EMIS Insights - India Steel Sector Report 2019 - 2023

INDIA
STEEL SECTOR
2019/2023
Including 5-Year Forecast
An EMIS Insights Industry Report
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ABBREVIATIONS
BGS British Geological Survey
CSO Central Statistics Office
DIPP Department of Industrial Policy and Promotion
ECM Equity Capital Market
IBEF India Brand Equity Foundation
JPC Joint Plant Committee
JSW Jindal South West (Steel)
MCI Ministry of Commerce and Industry
SAIL Steel Authority of India Ltd
Semis Semi-Finished Products
SIMA Sponge Iron Manufacturing Association
USGS United States Geological Survey
WSA World Steel Association
WTO World Trade Organization


CONTENTS FOREWORD
01 EXECUTIVE SUMMARY
Sector Overview
Sector in Numbers
p.5
p.6
Sector Snapshot
Driving Forces
Restraining Forces
02 SECTOR OUTLOOK p.13

Macroeconomic Outlook
Economic Sentiment
Finished Steel Outlook
03 SECTOR IN FOCUS p.18

Main Economic Indicators
Main Sector Indicators
Steel Capacity
Production
Steel Consumption
Raw Materials: Iron Ore
Raw Materials: Coking Coal
Global Positioning
Exports
Imports
Investments
Prices
04 COMPETITIVE LANDSCAPE p.34

Timeline India Steel Sector
Highlights
Iron Ore Market Structure
Crude Steel Market Players
Pig Iron Market Players
Finished Steel Market Players
M&A Deals
M&A Activity

CONTENTS 05 COMPANIES IN FOCUS
Steel Authority of India Ltd
JSW Steel Ltd
Tata Steel Ltd
Jindal Steel & Power Ltd
p.43
Essar Steel India Ltd
06 REGULATORY ENVIRONMENT p.54

Main Regulatory Bodies
National Steel Policy 2017
Government Policy
Anti-Dumping Duties
07 IRON p.59
Highlights
Main Events
Iron Ore Production
Iron Ore Consumption
Iron Ore Foreign Trade
Iron Ore Prices
Hot Metal Production
Pig and Sponge Iron Production
Pig Iron Consumption
Pig and Sponge Iron Foreign Trade
08 STEEL p.70
Highlights
Main Events
Crude Steel Production
Semi and Finished Steel Production
Finished Steel Production
Finished Steel Products Output
Semi and Finished Steel Consumption
Finished and Semi-Finished Steel Foreign Trade
Finished Steel Exports
Finished Steel Imports

INDIA STEEL SECTOR 2019/2023
Foreword
In 2018, India became the world’s second-largest crude

steel producer and is set to become the second-largest
consumer by end-2019. Steel production in the country is
booming, driven by government incentives and the rapidly
expanding economy, as well as the rebalancing of supply
and demand on the global markets.
Krasimir Yordanov,
Research Analyst,
EMEA
The Indian government sees the sector as strategically important for the ongoing industrialisation of
the country and as a key enabler for its ambitious infrastructure and construction projects. At the
same time, the authorities are pushing for both self-sufficiency and foreign trade surpluses in steel,
in line with its policy of eliminating the current account deficit.
Although generally seen as a restraining factor for the sector, the global steel trade war so far seems
to be having no meaningful negative impact on Indian steel exports. In FY2018, the foreign trade
surplus in finished steel more than doubled to 1.2mn tonnes, as steel exports surged faster than
imports.
As well as benefitting from stronger domestic and foreign demand, the top and bottom lines of steel
companies have been boosted by rising prices on both local and global markets. The rationalisation of
steel supply in China, which accounts for half of aggregate global capacity, has balanced the global
steel market, pushing prices higher.
In the longer-term, the Indian steel sector will benefit from the country’s rich iron ore resources,
government consumption incentives and policies of shielding domestic manufacturing from foreign
competition. However, in the short run, global steel demand is facing the challenge of a slowing
global economy, and oversupply is once again a real threat.


An EMIS Insights Industry Report CONTENTS
01
EXECUTIVE
SUMMARY

Copyright © 2019 EMIS, all rights reserved. 6
01 EXECUTIVE SUMMARY CONTENTS
Sector Overview
The steel sector contributed about 2% of the Indian economy’s total GVA in FY2018, employing 500,000
people directly and 2.5mn people indirectly. Indian crude steel production is the second-largest in the
world and the domestic steel market is expected also to become the second-largest by the end of
2019. The global importance of Indian steel derives mainly from the country’s abundant iron ore
resources and the rising domestic demand fuelled by an expanding economy and by government
infrastructure and construction projects. The construction sector absorbed 62% of overall steel
consumption, while mechanical engineering accounted for 15% in FY2018. Exports of iron and steel
constituted 3.7% of the country’s total in FY2018, while iron and steel imports claimed a 3.1% share.
Entry Modes
Entering India’s steel industry is a capital-intensive process, involving long delays because of the
various regulatory clearances required. The government favours domestically-produced iron and steel
products and the best way to tap into the country’s domestic market is through local manufacturing.
However, the Indian iron and steel sector is highly competitive and the local players have established
stable positions. Because of this, the most feasible way to enter the steel sector in India is through
M&A deals or in partnerships and JVs with local companies. In an effort to facilitate entry through
acquisition, the government has lifted the requirement for buyers to obtain clearance for taking
possession of captive iron ore mines belonging to companies acquired.
Segment Opportunities
Per capita finished steel consumption in rural India is expected to reach 12-14 kg by FY2020, compared
to 9.7kg in FY2016. Government-sponsored housing policies are driving growing demand for
construction steel in India’s rural areas. Growth opportunities for Indian steel exist in automotive and
capital goods manufacturing, as well as in infrastructure development. Expansion and enhancement
of the railway network is planned and creation of more private airports is expected, both of which
bode well for steel manufacturing. The booming economy will require an expansion of electric power
generation capacity, which will enhance the country’s transmission and distribution capabilities,
thereby also raising steel demand.
Government Policy
The Indian government recognises the steel sector as strategically important and pursues supportive
policies. The government maintains import duties on steel products to protect local steelmakers, but
at the same time does not control steel prices (which were deregulated in 1992) and allows foreign
investments involving stakes of up to 100% in the steel sector. The National Steel Policy sees 300mn
tonnes/year of steel capacity in place by FY2031, up from 138mn tonnes/year in FY2018.
Source: WSA, Ministry of Steel, MCI, IBEF
INDIA STEEL SECTOR 2019/2023 7

Sector in Numbers
126.9mn 138mn
tonnes tonnes/year 1.8%
Share of Metal
Finished Steel Steel Production Products in GVA
Production for Capacity
Sale
2nd 103.1mn 90.7mn

largest tonnes tonnes
Crude Steel Crude Steel Finished Steel
Manufacturing Production Apparent
Country Globally Consumption
200.8mn INR INR

tonnes 24.1bn 217bn
Iron Ore FDI Inflows in Iron and Steel
Production Metallurgical Foreign Trade
Industries Gap
Note: data for FY2018

Source: CSO, MCI, DGCIS, DIPP, JPC, CEIC

Sector Snapshot
India Steel
PRODUCTION
126.9mn tonnes 103.1mn tonnes
Finished Steel Crude Steel
Production for Sale Production
EXPORTS
INR 725bn 9.6mn tonnes
Iron and Steel Finished Steel
Export Value Export Volume
DOMESTIC
CONSUMPTION
90.7mn tonnes
Finished Steel Apparent
IMPORTS Consumption
INR 942bn 7.5mn tonnes

Iron and Steel Finished Steel
Import Value Import Volume
IRON FINISHED STEEL

Iron Ore Production: Non-Alloy, Flat Production:
200.8mn tonnes 62.5mn tonnes
Total Hot Metal Production: Non-Alloy, Non-Flat Production:
68mn tonnes 45.1mn tonnes
Sponge Iron: 29mn tonnes Alloy Production: 10.2mn tonnes
KEY PLAYERS REVENUES

1. Tata Steel – INR 1,330bn 4. Jindal Steel & Power – INR 278bn
2. JSW Steel – INR 715bn 5. Essar Steel – INR 274bn
3. SAIL – INR 590bn
Note: Unless otherwise stated, data are for FY2018.
Source: CSO, MCI, DGCIS, JPC, CEIC, Company Data

Sector Snapshot: India Steel
Indian steel capacity continued to expand in FY2018. Domestic steel manufacturers added a combined
10mn tonnes/year of steel capacity, reaching a total of 138mn tonnes. Of aggregate installed capacity,
55mn tonnes/year was oxygen blast-furnace capacity, 40mn tonnes/year electric arc furnace capacity,
and the remaining 42mn tonnes/year induction furnace capacity.
Driven by the growing economy and by government programmes for infrastructure and construction
development, the sector produced 117.9mn tonnes of finished steel in FY2018, up by 16% y/y. Crude
steel production totalled 103.1mn tonnes, with the private sector accounting for 80% of this, and the
public sector for the remaining 20%. Some 91% of the finished steel produced in FY2018 was non-alloy
steel. Close to 53% of overall non-alloy steel production consisted of flat products, of which, in turn,
53% comprised hot-rolled coils, and 18% cold-rolled sheets or coils. Bars and rods claimed the largest
share (of 79%) in non-flat, non-alloy steel production. The output of non-alloy flat products surged by
11% y/y to 62.5mn tonnes, while that of alloy steel products rose by 17% y/y to 10.2mn tonnes in
FY2018.
Production of sponge iron (or “direct reduced iron”/DRI) rose by 6% y/y to 30.5mn tonnes in FY2018.
The coal-based route accounted for 78% of total sponge iron production, while the remaining 22% was
gas-based. According to the World Steel Association (WSA), India’s total production of “pig iron” – or,
in Indian statistical terms, “hot metal” – in CY2017 was 66.0mn tonnes, up from 63.7mn tonnes in
CY2016. However, output in the much more restricted category of “pig iron” reported in Indian
statistics came to 10.34mn tonnes in FY2017 – and just 5.73mn tonnes in FY2018.* In FY2018, apparent
finished steel consumption totalled 90.7mn tonnes. Within this total, the construction sector
accounted for 62%, mechanical engineering for 15%, the automotive sector for 9%, and domestic
appliance production for 5%.
In FY2018, finished steel exports rose by 17% y/y to 9.6mn tonnes, while imports increased by 3.5% y/y
to 7.5mn tonnes. As a result, the foreign trade surplus for finished steel came in at 2.1mn tonnes, more
than twice as much as in FY2017. Factors behind the rising foreign trade surplus included global
supply/demand rebalancing and stronger foreign demand for Indian steel, which gained market share
at the expense of Chinese steel. At the same time, the domestic market has been protected through
higher import duties, which favoured local manufacturers and eroded the potential for even higher
steel imports.
The biggest steel companies in India are Tata Steel, with revenues of INR 1,330bn in FY2018, Jindal
South West Steel (JSW Steel) with INR 715bn, and the state-run Steel Authority of India Ltd (SAIL) with
INR 590bn. The top five steel players also include Jindal Steel & Power Ltd – not to be confused with
JSW Steel – with revenues of INR 278bn in the same year, and Essar Steel India Ltd (INR 274bn).
*The WSA figure includes the molten iron or “hot metal” used in-house by big firms in vertically integrated steelmaking
processes, and fed directly into those processes. The Indian figure appears to refer only to pig iron produced in solid form (as
“pigs”), having cooled from its molten state – and produced mostly for sale rather than in-house use. In this report we will
adhere to Indian usage, referring to the former as “hot metal” and only the latter as “pig iron”.
Source: CSO, MCI, DGCIS, JPC, CEIC, Company Data

Driving Forces
India is still industrialising and is at an early stage of the standard steel consumption curve, which is
characterised by low per capita consumption rates. Thus, as India’s per capita GDP increases, its iron
and steel consumption will grow at an accelerating pace. This will be supported by the country’s
strong resource fundamentals – such as its iron ore reserves – and the government’s awareness of the
sector’s importance in the supply chain of the industrial sector as a whole. Indian steel companies
have already emerged as global players, which creates a stable base for the future development of
the country’s steel industry.
External
Domestic steel manufacturers have been aided by the government’s protectionist policies. The
authorities apply steel import duties ranging between 5% and 12.5%. Coupled with stronger domestic
demand for steel coming from sectors that are being stimulated through government expenditures
and institutional support, this was the major external driving force behind the sector production boom
in FY2017 and FY2018. To ensure cheap iron ore supplies for local steel manufacturers, the government
imposed a 30% export duty on Indian iron ore, while domestically produced iron and steel products
are favoured in public tenders organised by the government. The depreciation of the Indian rupee
against the US dollar over the last five years has given a boost to Indian steel exports on international
markets. Supply rationalisation on global steel markets has supported prices and boosted Indian steel
exports. The industry is investing heavily in capacity buildup in order to tap into the enormous
potential of the domestic steel market, which is expected to become the second-largest in the world
by end-2019.
Internal
The growth of the Indian steel sector has been driven by domestic supplies of raw materials such as
iron ore and by the easy availability of cost-effective labour. Thanks to the continuous modernisation
and upgrading of older plants and improvement in energy-efficiency levels, Indian steel companies
have become competitive on global markets by maintaining one of the lowest cost structures in the
world. Another factor contributing to lower costs is the closed manufacturing cycle of Indian steel
companies, as they have invested heavily in captive mines and power plants to slash expenses and
gain a price advantage. A major internal driving force for domestic market expansion has been the
country’s vast population and low per capita consumption of iron and steel, which implies potential
for a rapid growth of the domestic market for steel because of low-base effects. India’s relatively
young population and the trend of urbanisation both tend to boost demand for housing,
transportation and public infrastructure, which means more steel consumption demand.
Source: EMIS Insights

Restraining Forces
The biggest restraining factor for Indian steel in the short term is the slowdown of the global
economy – and in particular the Chinese economy, which accounts for more than half of global steel
consumption. The steel business is prone to high fixed costs, and volatility in raw materials and
energy prices could lead to reduced budgets for capacity expansion. The Indian government is
providing support on the steel demand side, which is driving production higher; but too much reliance
on government programmes exposes the steel sector to concentration risks. Longer-term, one of the
main challenges that the Indian steel industry has to tackle is the tight supply of domestic coking
coal – which is partly a function of its low quality. The availability of cheap imported steel, despite
government efforts to restrict foreign supply on the Indian market, has also put pressure on domestic
steel prices.
External
The slowdown of the global economy that started in the second half of 2018 is threatening steel
demand and harming India’s steel exports. China, which accounts for more than half of global steel
demand, is showing notable signs of a GDP growth slowdown, reinforced by the trade war with the US.
Global trade wars in the steel sector undermine free trade and result in lost opportunities for
companies, including Indian steel players. Moreover, as India has FTAs with major steel producing
countries like Japan and South Korea, its domestic steel market is exposed to risks of high inventory
with the excesses that would arise from steel unsold as a result of higher global tariffs. Restraining
forces in related sectors, such as iron ore transportation, are also dragging down steel sector
development. India’s underdeveloped railway infrastructure has been creating bottlenecks for iron ore
miners, thereby disrupting the iron ore industry as a whole. The government has been trying to
address the issue by dedicating over 25% of rail freight capacity to the steel sector.
Internal
A major internal restraining factor for the sector is the limited availability of some essential raw
materials, such as high-grade manganese ore and chromite, coking coal, steel-grade limestone,
refractory raw materials, nickel, and ferrous scrap. The domestic supply of coking coal is tight due to
poor quality and high ash content. To tackle this, the country imports around 85% of the coking coal it
consumes. Additionally, iron ore production has been disrupted by the Indian Supreme Court over
security and environmental concerns. For example, in February 2018, the Supreme Court cancelled all
iron ore extraction permits in the State of Goa, ordering mining activities to cease, effective March, on
environmental concerns. The iron ore mining industry is lobbying for abolition of the 30% export tax
on Indian iron ore. At the same time, the sector insists that the government should impose a 30%
import duty on iron ore and iron ore pellets to protect domestic miners. If enacted, the measures
could lift production costs for local steel manufacturers and take away their key advantage of
cheaper local resource inputs.

