Comprehensive analysis Report On Indian Steel Sector

Prepared By : Yuvraj Hedaoo Batch: IM-17. Roll No: 231 Steel Scenario and Future Prospective
Abstract: This article covers the present steel scenario of Indian steel industries and future prospective. As per the national steel policy 2005, the goal of Indian steel industries is that India should have a modern and efficient steel industry of world standards, catering to diversified steel demand. This report will give you position and status of Indian steel industries in world.

India’s economic growth is contingent upon the growth of the Indian steel industry. Consumption of steel is taken to be an indicator of economic development. As the present per capita consumption in the country is only around 47 kg (2008) against the world average of 190* kg and that of 400 kg* in developed countries. This study has been made to estimate the per capita demand for iron and steel in the rural sector of India and to determine the factors those can contribute to its enhancement. India was the fifth largest producer of crude steel in the world in 2009, based on rankings released by World Steel Association. Domestic crude steel production grew at a compounded annual growth rate (CAGR) of 8.6 per cent during 2004-05 to 2008-09 which is more than the projected growth by National Steel Policy. This growth was driven by both capacity expansion (from 47.99 million tons in 2004-05 to 66.343 million tons in 2008-09) and improved capacity utilization. India is expected to become the second largest producer of steel in the world by 2015-16, provided all requirements for fresh capacity creation are met. As per official estimates, the Iron and Steel Industry contributes around 2 per cent of the Gross Domestic Product (GDP) and its weight in the Index of Industrial Production (IIP) is 6.2 per cent. From a negligible global presence, the Indian steel industry is now globally acknowledged for its product quality.
Data taken from Joint Plant Commission (JPC) during the 2008

Production, consumption and growth of steel
The National Steel Policy 2005 had projected consumption to grow at 7% based on a GDP growth rate of 7-7.5% and production of 110 million tons by 2019-20. These estimates will be largely exceeded and it has been assessed that, on a 'most likely scenario' basis, the crude steel production capacity in the country by the year 2011-12 will be nearly 124 million tons.

The table below shows the trend in production for sale, import, export and consumption of total finished steel (alloy +non-alloy) in the country: Total Production of Steel( alloy + non alloy) ‘000tons
Year 2004-05 2005-06 2007-08 2008-09 April-Dec 2009-10 Source: JPC; Production for Sale 43513 46566 52529 56075 43849 Import 2293 4305 4927 7029 5210 Export 4705 4801 5242 5077 2099 consumption 36377 41433 46783 52125 40997

Trends in production, private/public sector in India
Indian Crude steel Production (In MT)
Sector Public Sector Private sector Total Production % of share of Public Sector Source: JPC; 2005-06 16.964 29.496 46.460 36.5 2006-07 17.003 33.814 50.817 33.5 2007-08 17.091 36.766 53.857 32 2008-09 16.372 42.065 58.437 28 200910(Apr-Dec) 12.483 33.292 45.775 27

Global ranking of Indian steel
Global crude steel production reached 1220 million tons in 2009, a decline of 8 per cent over 2008. China was the largest crude steel producer in the world with production reaching 567.8 million tons a growth of 13.5 per cent over 2008. India once again emerged as the fifth largest producer in 2009 and recorded a growth of 2.7 per cent as compared to 2008, the only other country in the top 10 bracket to register a positive growth during 2009. India also emerged as the largest sponge iron producing country in the world in 2009, a rank it has held on since 2002. If proposed expansions plans are implemented as per schedule, India may become the second largest crude steel producer in the world by 2015-16. World crude steel production in 2009* Import and Export scenario
Country Production CHINA 567.8 JAPAN 87.5 RUSSIA 59.9 US 58.1 INDIA 56.1 SOUTH 48.6 KOREA 7 GERMANY 32.7 8 UKRAINE 29.8 9 BRAZIL 26.5 10 TURKEY 25.3 Source: World Steel Association Rank 1 2 3 4 5 6

Indian steel scene: April - December, 2009-10
Item Total Finished Steel Production for sale Import Export Consumption Quantity (MT) 43.849 5.210 2.099 40.997 % change 3.2 16.6 36.1 7.8 4

Crude steel Production 45.775 Capacity Utilisation (%) 84 -

SWOT Analysis of Indian Steel Industries
The strengths, weaknesses, opportunities and threats for the Indian steel industry have been tabulated below. Strengths Weaknesses 1. 2. 3. 4. Availability of iron ore and coal Low labor wage rates Abundance of quality manpower Mature production base 1. 2. 3. 4. 5. Low productivity Coking coal import dependence Low R&D investments High cost of debt Inadequate infrastructure Threats 1. China becoming net exporter 2. Protectionism in the West 3. Dumping by competitors

Opportunities 1. 2. 3. 4. Unexplored rural market Growing domestic demand Exports Consolidation

TRADE POLICY Exports: It is estimated that the country will achieve an export ratio of around 25 percent of the total production in 2019-20 from 11 percent in 2004-05. This is comparable with a 30 percent share of exports in global production. The Government will support all efforts to make available export credit, provide trade information, and cut transaction costs in general. In view of the slow progress of multi-lateral negotiations, Government would focus on regional trade agreements to broaden the export base. Exports of value-added steel and steel products, including indirect export of steel through project exports, would be encouraged. Imports: Import duty rates have been brought down progressively in the postderegulation period. The Indian steel industry has been able to successfully withstand the competitive pressures of overseas producers. However, integration with the global economy requires that the industry should be protected from unfair trade practices, which become common especially during mechanisms for import surveillance, and monitor export subsidies in other countries.

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