Steel Industry in India 2013 Report

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IORR: Industry Outlook Reference Report
Steel Industry in India - 2013
1.
Index & Disclaimer
Index: Page
1. Steel Industry in India: Global Perspective 3-4
- Indian steel industry vs. global steel industry
- Contribution of Indias economy to global GDP
- India & the leading steel producers in the world
- Indias share in global steel consumption
- Competitiveness of the Indian steel industry
2. Steel Production Scenario in India: The Way Forward 5-7
- Indian steel industry: evolution and growth
- Steel production trend in India
- Leading steel producers in India
- Technology wise steel production
- Category wise steel production
3. Indias Steel Consumption Trend and the Growth Drivers 8-9
- Indias steel consumption on high growth trajectory
- Steel consumption trend in India
- Category wise steel consumption
- Prime growth drivers of steel demand in India
4. Indias Steel Import Export Scenario and Future Prospects 10
- Steel import trend and future scenario
- Steel export trend and future scenario
5. Raw Material Supplies for Steel Industry: Is India Self Sufficient? 11
- Assessing raw material supply scenario for India
- Raw material demand by steel industry
- Initiatives that will improve & secure raw materials supply

Disclaimer
This report is for personal reference only, to increase knowledge and awareness about the steel industry.
Information provided in this report are sourced from standard sources however Corpotrade Global does not
guarantee exactness and accuracy of the information sourced. Corpotrade Global will not be responsible for
any losses claimed in relation to contents or material of this report. A detailed research and expert assistance
is advised for conclusions and decision making.
About IORR
IORR: Industry
Outlook Reference
Report is an initiative
by Corpotrade Global
Pvt. Ltd., India to
increase knowledge
and awareness about
a particular industry
among information
seekers, professionals
and executives of the
industry. The report
gives a quick overview
and insight of the
particular industry and
is meant only for
personal reference
and increasing
knowledge and
awareness.

Note
For More
Information,
Consultancy Or
Advisory Services
Contact Us

2.
Index Continued
Index: Page
6. Inadequate Infrastructure: A Major Concern for Steel Industry in India 12
- Infrastructure issues for steel industry in India
- Infrastructure addition during twelfth five year plans (2012-17)
- Actions to boost infrastructure support to steel industry
7. Indian Steel Industry and Increasing Role of Technology 13
- Technological exposure of Indian steel industry
- Indian steel industry needs to adapt latest technologies
8. Prospective Analysis of Indian Steel Industry 14
- Potential Growth Drivers of Indian Steel Industry
- Strength, Weakness, Opportunity & Threat: SWOT Analysis
9. Executive Summary 15
10. Abbreviations and Bibliography 16
About IORR
IORR: Industry
Outlook Reference
Report is an initiative
by Corpotrade Global
Pvt. Ltd., India to
increase knowledge
and awareness about
a particular industry
among information
seekers, professionals
and executives of the
industry. The report
gives a quick overview
and insight of the
particular industry and
is meant only for
personal reference
and increasing
knowledge and
awareness.

Note
For More
Information,
Consultancy Or
Advisory Services
Contact Us

Disclaimer
This report is for personal reference only, to increase knowledge and awareness about the steel industry.
Information provided in this report are sourced from standard sources however Corpotrade Global does not
guarantee exactness and accuracy of the information sourced. Corpotrade Global will not be responsible for
any losses claimed in relation to contents or material of this report. A detailed research and expert assistance
is advised for conclusions and decision making.
3.
1. Steel Industry in India: Global Perspective
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.
Exhibit 1: World crude steel production: 2007-11, country-wise contribution (%)
to world crude steel production in 2011

Source: World Steel Association
CONTRIBUTION OF INDIAS 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. Indias economic growth has
slacked during past three years due to worldwide economic slowdown however
during next five years its 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 Indias GDP will be the key growth
drivers for the Indian Steel Industry
Exhibit 2: GDP (trillion $) of leading global economies in terms of PPP- 2011