02
SECTOR
OUTLOOK

02 SECTOR OUTLOOK CONTENTS
Macroeconomic Outlook
Real GDP, y/y change Consumption, Investment, and Public

Spending, y/y change
8.7% 9.0%
8.1% 8.2% 8.6%
7.4%
7.7% 7.7% 7.1%
7.8%
6.7%
7.4%
7.2% 7.2% 7.0%
7.3% 7.3% 6.3%
7.2% 7.2%
FY2019f FY2020f FY2021f FY2022f FY2023f FY2019f FY2020f FY2021f FY2022f FY2023f
Private Consumption Fixed Investment

Real GDP Growth, y/y change Public Spending
Comments
India’s GDP growth is likely to come out at 7.4% in FY2019 as a whole, and to remain close to that level
in FY2020. This is in contrast to FY2017 and FY2018, when there was a distinct slowdown in growth –
albeit to a rate that was still very brisk by world standards. This slowdown largely reflected the short-
term results of two government initiatives. One was the withdrawal of high-value banknotes in
November 2016, known as the demonetisation or DeMo. The other was the introduction of General
Sales Tax (GST) in July 2017. This replaced India’s complex taxation system and created a single pan-
Indian market for the first time since the country gained independence in 1947. Real GDP growth is
projected to remain comfortably above 7% for the entire period to FY2023, though slowing down
slightly over that period. This positive performance will be supported by ongoing structural reforms,
resilient private consumption, substantial public investment in infrastructure, and a higher tax take
resulting from GST, following the initial disruption. India spent INR 60tn on infrastructure between
FY2007 and FY2017, and will invest an estimated INR 50tn over the five fiscal years starting on April 1,
2018. The upcoming general elections in 2019 might pose risks for the reform agenda of prime minister
Narendra Modi’s government, but infrastructure remains a priority, supported by a wide political
consensus that India needs better infrastructure to sustain growth. The IMF is positive about India’s
growth prospects: in October 2018, it reaffirmed its May prognosis that India would be the world’s
fastest-growing major economy in 2019, well ahead of China, and that its medium-term outlook was
also good.
Source: EMIS Insights, ET

Macroeconomic Outlook (cont’d)
Current Account
FY2019f FY2020f FY2021f FY2022f FY2023f
-67 0%
-68
-69 -70.9 -1%
-70 -73.5 -73.8 -1%

-71
-75.9
-72 -77.0
-2%
-73 -1.67%
-74 -1.91%
-2%
-75 -2.15%
-2.26%
-76 -2.44% -3%
-77
-78 -3%
Current Account, USD bn Current Account, % of GDP
Total Exports and Imports, y/y change
10.0%
9.0% 9.3% 9.6%
8.9%
8.4%
7.7%
6.9%
6.1%
5.1%
FY2019f FY2020f FY2021f FY2022f FY2023f

Exports Imports

Economic Sentiment
Consumer Confidence Survey (Future Business Expectation Index

Expectations Index)
130 117
128 116
115
126
114
124
113
122
112
120 111
118 110
116 109
114 108
03/2015
06/2015
09/2015
12/2015
03/2016
06/2016
09/2016
12/2016
03/2017
06/2017
09/2017
12/2017
03/2018
06/2018
09/2018
12/2018
03/2015
06/2015
09/2015
12/2015
03/2016
06/2016
09/2016
12/2016
03/2017
06/2017
09/2017
12/2017
03/2018
06/2018
09/2018
Comments
Consumer confidence – as measured by the Future Expectations Index of RBI’s consumer confidence
survey for the period between March 2015 and September 2018 – peaked at 129.7 in December 2016 and
fell thereafter. It started rising again after March 2018, but not quite to the same levels. In March 2018,
it fell to 118.6, its lowest level over the period. The dip was the result of consumer worries about
savings and household expenses, the ET daily commented in October 2018. The Business Expectation
Index values were volatile over the period, falling to lows of 111.1 and 110.9 in March 2017 and June
2016, respectively, and reaching highs of 115.8 in March 2018 and 115.5 in March 2015. Generally, the
discrepancy is rooted in the fact that consumers are being hit harder than businesses by government
policy initiatives. In particular, firms were better placed to handle the November 2016 demonetisation,
which withdrew about 90% of India’s cash in circulation (CIC) overnight. Businesses in capital-
intensive sectors, such as oil and gas and construction, are also supported by multi-year public
spending programmes. However, the volatility in the Business Expectation Index also reflects a
challenging business environment for domestic producers. The Indian rupee declined substantially
against the US dollar y/y in 2018, which helped increase India’s import bill and put stress on export-
oriented sectors.

Finished Steel Outlook
Comments
EMIS Insights predicts that finished steel production will slow down in FY2019, mainly as a result of
weaker foreign demand and oversupply pressures, only partially offset by strong domestic steel
consumption. Specifically, we forecast that production will grow by just 5% y/y to 123.8mn tonnes,
down from 15.8% y/y in FY2018. The apparent consumption of finished steel will rise by 5% y/y in
FY2019, up from a 4% y/y growth in FY2018. Longer-term, the fact that per capita steel consumption is
still low, coupled with the government’s target of more than doubling the country’s steel production
capacity by FY2031, will ensure solid growth for the sector.
EMIS Insights estimates that production of finished steel will increase at a CAGR of 6.4% between
FY2019 and FY2023 – and will exceed 147mn tonnes at the end of the forecast period. Apparent
consumption is forecast to increase at a 4.5% CAGR to almost 130mn tonnes/year. The growth of
finished steel exports will significantly decelerate to 3.2% y/y in FY2019, down from 16.7% y/y in FY2018.
The overall output of cold rolled sheets and coils will be strong: we forecast a CAGR of 8.8% over the
years FY2019-FY2023.
Steel Outlook FY2019-FY2023

FY2017 FY2018 FY2019f FY2020f FY2021f FY2022f FY2023f
Finished Steel Production 101.8 117.9 123.8 129.7 135.7 141.6 147.5
Finished Steel, Apparent Consumption 99.4 103.3 108.5 113.6 118.8 124.0 129.1
Finished Steel Exports 8.2 9.6 9.9 10.2 10.5 10.8 11.1
Finished Steel Imports 7.2 7.5 7.6 7.8 7.9 8.1 8.2
Production of Cold Rolled Sheets or Coils 8.6 11.3 11.9 12.5 13.1 13.6 14.2
Production of Galvanised Polycarbonate or

7.7 7.6 7.8 7.9 8.0 8.1 8.2
Galvanised Corrugated Coated Sheets

03
SECTOR
IN FOCUS

03 SECTOR IN FOCUS CONTENTS
Main Economic Indicators
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Population, mn persons 1,220 1,235 1,251 1,267 1,283 1,299 1,316
GDP at Current Prices, INR tn 87.4 99.4 112.3 124.7 137.6 152.5 167.7
Real GDP Growth, y/y % Change 6.6 5.5 6.4 7.4 8.2 7.1 6.6
GVA Metal Products at Current Prices, INR tn 2.3 2.5 2.9 2.7 2.3 2.5 na
GVA Metal Products, % of Total GVA 2.8 2.7 2.8 2.4 1.9 1.8 na
Mining and Quarrying GVA at Current Prices, INR tn 2.6 2.9 3.0 3.1 3.0 3.3 3.7
Manufacturing GVA at Current Prices, INR tn 14.1 15.7 17.1 18.8 21.2 23.3 25.3
Construction Sector GVA at Current Prices, INR tn 7.8 8.5 9.2 9.8 9.9 10.3 11.2
Unemployment Rate, %* 3.6 3.5 3.4 3.5 3.5 3.5 3.5
Monetary Policy Rate, % 9.5 8.5 9.0 8.5 7.8 6.8 6.3
USD/INR Exchange Rate 51.2 54.4 60.1 62.6 66.3 64.8 65.0
Current Account Balance, INR tn -3.8 -4.8 -1.9 -1.6 -1.4 -1.0 -3.1
Current Account Balance, % of GDP 4.3 4.8 1.7 1.3 1.0 0.6 1.9
Iron and Steel Exports, INR bn na na 560.4 530.8 358.3 582.1 725.0
Iron and Steel Exports, % of Total Exports na na 2.9 2.8 2.1 3.1 3.7
Iron and Steel Imports, INR bn na na 765.9 992.9 975.8 782.6 941.7
Iron and Steel, % of Total Imports na na 2.8 3.6 3.9 3.0 3.1
FDI Inflows, Total, USD bn 30.0 22.4 24.3 30.9 40.0 43.5 44.9
FDI Inflows, Metallurgical Industries, INR bn 83.7 78.8 34.4 29.0 22.8 96.5 24.1
Source: CSO, World Bank, IMF, RBI, MCI, DGCIS, DIPP, CEIC

Main Sector Indicators

Indicator FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Crude Steel
Production, mn tonnes 78.4 81.7 89.0 89.8 97.9 103.1
% of Oxygen Route in Total Crude Production 43 43 42 43 43 46
% of Electric Route in Total Crude Production 57 57 58 57 57 54
Crude Steel: Installed Capacity, mn tonnes 97.0 101.0 109.9 122.0 128.3 138.0
Capacity Utilisation 81 80 81 74 76 75
Hot Metal & Pig Iron
Hot Metal Production, mn tonnes 48.7 52.5 56.4 58.7 65.2 68.0
Pig Iron Production, mn tonnes n/a 8.4 10.2 10.2 10.3 9.9 (provisional)
Pig Iron Production for Sale, mn tonnes 6.9 8.0 9.7 9.2 9.4 9.4 (provisional)
Pig Iron Production for Sale – Public Sector Share, % 9.8 6.6 9.0 7.1 5.5 6.4
Pig Iron Production for Sale – Private Sector Share,
90.2 93.4 91.0 92.9 94.5 93.6
%
Pig Iron Exports, thou tonnes 21 34 23 22 34 16
Pig Iron Imports, thou tonnes 414 943 540 297 387 518
Sponge Iron
Production for Sale, thou tonnes 14.2 18.2 20.4 14.5 17.5 16.7
Exports, thou tonnes 58 74 98 127 130 390
Semis
Imports, thou tonnes 793 258 696 981 732 917
Exports, thou tonnes 144 486 640 639 1,066 1,994
Apparent Consumption, mn tonnes 32 38.3 43.5 37.0 33.4 39.4
Finished Steel
Total Production for Sale, mn tonnes 81.7 87.7 92.2 91.0 101.8 126.9
Exports, mn tonnes 5.4 6.0 5.6 4.1 8.2 9.6
Imports, mn tonnes 7.9 5.5 9.3 11.7 7.2 7.5
Apparent Consumption, mn tonnes 85.3 87.6 92.9 97.3 99.4 90.7
Source: JPC, CEIC, WSA

Steel Capacity
Crude Steel Production Capacity, mn Crude Steel Production Capacity by

tonnes Route, FY2018, mn tonnes
300 Electric Arc Induction

Furnace 40 Furnace 42
138
122 128
102 110
91 97
80
Blast Oxygen
Furnace 55
Comments
India’s overall crude steel production capacity increased at a CAGR of 8.1% between FY2011 and FY2018,
reaching more than 138mn tonnes/year. Of this total, the blast oxygen furnace production method
accounted for 55mn tonnes/year, electric arc furnaces for 40mn tonnes, and induction furnaces for
42mn tonnes/year. Steel industry companies are investing heavily in capacity expansion as the
National Steel Policy 2017 envisages a capacity total of 300mn tonnes by FY2031. This is estimated to
require an additional USD 156bn of investments (or INR 10tn). To help this capacity build-up, the
government has reduced from 7.5% to 2.5% the basic customs duty on the plant equipment required
for the construction or expansion of iron-ore pellet plants and iron-ore beneficiation plants. At
present, several projects are in progress or planned. JSW Steel is planning to increase its Vijayanagar
plant’s capacity by 5mn tonnes to 18mn tonnes/year; it will also complete the doubling of capacity at
its Dolvi unit in Maharashtra (to 10mn tonnes/year) by end-2019. Additionally, Tata Steel is expanding
the annual capacity of its Kalinganagar plant from 3mn to 8mn tonnes.
Source: IBEF, Company Data

Production
Market Value of the Indian Steel Sector Finished Steel Total Production Volume
131.6
37.2% 115.9 126.9
100.0
39.7% 95.0
102.9
88.0
81.0 100.7
27.0% 89.6
23.4% 12.6%
73.4 9.5%
58.0
6.2%
47.0 2.2% 3.7%
8.6% 8.0%
37.0 5.3%
-18.1%
-14.0%
FY2009 FY2010 FY2011 FY2014 FY2015 FY2016 FY2017 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Steel Sector Market Value, USD bn y/y Change Finished Steel Production, mn tonnes y/y Change
Comments
Steel manufacturing in India has experienced a boom in recent years. In FY2018, the sector produced
127mn tonnes of finished steel, up by 9.5% y/y. In fact, India became the world’s second-largest crude
steel producer in calendar 2018, surpassing Japan, according to data from the World Steel Association
(WSA). The growth of steel production was supported by fast-growing demand on the domestic
market, with the infrastructure and housing construction sectors benefitting from government
programmes. Steel manufacturers are expanding capacities in anticipation of rising demand – and in
line with the government target of achieving steel capacity of 300mn tonnes/year by FY2031. At the
end of FY2018, overall crude steel capacity stood at 138mn tonnes/year, up from 80mn tonnes/year in
FY2011. An additional factor favouring the growth of production is the government’s protectionist
policy, designed to shield domestic players from steel imports. The authorities have imposed a 20%
“safeguard duty*” on steel imports as well as a 30% export duty on iron ore to ensure supply to the
domestic steel industry. Local producers have also received a boost from rising steel prices
throughout the value chain. For example, average wholesale prices of flat steel products surged by
20% y/y in calendar 2018 – on top of a 15% rise in 2017.
*A safeguard duty is a duty on the import of goods whose manufacturing costs in India are higher than their import price. The
duty is imposed by the federal Indian government in an effort to discourage imports and support Indian manufacturers.
Source: IBEF, CEIC, JPC, BGS

