State Wise Steel Demand in India

ISA Steel Conclave, New Delhi, October 26, 2018

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Contents

▪ worldsteel’s India state wise steel demand study

▪ Aspects of state wise steel use in India
▪ Insights on state wise steel demand prospects
▪ Summary and conclusion

3
worldsteel’s India state wise steel demand study
Motivation of the study

▪ India is known as a country of potential, but there are different views about when India’s
steel demand will start to take off.

▪ India’s growth prospects can be better understood by looking at India by states as was
the case with worldsteel’s provincial approach to China.

▪ Such disaggregated approach enables identification of uniqueness of each state and

better insight on economic and steel demand potential.

▪ The Project Team looked into characteristics of states (“White book of Indian
states”) focusing on potential for growth of steel using sectors, notably construction
and manufacturing.

5
Project team

▪ The Project was conducted under Joint leadership of worldsteel and ISA since 2016 2H
▪ Key contributors

▪ External partners: Joint Plant Committee

6
Estimating state wise steel demand – worldsteel approach

▪ In the absence of steel use statistics by state, SWIP share was used to estimate state
wise steel use

GSDP Construction VA SWIP

× ASU, fs India × 0.62 +
.

× ASU, fs India × 0.38

GSDP Construction VA SWIP

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Aspects of state wise steel use in India
White books of India States

▪ Project Team has produced a “white book” for each state which covers the following aspects:
• Macroeconomic performance and drivers.
• Key policy initiatives and business environment.
• Overview of key industries in the state.
• Identification of steel demand drivers and SWOT analysis.

▪ Through this exercise, it was possible to identify and compare growth potential of different
states and the team has produced an evaluation of steel demand growth potential for
each state.

Note. 7 North Eastern states were approached in a consolidated way, the rest of the 22 states were studied separately along with National
Capital Region of Delhi.

9
States show uneven and multispeed development
▪ Regional growth has been uneven among states.
• West Bengal experienced economic decline after 1960s.
• Tamil Nadu on the other hand has grown steadily and consistently.
• Gujarat has been outperforming while northeastern states lag behind.
▪ Rich states are located in western/southern and northern India.
GDP per capita, 2015-16 GDP growth, CAGR 15-16 / 11-12
Jammu & Jammu &
Kashmir Kashmir
Himachal Pradesh Himachal Pradesh
Punjab Uttarakhand Arunachal Punjab Uttarakhand
Haryana Haryana Arunachal
Rajasthan Uttar Sikkim Pradesh Uttar Sikkim Pradesh
Assam
laya Rajasthan AssamNagalan
Pradesh Bihar Nagaland Pradesh Bihar d Meghalaya
Megha Manipur Manipur
Gujarat Jhark- Jhark- WestTripura
Madhya WesTt Madhya
ripura
hand
Pradesh Chhattis- Mizoram Gujarat
Bengal Chhattis- Mizoram
Pradesh garh Bengal
hand
Maharashtra garh Odisha Maharashtra Odisha
Telang < 50 k INR Telang <4%
ana
ana
Goa Andhra 50-100 k INR Goa Andhra 4-6 %
KarnatakaPradesh Source:
Central aka Pradesh
Karnat
Tamil Statistics 100-140 k INR Tamil
Office,
KeralaNadu worldsteel Nadu Kerala
> 140 k INR
6-8 %

>8%

10
Crude steel production by states
▪ Steel production centres: raw materials (iron ore) driven (Odisha, Chhattisgarh, Jharkhand and
Karnataka) or port based and proximity to markets (Maharashtra and Gujarat).

Crude steel production, Jammu &

Mt India total: 89.8 Mt Kashmir
18 Himachal Pradesh
Punjab
16 Uttarakhand Arunachal
Haryana
Delhi Pradesh
14 Sikkim
Rajasthan Uttar AssamNagaland
12
Pradesh MeghalayaManipur
Bihar
10
Gujarat Madhya Jhark- West Mizoram
8 Pradesh hand Bengal Tripura
Chhattis-
6 Maharashtra garh Odisha
< 1 Mt
4
Telangan 1-4 Mt
2 a
Goa Andhra 4-10 Mt
0 Pradesh
Karnataka
> 10 Mt
Tamil
Kerala Nadu

Source: JPC, 2015-2016, million tonnes (Mt)

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Steel use by states
▪ Maharashtra and Tamil Nadu are largest steel using states, both auto hubs.

