel industry will increase at
faster pace.
54. INITIATIVES THAT WILL IMPROVE & SECURE RAW MATERIALS
SUPPLY
Indian steel industry requires reliable and economical raw material supplies
to remain competitive on global platform.
Being deficient in coking coal and rich in iron ore fines India needs to adapt
steel making technologies which are suitable for low grade Indian coal and
iron ore fines.
India requires technology inputs and investments to increase sintering and
pelletisation facility for making use of iron ore fines.
Indian companies needs to acquire coking coal assets overseas to assure
uninterrupted and economic supply of coking coal for its steel Industry.
56. KEY FIGURES
Iron ore
production in
FY 12 was
169.66 MT
India has
28.52 billion
tons of iron
ore reserves
Estimated
iron ore
consumption
by iron and
steel industry
in FY 12 was
116.3 MT
Coking coal
production in
India for FY
12 is
estimated at
about 22 MT
Coking coal
import in
India for
2012 is
estimated at
about 36.8
MT
57. 6. Inadequate
Infrastructure: A Major
Concern for Steel
Industry in India
- Infrastructure issues for steel industry in India
- Infrastructure addition during twelfth five year plans
(2012-17)
- Actions to boost infrastructure support to steel
industry
58. INFRASTRUCTURE ISSUES FOR STEEL INDUSTRY IN INDIA
Steel industry is heavily dependent on raw material and bulk movement.
For every tonne of steel produced about four tonnes of raw materials requires to be
transported.
Indian steel industry is facing difficulties and delays caused due to inadequate
infrastructure for transportation and handling bulk materials.
Most of the steel plant does not have proper connectivity through rail network to
mines and ports.
Bulk handling facility at majority of the ports, mines and steel plants are of low
capacity causing delays in loading & unloading.
In most cases road networks connecting steel plants to mines and ports are
congested leading to delays in supply and delivery of raw material and other items.
60. INFRASTRUCTURE ADDITION IN INDIA DURING TWELFTH FIVE YEAR
PLANS (2012-17)
With increasing capacities of steel production in India more than 400 MT
of bulk handling capacity and transportation infrastructure will be required by
steel industry by 2017.
Almost two fold rise in infrastructure demand by steel industry during next
five years will require massive investment in road, rail and port
infrastructure facility.
An estimates investment (by public and private sector) of $ 1 trillion has
been envisaged for infrastructure sector(including road, rail, port and other
transportation infrastructure) during 12th FYP.
62. ACTIONS TO BOOST INFRASTRUCTURE SUPPORT TO STEEL
INDUSTRY
- Rapid completion of
“Dedicated Freight Corridor”
by railways to address
increasing freight traffic
- Developing road,
rail and port
infrastructure
dedicated for steel
industry
- Addition of large
capacity siding
and loading
facility at ports,
mines and steel
plant
- Developing self, part of project linked
transportation infrastructure by large project
developers
- Introducing large
capacity wagons
for rail transport
- Improving
loading and
transportation
infrastructure by
adapting latest
technology and
equipment
- Widening
congested road
and railways
63. KEY FIGURES
Estimated
investment in
infrastructure
sector
during 12th
FYP(2012-17): $
1 trillion
Estimated bulk
transportation &
handling capacity
requirement of
steel industry by
2017: more than
400 MT
Investment in
infrastructure
sector of India is
estimated to
remain in 9-10 %
range during 12th
FYP (2012-17)
Infrastructure
requirement by
steel industry is
estimated to
double in next
five years.
64. 7. Indian Steel Industry
and Increasing Role of
Technology
- Technological exposure of Indian steel industry
- Indian steel industry needs to adapt latest
technologies
65. TECHNOLOGICAL EXPOSURE OF INDIAN STEEL INDUSTRY
Indian steel industry is highly fragmented with large number of small to
large scale producers.
Use of steel making technologies varies among different steel making units.
With overall low level of advanced technological exposure, Indian steel industry
faces issues of quality, efficiency, hazards and process standards.
The overall use of latest and modern technologies is inadequate in the
entire steel industry value chain comprising of raw material mining and
processing, transportation and steel making.