Production (cont’d)
Comments Construction and Infrastructure Industry

as a Major Driver for Steel Production,
Steel production is to a large extent determined
2016-2018
by the dynamics of the construction and 15%
infrastructure industries. Between 2016 and 2018,
Finished Steel Production Volume, m/m
about 70% of the monthly changes in finished 10%
steel production volumes can be attributed to
changes in these two sectors, as measured by the 5%
CSO’s Infrastructure and Construction Goods
Change
Index. The remaining 30% is due to other factors 0%

such as steel exports, inventory build-up, and -15% -10% -5% 0% 5% 10% 15%
demand from other industries. Moreover, every -5%

y = 0.9365x + 0.0019
1% rise of the index is likely to lead, on average, R² = 0.7061
to 0.93% increase in finished steel output. -10%
-15%
Infrastructure and Construction Goods Index, m/m
Change
Steel Production vs Construction and Infrastructure Industry

15%
10%
5%
0%
-5%
-10%
-15%
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
May-16
Aug-16
Sep-16
Nov-16
Dec-16
May-17
Aug-17
Sep-17
Nov-17
Dec-17
May-18
Aug-18
Sep-18
Nov-18
Jul-16
Jul-17
Jul-18
Jan-16
Feb-16
Mar-16
Jun-16
Jan-17
Feb-17
Mar-17
Jun-17
Jan-18
Feb-18
Mar-18
Jun-18
Infrastructure and Construction Goods Index, m/m Change Finished Steel Production Volume, m/m Change
Source: EMIS Insights, JPC, CSO, CEIC

Steel Consumption
Comments Finished Steel Apparent Consumption

The boom of the Indian steel industry mostly 99.4
97.3 97.5
stems from the fact that India’s per capita 10.2% 92.9
87.6 7.5%
consumption levels are low by global standards. 6.1% 90.7
4.7%
85.3 2.7% 2.2%
In FY2018, the consumption of steel in India was
68 kg per capita, according to IBEF. According to
-8.8%
WSA data, it was 66 kg in CY2017, far lower than
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
the world average of 212 kg/capita. It is expected
that consumption per capita will increase, Finished Steel Apparent Consumption, mn tonnes
supported by rapid industrial growth and rising y/y Change
expenditure on rail, road, and highway

infrastructure projects. Steel Consumption Per Capita, kg
In FY2018, apparent finished steel consumption 68
64 65
totalled 90.7mn tonnes, down by 8.8% y/y. 58 59 60 61
55
51
The construction sector accounted for 62% of
overall finished steel consumption in FY2018,
mechanical engineering for 15%, the automotive
sector for another 9%, and domestic appliance
production for 5%.
Government stimulus programmes for the

development of automotive production and Finished Steel Consumption by Sectors,
expected infrastructure investments in railways FY2018
and airports, as well as enhancements in both Mechanical
Machinery
power transmission and power distribution 15% Automotive
capacities, will boost domestic steel demand. 9%
Metal
The government targets a per capita finished Products 6%
steel consumption of 12-14 kg in rural areas by
Domestic
FY2020, up from 9.7 kg per capita in FY2016. Appliances
Construction 5%
62%
Others 3%
Source: WSA, JPC, CEIC, IBEF

Steel Consumption (cont’d)
Steel Consumption Curve
1,400
1,200
South Korea
Finished Steel Consumption per Capita, 2017, kg
1,000
800
600
China Germany
Japan
400
USA
Russia
200
Brazil
India
0
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000
-200
GDP per capita 2017 (USD at PPP)
At 66.2 kg a year, per capita finished steel consumption in India is low, but intelligibly so and probably
about right for its per capita GDP level. The graph plots per capita steel consumption against per
capita GDP in 2017 at purchasing power parity for a selected group of key developed and developing
countries. These are the emerging BRIC economies (Brazil, Russia, India and China) and certain
advanced economies (Japan, South Korea, Germany and the US). India’s is the lowest, lower even than
that of Brazil (101.8 kg) – let alone its fellow BRIC members China (544.5 kg) and Russia (308.3 kg).
However, it will be seen that India lies very close to the “steel consumption curve” that, with the
possible exception of South Korea, describes the relation between the two variables in these
countries. That implies two things. First, India’s finished steel consumption is adequate for its GDP
level. And second, per capita consumption is likely to be growing concomitantly with GDP for quite
some time to come, before the onset of the tendency of steel consumption to decline after a certain
point – reflecting the service orientation of really advanced economies. In other words, India’s steel
consumption has significant room for growth.
Source: EMIS Insights, World Bank, WSA

Raw Materials: Iron Ore
Production Iron Ore Production

India has plenty of iron ore reserves (estimated at
6.6bn tonnes as of 2013), and iron ore is the key
23.5% 200.8
raw material for steel production. The country is 21.1%
192.1
self-sufficient in iron ore. In FY2017, India 168.5 151.7
produced 192.1mn tonnes of iron ore, or 1.3 times 11.2% 155.6
136.4
as much as the domestic steel sector’s total 128.4
4.6%
consumption. However, Indian iron ore production
has been unstable in recent years because of
environmental and legal concerns.
-15.3%
In 2011, the Supreme Court suspended iron-ore
-19.0% -19.0%
mining activities in the States of Karnataka and
Goa after illegal mining activities had caused FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
pollution. As a result, between FY2011 and FY2014,
Iron Ore Production, mn tonnes y/y Change
iron ore production volume shrank cumulatively
by a quarter. In 2013 and 2014, the Supreme Court
lifted the ban on 63 mines in the State of
Karnataka and allowed production of 20mn Foreign Trade Regulations
tonnes per year of iron ore in the State of Goa, In 2012, India imposed a 30% export duty on iron
but many mines remained closed after failing to ore in order to ensure cheap iron ore for the
meet government environmental standards. After domestic steel industry.
the lifting of the production ban, Indian miners
In FY2018, the Ministry of Mines raised the
ramped up production volumes by 30% in 2016,
question of whether to reduce or even scrap this
while production rose further in 2017 – increasing
export duty. Mining industry players had been
by 12% y/y to 134.2mn tonnes in January-August
lobbying for months for a duty cut.
2017. The National Steel Policy 2017 forecasts that
India’s total iron ore requirement in FY2031 will However, the Steel Ministry and steel companies
be 437mn tonnes, or 3.6 times higher than that in were and remain opposed to this export duty
FY2016. To meet this demand, India intends to reduction, since they wanted to be supplied with
step up the development of its domestic iron ore cheap domestic ore and were concerned that
resources. lower export duty could lead to a domestic
shortage of iron ore.
Source: Ministry of Mines

Raw Materials: Coking Coal
Comments
Coking coal – also known as “metallurgical-grade coal” – is a major input for steel production. The
domestic supply of coking coal is of poor quality due to the high ash content of Indian coal, which
leads to higher coal usage and, ultimately, to higher production costs. India imports around 85% of
the total annual coking coal requirement of its steel industry.
India’s National Steel Policy (NSP) 2017, approved by the cabinet in May 2017, identified overseas asset
acquisitions as a means of increasing the supply of coking coal available in the country. In addition,
the policy made the Ministry of Steel responsible for establishing an adequate number of modern
coking coal washeries and for helping to facilitate periodic auctions of coking coal mining blocks.
These steps are expected to encourage the Indian steel industry to develop its own dedicated coking
coal mines.
NSP 2017 targets a reduction of the degree of dependence on imported coking coal from 85% in FY2017
to 65% by FY2031. According to Ministry of Steel forecasts, the steel industry’s annual consumption of
coking coal will have reached 161mn tonnes by FY2031, or 2.6 times higher than the current levels of
production.
Coking Coal Production
57.5 60.9 61.7

56.8
51.7 51.8 9.6%

49.6
5.7% 6.0%
4.2%
1.1% 1.3%
0.3%
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017
Coking Coal Production, mn tonnes y/y Change
Source: CEIC, CSO

Global Positioning
Production of Crude Steel, 2018 Production of Finished Steel, 2017, mn

tonnes
US 4.8%
Japan 5.8% China 736.8
South Korea 4.0%
India 5.9% Russia 4.0% US 97.7
India 88.7
Japan 64.4
Others
South Korea 56.4
24.3%
Germany 41.0
Russia 40.6
Turkey 36.1
Mexico 26.4
China 51.3%
Italy 24.6
Comments
In 2018, India became the world’s second-largest crude steel producer, with 106.5mn tonnes or 5.9% of
global output according to WSA estimates – which put it just in front of Japan. According to WSA’s
Short Range Outlook, it is likely that India will also become the second-largest steel consumer by the
end of 2019. The largest player, China, produced a little more than half of the global crude steel output
in 2018. The largest six crude steel producing countries accounted between them for 75% of global
output. According to the latest available WSA data on finished steel – which are for CY2017 – India was
its third-largest producer in the world in that year, after China and the US. Japan ranked fourth,
followed by South Korea and Germany. In 2017, according to the WSA, India ranked third in the world
in production of “pig iron” – a category equivalent to “hot metal” in Indian national statistics. Its
output of 66.8mn tonnes in that year gave it a share of 5.6% in world production, putting it behind
Japan (78.3mn tonnes) and, more distantly, China (710.8mn tonnes). Further, also according to the WSA,
India was the world’s biggest sponge iron (DRI) producer in 2017, its output of 25.9mn tonnes putting it
5.4mn tonnes ahead of its nearest rival (Iran) – and giving it 30% of the world total. (For reasons that
are not clear, the WSA figure for sponge iron production is somewhat lower than the Indian one.)
Finally, the country accounted for about 8% of global iron ore production in 2017.
Source: WSA

Exports
Comments Iron and Steel Exports

The rebalancing of global iron and steel markets 15.9
has had a favourable impact on Indian exports. 14.0 725.0
11.6 11.1
582.1 8.9
Between FY2016 and FY2018, volume exports of 560.4 530.8
7.6 502.7
iron and steel more than doubled, reaching 358.3
15.9mn tonnes. Exports’ value surged by 102% to
INR 725bn over the same period. The US was the
main export destination, with an 18% share, FY2014 FY2015 FY2016 FY2017 FY2018 Apr-Dec
followed by Italy with 11% and UAE with 10% of FY2019
the total. In March 2018, the US imposed a 25% Volume, mn tonnes Value, INR bn
duty on imported steel but is considering whether
to exempt India from the rule. Indian steel is Finished Steel Exports
competitive on the global markets because of the
availability of relatively cheap iron ore. Local 8.2 9.6
players own large manufacturing plants that 102%
5.4 6.0 5.6
4.6
bring economies of scale and many of them 4.1 4.1
26% 17% 17%
operate captive mines and power plants that 11%
-6%
further reduce their costs. Indian iron ore, in turn, -27% -39%
is to a large extent constrained by a 30% export FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Apr-Nov
duty, which is one of the key tools of government FY2019
support for the local steel industry. Despite the Finished Steel Exports, mn tonnes y/y Change
lobbying of iron ore miners in favour of removing
Iron and Steel and Articles Exports Value
export tariffs, no such moves had been
by Country, FY2018
undertaken by January 2019. In FY2018, finished
steel exports rose by 17% y/y to 9.6mn tonnes. Indonesia 5%
Others 43%
This was on top of a 102% surge in finished steel
Vietnam 5%
exports’ volume in FY2017. The foreign trade
surplus in finished steel came in at 2.1mn tonnes, Belgium 8%
more than twice the FY2017 figure. However, due
to global economic slowdown in H2 2018, India UAE 10%
became a net importer of finished steel, after
export slumped by close to 40% y/y between April Italy 11% USA 18%
and November FY2019.
Source: DGCIS, JPC, CEIC

Exports (cont’d)
Comments Indian vs Chinese Steel Exports Volume,

Quarterly Data, Q12014-Q12018
Chinese steel is crucial for global supply, as 300%
Chinese exports of finished and semi-finished
250%
steel account for a fifth of the world’s total. As a
result, Indian steel companies face strong Indian Exports, y/y Change 200%
competition from their Chinese peers and the 150%
dynamics of Indian steel exports are to a large
100%
extent inversely related to those of Chinese steel
exports. An EMIS Insights analysis shows that 50%
there is a negative correlation between changes 0%
in the steel export volumes of the two countries –
-50%
the correlation coefficient being -0.6 in the period
between Q1 2014 and Q1 2017. This means that -100%
-40% -20% 0% 20% 40% 60% 80% 100%
Indian exports are very likely to increase when
Chinese Exports y/y Change
Chinese steel exports decrease and vice versa.
Chinese vs Indian Monthly Steel Exports, thou tonnes

35,000 3,500
30,000 3,000
25,000 2,500
20,000 2,000
15,000 1,500
10,000 1,000
5,000 500
0 0
China Steel Exports India Steel Exports
Source: EMIS Insights, JPC, China Iron and Steel Association