Jammu &
Kashmir PunjabHimachal Pradesh
Uttarakhand Haryana
Apparent steel use,
Mt
India total: 76.4 Mt
Arunachal
14,000 Delhi Pradesh
Sikkim
12,000 Rajasthan Uttar AssamNagaland
Pradesh MeghalayaManipur
Bihar
10,000
Gujarat Madhya Jhark- West Mizoram Tripura
Pradesh hand Bengal
8,000
Chhattis- Odisha
garh
6,000 Maharashtra
< 1 Mt
Telangan
4,000 1-3 Mt
a
Andhra
2,000 Goa
3-10 Mt
Karnataka Pradesh
0,000 > 10 Mt
Tamil
Kerala Nadu

Source: worldsteel estimation, 2014-15, million tonnes (Mt)

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Steel geography of India is unbalanced
▪ Steel producing states in the east have not seen development of own steel markets.
▪ Therefore intra-state trade in steel has been a common feature.

Steel use
Jammu Jammu Steel production
& &
Kashmir Kashmir
Himachal Pradesh Himachal Pradesh
Punjab Punjab
Uttarakhand Arunachal Uttarakhand Arunachal
Haryana Haryana
Pradesh Pradesh
Rajasthan Uttar Sikkim Assam Rajasthan Uttar Sikkim Assam
Pradesh N agaland
Nagaland Meghalay a
Bihar Meghala ya
Manipur Pradesh Bihar Manipur
Gujarat Madhya West
Pradesh
Jhark-
Bengal Tripura Gujarat MadhyaChhattis-Jhark-WestTripura
Mizoram
Chhattis- hand Mizoram Pradesh handBengal
garh Odisha
Maharashtra garh Odisha Maharashtra
< 1Mt
Telanga Telang
na 1-3 Mt ana
Goa Goa Andhra
Andhra
Karnata Pradesh 3-8 Mt Pradesh
ka Karnata ka
Tamil >8 Mt Tamil
Nadu Kerala
Kerala iron ore production Nadu
(major sites)
Source: worldsteel estimation, 2014-15 Source: Joint Plant Committee, 2015-16

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Steel use across states is also uneven
▪ Among rich states, only a few states show high steel use per capita, e.g. Tamil Nadu, Maharashtra,
Gujarat, Goa.
▪ North-Eastern states feature low steel use per capita, e.g. Assam, Manipur, Nagaland
▪ Some states have high steel use per capita despite low per capita income, driven by infrastructure, e.g.
Uttarakhand.
kg
k INR
250 Apparent steel use per capita
300
ASU per capita, kg Jammu &
200 250
Kashmir
GDP per capita, k INR Himachal Pradesh
200 Punjab Uttarakhand
150 Haryana Arunachal
150 Uttar Sikkim Pradesh
100 Rajasthan AssamNagaland
Pradesh Bihar Meghalaya
100 Manipur
Gujarat Madhya West Tripura
Jhar k-
Pradesh d Mizoram
Bengal
Chhattis-han
50 Odisha
50 Maharashtra garh
Telang
India average: 60.3 kg

Uttarakhand
0 0 ana
Goa Andhra < 50 kg
Haryana Pradesh
Karnataka
Tamil 50-100 kg
aharashtra

Nadu
Kerala
Source: Central Statistics Office, worldsteel estimation, 2014-15 > 100 kg
14
Diverse patterns of steel use of Indian states
▪ Reflecting uneven and diverse economic growth patterns, different states shows
different tracks of S-curve.
S-curve, 2004-05 – 2014-
ASU/cap 15

300
Goa
250
Haryana
Kerala
200 Maharashtra
Orissa
150
Uttar Pradesh
100

50

0
0 50 100 150 200 250 300 GDP/cap
Source: worldsteel estimation, 2004-15

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Insights on state wise steel demand prospects
Insight 1: Uneven growth will continue, but catching-up
is taking place in some states State GDP growth
CAGR 15-16 / 11-12 (India average: 6.7 %)

(1/2) Gujarat
Himachal Pradesh
9.5
7.6
Karnataka 7.5
Chhattisgarh 7.3
▪ Uneven economic performances of Indian states has Haryana 7.1
Uttarakhand 7.0
been driven by geography, natural resources and Maharashtra 6.6
socio-political environments. Madhya Pradesh 6.6
West Bengal 6.4
Andhra Pradesh 6.4
▪ Political leadership and consistent policy had important Jharkhand 6.3
North East states 6.1
influence on the economic performance of the Odisha 5.9
Tamil Nadu 5.7
advanced states (e.g. Gujarat). Rajasthan 5.6
Sikkim 5.6
Telangana 5.2
▪ Central government’s focus on improving ease of Jammu and Kashmir 5.1
doing business has prompted pro-business reforms in Uttar Pradesh 5.0
Punjab 4.7
various states. Kerala 4.6
Bihar 4.5
Goa 1.0