Source: International Monetary Fund, Economic Times
KEY FIGURES
Global crude steel
production 2011:
1527 MT
Global crude steel
production growth
during 2007-11: at
CAGR of 3.2 %
Indias crude steel
production -2011:
72.2 MT
Indias GDP
growth:
2010-11= 8.4%
2011-12= 6.5%
2012-13= 5.9%(E)
Indias GDP: 2011
Nominal - $ 1.85
trillion
PPP - $ 4.5 trillion
Approximate share
of infrastructure(8%
E) & manufacturing
sector(16 % E) in
Indias GDP (FY
12): one fourth

China, 45.5
Japan, 7
United States, 5.6
India, 4.7
Russia, 4.5
South Korea, 4.5
Ukraine, 2.3
Brazil, 2.3
RoW, 11.8
World Crude Steel Production in MT (2007-11)
0
200
400
600
800
1000
1200
1400
1600
1800
2007 2008 2009 2010 2011
Share in % (2011)
US
15.1
CHINA
11.3 INDIA
4.5
JAPAN
4.4
Global Rank
1 3 2 4
Indias is gradually
evolving as global
leader in steel
production though it
lags in per capita
steel consumption

4.
1. Steel Industry in India: Global Perspective
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.
Exhibit 3: Top ten crude steel producers in the world and their steel production
in: 2010 and 2011 (MT)

INDIAS SHARE IN GLOBAL STEEL CONSUMPTION
Indias 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
Exhibit 4: World crude steel consumption: 2007-11, country-wise contribution (%)
to world crude steel consumption in 2011

Source: World Steel Association, Ministry of Steel- GoI
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.
KEY FIGURES
Global crude steel
consumption
2011: 1373 MT
Global crude steel
consumption
growth during
2007-11: at CAGR
of 3.04 %
Indias crude steel
consumption -2011:
67.8 MT
Indias global rank:
Largest sponge
iron producer.
4
th
Largest crude
steel producer
Per capita steel
consumption-2011:
Global - 215 Kg
Indias 57 kg

Country China Japan
United
States
India Russia
South
Korea
Germany Ukraine Brazil Turkey
2011 695.5 107.6 86.2 72.2 68.7 68.5 44.3 35.3 35.2 34.1
2010 638.7 109.6 80.5 68.3 66.9 58.9 43.8 33.4 32.9 29.1
China, 45.1
NAFTA, 7.7 CIS, 7.4
India, 4.9
EU, 11.7
Japan, 7.1
Others, 6.3
Other Asian, 7.2
Other Europe, 2.6
World Crude Steel Consumption in MT ( 2007-11)
0
500
1000
1500
2007 2008 2009 2010 2011
Share in % (2011)
OTHERS
Africa: 1%
Middle East: 1.5%
Central & South America: 3.3%
Australia & New Zealand: 0.5%
Potential growth of
steel consumption in
India will polarise
development of
global steel sector
towards India
5.
2. Steel Production Scenario in India: The Way Forward

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 liberalisation(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.
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 liberalisation the growth trend continued however at a higher
pace and finished steel production reached 73.7 MT(provisional) for 2011-12.
Exhibit 5: Historical trend of steel production in India: 1951 to 2012

Source: Public Information Bureau-GoI, Ministry of Steel-GoI
During the period FY 07 to FY 12 crude steel production has attained growth at
CAGR of about 7.7 %. While the average capacity utilisation 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.
Exhibit 6: Indias crude steel production trend & projection- FY 2007 to FY 2017

Source: Ministry of Steel-GoI: working group report 2012-17, Annual Report-2011: MoS-GoI
0
20
40
60
80
FY 1951 FY 1992 FY 2012(P)
Finished Steel Production in MT
CAGR: 5.16 %
CAGR: 8.53 %
0
50
100
150
FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17
Production
Capacity
Estimates
Crude Steel Production vs. Capacity (MT)
Actual
KEY FIGURES
Modern steel
production facility
started in India in
1874
Post liberalisation
(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(P)
Indias crude steel
production growth
during 12
th
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
Capacity utilisation
of the Indian steel
industry on average
remains high at 89%,
however the sector
suffers due to low
efficiency