Imports
Comments Iron and Steel Imports

Protecting the local steel industry from cheaper 20.9
755.2 735.6
foreign steel is one of the core features of the 16.9 13.9 672.4 664.0
Indian government’s steel policy. 549.1 552.8 14.2
11.8 11.8
As of end-April 2019, India applies steel import

duties ranging between 5% and 12.5%. In addition,
in FY2017, the government imposed a minimum FY2014 FY2015 FY2016 FY2017 FY2018 Apr-Dec
import price (MIP) and anti-dumping duties on FY2019
steel imports, which resulted in a 34% y/y drop in Volume, mn tonnes Value, INR bn
iron and steel imports. India has imposed anti-
dumping duties on the imports of various steel
Imports of Finished Steel
products coming from China and other countries
such as South Korea, Japan, and Ukraine. 71.0% 11.7
9.3
China is the largest iron and steel importing 25.7% 7.2 7.5
5.5 5.2
country, with a share of 24% of the total in 3.5%
-5.4%
FY2018. South Korea and Japan – with which India -31.2% -38.3%
has a Free Trade Agreement in place – contributed
20% and 12%, respectively, of total iron and steel FY2014 FY2015 FY2016 FY2017 FY2018 Apr-Nov
FY2019
imports. In the first eight months of FY2019 (April-
November CY2018), India once again became a net Finished Steel Imports, mn tonnes y/y Change
finished steel importing country, as exports
Iron and Steel and Articles Imports,
slumped thanks to global economic slowdown – FY2018
producing a trade gap of 1.2mn tonnes for these
USA 6% Germany 4%
eight months.
Japan 12%
Because of this, the Indian government is
considering a hike in import duties on steel to Others 34%
15%, up from the current rates, which range from
5% to 12.5%. India imports iron ore mainly from
South Korea 20%
South Africa (44% of imports), Brazil (31%), and
Bahrain (4%).
China 24%
Source: MCI, JPC, CEIC

Investments
FDI Inflow, Metallurgical Industries, INR Gross Bank Credit, Iron and Steel, INR tn
bn
96.5
37.5 38.6
83.5 35.3
78.8 32.2
30.2
25.7
23.9
50.5 21.5
17.3
34.4
29.8
29.0 24.1
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Comments
India allows 100% FDI through the automatic route in the steel sector. Moreover, in order to encourage
investments in additional manufacturing capacity, the government has reduced, from 7.5% to 2.5%,
the basic customs duty on the plant and equipment required for either greenfield construction or
expansion of iron ore pellet plants and iron ore beneficiation plants. In addition, the central
government has stated that all government tenders will give preference to domestically
manufactured iron and steel products. Still, numerous aspects of steel projects – such as land
acquisition and raw material supply licences – remain subject to a strict and slow regulation regime.
However, since 2016, India has allowed buyer companies to take possession of the captive mines of
their acquisition targets without additional red tape, as part of a deal. The steel sector’s market
structure is characterised by well-established players, and greenfield investments by newcomers are
relatively unlikely. Foreign investments in the sector are likely to come in the form of brownfield
investments, through acquisitions and cooperation with existing players. For example, Japan-based
companies Nippon Steel and Sumitomo Metal Corporation acquired a 51% share in Sanyo Steel in 2018.
Source: Reserve Bank of India, DIPP, IBEF

Prices
Average Wholesale Prices of Semi-Finished Steel, y/y Change
25%
20%
15%
10%
5%
0%
2013 2014 2015 2016 2017 2018
-5%
-10%
-15%
-20%
Semi Finished Stainless Steel Semi Finished Steel Mild Steel
Average Wholesale Prices of Finished Steel Products, y/y Change
25%
20%
15%
10%
5%
0%
2013 2014 2015 2016 2017 2018
-5%
-10%
-15%
Long Products Flat Products
Source: MCI, CEIC

04
COMPETITIVE
LANDSCAPE

04 COMPETITIVE LANDSCAPE CONTENTS
Timeline 1907 Development Milestones
India Steel
India starts first production of steel with the
establishment of the Iron and Steel Company, now
Tata Steel.
1911
Pig iron is first made in India.
1912
Development Milestones
Inia rolls its first ingot of steel. 1954 Market Players
Development Milestones Hindustan Steel Pvt Ltd, the

predecessor of Steel Authority
of India, is established.
1957 Development Milestones
The Indian government enacts the Mines and

Minerals (Regulation and Development) Act,
regulating the mining sector in India. 1964 Development Milestones
The government establishes the Joint Plant

Committee, in charge of formulating guidelines
for production, allocation, pricing and
distribution of iron and steel materials.
1972 Market Players
The Steel Authority of India is set up to

consolidate five integrated steel plants – at Bhilai,
Bokaro, Durgapur, Rourkela and Burnpur – and two
special steel plants (the Alloy Steel Plant in West
Bengal and the Salem Steel Plant in Tamil Nadu).
1982 Market Players
JSW Steel sets up its first steel

plant near Mumbai.
2005
Price regulation of iron and steel is abolished.
Development Milestones
India enacts the National Steel Policy 2005,

outlining long-term goals for the Indian steel
2006 Market Players

sector.
India’s Mittal Steel Company acquires steel

and mining company Arcelor and becomes the
world's biggest steel maker.
2007 Market Players
Indian steel maker Tata Steel buys European

steel maker Corus Group.
2018
India adopts the new National Steel Policy
2017 to boost further sector development. Development Milestones
India becomes the world’s second-

largest crude steel producer.
Source: Company Data, Ministry of Steel, Reuters, WSA

Highlights
Overview
India liberalised its steel sector in 1992 and at present the private sector has a dominant position, as
about 80% of crude steel output in FY2018 came from private companies. The steel sector is going
through a phase of consolidation and companies operating in the sector are expected to undertake
brownfield investments for expansion. The Indian iron ore segment is highly fragmented, with more
than 40 companies performing mining activities. The government’s presence in the sector is
significant, at about 35%, as it controls the country’s two largest iron ore mining companies, in terms
of production volumes. Unlike that of iron ore, the production of crude steel in India is dominated by
the private sector, which controlled 80% of it in FY2018. The six largest companies in the finished steel
segment accounted for 54% of total production in FY2018.
Market Players
The largest player in the iron ore segment in FY2018 was the state-owned National Mineral
Development Corporation Ltd (NMDC), which accounted for 16.2% of total iron ore production. In the
same year, privately-owned JSW Steel was responsible for 16.4% of India’s crude steel production and
was the top player in the segment. JSW Steel produced 22.5mn tonnes of finished steel products in
FY2018, which made the company the largest producer in the segment, with an 18.3% share. The
company claims to be the largest domestic producer of spring steel flats, alloy steel rounds, and bars
and alloy steel wire rods.
Market Entries
The best way to enter the Indian steel sector is through M&A deals and partnerships, since existing
companies in the industry enjoy a stable market presence. Foreign steel players are attracted by
India’s growth potential and several companies are planning to enter the market. The UK-based
Liberty House Group is aiming to acquire Bhushan Power and Steel and is already in the process of
acquiring Adhunik Metaliks, another Indian company. Russian financial group VTB Bank had expressed
interest in acquiring India’s fourth-largest steel producer, Essar Steel. However, the latter was
actually acquired by global steel company ArcelorMittal in October 2018. Japan’s Nippon Steel and
Sumitomo Metal Corporation acquired 51% in Sanyo Steel in December 2018, while ArcelorMittal
formed a joint venture with Indian state-owned steel company SAIL in January 2019.
Source: EMIS Insights, JPC, CEIC

Iron Ore Market Structure
Comments Major Iron Ore Producers, FY2018

The Indian iron ore segment is highly
fragmented, with more than 40 companies
performing mining activities. The government’s Rungta
Mines; 4.6% Others;
presence in the sector is significant, as it 49.5%
controls the country’s two biggest-volume iron Odisha
Mining Corp;
ore mining companies. In FY2017, the public 4.8%
sector claimed a 35.5% share in total iron ore
production. India’s largest iron ore miner, Tata Steel
Ltd; 11.0%
NMDC, had a share of 16% in overall iron ore
production in FY2018. It was followed by Steel
Steel
Authority of India Ltd (SAIL) with a 14% share. Authority of
India Ltd; NMDC;
The largest private player in the iron ore mining 16.2%
13.9%
segment was Tata Steel, which had an 11%
share in total production. The three biggest
companies thus controlled 43% of total iron ore
production, while the top five accounted for
55% of output in FY2018. Captive mines
contributed 30% of aggregate iron ore
production, while the remaining 70% was the
product of pure play miners.
Iron Ore Production by Sector, FY2017 Iron Ore Output by Producer Type,
FY2017
Public
Sector; Captive
35.5% Producers;
29.9%
Non-Captive
Private Producers;
Sector; 70.1%
64.5%
Source: IBM, MoM, Company Data

Crude Steel Market Players
Comments Crude Steel Production, FY2018, mn

tonnes
Jindal Steel
In FY2018, JSW Steel was India’s largest producer and Power
Rashtriya
of crude steel, contributing 16% of overall output Ispat Nigam
4.0
in tonnage terms, followed by Steel Authority of 4.8

Other
India (SAIL) with a 15% share, and Tata Steel with Producers 43.2
ESSAR Steel
12%. The three companies thus had a combined 6.4
share of 43% of total production in FY2018; the

top six companies were responsible for 58%. The
fourth-largest company, ESSAR Steel, was Tata Steel
12.5
acquired by ArcelorMittal in October 2018, after
the Indian central bank pushed the creditors of
ESSAR to initiate bankruptcy proceedings against
the company.
Steel JSW Steel
Authority of 16.8
India 15.0
Crude Steel Production by Sector, %
21% 21% 19% 20% 19% 20%
79% 79% 81% 80% 81% 80%
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Private Sector Public Sector
Source: JPC, CEIC

Pig Iron Market Players
Pig Iron Production by Top Companies, FY 2018, % of total tonnage
Others 91.6%
Steel Authority of India Ltd

3.3%
Jindal Steel & Power Ltd
2.1%
Rashtriya Ispat Nigam Ltd
1.2% JSW Steel 1.8%
India’s pig iron segment is extremely fragmented and fiercely competitive. In FY2018, there were more
than 300 pig iron producers in the country. The top four producers – all of them big integrated steel
producers – accounted for just 8.4% of the total output of pig iron in FY2018, indicating that pig iron
production is essentially a sideline for them. The private sector dominates production with more than
90% of total output. Competition, though strong, is presumably somewhat diluted by transport costs
and the fact that many smaller players will be producing largely or entirely for particular localities.
The largest player in FY2018 was SAIL, with production of 265,000 tonnes of pig iron, or 3% of the total.
Jindal Steel Power Ltd produced 171,000 tonnes and JSW Steel 147,000 tonnes, equivalent to shares of
around 2% each.
Source: JPC, CEIC

Finished Steel Market Players
Finished Steel by Top Companies, FY2018, mn tonnes
Jindal Steel Power 2.9
Others 56.9
Rashtriya Ispat Nigam 3.9
ESSAR 10.2
Steel Authority of India 13.1
Tata Steel 13.3

JSW Steel 22.5
The six largest companies in the finished steel segment accounted for 54% of total production in
FY2018, Joint Plant Committee (JPC) data showed. Jindal South West Steel (JSW Steel) continued to be
the largest player, with 22.5mn tonnes of finished steel output, representing 18.3% of India’s total for
the fiscal year. The company claims to be the largest domestic producer of spring steel flats, alloy
steel rounds, and bars and alloy steel wire rods. JSW Steel’s Salem plant has emerged as a global
steel hub for vehicle and auto component manufacturers and, according to the company, it is India’s
leader in production of the special-grade steel used in gears, crank shafts, and bearings. Tata Steel
was the second-largest finished steel producer, with an output equivalent to 10.9% of the country’s
total in FY2018. A Tata subsidiary – The Tinplate Company of India Ltd – claims to be the largest
indigenous producer of tin-coated and tin-free steel used for metal packaging. State-run SAIL ranked
third in terms of finished steel production and had a 10.7% share in FY2018.
Source: JPC, CEIC

M&A Deals
M&A Deals, India Steel Sector, 2015-2018
Date Target Company Deal Type Buyer Country of Buyer Deal Value, USD mn Stake, %
Steel business of
Sep-18 Acquisition Tata Steel Ltd India 650 (EMIS est.) 100
Usha Martin Ltd
Jajpur-based ferro
Feb-15 alloys plant of Rohit Acquisition Balasore Alloys Ltd India 164.5 100
Ferro-Tech
Tidfore Heavy
Uttam Galva Metallics
Aug-16 Minority stake Equipment Group Co China 150.0 na
Ltd
Ltd
Mountainpeak
Investment Holdings
Singapore; United
Aug-18 Gerdau Steel India Ltd Acquisition Ltd; Blue Coral 120.0 100
States
Investment Holdings
Pte Ltd
Williamson Magor &
Co Ltd; Sahal
McNally Bharat Business Pvt Ltd;
Feb-17 Engineering Company Acquisition Resonance India; Mauritius 81.9 53.73
Ltd Opportunities Fund;
Silver Stallion Ltd; ITF
Mauritius
Seamless stainless
Feb-15 steel tube business of Acquisition Tubacex SA Spain 40.7 67.53
Prakash Steelage
Pig iron plant of VSL Kirloskar Ferrous
Jul-16 Acquisition India 23.1 100
Steels Industries Ltd.
Mahindra Sanyo
Sanyo Special Steel
Feb-18 Special Steel Private Minority stake Japan 22.7 (EMIS est.) 22
Co Ltd
Limited
Williamson Magor &
Co Ltd; Rekha
McNally Bharat Jhunjhunwala - private
Feb-15 Engineering Company Minority stake investor; Rakesh India 20.1 28.67
Ltd Jhunjhunwala - private
investor; MKN
Investments Ltd
McNally Bharat
Jul-15 Engineering Company Minority stake EMC Ltd India 15.7 17.1
Ltd
Open market MGN Agro Properties
Dec-16 Welspun Corp Ltd India 6.6 2.21
purchase Pvt Ltd
Aug-15 VISA Steel Ltd Minority stake Baosteel Group Corp China 1.4 (EMIS est.) 5
Uttam Galva Steels Open market

Jan-18 Buyer(s) unknown na 1.2 2.38
Ltd. purchase
Source: EMIS DealWatch

M&A Activity
Number and Value of Deals Number of Deals by Deal Value (USD)

50.1-100mn
7.7%
3
100.1-500mn
2 2 2 2 23.1%
1 1
770
0 0 0 0 0 0 0 0 0
225
173
17
82
24
7
0-50mn 500.1-1000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 61.5% 7.7%
2015 2016 2017 2018
Value of Deals, USD mn Number of Deals
Number of Deals by Deal Type, % Number of Deals by Region

of Investors, %
Minority
Stake
China 15.4% Spain 7.7%
Purchase
38.5%
Japan 7.7%
Singapore
7.7%
Open Market
Purchase
15.4% Undisclosed
7.7%
India 53.8%
Acquisition
46.2%
Source: EMIS DealWatch

05
COMPANIES
IN FOCUS

05 COMPANIES IN FOCUS CONTENTS
Steel Authority of India Limited
Highlights Consolidated Income Statement, INR bn

Steel Authority of India Ltd (SAIL) is India’s
8.8%
largest steel-making company. The government
owns 75% of the company’s equity capital.
SAIL produces iron and steel at five integrated

plants and three special steel plants, located in
590.0
1.3%
498.3
the eastern and central regions of the country.
439.3
The company has nine iron ore mine complexes in
51.8
the states of Chhattisgarh, Odisha, and
-22.0
6.7
Jharkhand. SAIL also has seven flux mine
-5.0%
-2.8
complexes located in the States of Chhattisgarh,
-41.8
-27.6
Madhya Pradesh, Jharkhand and Karnataka, as FY2016 FY2017 FY2018
well as six coal mining complexes.