Source: Central Statistics Office, worldsteel 17

Insight 1: Uneven growth will continue, but catching-up is
taking place in some states (2/2)
Potential for growth,
economic development
▪ Strong growth momentum will continue in Gujarat, Haryana,
Maharashtra & Tamil Nadu. Jammu &
Kashmir
Himachal Pradesh
▪ Some middle income states shows high growth potential PunjabUttarakhand
Arunachal
Haryana
driven by renewed focus on economic development (Andhra Rajasthan
Uttar Pradesh
Sikkim Assam
Nagaland
Pradesh, Pradesh Bihar Meghalaya
Telangana).
Madhya Jhark- Manipur
Tripura
West
Gujarat Pradesh handBeng Mizoram
al
Chhattis-
▪ Eastern states (Chhattisgarh, Jharkhand, Odisha) are Odisha
Maharashtra garh Potential for growth:
expected to catch up thanks to mining and Telang
ana
manufacturing
development. Goa Andhra
low

Source: Project Team Analysis

▪ North eastern states are expected to stay on lower growth Karnataka Pradesh
Tamil
track limited by lack of reform and geography, but large Kerala
Nadu
infrastructure investment as announced by the government
can change overall investment environment in the long run.
medium low medium high high

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Insight 2: Service sector will continue to be a growth driver
▪ Service sector has been the key growth driver for India, enabling employment generation with less capital
investment.

▪ Service sector will continue to be important due to:

• Stronger focus on generating employment for sustainable and equitable growth,
• Competitive advantage in the knowledge based service sectors

Share of services in GDP Potential for growth, services (knowledge based)

Jammu & Kashmir Jammu & Kashmir
Himachal Pradesh
Punjab
Himachal Pradesh Arunachal
Uttarakhand Punjab HaryanaUttarakhand Arunachal
Haryana Pradesh
Uttar Sikkim Assam Rajasthan Pradesh
MeghalaNyaagaland Uttar SikkimAssam
Rajasthan Pradesh MeghalaNyaagaland
Bihar TripuraManipur Pradesh Bihar
Madhya Jhark- West Mizoram Manipur
Gujarat Jhark- Tripura
Pradesh
Chhattish- and Bengal Gujarat MadhyaChhattis-hand West Mizoram
garh Odisha Pradesh Bengal
Maharashtra garh
Telang MaharashtraTelan Odisha Potential for growth:
< 40 %
ana Andhra
gana low
Goa 40-50 % Andhra medium low
Goa
Karnata kaPradesh
Pradesh
Karnataka
KeralaTamil 50-60 % KeralaTamil
Nadu medium high
Nadu
high
60-70 %
Source: Central Statistics Office, 2015-16 Source: Project Team Analysis

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Insight 3: Manufacturing is slowly gaining momentum (1/2)
▪ The share of manufacturing in India’s GDP stayed within 14-16% in the last 40
years, only recently rising to 18%.
▪ Some states have strong presence of manufacturing due to:
Share of manufacturing in GDP
• Unfavorable climate for agriculture (e.g. Gujarat,
Jammu &
Maharashtra and Tamil Nadu). Kashmir
Himachal Pradesh
• Mineral deposits leading to heavy industries base (e.g. Punjab
Uttarakhand Arunachal
Haryana Pradesh
Goa, Odisha, Chhattisgarh and Jharkhand). Rajasthan Uttar Sikkim Assam
Nagaland
Pradesh
Bihar Meghalaya
• Special tax benefits (e.g. Uttarakhand, Himachal Pradesh Gujarat Madhya
Jhark- West
Bengal Tripura
Manipur

and Sikkim). Pradesh Chhattis-

hand
Mizoram

Maharashtra garh Odisha

▪ “Make in India” provides vision for enhancing manufacturing Telanga < 10 %

activities across states, aiming to raise share of manufacturing Goa
na
Andhra 10-20 %
to 25% of Karnataka
Pradesh
20-40 %
GDP. Tamil
Kerala
Nadu > 40 %
Source: Central Statistics Office, 2015-16

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Insight 3: Manufacturing is slowly gaining momentum (2/2)
▪ Some states will have stronger focus on manufacturing: Potential for growth,
manufacturing
• Maharashtra, Uttarakhand, Tamil Nadu, Gujarat, and
(steel intensive)
Haryana have made significant progress in implementing
Jammu &
business reforms and suitable infrastructure. Kashmir

Himachal Pradesh
Punjab Arunachal
• States like Andhra Pradesh, Madhya Pradesh and Haryana
Uttarakhand
Pradesh
Punjab have renewed thrust on manufacturing, especially Sikkim Assam
Rajasthan Uttar Meghala Nagaland
Pradesh
in auto and ancillary sector. Bihar
Jhark-
ya
Manipur
Tripura
Gujarat Madhya
▪ Within the manufacturing sector the focus is more on Pradesh
Chhattis-
garh
hand
West
Bengal
Mizoram