6.
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.
Exhibit 7: Leading steel producers in India and their production share: FY 2007 to FY 2011

Source: Joint Plant Committee: MoS-GoI working group report 2012-17
Steel production in India which was primarily reserved for government
companies till liberalisation 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.
Exhibit 8: Share of private sector companies in steel production in India (%): FY 2011

Source: Joint Plant Committee
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%


Producer FY 07 FY 08 FY 09 FY 10 FY 11(P)
SAIL 13.51 13.96 13.41 13.51 13.76
RINL 3.50 3.13 2.96 3.21 3.24
Tata Steel 5.17 5.01 5.65 6.56 6.86
JSW 2.64 3.15 3.22 5.26 5.85
ISPAT 2.76 2.83 2.20 2.69 2.38
ESSAR 3.01 3.56 3.34 3.47 3.37
JSPL - - 1.46 1.96 2.27
Others-1 4.84 5.28 8.15 9.36 9.79
Others-2 15.39 16.93 18.05 19.82 22.07
Total 50.82 53.86 58.44 65.84 69.58
Crude Steel Production Share in MT (2007-11) Share in % (2011)
Others-1: Includes production from EAF Units/ COREX-BOF
Others-2: Includes production from induction furnace
20%
5%
10%
8%
3%
5% 3%
14%
32%
SAIL RINL
Tata Steel JSW
ISPAT ESSAR
JSPL Others-1
Others-2
75
25
Crude Steel Production (% Share)
Private Sector Companies Government Sector Companies
80
20
Finished Steel Production (% Share)
Post deregulation of
steel industry private
sector is gaining
dominance in terms
of cumulative
production share

7.
TECHNOLOGY WISE STEEL PRODUCTION
Steel production in India attained a high growth at CAGR of about 5.8 %
during the 11
th
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.
Exhibit 9: Technology-wise crude steel production share (%): FY 2011 vs. FY 2006

Source: Joint Plant Committee
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.
Exhibit 10: Category-wise crude steel production share (MT): FY 2008 to FY 2012

Source: Joint Plant Committee: MoS
Exhibit 11: Product-wise crude steel production for sale (MT): FY 2007 to FY 2011

Source: Joint Plant Committee: MoS-GoI: working group report 2012-17
KEY FIGURES
Steel production
growth during 11
th

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
11
th
FYP 2007-11,
in CAGR terms:
Flat Prod.- 4.9 %
Long Prod.- 5.8 %
Alloy Prod.- 16 %

Basic Oxygen Furnace
(44%)
Electric Arc Furnace
(24%)
Induction furnace
(32%)
Process Route & % Share in Crude Steel Making
FY 11
FY 06
Total
100 %
Total
100 %
Basic Oxygen Furnace
(53%)
Electric Arc Furnace
(18%)
Induction furnace
(29%)
Decline
in %
share
Increase
in %
share
Steel Category FY 08 FY 09 FY 10 FY 11 FY 12(P)
Pig Iron 5.28 6.21 5.88 5.68 5.78
Sponge Iron 20.37 21.09 24.33 25.08 20.37
Total Finished Steel (alloy +
non alloy)
56.08 57.16 60.62 68.62 73.42
0
20
40
60
80
FY 07 FY 08 FY 09 FY 10 FY 11 (P)
Total of Alloy Products
Total of Flat Products
Total of Long Products
With increasing
number of small
steel producers steel
production through
electric furnaces
route is growing
substantially

8.
INDIAS 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 liberalisation, 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.
Exhibit 12: Per capita steel consumption in India (kg): 2006 to 2011

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 12
th
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.
Exhibit 13: Steel consumption trend in India (MT): FY 2007 to FY 2017

Source: WSA, Joint Plant Committee: MoS-GoI: working group report 2012-17, *Estimates

KEY FIGURES
Per capita steel
consumption
growth (CAGR in
%) 2006-2011:
World Avg.- 2.75 %
For India- 6.71 %
Steel consumption
growth during 11
th