Revenue from Operations EBITDA
In FY2018, SAIL achieved its highest-ever Net Profit EBITDA Margin
production of hot metal – 15.9mn tonnes – as well
as crude and saleable steel outputs of 15mn
tonnes and 14.1mn tonnes, respectively. SAIL’s Consolidated Balance Sheet, INR bn
captive mines produced 26.8mn tonnes of iron ore
64.03
and covered all its iron resource requirements.
During FY2018, the company increased its
shipments of rails to Indian Railways by close to
40% y/y. In February 2018, the company’s new
Bhilai Steel Plant started production. The plant
1,154.4
1,076.2
has a capacity of 2.8mn tonnes.

1,013.0
401.5
7.15
In FY2018, SAIL’s total operating revenues came in

429.0
at INR 590bn, which was an increase of 18% y/y.

370.4
370.4
367.2
369.5
-16.69
The company’s EBITDA improved to INR 51.8bn (an
8.8% EBITDA margin), up from INR 6.7bn (1.3% FY2016 FY2017 FY2018
EBITDA margin) in FY2017. Total Assets Shareholders' Equity
Net Debt Net Debt/EBITDA
Source: Company Data

Steel Authority of India Limited

(cont’d)
Production, thou tonnes

15,721
15,726
15,938
15,413
15,021
14,496
14,447
14,279
14,074
13,908
13,867
13,579
12,880
12,842
12,381
642
495
270
223
FY2014 FY2015 FY2016 FY2017 FY2018
Hot Metal Crude Steel Saleable Steel Pig Iron
Domestic Sales, INR bn Export Sales, INR bn
559.7 23.2
503.4 490.3
473.8
427.3 18.0
15.9
15.3
5.7
FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018

JSW Steel Ltd

JSW Steel Ltd is part of JSW Group and is India’s
leading integrated steel company, claiming to be
20.7%
the country’s largest steel exporter. As of FY2018, 20.1%
JSW had seven manufacturing units, 46 subsidiary
companies and 8 jointly-controlled entities.
13.9%
According to World Steel Dynamics, in 2017 JSW
715.0
ranked sixth among the top 36 world steelmakers.
605.3
460.0
JSW’s total steelmaking capacity amounts to
147.9
121.7
18mn tonnes/year but the company plans an
64.1
61.1
35.2
34.7
expansion to 24.7mn tonnes/year up to FY2020
since the company presently works on 91%
utilisation capacity and sees further potential for FY2016 FY2017 FY2018
increased steel demand. The overall planned Net Revenues EBITDA

Net Profit EBITDA Margin
capital expenditures up to FY2021 amount to INR
444bn. As of FY2018, JSW Steel has a downstream
capacity of 3.6mn tonnes/year, producing cold Consolidated Balance Sheet, INR bn
rolled, galvanised and galvanneal products.
The company has acquired five iron ore mines in 6.39

the State of Karnataka, one of which became
operational in February 2018, while the remaining
four will be operational by the end of FY2019.
Collectively, they will provide 4.7mn tonnes/year 3.41
920.0
880.4
824.7
of iron ore, or about 20% of company’s iron ore 2.57

requirements at its Vijayanagar steel plant.
415.0
409.3
380.1
275.3
In FY2018, the company recorded its highest-ever

224.0
187.7
crude steel production of 16.3mn tonnes, up by

3% y/y. The domestic market accounts for 82% of FY2016 FY2017 FY2018
the company’s steel sales. Total Assets Shareholders' Equity
Source: Company Data, World Steel Dynamics

JSW Steel (cont’d)
Production, mn tonnes Sales by Product, mn tonnes
16.3
15.8 15.6
14.8 15.6
14.8
12.211.9 12.6 12.612.1
12.0
12.1 11.0 11.2
9.2
3.6
2.7 3.1
0.7 0.9
0.2
Crude Steel Saleable Steel Rolled Products, Flat Rolled Products, Long
Semis Total
Turnover Revenues by Source, FY2018 Manufacturing Facilities, FY2018

Capacities, mn
Locations Products
tonnes/year
Slabs, Billets, HR coils and
sheets, Cold Rolled Close
12.0 Annealed (CRCA) coils and
Vijayanagar,
(planned expansion up to sheets, Galvanised products,
Karnataka
13) Non-grain Oriented Electrical
Steel, Wire Rods, Bar Rods and
Angles
5.0
Dolvi, Hot Rolled coils (HRC) and Bar
(planned expansion up to
Maharashtra Rods
13)
Export 18%
Salem, Tamil
Domestic 1.0 Special steel long products
Nadu
82%
Salav, Direct Reduced Iron (DRI) and
0.9
Maharashtra** Hot Briquetted Iron (HBI)
Vasind, Galvanised, Galvalume and
0.4
Maharashtra* Colour Coated products
Tarapur, Galvanised, Galvalume and
0.8
Kalmeshwar, Galvanised, Galvalume and
0.6

Tata Steel

Tata Steel Ltd was established in 1907 and is part
16.6%
of the 150-year-old Tata Group. According to WSA,
the company is the 10th largest steel 14.5%
manufacturer in the world, in terms of production
capacity. 10.6%
1,330.2
1,174.2
1,063.4
Tata Steel has a vertically-integrated structure

encompassing all stages of the production and
220.5
177.6
170.3
113.0
sale process, from ore-mining (iron, chrome and

manganese), through to production and sale of
ferro-alloys and minerals. The company reported
-24.0
244 subsidiaries, including 30 JVs, and 64

-41.7
associate companies as of FY2018. The company FY2016 FY2017 FY2018
is listed on India’s BSE and NSE stock exchanges. Net Revenues EBITDA
Net Profit EBITDA Margin
With operations in 26 countries – and a
commercial presence in 50 – the Tata Steel Group
has a steel production capacity of 27.5mn Consolidated Balance Sheet, INR bn
tonnes/year.
6.6
In India, Tata Steel has two major manufacturing
units. The one in Jamshedpur (Jharkhand State)
has a production capacity of 10mn tonnes/year 4.6
(7mn tonnes flat and 3mn tonnes long products).
3.7
The other, in Kalinganagar (Odisha State), has an
2,098.0
annual capacity of 3mn tonnes (all flat products).

1,775.1
1,733.3
Stable operations at both plants allowed a record

crude steel output of 12.48 tonnes in FY2018, a y/y
809.0
775.2
744.9
618.1
rise of 6.8%. In the same year, the Kalinganagar

445.1
394.2
unit received approvals for an expansion to 8mn

tonnes/year. In September 2017, Tata Steel and FY2016 FY2017 FY2018
Thyssenkrupp AG agreed to create a steel Total Assets Shareholders' Equity
enterprise by combining the flat product Net Debt Net Debt/EBITDA
businesses of the two companies in Europe with
the steel mill services of ThyssenKrupp.

Tata Steel (cont’d)
Production Statistics, mn tonnes Production Statistics, mn tonnes

23.0
12.2
21.3
11.4
9.7
17.4
9.1
8.9
16.4
15.0
7.9
13.9
13.7
7.1
13.1
12.5
6.3
11.7
10.7
10.2
10.0
4.7
9.9
9.3
4.3
4.3
9.2
8.9
8.1
3.3
7.3
7.0
6.3
6.2
6.2
6.0
1.9
1.9
1.9
1.8
1.8
1.8
1.8
1.7
1.7
1.6
1.6
1.5
1.5
1.5
1.4
1.4
1.3
1.2
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Total Saleable Steel Hot Rolled Coils/Strips
Iron Ore Pig Iron Crude Steel Coal Rolled/Forged Bars and Structurals Cold Rolled Coils
Semi-Finished for Sale
Sales Breakdown (in volume), FY2018 Steel Manufacturing and Finishing Mills in
India, FY2018
Capacity,
Location Nature of Operation
Domestic mn tonnes/year
90%
Flat Product
7
Manufacturing
Jamshedpur
Long Product
3
Manufacturing
Exports 10%
Flat Product
Kalinganagar 3 (+5 Planned)
Manufacturing

Jindal Steel & Power

Jindal Steel & Power Ltd (JSPL), set up in 1991, is a
major Indian steel, electricity generation, mining, 23.2%
oil, gas and infrastructure company.
JSPL is part of industrial conglomerate Jindal

Group. JSPL group companies include Jindal
278.4
20.7%
Power Ltd., Jindal Petroleum Ltd., Jindal Cement
227.0
186.3
Ltd. and Jindal Infosolutions Ltd. 19.5%
JSPL operates integrated steel plants in Raigarh
64.7
47.0
36.3
in the State of Chhattisgarh, Angul in Odisha and

Patratu in Jharkhand. At end-FY2018, its total
-16.2
-19.0
steel capacity in India was 8.6mn tonnes/year, -25.4

FY2016 FY2017 FY2018
while its iron ore capacity stood at 3.11mn
Total Revenues EBITDA
tonnes/year. JSPL also operates a 9mn Net Profit EBITDA Margin
tonnes/year pellet plant. Jindal claims to operate
the world’s largest coal‐based sponge iron plant.
Consolidated Balance Sheet, INR bn
The company’s portfolio of steel products
includes plates, coils, wire rods, TMT rebars and
billets, and rails, amongst others. JSPL coal and 12.01
iron ore requirements are met through captive
mines and long-term alliances with miners.
8.45
In FY2018, JSPL produced 5.7mn tonnes of steel,
924.0
906.0
892.3
which was an increase of 18.5% y/y, and 6.02

generated consolidated revenues of INR 278.4bn,
up 23% y/y. Of this revenue total, 88% was
436.3
397.1
389.4
generated on the domestic market.

313.1
292.8
290.5
FY2016 FY2017 FY2018

Total Assets Shareholders' Equity

Jindal Steel & Power (cont’d)
Steel Production and Sales, mn tonnes
5.69
5.44
4.82
4.80
4.62
4.60
4.49
4.43
FY2015 FY2016 FY2017 FY2018
Steel Production Steel Sales
Production Capacity, FY2018 Sales Breakdown, INR bn

251.0
Category Annual Capacity, mn tonnes

203.9
198.3
196.3
182.8
Steel 8.6
Iron Ore 3.11

34.7
33.3
29.2
17.5
10.7
FY2014 FY2015 FY2016 FY2017 FY2018

Pellet Plant 9
Domestic Sales Export Sales

Essar Steel India
Highlights Income Statement, INR bn

Essar Steel India Ltd is a fully-integrated flat
carbon steel manufacturer – producing everything 31.3%
from iron ore to ready-to-market steel products –
with a capacity of 10mn tonnes per annum.
274.2
233.3
161.8
Essar Steel’s manufacturing facilities include ore 50.6
29.9
29.4
beneficiation, pellet-making, iron-making, and
steel-making capacities, as well as downstream 12.8%
facilities including a cold rolling mill, a 10.7%
-44.0
galvanising facility, a steel processing facility, an
-56.4
extra-wide plate mill, and a pipe mill.
-142.4
The company’s sales volume rose by 9% y/y to FY2016 FY2017 FY2018
5.8mn tonnes. In FY2018, Essar reported total
Net Revenues EBITDA
consolidated revenues of INR 274.2bn, an increase Net Profit EBITDA Margin
of 18% over FY2017. Of the total, 69% was
generated on the domestic market. Europe
accounts for 59% of export sales. Balance Sheet, INR bn
In June 2017, India’s central bank – the Reserve

10.9
Bank of India (RBI) – asked lenders to initiate
bankruptcy proceedings against Essar Steel. The
move came after a legal change, known as the
631.0
618.3
543.6
Bankruptcy Act, gave RBI greater power to 6.8

346.5
324.6
address the issue of non-performing loans. In 5.5

17.9
160.3
October 2018, ArcelorMittal won a bid to acquire

Essar Steel for over INR 420bn. Essar Steel had
-182.2
-39.7
net debts of INR 160bn as of FY2018, and a Net

Debt/EBITDA ratio of 5.5x. This was a significant
improvement compared to FY2017, when the FY2016 FY2017 FY2018
respective figures had been INR 325bn and 10.9x. Total Assets Shareholders' Equity

Essar Steel India (cont’d)
Export Sales, FY2018 Sales by Channel, FY2018
Middle East
19%
Export 18%
Asia 12%
Retail 13%
Others 10%
Europe 59% Domestic

69%
Sales Volume, mn tonnes Revenues by Product, FY2018
Hot/Cold
5.8 Rolled Coils,
5.3 Sheets and
Plates 91.7%
3.7
3.3
Pellets 3.5%
Pipes 2.9%
Others 1.8%
FY2015 FY2016 FY2017 FY2018 Hot Briquette

Iron Fines
0.1%

06
REGULATORY
ENVIRONMENT

06 REGULATORY ENVIRONMENT CONTENTS
Main Regulatory Bodies
Ministry of Steel
The main activities of the Ministry of Steel include co-ordination and planning of the growth and
development of the country’s iron and steel industry, in both the public and the private sector. It
formulates policies in respect of production, pricing, distribution, import and export of iron and steel,
ferroalloys and refractories. The ministry also participates in the development of input industries
relating to iron, manganese and chrome ore.
Joint Plant Committee (JPC)

Established in 1964, the JPC is empowered by the Ministry of Steel to collect data on the Indian iron
and steel industry. It formulates guidelines for production, allocation, pricing, and distribution of iron
and steel materials. After the deregulation of the Indian steel industry in 1992, the JPC positioned
itself as a facilitator for the sector, focusing on giving form to a comprehensive databank on the
Indian iron and steel industry.
Ministry of Mines (MoM)

The Ministry of Mines is responsible for surveying and exploring the current and prospective mining
of all minerals, other than natural gas, petroleum, atomic minerals and coal. It is responsible for
enforcing the Mines and Minerals Act and its provisions with regard to Indian mines and minerals
other than coal, natural gas, and petroleum.
Indian Bureau of Mines (IBM)

The Indian Bureau of Mines is a government organisation under the Ministry of Mines, in charge of
conserving and developing mineral resources while protecting the environment with regard to mining
and extraction of minerals other than coal, petroleum and natural gas, and atomic and minor
minerals. It inspects mines, conducts geological studies, and scrutinises and approves mining plans
and schemes.
Bureau of Indian Standards (BIS)