This leaves a broad scope for process improvement through introduction of
latest and efficient technology
66. TECHNOLOGICAL EXPOSURE OF INDIAN STEEL INDUSTRY
RAW MATERIAL SUPPLY
• Low mechanization level & latest technology
input: for mining and processing raw materials
• Inadequate facility: for use of iron ore fines using
pelletisation & sintering technology
• Lack of coal processing & washing technology : to
make higher use of low grade Indian coal
• Inadequate facility: for raw material loading and
transportation
• Lack of facility: for use of raw material rejects
STEEL MAKING PROCESS
• Most of steel making facilities use: old and less
efficient steel making technology
• Expenditure on research and development: is
considerably low
• Present steel making facility: not suitable for Indian
iron ore fines and high ash coal
• Relatively lower number of steel plants: with facility to
make complex steel products
• On average Indian steel industry lags: in process
efficiency and hazard control
STEEL INDUSTRY
PROCESS CHAIN
67. INDIAN STEEL INDUSTRY NEEDS TO ADAPT LATEST
TECHNOLOGIES
With open trade policy for steel, Indian steel industry faces global
competition, hence to remain competitive and profitable it has to adapt
latest and efficient technologies.
Using latest technologies can boost steel companies business with
advantages of scale, quality, productivity, safety and higher margins.
As overall exposure of Indian steel industry to latest technology remains
low, so there is a huge potential for increase in production and process
optimization.
Also with development and use of technologies suitable for steel making
using iron ore fines and low grade Indian coal, Indian steel Industry can
have advantage of raw material security and sustainability.
69. KEY FIGURES
Expenditure on research &
development by Indian steel Industry
is estimated to be very low at an
average 0.2% of the turnover
Introducing latest technologies will
improve Indian steel industry’s:
- Efficiency
- Product quality
- Carbon footprint
- Production cost
- Competitiveness
- Use of domestic raw material
- Growth
70. 8. Prospective Analysis
of Indian Steel Industry
- Potential Growth Drivers of Indian Steel Industry
- Strength, Weakness, Opportunity & Threat: SWOT
Analysis
71. POTENTIAL GROWTH DRIVERS OF INDIAN STEEL INDUSTRY
Indian steel industry is aiming for high growth during the next 5-7 years,
supported by economic growth and positive change in consumption
behavior of the large and growing population.
The prime factors which will support growth of Indian steel Industry are
demand driving factors, government policies and capacity addition plan for steel.
72. POTENTIAL GROWTH DRIVERS OF INDIAN STEEL INDUSTRY
SteelDemandDrivers
- Growing economy
- Large population
- Low per capita steel
consumption
- Manufacturing &
construction activity
- Untapped rural market
- Industrial activity
growth
GovernmentPolicies
- Funding developments
- Stressing on R&D
- Offering incentives
- Policies favoring
domestic industry &
regulating dumping
- Judicious Import-
export taxes/duties
- Faster approvals
CapacityAdditioninSteel
Making
- SAIL, Tata Steel,
JSW, ISPAT, RINL, ISPAT
etc. along with global
multinational like
POSCO, Arcelor Mittal,
Nippon Steel Kobe
Steel, Severstal and
others have large scale
expansion plans for
steel making in India
- Planned projects by
Indian and global
companies is likely to
increase India’s steel
producing capacity to
150 MT by 2017
73. STRENGTH, WEAKNESS, OPPORTUNITY & THREATS: (SWOT)
ANALYSIS
Indian steel Industry is evolving itself to become global leader in terms of
product quality and overall efficiency.
It’s growth objective can be attained efficiently by addressing the present
issues and challenges and building the growth strategies in cohesion with its
strength.
74. SWOT
Analysis
STRENGTH
Low manpower
cost
Abundance of
raw materials
Policies for
long term
linkages for raw
material supply
Option of
getting project
linked captive
iron ore, coal
mines
Large economy
and population
driving steel
demand
76. SWOT
Analysis
OPPORTUNITY
Growing &
untapped rural
market
Infrastructure &
manufacturing
activity growth
to drive steel
demand
Per capita steel
demand to grow,
which at present
is one fourth of
the global
average
Low present
export volume:
so potential for
growth in
exports is
considerable
Option for
investment and
stake acquisition
78. KEY FIGURES
Planned projects for steel
making is likely to
increase steel production
capacity of India to 150
MT by 2017
Promising factors of
Indian steel industry: -
Potential for
high growth - Cheap
labour - Untapped
market - Abundant raw
material supply -
Growing Economy
79. 9. BIBLIOGRAPHY
World Steel Association,
International Monetary
Fund, Economic Times,
Ministry of Steel - India,
Public Information
Bureau - India,
mjunction
Joint Plant Committee-
India, Planning
Commission -
committee on
Infrastructure, Annual
report 2010-11- MoS,
World Steel in Figures
2012-WSA,
Press Information
Bureau- GoI,
moneycontrol.com, The
Telegraph, The
Economic Times,
miningweekly.com,
Wikipedia and
CorpotradeGlobal
Research & Database.