FYP (2007-11): at
CAGR of 8.8 %
Increasing
urbanisation and
infrastructure
growth to propel
per capita steel
consumption in
India
Finished steel
demand for India by
FY 17:
Scenario-1: 105
MT (Estimated)
Scenario-2: 107
MT (Estimated)

3. Indias Steel Consumption Trend and the Growth Drivers

0
50
100
150
200
250
2006 2007 2008 2009 2010 2011
India
World Average
Indias Per Capita Steel Consumption vs. World Average
0
20
40
60
80
FY 07 FY 08 FY 09 FY 10 FY 11(P)
Finished Steel Consumption (Actual)
Finished Steel Consumption
*Finished Steel Demand Growth (Estimates)
60.00
70.00
80.00
90.00
100.00
110.00
120.00
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17
Scenario- 1 Scenario- 2
Steel consumption
growth in India
during 11
th
FYP has
outpaced domestic
steel production
growth with a
differential of 3% in
CAGR

9.
CATEGORY WISE STEEL CONSUMPTION
Steel consumption in India though maintained healthy growth during the
11
th
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.
Exhibit 14: Product-wise consumption of finished steel (MT): FY 2007 to FY 2011

Source: Joint Plant Committee: MoS-GoI: working group report 2012-17
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.
Exhibit 15: Steel demand drivers and their potential effect on steel demand growth during
next 5 year time frame

Source: Indicative model

KEY FIGURES
Product-wise
growth in steel
consumption during
11
th
FYP 2007-11,
in CAGR terms:
Flat Prod.- 12.1 %
Long Prod.- 5.9 %
Alloy Prod.- 9 %
Indias 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

3. Indias Steel Consumption Trend and the Growth Drivers

0
10
20
30
40
50
60
70
FY 07 FY 08 FY 09 FY 10 FY 11 (P)
Total of Alloy Products
Total of Flat Products
Total of Long Products
Major Factors for Steel Demand Growth

Economic growth
Industrial, construction &
manufacturing growth
Growth in population
Rising middle class population and per
capita steel consumption
Growth in rural steel consumption
Infrastructure Development

Growth prospect of the segment
Potential
Demand
Driver
Construction &
Infrastructure

Housing & Real
Estate

Manufacturing
Sector

Energy & other
Sector

Agriculture,
Mining sector
activity

High
High
Construction,
infrastructure
development and
manufacturing
activity forms the
backbone of steel
industry demand

10.
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 12
th
FYP is estimated to be in 5-6 MT range.
Exhibit 16: Steel import in India : past trends and future estimates- 2007-08 to 2017

Source: Joint Plant Committee - MoS, Working group report 2012-17- MoS
STEEL EXPORT TREND AND FUTURE SCENARIO
Liberalisation 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.
Exhibit 17: Steel exports from India : past trends and future estimates- 2007-08 to 2017

Source: Joint Plant Committee - MoS, Working group report 2012-17- MoS

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 group on
Steel estimates
steel imports in
range of 5-6 MT
during 12
th
FYP
During 11
th
FYP
steel import posted
negative growth of
about 9 %
Working group on
Steel estimates
steel exports to
reach 7 MT during
12
th
FYP

4. Indias Steel Import Export Scenario and Future Prospects

0
2
4
6
8
FY 08 FY 09 FY 10 FY 11 FY 12 (P) FY 13 FY 14 FY 15 FY 16 FY 17
Finished Steel Import in MT
Steel Import
Actual Estimates
0
2
4
6
8
FY 08 FY 09 FY 10 FY 11 FY 12 (P) FY 13 FY 14 FY 15 FY 16 FY 17
Finished Steel Export from India in MT
Steel Export
Actual Estimates
Indias steel export
will shift towards
higher percentage of
value added and
high margin steel
products in the
export basket

11.
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.
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.
Exhibit 18: Raw material demand (MT) by steel industry during 12
th
FYP: 2012-17

Source: Working group report 2012-17- MoS, Projections by working group on steel industry
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.
Exhibit 19: Major initiatives to improve and secure raw material supplies to steel industry


