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The crude steel production in India registered a moderate year-on-year growth of 2.7% in 2009 and reached 56.6 Million Metric Tons. Total Finished steel (alloy+non-alloy) Apr-Dec 2010-11 :- Consumption/Demand 44275 (‘000 tonne) The Working Group on Steel Industry set up by the Planning Commission for the 11th Five-Year Plan (2007-12) had projected a total demand of 70.34 million tonne for finished steel and a total production of 80.23 million tonne of crude steel by the end of the 11th Plan, that is, 2011-12. Both the 11th Plan projections and the NSP targets are likely to be considerably surpassed. Indian steel consumption during April to January of fiscal year 2011-2012 increased by 5.5% year on year to 57.24 million tons, according to the ministry of steel. Indian steel consumption was 54.24 mill tons in the first 10 months of the last fiscal. India's steel consumption may grow by just 4.3% in 2011 to 67.7 million tonne, premier industry body World Steel Association (WSA) said today. In 2012, India's steel demand will touch 14.3 per cent, reaching 79 million tonne per year, according to the data made available by the World Steel Association (WSA)
Crude steel production in India in 2010 is 66.80 metric tonnes. Total Finished steel(‘000 tonne) (alloy+non-alloy) Apr-Dec 2010-11 : Production 47296 , Import 5359, Export 2462 Crude Steel(‘000 tonne) Apr-Dec 2010-11* : Capacity 56597, Production 50594 India’s crude steel production capacity rose to 78 million tonnes (mt) in 2010-11, a 7.2% increase from 72.76 mt in the previous year, according to an official release. Output of crude steel was 68.32 million tonnes during 2010. India‟s current steel production capacity is 62 million tonne per annum, including both public and private producers. According to the Ministry of Steel, by 2011-12, the capacity is expected to touch 124 million tonne per annum on the back of major expansion plans announced by the steel producers. According to the Steel Ministry, around 222 MoU‟s have been signed with various states for planned capacity of around 276 million tonne. CAPACITY EXPANSION PLANS ANNOUNCED BY STATES:State Orissa Jharkhand Chattisgarh West Bengal Other states Total Source:Annual Reports 2010 No. of MoU signed 49 65 74 12 22 222 Capacity (million tonne per annum) 75.66 104.23 56.61 21 18.2 275.7*
79 mtpa.5 MT in next couple of years. This was soon followed by Mittal Group's announcement of plans to set up their 12 million tonne integrated steel unit in Orissa.45390. Internal and Extra Budgetary Resources [I&EBR] of Rs. Electro Steel is installing integrated Steel Plant near Chas with an investment of Rs 4000 crore. the steel sector in the state has recorded an investment of Rs 51940.5 MT and 3. BSP is on a modernization and expansion plan to take up its steel making capacity to 7. the Planning Commission has approved total outlay of Rs. Atibir Industries has already set up a steel plant. With these. According to the state steel & mines minister Raghunath Mohanty. Bhushan Power & Steel Ltd-Sambalpur ( Rs 7000 crore).96 crore).67 crore till the end of December 2010.e. There are many small companies in the state that are setting up steel plants. the steel production by Integrated Steel Plant in Jharkhand will be 25 MT by 2015. Among the steel investors who have made significant investments in the state are Bhushan Steel Ltd-Dhenkanal (Rs 12000 crore).2 MT steel plants respectively in Bastar region.08 crore (i. For the 11th Five Year Plan (2007-12).08 crore and Gross Budgetary Support [GBS] of Rs. Jindal Steel & Power Ltd-Angul (Rs 8470.The decision of Posco. to set up their 12 million tonne integrated steel plant in Orissa has given the Indian steel industry a feel of what 'globalisation' is all about. To be commissioned by March 2011. Orissa The state government had inked Memorandum of Understanding (MoU) with 50 steel players. Likewise.45607.24 million tonne per annum (mtpa) and steel capacity of 7. Jindal Steel and Power is commissioning integrated steel plant with an investment of Rs 18500 crore at Patratu. The Tata and Essar groups are also in the line as both the companies have signed memoranda of understanding with the Chhattisgarh government to set up a 5. attracting investments of over Rs 2 lakh crore of which 30 small and medium steel projects had begun partial production Even though the big ticket projects of Posco and ArcelorMittal are yet to take off in Orissa. 29 out of these 50 steel firms have begun partial production. The JSPL having major facility in Raigarh district will enhance its steel making capacity to 6 Million Tonne (MT) in next three years and later expand it to 10 MT. Essar Steel Orissa Ltd-Paradip (Rs 5077 crore). Adhunik Metalicks Ltd-Kuarnmunda . Jharkhand Tata Steel has increased capacity upto 6.7 MT is underway with an estimated investment of Rs 14000 crore to be completed by March 2012. The National Mineral Development Corporation (NMDC)—country’s largest iron-ore producer and exporters having major mining operations in Chhattisgarh—has also ventured into steel production. Partly commissioned. Chhattisgarh The mineral rich state of Chhattisgarh will be in a position to produce 32 per cent of country’s total steel production by 2015.59 crore). JSL Ltd-Kalinganagar (Rs 5367. South Korea. The company is setting up a 3 MT steel plant near Jagdalpur.217 crore).8 MT with an investment of Rs 5000 crore and expansion up to 9. achieving a sponge iron output of 6.