BIS is India’s national standards body, which resolves all matters concerning standardisation,
certification, and quality. Its main responsibilities include standardisation, certification marking, and
quality certification and control.
Source: JPC, Ministry of Steel, BIS

National Steel Policy 2017
Comments
The National Steel Policy 2017 (NSP 2017) seeks to encourage the Indian steel industry to achieve its
full potential by expanding steel production with a focus on high-end value-added steel products.
With NSP 2017, the government will work to create a technologically advanced and globally
competitive steel industry that promotes economic growth.
The mission of NSP 2017 is to help India attain self-sufficiency in steel production by providing policy
support and guidance to private manufacturers, enhancing domestic steel demand, enabling cost-
efficient production, and ensuring adequate supplies of iron ore, coking coal, and natural gas. NSP
2017 aims at achieving objectives such as: increasing per capita steel consumption to 160 kg by FY2031
(compared to 61 kg in 2015); ensuring that local production completely covers the country’s demand
for high-grade automotive steel, electrical steel, and special steels and alloys for strategic
applications by FY2031; and increasing the domestic supply of washed coking coal so as to reduce
dependence on imported coking coal from 85% at present to 65% by FY2031.
NSP 2017 Forecast of Iron and Steel NSP 2017 Finished Steel Consumption in
Demand and Production, mn tonnes India by Sector, mn tonnes
Current Projections Current Demand Projected Demand

Parameters Sector
(FY2017) (FY 2031) (FY2016) (FY2031)
Total Crude Steel Construction &

128 300 50.5 138
Capacity Infrastructure
Total Crude Steel Engineering &

98 255 18 50
Demand/Production Fabrication
Total Finished Steel

101 230 Automotive 8.2 28
Demand/Production
Sponge Iron
24 80 Other Transport 2.4 8
Demand/Production
Pig Iron Demand/

9 17 Packaging & Others 2.4 6
Production
Per Capita Finished

61 158 Total 81.5 230
Steel Consumption, kg
Source: Ministry of Steel

Government Policy
Major Policies and Regulations

In FY1992, in order to improve the supply of steel available to the Indian economy, the government
adopted various policy initiatives such as removing the steel sector from the list of industries
reserved for the public sector and opening it to private sector investment. India has also permitted
FDI in the sector and foreign technology imports are exempt from compulsory licensing. In addition, in
2017, India approved a policy of granting preference to domestically manufactured iron and steel
products with a minimum value addition of 15%. In 2016, the Bureau of Indian Standards (BIS) adopted
mandatory norms for steel production. Steel imports were restricted to foreign firms that had
acquired the BIS licence to export to India. The goods and services tax (GST) applicable to steel is 18%.
Price Regulation and Foreign Trade Duties

Price regulation in iron and steel was abolished in 1992. Over the last two years, the government has
raised import duties on steel products twice, each time by 2.5%, and has imposed additional measures
such as anti-dumping and safeguard duties that are applicable to a host of iron and steel items.
Currently, basic excise duty for steel is set at 14%. In a further move to curb steel imports, the Indian
government has banned the production and sale of steel products that are not approved by BIS. In
February 2016, India imposed minimum import prices (MIP) on steel products, above market prices, in
order to defend local producers from the dumping policies of other countries. The MIP measure was
extended twice and only ceased to be effective in February 2017. India has also imposed a 30% export
duty on iron ore in order to ensure access to India’s relatively cheap iron ore for the domestic steel
industry.
Initiatives in Related Industries

The steel sector is supported by major government-sponsored projects like the development of 100
Smart Cities, smart armed forces stations, the Delhi-Mumbai Industrial Corridor, port and railway
development, and the National Solar Mission, among others. The government approved the Housing
for All 2022 project, which aims to encourage construction of affordable housing units across nine
states and 305 cities. Generally, the construction sector is a pan-India steel demand driver because of
India’s strong infrastructure development and housing demand, especially affordable housing.
Projects like industrial corridors (connecting existing industrial cities and develop manufacturing
sectors) and Sagarmala (connecting states through waterways) would naturally result in higher steel
demand at least in the mid term. India aims to have 275 GW of renewable electricity generating
capacity in place by 2027, with generation and transmission capacities expected to raise steel
demand.
Source: JPC, Ministry of Steel

Anti-Dumping Duties
Comments India’s Trade Remedies in Effect Against

Iron and Steel Imports
In October 2017, India imposed anti-dumping
Partner affected Requirements Phase Measures
duties on some cold-rolled flat stainless steel
Brazil Anti dumping In force 1
products from China, the US, South Korea and the
China Anti dumping In force 4
EU, in order to curb cheaper imports and help
China Anti dumping Initiation 2
local producers. The duties will be in effect until
China Countervailing Initiation 1
the end of 2020. EU Anti dumping In force 2
EU Anti dumping Initiation 1
India has imposed anti-dumping duties on
Indonesia Anti dumping In force 1
imports of wire rod made of alloy or non-alloy
Japan Anti dumping In force 2
steel from China, and on imports of cold-rolled
Korea Anti dumping In force 5
flat products of alloy or non-alloy steel coming
Malaysia Anti dumping In force 1
from China, Korea, Japan and Ukraine.
Russian Federation Anti dumping In force 1
South Africa Anti dumping In force 1
Chinese Taipei Anti dumping In force 1
Thailand Anti dumping In force 1
Ukraine Anti dumping In force 1
USA Anti dumping In force 2
Anti-Dumping Duties
Item Country Duty Amount
Cold-rolled flat products of stainless steel China 57.39% of landed value of imports
Cold-rolled flat products of stainless steel Korea 5.39%-13.44% of landed value of imports
Cold-rolled flat products of stainless steel Chinese Taipei 15.93% of landed value of imports
Cold-rolled flat products of stainless steel South Africa 12.34%-36.91% of landed value of imports
Cold-rolled flat products of stainless steel Thailand 4.58%-5.39% of landed value of imports
Cold-rolled flat products of stainless steel USA 9.47% of landed value of imports
Cold-rolled flat products of stainless steel EU 29.41%-52.56% of landed value of imports
Wire Rod of Alloy or Non-Alloy Steel China Difference between landed value and USD 535-545 per tonne
Cold-Rolled flat products of alloy or non-alloy steel Korea Difference between landed value and USD 576 per tonne
Cold-Rolled flat products of alloy or non-alloy steel Japan Difference between landed value and USD 576 per tonne
Cold-Rolled flat products of alloy or non-alloy steel China Difference between landed value and USD 576 per tonne
Cold-Rolled flat products of alloy or non-alloy steel Ukraine Difference between landed value and USD 576 per tonne
Source: Central Board of Excise and Customs, WTO

07
IRON ORE
AND IRON

07 IRON ORE AND IRON CONTENTS
Highlights
Overview
India is self-sufficient in iron ore, as domestic output exceeds domestic consumption. Almost all
major Indian steel companies have captive iron ore mines, which makes them less reliant on imported
iron resources. India accounts for about 8% of global iron ore production and the country is the
largest producer of sponge iron, with a 33% share of the world’s total. India is also an important
producer of pig iron (or “hot metal”, in Indian terms), ranking third in the world after China and Japan,
according to the WSA. The largest single consumer of pig iron is the steel sector, which has benefitted
from a booming construction sector and from government infrastructural development programmes.
In FY2017, India’s total consumption of iron ore came in at 142.5mn tonnes, of which over 58% is
accounted for by pig iron production, while another 40% goes into the making of sponge iron.
Challenges
Iron ore production has been disrupted by several Indian Supreme Court rulings addressing related
security and environmental concerns. For example, in February 2018, the Supreme Court cancelled all
iron ore extraction permits in the State of Goa and ordered a ban on all mining activities effective in
March of that year. Lobbying from the metal-processing industry in favour of raising export duties on
iron ore could result in lost opportunities for the local miners. There are high export barriers for iron
ore as shipments abroad are at present subject to a 30% tax. Finally, more than 95% of Indian iron
shipments abroad are absorbed by China, and this lack of geographical diversification makes iron
exports vulnerable to demand risks deriving from country-specific factors.
Outlook
According to the Ministry of Steel forecasts included in the country’s National Steel Policy 2017, iron
ore requirements will grow to 447mn tonnes per year in FY2031. The growth in output in iron ore in
India will be supported by higher prices and government support of the domestic steel industry,
according to BMI Research. On the downside, the royalty changes laid down in the Mines and
Minerals Act 2015 are expected to limit growth prospects in the iron ore segment in the long run. On
the export front, prospects seem to be positive for Indian iron ore pellets. High-grade pellets have
been in strong demand in China but mining issues and export restrictions have kept India’s iron ore
out of the high-demand Chinese market in recent years, Hellenic Shipping News commented in May
2019.
Source: WSA, MoM, Ministry of Steel, BMI Research, Hellenic Shipping News

Main Events
 In December 2017, India’s Supreme Court raised the annual cap on iron ore output from mines in
the State of Karnataka. The move allowed miners in this state to extract 35mn tonnes of iron ore a
year – as against 30mn tonnes previously – the Business Standard daily reported.
 In June 2017, The Times of India said that the government of the southwestern state of Goa had
urged India’s Supreme Court to increase the iron ore mining cap for the State from 20mn tonnes
per annum to 37mn tonnes. As it turned out, the Supreme Court soon moved in the opposite
direction: in February 2018, it cancelled all iron ore extraction permits in State of Goa and ordered
mining to cease, effective March, because of environmental and other concerns. New licences
would be issued, Reuters reported at the time. Following this, Vedanta Resources, which operates
mines in the State, said it would lay off some 2,000 employees of its iron ore business, Reuters
reported in June 2018. The state exports low-quality iron ore to countries such as China. Court
action against illegal mining had shut down the industry in Goa for more than two years from 2012.
Goa had exported about 50mn tonnes of iron ore a year before the ban was imposed.
 The Federation of Indian Mineral Industries said in May 2018 that it will file a petition to the
government to seek abolition of the 30% export tax on fines with low iron content (ranging in 58-
62%) and enable miners to liquidate stocks, mining magazine Mining Weekly reported. Currently,
only fines with an iron content of below 58% attract a zero rate of export duty.
 In September 2018, Indian business journal The Hindu Business Line reported that the Federation of
Indian Mineral Industries has urged the government to impose 30% import duty on iron ore and
iron ore pellets to protect domestic miners. It also suggested providing incentives to boost exports,
as a means to reducing the current account deficit.
Source: Business Standard, Mining Weekly, Reuters, LiveMint, The Hindu Business Line, Hindustan Times

Iron Ore Production
Comments Iron Ore Production, Volume

India accounts for about 8% of global iron ore 184.5
201.8
production. However, domestic output has been 187.2 29.6%
142.4
143.0 140.4 138.0
unstable in recent years for environmental and 55.2
9.4%
legal reasons. In 2011, India’s Supreme Court 3.2%
-1.8% -1.7% -1.7%
suspended iron-ore mining activities in the States -11.4%
-23.6%
of Karnataka and Goa after illegal mining caused
pollution. As a result, national iron ore production 2011 2012 2013 2014 2015 2016 2017 Jan-Mar
2018
volume shrank by a quarter between 2011 and
2014. In 2013 and 2014, the Supreme Court lifted Volume, mn tonnes y/y Change
the ban on 63 mines in the State of Karnataka,

and allowed production of 20mn tonnes per year Iron Ore Production, Value
of iron ore in the state of Goa. However, many
346.8 314.6
mines remained closed because of failures to 298.9 308.4 33.5%
246.5 27.7%
236.8
meet government environmental standards. After
the lifting of the production ban, Indian miners 3.2% 4.1%
111.9
ramped up production volumes by 30% in 2016,
-14.9% -13.8%
and by a further 9.4% y/y in 2017, when output -23.2%
amounted to 201.8mn tonnes, the highest figure 2012 2013 2014 2015 2016 2017 Jan-Mar
since 2011. In value terms, iron ore production 2018
went up by 28% y/y to INR 314.6bn in 2017. Value, INR bn y/y Change
The largest iron ore producing region in 2017 was Iron Ore Production by State, 2017,
Odisha, with a 52% share, followed by volume
Chhattisgarh and Karnataka with 16% and 14%, Chhattisgarh Karnataka
respectively. In December 2017, the Supreme 16% 14%
Court hiked the total annual cap on iron ore
output at mines in Karnataka from 30mn tonnes
Jharkhand
to 35mn tonnes. However, in February 2018, the 11%
Supreme Court cancelled all iron ore extraction
permits in Goa and ordered mining to cease from
March, on environmental and other concerns. Odisha 52% Others 7%
The production of iron ore in India consists of

lumps, fines and concentrates.
Source: IBM, BGS, CEIC

Iron Ore Consumption
Iron Ore Consumption, mn tonnes Metal and Steel Production vs Iron Ore
Consumption
142.5 20%
126.8 18%
114.7 16%
108.3
100.6 103.6
14%
90.6 90.6
12%
10%
8%
6%
4%
2%
0%
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY FY FY FY FY FY FY FY FY
2008 2009 2010 2011 2012 2013 2014 2015 2016
Iron Ore Consumption, y/y change, %
Metal and Steel Production Index, y/y change, %
Comments
India is self-sufficient in iron ore, with domestic output exceeding domestic consumption by a margin
of about 40%, according to the latest data of the Indian Bureau of Mines, which is for FY2017.
Infrastructure and construction are among the major demand drivers for the iron and steel industry,
which is the main consumer of hot metal and pig iron in the country. Over the last ten years, iron ore
consumption in India has increased at a CAGR of 6.1%, reaching 142.5mn tonnes in FY2017. This strong
demand has come from rising production of hot metal and sponge iron, whose production has been
ramped up to address the growing iron and steel demand that results from government infrastructure
projects and increased construction activity.
Despite rising demand for iron ore, the industry has a mounting stockpile of unsold carryover low-
grade iron-ore lumps and fines (about 210mn tonnes as of FY2018). Indian steel producers are not
technically equipped to feed their blast furnaces with low-grade fines, while the 30% export tax on
low-grade iron ore means that traditional buyers of such ore, like China, have no incentive to buy
Indian exports.
Source: CSO, MoM, CEIC

Iron Ore Foreign Trade
Comments Iron Ore Exports

India is an iron ore exporting country. In 2017, its 28.9
112.0
iron ore exports exceeded imports by 23.5mn
21.7
tonnes (or INR 82.2bn). A major export destination 10.4 80.5
68.5 66.3 16.6
for Indian iron ore is China which devoured 96% 10.9 53.1
4.4
of the total in FY2017. China is a traditional
14.2
market for lower grade Indian iron ore (with iron
content of up to 62%). Lower grade iron ore 2013 2014 2015 2016 2017 Jan-Nov
2018
cannot be used by Indian steel companies since
they are not technically equipped to feed their Volume, mn tonnes Value, INR bn
blast furnaces with low-grade fines.