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

5. Raw Material Supplies for Steel Industry: Is India Self Sufficient?
Estimated Demand Iron Ore Coking Coal Others Total
FY 12 115.03 43.25 11.13 169.41
FY 13 135.7 52.29 13.92 201.91
FY 14 149.43 57.91 15.33 222.67
FY 15 166.66 67.49 17.28 251.43
FY 16 185.24 77.23 19.48 281.95
FY 17 206.18 90.16 21.76 318.1
Others : PCI Coal, Manganese Ore, Chromite, Ferro Chrome, Ferro-Manganese, Silico-Manganese, Ferro-Silicon and Refractories
Reformation Measures
Progressive Impact
Small Medium High
1. Limiting volatility in prices & assuring continuous supply through long term linkages
2. Assuring raw material supply security through overseas assets acquisitions
3. Consolidating steel industry and focus on backward integration
4. Adapting new technology to increase output and maximise efficiency
5. Allotting iron ore and coal mines for captive consumption by steel plants
6. Minimising duties & taxes on imports & increasing same for exports of raw material
7. Adding coal washing and iron ore sintering & pelletisation facility
India lags in coking
coal reserves,
acquiring coal
assets overseas can
assure reliable &
economic supplies
of coal in the future

12.
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.
Exhibit 20: Bulk movements and associated issues faced by steel industry in India

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 12
th
FYP.
Exhibit 21: Estimated Investment in Infrastructure during 12
th
FYP: 2012-17

Source: Planning Commission - committee on Infrastructure
ACTIONS TO BOOST INFRASTRUCTURE SUPPORT TO STEEL INDUSTRY

KEY FIGURES
Estimated
investment in
infrastructure sector
during 12
th

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 12
th
FYP
(2012-17)
Infrastructure
requirement by
steel industry is
estimated to
double in next five
years.

6. Inadequate Infrastructure: A Major Concern for Steel Industry in India
MARKET
STEEL PLANT
PORT
MINES
Inadequate
- Handling facility
- Road network
- Rail network
Inadequate
- Loading/unloading
Facility
Congested
- Road network
- Rail network
Inadequate
- Storage & Logistics
Lack of dedicated
- Road network
- Rail network
0
4
8
12
400
800
1200
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17
Investment in
INR,000 crore
Investment as
% of GDP
- Rapid completion of Dedicated Freight Corridor by
railways to address increasing freight traffic
- Addition of large capacity siding and loading facility
at ports, mines and steel plant
- Developing road, rail and port infrastructure
dedicated for steel industry
- Developing self, part of project linked transportation
infrastructure by large project developers
- Widening congested road and railways
- Improving loading and transportation infrastructure
by adapting latest technology and equipment
- Introducing large capacity wagons for rail transport
Infrastructure
development will
drive steel demand
as well as support
infrastructural
requirement by steel
industry itself
13.
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.
Exhibit 22: Technological input status at various process stages of Indian steel industry

Source: Indicative descriptive model
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 optimisation.
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.
Exhibit 23: Potential benefits of technological up-gradation in steel Industry


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 industrys:
- Efficiency
- Product quality
- Carbon footprint
- Production cost
- Competitiveness
- Use of domestic
raw material
- Growth

7. Indian Steel Industry and Increasing Role of Technology
Use of latest
technology by Indian
steel industry
remains low so there
is huge potential for
improvement
through introducing
latest technology
STEEL INDUSTRY
PROCESS CHAIN
- Low mechanisation 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
RAW MATERIAL SUPPLY 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
Improving overall
efficiency and
competitiveness of
Indian Steel
Industry

Improvement In Steel Production Efficiency
Improving Cost Effectiveness & Profit Margins
Improving Unit Yield and Product Quality
Reduction In Environmental Impact and Hazards

Utilise Domestic Coal and Iron Ore Fines In Steel Making
Addition In Production Capacity
Reduction In Raw Material & Energy Wastage
Potential Benefits in the Value Chain
14.
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 behaviuor
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.
Exhibit 24: Factors propelling Indian steel industrys growth

