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STEEL INDUSTRY ANALYSIS

. JOSNI JOSEPH
. AMIT SINGH
. TEJDIPSINH
AGENDA
. Industry Overview
. Industry Value chain & Structure
. Market size and Growth
. Industry Growth and segment
. Major players and Competition
. Technology
. Regulation
. Issue and Concerns
. Growth Drivers
. Outlook
Industry Overview
. Production wise India accounts 3.93% of total steel production globally.
. India is a 5th largest steel producer globally and china at first position.
. Steel industry contribution to GDP is 1.2%.
. Currently India has 59.58mt installation Capacity for 2008-09.
. The growth rate of 1.23% over last year with capacity utilisation at 89%
. The exports decreased by 26% at 3.77mt while imports decline 18% at 5.77mt for
2008-09.
. The steel industry is expected to achieve a steel production Capacity of nearl
y
124mt by year 2011-12.
. Steel sector is expected to generate additional employment of around 4 million
by
2020.
Global Scenario
. Global crude steel production
reached 1.33bnt in 2008.
. China is the largest producer
with 502mtn with 2.06%
growth.
. India may become second
largest steel producer in the
world by 2015.
www.steel.nic.in.
W o rld s te e l p r o d u c tio n
0
1 0 0
2 0 0
3 0 0
4 0 0
5 0 0
6 0 0
China
Japan
US
Russia
India
South Korea
Germany
Ukraine
Brazil
Italy
mn. tonnes
Iron ore Fluxes Coal
Sinter plant Coke plant
Blast Furnace
LD1 LD2
Slab caster Continuous billet caster
Hot strip mill Cold strip mill Billets Merchant mill Wire mill
Slabs
Steel making process
Market size and Growth
. Production of steel
gradually increases
. The industry is 60%
organized.
. Per Capita steel
consumption is 45 kgs,
leaving scope for
further increase in
production.
Steel production and Growth rate
0
10000
20000
30000
40000
50000
60000
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
'000 tonnes
0
2
4
6
8
10
12
14
%
Production Growth rate
www.steel.nic.in
Segments of steel
. Technology:
. Basic oxygen furnace
. Electric arc furnace
. Induction furnace
. Products
. Flat iron
. Long iron
. Value chain
. Integrated steel producers
. Secondary steel producers
. Customers
. Construction
. Transport equipment
. others
Major Players

In India, Public Sector


companies contributes 32%
of total production.
SAIL,Tata steel and JSW steel
are major three players.
The market leader as per
installed capacity is SAIL
with capacity of 15.2 Mt
Tata steel is the 2nd largest
player after SAIL.
0
200
400
600
T ata S tee S A IL J S W R IN L IS PA T B hus han Stee
Ltd.
U ttam Stee
Ltd.
Lloy ds S tee Es s ar S tee M uk and Lt Rs.bn
S a le s o f T o p T e n P la y e rs F o r T h e Y e-0 9
S a le s (R s . B
www.steel.nic.in
Herfindal Index

Company Net sales Market share Index value


TATA STEEL 253950 55.03 3027.828
SAIL 100391 21.75 473.172
ISPAT 20480 4.44 19.691
JSW 47565 10.31 106.221
BHUSHAN 12985 2.81 7.916
BSL LTD. 546.4 0.12 0.014
STEEL CO OF GUJRAT 1142.8 0.25 0.061
JSPL 24453 5.30 28.073
TOTAL 461512 3662.976
It implies that the competition in the steel industry is medium to high and
with high concentration.
Michel Porter Analysis
. Threat of Entry: Low to moderate
. Bargaining power of Buyer: Moderate to high due to high
competition
. Bargaining power of Supplier: Moderate to high
.
. Threat of substitute: Low
. Competitive Rivalry: Moderate to high but compared to
other industry its still low
Technology

Two main Technology used:


Basic Arc furnace and
Electric Arc Furnace Crude steel production by Process
Cost competitiveness &
quality improvement
B as ic O x y gF urna c e (B O
4 7%
E lec tric A rc
F urna c e (E A
20 %
Induc tio n
F urnac e(IF
33%
e
initiatives

Auto operation of blastfurnace charging conveyors


resulting in downtime of
conveyors& in