2. 02-Dec-2010
Indian Steel Demand – Buoyant
56.5
60 52.1 52.4
Steel CAGR in
46.8
50 41.4 last 5 yrs was
36.4 29.9 9.4%
40 26.5 27.3
24.7
30 22.2 Longs
20.3
Flats
20
23 21.9 23.4 Alloys
17 19.6
10 14.1
2.1 2.2 2.5 2.7 3.2 3.1
0
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
Steel consumption growth in last 5 yrs was range bound at 9-13%,
Per capita steel use is 48 kg vis-a-vis 35 kg in 2005
Steel demand expected to continue @10%+ CAGR till 2020
Steel Demand Driver
9.5 9.7
10.0 9.0 9.0
9.0 8.2 8.0 8.1
7.3 7.6
8.0 7.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
GDP growth to continue at 8-9%
Huge infrastructure investment by Govt. ~ $500 billion
2
3. 02-Dec-2010
Indian Steel Demand on High Pedestal
165
Long-term GDP Growth 148 GDP @9%
140 target rate ~9%
133
113 GDP @8%
115
105
90 78
59
57 75
65 52
33
40 26
15
1999-00 2003-04 2007-08 2009-10 2012-13 2016-17 2019-20
• High GDP growth - support to steel demand
• Steel intensity to go up with more fixed asset investment
Indian Steel Demand – Likely Sources
Sector-wise incremental steel demand by 2012 (million MT)
3 1 ~100
100 4
30 5
90
80
70
60 52
50
40
30
20
10
0
ds
s
s
08
t
12
s
ay
ns
le
ile
oo
20
20
ab
ilw
o
ob
/C
lG
ur
U
U
Ra
m
ra
AS
AS
ta
.D
to
f
pi
In
ns
Au
Ca
Co
Source: In-house
Private sector investment growing at 15% plus
Large infrastructure projects in Public-Private Partnership (PPP) mode
Foreign investment of nearly $40 billion committed in steel sector
6
3
4. 02-Dec-2010
Domestic Steel Availability
59.7
India: Steel Production (million MT)
60.0 52.8 53.5
50.2
50.0 44.4
41.3 29.7
38.6
40.0 26.3 27.0
24.7
22.1
20.4
30.0 19.2
Longs
20.0 Flats
26.4 26.5 30.0
22.3 25.5
10.0 19.4 21.0
0.0
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
Source: JPC
Steel consumption in Apr-Sep 2010 rose by 9.8% y-o-y
Capacity augmentation to meet domestic demand
7
Indian Steel Capacity By 2020
2009 2012 2020
SAIL 12.8 12.0 35.2 60.0
JSW 7.8 3.2 21.0 32.0
TATA 6.8 6.2 20.5 33.5
ESSAR 4.6 9.9 6.0 20.5
ISPAT 3.0 2.0 12.0 17.0
RINL 2.9 3.9 9.2 16.0
JSPL 2.4 8.1 16.1 26.5
BSPL 1.22.8 3.0 7.0
Additional capacity by 2020
BSL 0.6 5.4 3.0 9.0
~230-240 million MT
POSCO 18.0 12.0
ARCELOR… 30.0 (million MT) 24.0
SECONDARY 22.0 6.5 14.0 42.4
0.0 10.0 20.0 30.0 40.0 50.0 60.0 Source: MoS
Current capacity ~ 73 million MT
By the year 2012, Crude Steel Production Capacity Likely to be 110-120
million tonnes
8
4
5. 02-Dec-2010
Greenfield Projects – Update
10-15 million MT capacity at various stages where land has been acquired
Another 50 million MT capacity at preliminary stages such as land
acquisition, statutory clearances etc.
The Global Crisis post-Sep. 2008 has caused deferment of some Greenfield
projects
Land acquisition has become a critical factor for a few projects
Steel capacity by 2012 – expected to be 110-124 million MT
9
Indian Steel – Policy Imperatives
Liberal policy regime – import duty at 5%
Export of raw materials exceeding domestic consumption
100% foreign investment allowed through automatic route even in mining
sector
Focus on capacity building and consumption
Large Infrastructure Project in Public-Private Partnership (PPP) mode.
Demand Booster from infrastructure, housing, automobile, gas and oil
pipelines, capital goods (machinery) and consumer goods.
10
5
6. 02-Dec-2010
Indian Steel – Impediments
Capacity addition – hindered by difficulty in land acquisition
Uncertain Time frame for land acquisition, environmental clearances.
Concerns on depleting raw materials reserves
Need for higher spending on infrastructure (roads, railways & ports)
Significant infrastructure constraints in roads, railways, ports, power.
11
The Roadmap
Accelerated capacity building in steel, through Brownfield route to meet
demand in the medium term
Fast-tracking of Greenfield projects by way of better coordination &
monitoring
New legal policy regimes on mining, land acquisition & rehabilitation
Encourage value addition and production of value added steel products
12
6
7. 02-Dec-2010
The Roadmap (Contd.)
Encourage beneficiation methods for utilization of low grade iron ore &
fines
Energy efficiency, carbon emission reduction and new technology for
higher productivity
Higher emphasis on resource optimization
Spread to niche international markets through quality steel products
World’s third largest steel producer by 2014
13
Thank You
7