In India. Low quality of steel and steel products. coated sheets etc. at comparable capacities labour productivity of SAIL and TISCO is 75 t/man year and 100 t/man year. e. Poor quality of basic infrastructure like road. Rio Tinto. JSPL will set up two plants in Angul.g. is deteriorating as the stock of 25 million tonnes in Karnataka is getting exhausted.05 LT. sold through Supreme Courtmandated E-auction route. Besides. port etc Lack of expenditure in research and development. Delay in absorption in technology by existing units.g. Unremunerative prices making it difficult for the companies to maintain capital costs.60 crore). Korea and NIPPON. LOW LABOUR PRODUCTIVITY o HIGH COST OF BASIC INPUTS AND SERVICES o The electricity. HIGH COST OF CAPITAL o Steel is a capital intensive industry.000 crore. Advantage of high Fe content of indigenous ore is often neutralized by high basic index. Japan the values are 1345 t/man year and 980 t/man year. certain key ingredients of steel making. (Rs 1740 crore). for POSCO..17 MT of ore was sold last month through the auction route against the industry requirement of 3 MT. Orissa to manufacture steel with an investment of Rs 10. Limited access of domestic producers to good quality iron ores which are normally earmarked for exports. the advantages of cheap labour gets offset by low labour productivity. . JSW problem: According to the JSW statement. Lack of facilities to produce various shapes and qualities of finished steel on-demand such as steel for automobile sector.200 crore. will help to convert coke into gasoline and will be operational in 2017. eg. high ash content of indigenous coking coal adversely affecting the productive efficiency of ironmaking and is generally imported. steel companies in India are charged an interest rate of around 14% on capital as compared to 2. Impact on Business/ Key issues/Challenges: The cost of power and non availability of metallurgical coke. cost of electricity is 3 cents in the USA as compared to 10 cents in India. availability of raw material is also not in tune with the demand and only 1.4% in Japan and 6. parallel flange light weight beams. nickel. Added to this are poor quality and ever increasing prices of coking and non-coking coal. e. Visa Steel-Kalinganagar (Rs 1626. Quality and availability of some of the essential raw materials available in India. the quality of iron ore. will invest in a $2 billion iron ore project in Orissa to supply clients in India and overseas with the steel making material. JSW Steel today reported a decline of over 24 per cent in steel production for February at 6. Besides. eg. The third plant.83 crore) and Tata Steel-Kalinganagar (Rs 1302. and freight cost from Jamshedpur to Mumbai is $50/tonne compared to only $34 from Rotterdam to Mumbai.4% in USA.10 lakh tonnes (LT) compared to the January production level of 8. the world’s third largest mining company. ferromolybdenum are also unavailable indigenously. Marred by inferior quality of iron ore. and High level taxation. which is being set up with an investment of Rs 50. The total capacity would be six million tonnes and the two plants are likely to be operational by 2015.
. Should invest more in iron ore mining and find out new reserves to remove the problems of raw material supply.How to strategize on key issues/Action Plan: Short and Medium term Do market surveys to successfully plug in the gaps in the demand and supply and capture market share by finding out the latent needs. Investments in infrastructure to reduce transaction and freight cost. More emphasis on quality and efficiency. Find out substitutes to traditional raw materials in steel production to gain first mover advantage. Strategically position new steel plants to remove the problems of infrastructure and taxation. Introduce Quality check during procurement of iron ore to remove the problems of low quality raw materials and hence decline in the steel production. Long Term Investing more in R&D and hence find new methods to develop steel. R&D will help in producing new better and different qualities of steel and that too at low costs by increasing the operational efficiency and supply chain integration. Use of internally generated power (Jindal powers) to have a competitive advantage in the price and availability of power. Training camps for labour to increase the productivity and efficiency of labour.
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