Iron Ore Imports
In the first eleven months of CY2018, iron ore
14.3
exports plunged by 38% y/y to 16.6mn tonnes, 15.9 62.0
while imports almost tripled to 14.3mn tonnes. 51.7
This prompted the Federation of Indian Mineral 41.7 10.6 5.4
7.4 5.0
Industries (FIMI) to urge the government, in 29.8
21.5
September 2018, to impose a 30% import duty on
3.1
iron ore and iron ore pellets to protect domestic
2013 2014 2015 2016 2017 Jan-Nov
miners. At present, import duty on iron ore 2018
imports is 2.5%. At the same time, the iron ore
Volume, mn tonnes Value, INR bn
industry has been lobbying for a cut in export
duties, which have been at 30% since 2012, in Iron Ore Volume Exports by Country,
order to clear out stockpiles. The Steel Ministry FY2017, thou tonnes
and steel companies, in turn, are opposing the
export duty reduction, as they want to be China 29,474
supplied with cheap domestic ore, and have
concerns that lower export duties could lead to a
domestic shortage of iron ore.
Japan 468
In FY2016, India imported iron ore mainly from Oman 417
South Africa (44% of imports), Brazil (31%), and Italy 109
Bahrain (4%). Korea 75
Others 185
Source: DGCIS, MoM, CEIC

Iron Ore Prices
Iron Ore Average Indian Sales Price, INR/tonne
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Apr-13
Oct-13
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Aug-13
Dec-13
Aug-14
Dec-14
Aug-15
Dec-15
Aug-16
Dec-16
Aug-17
Dec-17
Aug-18
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
China Export Price, Iron Ore and Concentrate, USD/tonne
1,200
1,000
800
600
400
200
0
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
May-13
Sep-13
May-14
Sep-14
May-15
Sep-15
May-16
Sep-16
May-17
Sep-17
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jan-13
Mar-13
Jan-14
Mar-14
Jan-15
Mar-15
Jan-16
Mar-16
Jan-17
Mar-17
Jan-18
Mar-18
Source: IBM, General Administration of Customs of China, CEIC

12.4% 68.0
12.1% 65.2
58.7 11.0%
10.6% 56.4
48.7 52.5
9.0% 44.7 8.9%
41.5 42.9
37.1 7.7% 7.5%
34.7 36.8
31.8
28.2 28.3 6.0%
4.1% 4.1% 4.3%

3.4%
0.5% 0.8%
FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Hot Metal Production, mn tonnes y/y Change
Hot Metal Production by Sector, %
34% 37% 40% 41% 46% 48% 52% 56% 56% 60% 63% 65% 66% 66% 70% 69%
66% 63% 61% 59% 54% 52% 49% 44% 44% 40% 37% 35% 34% 34% 30% 31%
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Public Sector Private Sector
Note: India is an important producer of hot metal – or “pig iron”, in WSA terminology – ranking third in the world after China
and Japan, according to WSA. India’s output in this category rose by from 63.7mn tonnes to 66.0mn tonnes in CY2017,
according to WSA figures.
Source: JPC, CEIC

Pig and Sponge Iron Production
Sponge Iron Production Volume
28.8
28.5
28.2%
24.2
23.0 22.9 22.4
19.6
6.0%
-0.6% -0.9% 0.0%
-7.9% -7.5%
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Apr-Nov FY2019
Sponge Iron Production, mn tonnes y/y Change
Comments
For most of the last two decades, India has been the world’s largest producer of sponge iron (it was
briefly overtaken by Iran in 2016). In 2017, it accounted for a 30% share of the world’s total, according
to the WSA. Unlike other big steel producing countries, India has a large number of small steel
producers that utilise sponge iron. As of late 2017, there were 320 sponge iron producers that used
iron ore and pellets and either non-coking coal or gas to provide feedstock for steel production, while
more than 1,200 induction furnaces used sponge iron to make steel.
The largest sponge iron producers are Essar Steel, Sova Ispat, and JSW Ispat. Most sponge iron
production is for the needs of the domestic market, though relatively small amounts are exported
(390,000 tonnes out of a total output of 30.5mn in FY2018). Imports are small: annual totals ranged
from 200 tonnes to 20,100 tonnes in the period FY2013-FY2017, though they appear to have surged
modestly in FY2018 (imports in whose first nine months topped 58,000 tonnes). NSP 2017 envisages
demand for, and production of, sponge iron at 80mn tonnes in FY2031, and capacity at 114mn tonnes –
both implying strikingly high growth-rates. Some 30% of that projected capacity is to be gas-based, in
line with stricter environmental requirements and the expected long-term availability of gas.
Source: JPC, CEIC, WSA, Ministry of Steel

Pig Iron Consumption
India is a large-scale producer of pig iron (in the narrow sense of solid iron rather than the “hot
metal” described as “pig iron” by the WSA). Production peaked at 10.34mn tonnes in FY2017, a rise of
around 2mn tonnes, or almost a quarter, since as recently as FY2014. As the NSP 2017 puts it, such pig
iron is mainly “for merchant use, such as for castings and supplementary metallic in electric arc or
induction furnaces.” Of total output, 9.39mn tonnes was “production for sale”: indeed, at around 91%,
this was a rather lower proportion than observed in most recent years. Hence, production was
overwhelmingly for the market rather than for in-house use – an interesting contrast with sponge
iron, at least since FY2016
India is essentially somewhat more than self-sufficient in pig iron. Most of what is produced in India
remains within the country, though modest quantities are exported and even more modest amounts
imported. Consumption is therefore regularly a few hundred thousand tonnes below what is produced
for sale. As noted above, the pig iron market is not very concentrated: the “big six” of Indian steel
statistics* produced just shy of 800,000 tonnes between them in FY2017. A connected (though not
identical) point is that the private sector predominates: in FY2017 it accounted for no less than 94.5%
of production for sale.
For reasons not explained by official Indian sources, the pig iron market seems to have been rather
disrupted in the last couple of years. Production is now reported to have plummetted to 5.73mn
tonnes in FY2018, and recovery in FY2019 appears to have been slight: the 11-month figure was 5.54mn
tonnes. JPC reports have neither offered an explanation nor indicated any change in definition or
methodology of the sort that might suggest that this is a statistical rather than a real effect. And to
deepen the mystery – and maybe support the latter explanation – the JPC initially reported FY2018
output at 9.41mn tonnes. According to The Hindu, public sector companies suspended pig iron
production in FY2017 because of rising production costs which they were unable to pass on to pig iron
consuming industries, the paper reported in May 2017.
Longer term, it is assumed that pig iron output will grow, but that it will be somewhat less important.
In NSP 2017, consumption in FY2031 was projected at 17mn tonnes, less than double the FY2017 level.
This implied considerably lower growth than both steel and sponge iron output (slated to rise to
255mn tonnes and 80mn tonnes respectively), with both pig iron and sponge iron projections
depending on the assumption that 60-65 % of steel production in FY2031 would be via the BF-BOF
route and the rest through the EAF and IF routes.
*SAIL, TSL, RINL, ESL, JSWL, and JSPL
Source: Ministry of Steel, JPC, The Hindu

Pig and Sponge Iron Foreign Trade
Pig Iron Foreign Trade, thou tonnes
1,063.0
835.0
655.0
542.0 556.0
394.0
46.00 27.00 35.00 38.00 27.00

12.00
CY2012 CY2013 CY2014 CY2015 CY2015 CY2017
Exports Imports
Sponge Iron Exports, thou tonnes
390
333
127 130
98
74
54 58
25 20
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Apr-Nov
FY2019
Source: JPC, CEIC, WSA

08
STEEL

08 STEEL CONTENTS
Highlights
Overview
FY2018 was a record-breaking year for Indian steel manufacturers, as the country became the second-
largest crude steel producer in the world, surpassing Japan. Driven by solid local demand, boosted
primarily by government infrastructure and construction projects, manufacturers expanded capacities
– encouraged by the government’s ambitious steel capacity target of 300mn tonnes/year by FY2031
(compared to 135mn tonnes/year in FY2018). In FY2018, India’s foreign trade surplus in finished steel
expanded to 2.1mn tonnes, up from 1mn tonnes in FY2017, as exports grew faster than imports.
However, exports of finished steel plunged by 40% y/y in the first eight months of FY2019, as a result
both of global trade wars in the sector and of slowdown in the Chinese and the global economy in the
second half of calendar 2018. As a result, the segment recorded a foreign trade deficit of 1.2mn
tonnes.
Challenges
The global trade wars in the steel sector, which have led to protectionist tariffs in some countries,
increase the risk that open markets like India will be flooded and their producers exposed to
increased competition. In 2018, the Chinese economy, which is the world’s biggest consumer of
metallic minerals, showed signs of slowing, which could lead to additional overcapacity and further
price pressures. The iron ore mining industry is lobbying for the abolition of the 30% export tax on
Indian iron ore. At the same time, the sector insists that the government impose a 30% import duty
on iron ore and iron ore pellets to protect domestic miners. If enacted, these measures could raise
production costs for local steel manufacturers and take away their key advantage of cheaper local
resource inputs.
Outlook
Steel production growth slowed down in FY2019, mainly as a result of weaker foreign demand and
oversupply pressures, and was only partially offset by strong domestic steel consumption. Short-term,
this trend is likely to continue unless foreign demand scenario changes significantly. Longer term,
solid growth will be ensured both by the fact that per capita steel consumption is still low and by the
government’s target of more than doubling the country’s steel production capacity by FY2031. EMIS
Insights therefore estimates that production of finished steel will increase at a CAGR of 6.4%,
between FY2018 and FY2023, and exceed 147.5mn tonnes at the end of our forecast period.
Source: EMIS Insights, JPC, CEIC, WSA

08 STEEL CONTENTS
Main Events
 In May 2017, the Indian government announced that the country’s National Steel Policy 2017 had
been approved. The new steel policy contains the long-term vision of the government for giving
impetus to the steel sector. It also seeks to enhance domestic steel consumption, ensure high-
quality steel production, and create a technologically advanced and globally competitive steel
industry.
 In June 2017, Reuters reported that India’s central bank – the Reserve Bank of India (RBI) – had
asked lenders to initiate bankruptcy proceedings against a dozen companies, including Essar Steel
and Bhushan Steel Ltd. The move came after a change in the law, known as the Bankruptcy Act,
had given RBI greater power to address non-performing loans in the Indian economy, which are
estimated at USD 150bn. Essar Steel appealed against the central bank move, but the High Court of
Gujarat dismissed the motion in July 2017.
 In October 2017, India imposed anti-dumping duties on some cold-rolled flat stainless steel
products from China, the US, South Korea, and the EU, to curb cheap imports and help local
producers, Reuters reported.
 In March 2018, US President Donald Trump's administration imposed duties of 25% on imported
steel and 10% on imported aluminium, Reuters reported. The tariff applied to all countries with the
exception of Canada and Mexico, with other countries having to negotiate possible exemptions
with the US.
 In September 2018, the Indian business and economic journal The Economic Times reported that the
US was considering an exemption of Indian steel and aluminium from the higher tariff regime
announced by in March 2018. As of April 2019, the US has agreed to exempt from the import duty a
quantity equal to a certain percentage of India's average exports over the last five years, but talks
are still proceeding, as India is pushing for a complete exemption.
 In September 2018, Reuters reported that the Indian government was considering a rise in the
effective import duty on some steel products to 15%, from current rates ranging from 5% to 12.5%.
in an attempt to support the rupee.
 In December 2018, Reuters reported that India was in talks with the United States over exemptions
on steel tariffs. The country would also be seeking relief from Canada over quotas and tariffs in
January 2019, Reuters added, as Indian steel companies had been affected by Canadian tariffs.
Source: Indian Government, Reuters, The Economic Times

08 STEEL CONTENTS
Crude Steel Production
Production Volume
9.1% 106.6
8.9% 103.1
89.8 97.9
81.7 89.0
78.4
74.3
5.6% 5.3%
5.1%
4.2%
3.4%
0.9%
Crude Steel Production, mn tonnes y/y Change
Comments
In 2018, India became the world’s second-largest crude steel producer, surpassing Japan, according to
data from WSA. In FY2018, crude steel production increased by 5.3% y/y to 103.1mn tonnes and rose by
3.4% y/y in FY2019. Since FY2011, crude steel output had increased at a CAGR of 5.6%, driven by strong
steel demand from the construction sector and by infrastructure development and housing demand in
the country. Production is likely to continue its strong performance supported by initiatives such as
Make in India, which aims to transform the country into a global design and manufacturing hub, and
Smart Cities, which will further boost urban infrastructure investment. The private sector plays an
important role in crude steel production and growth in the country. In FY2018, around 80% of total
crude steel output was produced by private companies, while the remaining 20% came from the public
sector. The National Steel Policy (NSP) 2017, published by the government, aims to increase steel
production, and projects crude steel capacity of 300mn tonnes by FY2031, up from 134.7mn tonnes/year
installed capacity in FY2018. The largest crude steel manufacturers in India are Jindal South West
Steel, Steel Authority of India, Tata Steel, and Essar Steel.
Source: CEIC, JPC, WSA

08 STEEL CONTENTS
Crude Steel Production (cont’d)
Crude Steel Capacity and Utilisation

160 90%
87.9% 137.98
140 128.28
121.97 85%
120 101.02 109.85
97.02
81.8%
100 80.8% 80.9% 81.0%
90.87 80%
80.36
80
76.3%
60 74.8% 75%
73.6%
40
70%
20
0 65%
Installed Capacity, mn tonnes Capacity Utilisation

Note: FY2019 Capacity Utilisation at 77.1%
Crude Steel Production Capacity by Comments

Process Route, % of Total
Over the last couple of years, Indian steel
companies have invested heavily in expanding
their production capacity. Between FY2011 and
FY2018, aggregate output capacity was boosted by
43% 42% 43% 43% 42% 43% 43% 43% 58mn tonnes/year, to 138mn tonnes/year in FY2018.
This trend is likely to continue at least until
FY2031, since the government targets an overall
steel capacity of 300mn tpa for that year. There
57% 58% 57% 57% 58% 57% 57% 57% has been continuous modernisation and upgrading
of older plants and improvement in energy
efficiency levels. Electric route capacity accounts
for 57% of the country’s overall crude steel
production capacity, while the oxygen route
Electric Route Oxygen Route accounts for around 43% of total.
Source: JPC, CEIC