STRENGTH, WEAKNESS, OPPORTUNITY & THREATS: (SWOT) ANALYSIS
Indian steel Industry is evolving itself to become global leader in terms of
product quality and overall efficiency. Its growth objective can be attained
efficiently by addressing the present issues and challenges and building the
growth strategies in cohesion with its strength.
Exhibit 25: Prospecting Indian Steel Industry via SWOT analysis

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

8. Prospective Analysis of Indian Steel Industry
There is a huge
potential growth
opportunity for
Indian steel industry
with untapped rural
markets and growing
economy
Steel Demand Drivers Government Policies Capacity Addition in Steel Making
- Growing economy
- Large population
- Low per capita steel
consumption
- Manufacturing &
construction activity
- Untapped rural market
- Industrial activity
growth
- Funding developments
- Stressing on R&D
- Offering incentives
- Policies favoring
domestic industry &
regulating dumping
- Judicious Import-
export taxes/duties
- Faster approvals
- SAIL, Tata Steel, JSW, ISPAT, RINL,
ISPAT etc. along with global multinationals
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 Indias steel
producing capacity to 150 MT by 2017
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

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
THREAT
Delays in approvals and regulatory
clearances
Land acquisition and rehabilitation issues
Competition from large number of small
steel producers
Threat from cheap import and dumping
Issues of capital for projects and high
interest on loans
WEAKNESS
Overall production efficiency is low
Inadequate infrastructure support
Lacking in coking coal reserve and most of
iron ore reserves consists of iron ore fines
Latest technological input and research and
development activity is low
SWOT
Analysis
15.

Post liberalisation in 1991 Indian steel Industry has attained a substantial
growth on domestic as well as global platform. Growing in pace with the
economy Indian steel industry has positioned itself as the largest sponge iron
producer and the fourth largest crude steel producer in the world. Global crude
steel production reached 1527 MT in 2011 in which India contributed a
significant 4.7%.
Though effect of global economic recession post 2008 was witnessed by steel
sector globally, but Indian steel industry showed resilience and growth due to
robust domestic demand. The credit of Indian steel industrys growth goes to
policies of government and Indian public and private sector steel producers.
With present low per capita steel consumption at 57 kg in India against global
average of 215 kg there lies a huge potential for steel demand growth in India.
Also the estimated massive $ 1 trillion investment in Indias infrastructure
sector during 12
th
FYP will boost demand of steel. Significant steel demand will
also arise from rural markets and proactive steel producers in India have
started exploring untapped rural markets to get maximum share of this market.
Indian steel industry attained appreciable growth post liberalisation but it has
suffered due to issues of efficiency, quality, safety and productivity. Future
growth and sustainability of Indian steel industry lies in adapting latest
technologies, improving efficiency and optimising process.

Thanks,
Tarun Mishra
Director & CEO
AUTHOR:

TARUN MISHRA
Director- Consulting & Research
Corpotrade Global Pvt. Ltd., India

For more information, consultancy
or advisory services feel free to
contact me through:

Phone: +91 11 6469 7575
Mail: tarun@cptgl.com
business@cptgl.com

Web: www.cptgl.com
www.corpotradeglobal.com

9. Executive Summary
16.
ABBREVIATIONS

10. Abbreviations and Bibliography
BIBLIOGRAPHY
World Steel Association, International Monetary Fund, Economic Times, Ministry of Steel - India, Public
Information Bureau - India, 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,
mjunction and CorpotradeGlobal Research & Database.
Short Name Full Name
CAGR Compounded Annual Growth rate
CIS Commonwealth of Independent states
E Estimates
EU European Union
FY Financial Year (April to March)
FYP Five Year Plan
GDP Gross Domestic Product
GoI Government of India
JPC Joint Plant Committee
MT Million ton
MoS Ministry of Steel
P Provisional
PPP Purchasing Power Parity
WSA World Steel Association
$ US Dollar
INR Indian Rupee
Crore 10^7
About Corpotrade Global:
Corpotrade Global Pvt. Ltd., India is a
Management Consulting and Business
Services Company located in New Delhi-
India.

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Contact:
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www.corpotradeglobal.com

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