08 STEEL CONTENTS
Semi and Finished Steel Production
Comments
Fuelled mainly by rising domestic demand, Indian production of finished steel has grew lately, by 12%
y/y in FY2017, and 24.7% y/y in FY2018.
The overall volume of finished steel produced in FY2019 totalled approximately 132mn tonnes, while
semi-finished steel production was at 107mn tonnes. Steel production has been supported by the
growing economy and demand coming from the major steel consuming segments such as
construction, real estate/housing, capital goods/machinery, consumer goods, automotive production,
and the energy sector.
In FY2018, non-alloy steel accounted for some 91% of total finished steel production. Close to 53% of
the overall non-alloy steel production consisted of flat products, of which 53% comprised hot-rolled
coils, and 18% cold-rolled sheets or coils. Bars and rods claimed the largest share (of 79%) in non-flat,
non-alloy steel production.
Finished Steel Production for Sale, Semi-Finished Steel Production Volume

Volume
131.6 103.1
126.9 106.6
101.8 43.4%
24.7%
91.0 71.9
92.2
87.7
81.7 65.9
66.5
58.0 55.8
11.9% 19.3%
7.9% 7.3% 9.2%

5.1%
3.7% 5.2%
3.3%
-1.0%
-1.3% -3.8%
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Finished Steel Production for Sale, mn tonnes

y/y Change Semis Production, mn tonnes y/y Change
Source: JPC, CEIC

08 STEEL CONTENTS
Finished Steel Production
Railway Steel Production Steel Production for the Automotive

Sector vs Vehicles Production, y/y
900 1,100 Change
35% 40%
800 30%
1,050 30%
700 25%
20%
600 1,000 20%
500 15% 10%

950
400 10% 0%
300 900 5%
-10%
200 0%
850
100 -20%
-5%
0 800 -10% -30%
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017
Passenger Vehicles Production
Railway Length Added, km Cold Rolled Sheets or Coils Production
Railway Steel Production, thou tonnes Galvanized Coated Sheets Production
Comments
Finished steel production for the railways has followed railway infrastructure sector trends. The
national budget for the railway sector increased the amount of spending by 22% y/y in FY2018, the
focus being on building infrastructure, stepping up safety, and improving maintenance. India's
railways sector is expected to continue registering growth in large projects, aided by relaxed
regulations on foreign investment and a steadily improving land-acquisition environment. Overall,
India plans to commission 3,500 km of new rail lines and renovate 500 stations by FY2019.
Cold-rolled products and galvanised coated sheets are consumed in significant volumes by India’s
automotive, industrial, and engineering sectors. Over the ten years ending in FY2018, passenger
vehicle production increased by 12%, while the production of cold-rolled sheets and coils went up by a
cumulative 52%, and that of galvanised coated sheets by 74%. Cold-rolled products are also used in
the solar PV industry, which offers great potential for growth as the Indian government’s target is to
have 100 GW of solar installations in place by 2020, up from about 20 GW in 2016. Both generation and
transmission capacities are expected to raise steel demand from the sector.
Source: Ministry of Railways, JPC, CEIC

08 STEEL CONTENTS
Finished Steel Products Output

Finished Steel Products, mn tonnes
FY2014 FY2015 FY2016 FY2017 FY2018 Apr-Nov 2019
Non Alloy 86.6 92.7 99.9 97.4 107.7 78.7
Non Alloy: Non Flat 38.3 41.6 43.4 41.1 45.1 31.4
Non Alloy: Non Flat: Bars and Rods 30.7 33.1 34.8 32.5 35.6 24.9
Non Alloy: Non Flat: Structurals 7.0 7.6 7.6 7.4 8.2 5.6
Non Alloy: Non Flat: Railway Materials 0.6 0.9 1.0 1.1 1.3 0.9
Non Alloy: Flat 48.3 51.1 56.4 56.3 62.5 47.4
Non Alloy: Flat: Plates 3.8 4.4 4.5 4.7 5.2 3.7
Non Alloy: Flat: Hot Rolled Coils or Skelp 23.4 25.6 29.7 30.1 33.1 24.6
Non Alloy: Flat: Hot Rolled Sheets 1.3 1.5 1.2 1.8 2.4 1.6
Non Alloy: Flat: Cold Rolled Sheets or Coils 10.3 9.7 10.8 10.4 11.3 9.4
Non Alloy: Flat: Galvanised Polycarbonate or Galvanised

6.9 7.3 7.6 6.9 7.6 5.2
Corrugated Coated Sheets
Non Alloy: Flat: Electric Sheets 0.1 0.1 0.2 0.2 0.3 0.2
Non Alloy: Flat: Tin Plates incl W/W 0.4 0.3 0.3 0.3 0.4 0.3
Non Alloy: Flat: Tin Mill Black Plate 0.0 0.0 0.0 0.0 0.0 0.0
Non Alloy: Flat: Large Diameter Pipes 2.1 2.2 2.1 1.9 2.2 1.4
Non Alloy: Flat: Tin Free Steel 0.0 0.0 0.0 0.0 0.0 0.0
Alloy 8.5 8.3 8.9 8.7 10.2 7.2
Alloy: Non Flat 5.4 5.3 6.0 5.9 6.9 4.8
Alloy: Flat 3.1 3.0 2.9 2.9 3.4 2.4
Source: JPC, CEIC

08 STEEL CONTENTS
Semi and Finished Steel

Consumption
Finished Steel Apparent Consumption Semis Steel Apparent Consumption
99.4
43.5
97.3 97.5 19.6%
10.2% 38.3 37.0 37.2
92.9 32.0
7.5% 13.5% 33.4
87.6 6.1% 10.8% 11.3%
4.7% 90.7
2.7% 2.2%
85.3
-9.5%
-8.8% -15.0%
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Finished Steel Apparent Consumption, mn tonnes
y/y Change
Semis Consumption, mn tonnes y/y Change
*Apparent steel consumption is the mathematical sum of production and imports minus exports. Real steel consumption is
defined as gross production plus imports minus exports, adjusted for materials consumed for downstream processing and
variation in stocks.
Comments
Housing construction is the sector which consumes the largest amount of steel in India, and is
witnessing strong growth led by an increase in per capita income and government social schemes.
This, coupled with the still low steel per capita consumption of 66 kg (compared to the world average
of 212 kg), is the major cause behind rising finished and semi-finished steel consumption. Government
schemes promoting steel consumption include Pradhan Mantri Awas Yojna (“Housing for All”), Sardar
Patel Urban (“Urban Housing Mission”), and the 100 Smart Cities Mission amongst others. Between
FY2013 and FY2018, real consumption of finished steel in India grew at a CAGR of 5.4%, exceeding the
90mn-tonne mark. Consumption of semi-finished rose at the more modest CAGR of 1.6% over the
period, to 37.2mn tonnes in FY2018. Consumption is likely to continue growing rapidly, as the National
Steel Policy (NSP) 2017 targets an annual per capita steel consumption of 160 kg by FY2031. High
spending in the infrastructure sector, expansion of the railway network, development of the domestic
shipbuilding industry, and the anticipated growth of the automotive, capital goods and construction
sectors, are expected to create significant demand for steel in the country.
Source: JPC, Ministry of Steel, CEIC

08 STEEL CONTENTS
Finished and Semi-Finished Steel

Foreign Trade
Finished Steel Foreign Trade, mn tonnes Semi-Finished Steel Foreign Trade, thou
tonnes
1,994
11.7
9.6
9.3
8.2
1,353
7.9
7.8
7.5
7.2
6.4
1,066
6.0
917
5.6
5.5
5.4
981
4.1
793 1,077.0
750
732
696
640
639
2.1 486 603.0
1.0
0.5 258
144
334.0
-1.5 228.0
-2.6 -56.0
-3.7
-342.0
-7.6 -649.0
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Apr-Nov
FY2019
Exports Imports Trade Balance Exports Imports Trade Balance
Comments
In FY2018, India had a foreign trade surplus in finished steel of 2.1mn tonnes, up from 1mn tonnes in
FY2017 – because exports had risen more sharply (17% y/y) than imports (3.5% y/y). However, finished
steel exports plunged by 40% y/y in the first eight months of FY2019, as a result of global trade wars
in the sector and of slowdown in China and in the global economy in the second half of calendar 2018.
As a result, finished steel imports exceeded exports, and the foreign trade balance at the segment
became negative, at 1.2mn tonnes. Because of this, the Indian government is considering raising
import duties on steel to 15% from the current rates of between 5% and 12.5%. In March 2018, the US
imposed a 25% duty on imported steel, but is considering a possible exemption of India from this rule.
In FY2018, the US accounted for 18% of total Indian exports of iron, steel and articles thereof, which
made it the largest foreign market for the sector. More than 90% of finished steel exports in FY2018
were non-alloy steel products, while the share of flat products was 67%. About a third of total finished
steel exports consisted of hot-rolled coils, while bars and rods accounted for 21% of the total in the
same year.
Source: CEIC, JPC, International Trade Administration

08 STEEL CONTENTS
Finished Steel Exports

Finished Steel Products Exports, thou tonnes
Apr-Nov
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
FY2019
Non Alloy 4,204 4,756 5,508 4,906 3,475 7,584 8,727 3,729
Non Alloy: Non Flat 311 476 651 478 448 872 2,259 339
Non Alloy: Non Flat: Bars and Rods 225 413 585 392 365 629 2,042 254
Non Alloy: Non Flat: Structurals 44 61 65 83 82 161 174 84
Non Alloy: Non Flat: Railway Materials 42 3 1 3 2 83 43 1
Non Alloy: Flat 3,892 4,280 4,857 4,428 3,027 6,712 6,468 3,390
Non Alloy: Flat: Plates 374 246 155 559 266 301 491 277
Non Alloy: Flat: Hot Rolled Coils or Skelp 1,181 1,675 2,043 1,320 385 2,878 2,820 1,742
Non Alloy: Flat: Hot Rolled Sheets 96 203 87 55 62 75 18 1
Non Alloy: Flat: Cold Rolled Sheets or Coils 295 412 561 585 655 1,394 1,230 418

1,443 1,544 1,822 1,629 1,420 1,716 1,145 632
Non Alloy: Flat: Electric Sheets 1 7 10 10 19 45 90 40
Non Alloy: Flat: Tin Plates 29 55 70 47 56 56 37 17
Non Alloy: Flat: Large Diameter Pipes 471 137 109 223 162 247 635 236
Non Alloy: Flat: Tin Free Steel 2 1 0 0 1 2 2 1
Alloy 384 612 477 689 604 658 893 350
Alloy: Non Flat 237 216 228 336 165 190 523 164
Alloy: Flat 147 396 249 353 439 468 370 186
Source: JPC, CEIC

08 STEEL CONTENTS
Finished Steel Imports

Finished Steel Products Imports, thou tonnes
Apr-Nov
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
FY2019
Non Alloy 5,438 6,253 4,299 6,754 8,718 5,366 5,636 3,973
Non Alloy: Non Flat 500 624 342 923 658 522 309 310
Non Alloy: Non Flat: Bars and Rods 425 514 294 854 621 419 243 250
Non Alloy: Non Flat: Structurals 63 91 43 53 25 64 37 38
Non Alloy: Non Flat: Railway Materials 12 19 4 15 12 39 29 22
Non Alloy: Flat 4,937 5,629 3,957 5,831 8,061 4,844 5,327 3,663
Non Alloy: Flat: Plates 661 862 410 732 1,060 740 574 262
Non Alloy: Flat: Hot Rolled Coils or Skelp 1,813 1,872 1,104 2,006 3,401 1,905 1,751 1,334
Non Alloy: Flat: Hot Rolled Sheets 54 122 102 79 105 39 19 1
Non Alloy: Flat: Cold Rolled Sheets or Coils 1,457 1,569 1,279 1,713 2,235 917 543 343

368 433 368 444 586 566 1,155 738
Non Alloy: Flat: Electric Sheets 276 387 347 418 318 297 606 457
Non Alloy: Flat: Tin Plates 150 184 188 218 170 249 192 131
Non Alloy: Flat: Tin Mill Black Plate 1 1 1 1 4 1 1 6
Non Alloy: Flat: Large Diameter Pipes 108 134 101 132 101 101 419 223
Non Alloy: Flat: Tin Free Steel 50 66 57 87 81 29 67 52
Alloy 1,425 1,672 1,151 2,567 2,994 1,860 1,846 1,264
Alloy: Non Flat 259 352 237 822 1,119 468 442 462
Alloy: Flat 1,166 1,319 915 1,745 1,874 1,393 1,404 802
Source: JPC, CEIC

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An EMIS Insights Industry Report

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BGS British Geological Survey

CSO Central Statistics Office

DIPP Department of Industrial Policy and Promotion

ECM Equity Capital Market

IBEF India Brand Equity Foundation

JPC Joint Plant Committee

JSW Jindal South West (Steel)

MCI Ministry of Commerce and Industry

SAIL Steel Authority of India Ltd

Semis Semi-Finished Products

SIMA Sponge Iron Manufacturing Association

USGS United States Geological Survey

WSA World Steel Association

WTO World Trade Organization

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02 SECTOR OUTLOOK p.13

03 SECTOR IN FOCUS p.18

04 COMPETITIVE LANDSCAPE p.34

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Essar Steel India Ltd

06 REGULATORY ENVIRONMENT p.54

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In 2018, India became the world’s second-largest crude

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Source: WSA, Ministry of Steel, MCI, IBEF

INDIA STEEL SECTOR 2019/2023 7

2nd 103.1mn 90.7mn

200.8mn INR INR

Note: data for FY2018

INDIA STEEL SECTOR 2019/2023 8

INR 942bn 7.5mn tonnes

IRON FINISHED STEEL

KEY PLAYERS REVENUES

INDIA STEEL SECTOR 2019/2023 9

Sector Snapshot: India Steel

Source: CSO, MCI, DGCIS, JPC, CEIC, Company Data

INDIA STEEL SECTOR 2019/2023 10

Source: EMIS Insights

INDIA STEEL SECTOR 2019/2023 11

Source: EMIS Insights

INDIA STEEL SECTOR 2019/2023 12

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Real GDP, y/y change Consumption, Investment, and Public

Private Consumption Fixed Investment

INDIA STEEL SECTOR 2019/2023 14

Macroeconomic Outlook (cont’d)

-70 -73.5 -73.8 -1%

Current Account, USD bn Current Account, % of GDP

Total Exports and Imports, y/y change

FY2019f FY2020f FY2021f FY2022f FY2023f

Source: EMIS Insights

INDIA STEEL SECTOR 2019/2023 15

Consumer Confidence Survey (Future Business Expectation Index

Source: EMIS Insights

INDIA STEEL SECTOR 2019/2023 16

Finished Steel Outlook