Odisha
relatively labour intensive ones like food processing and Maharashtra

Telanga
textiles. na
Potential for growth:
▪ Mechanical machinery and shipbuilding sectors are less Goa Andhra
Pradesh low
prominent across states with a few exceptions (e.g. Punjab Karnataka

medium low
and Gujarat). Kerala
Tamil
Nadu
medium high
high
Source: Project Team Analysis

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Insight 4: India’s auto manufacturing hub will expand
Automotive industry in India
▪ India’s auto industry has shown a strong growth driven
by domestic demand and FDI inductive policies.

▪ India aims to be a global auto hub for small cars with

huge focus on exports.

▪ The existing automotive hubs in Haryana, Tamil

Nadu, Maharashtra will continue to strengthen.
• Haryana is the largest production hub and geared to
domestic market.

▪ New auto hubs are emerging in Andhra Pradesh, Gujarat

mainly driven by FDI.

▪ The sector is also poised for continued strong growth.

Source: SIAM, IBEF, public domain

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Insight 5: Construction will be a common demand driver
▪ Growth in the construction sector will be a pan-India phenomenon driven both by infrastructure spending
and housing demand, especially affordable housing.
▪ Construction has gained significant share in Tamil Nadu, Uttar Pradesh, Chhattisgarh, etc.
▪ Majority of states are expected to have strong infrastructure development, especially along major corridors.
▪ In some states, like Jammu & Kashmir and Bihar, steel demand will be driven almost entirely by
infrastructure development.
Share of construction in GDP Potential for growth, infrastructure
Jammu & Jammu &
Kashmir Kashmir
Himachal Pradesh
Punjab Himachal Pradesh
Uttarakhand Arunachal Punjab Uttarakhand Arunachal
Haryana Haryana
Uttar Sikkim Pradesh
Nagaland Uttar Bihar Pradesh
SikkimAssam
Rajasthan Pradesh Assam Rajasthan Pradesh Nagaland
Bihar Meghalaya Meghalaya
Madhya
Jhark- West Manipur Manipur
Mizoram Madhya Jhark- West
Gujarat Pradesh hand
ra Tripu
Bengal Gujarat Ch hattis- Tripura Mizoram
Chhattis- Pradesh gar
handBengal
h
Maharashtra Odisha
garh
Maharashtra
Odisha
Potential for growth:
Telan <6% Telan
gana gana
low
Goa Andhra 6-8 % Goa Andhra medium low
Karnata Pradesh Karnataka Pradesh
ka
Tamil 8-10 % Tamil medium high
KeralaNadu Kerala Nadu
Source: Central Statistics Office
> 10 % Source: Project Team Analysis
high
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Insight 6: Steel geography of India will remain unbalanced
▪ Gujarat, Maharashtra and Haryana are likely to experience strongest growth in steel demand.
Tamil Nadu also has good potential.
▪ The unbalanced steel geography will continue: capacity expansion have been mostly brownfield and
new steel production facilities most likely to be built around raw materials.
▪ With decreased transportation cost, intra-state trade steel trade will continue to prevail.
Potential for steel demand growth Increase in annual crude steel production
(from 2010/11 to 2015/16)
Jammu &
Kashmir Jammu &
Kashmir
Punjab Himachal Pradesh Himachal Pradesh Uttarakhand
Uttarakhand Arunachal Haryana
Punjab
Haryana Pradesh Arunachal
Rajasthan Sikkim Assam Pradesh
Uttar Nagaland Uttar Sikkim
Rajasthan
Pradesh Bihar Megha laya Pradesh AssamNagaland
Jhark- Manipur Bihar Meghalaya
Jhark- Manipur
Gujarat Madhya Chhattis-hand WestTripura Mizoram Gujarat Madhya West Tripura
Pradesh Bengal Chhattis-hand Mizoram
Pradesh Bengal
Maharashtra garh Odisha Potential for growth: Maharashtra garh
Odisha
Telang Telang
ana Andhra low ana Andhra
Goa medium low medium high Goa
KarnatakaPradesh Pradesh
Tamil KeralaNadu Karnataka
Source: Project Team Analysis Tamil
Kerala
Nadu
high Source: JPC
Increase of >1 Mt
Summary and conclusion
 Steel demand potentia
Summary of state potential
Gujarat,
H Haryana,
Andhra Pradesh, Maharashtra
Chhattisgarh,
Jharkhand,
MH Karnataka, Odisha, Tamil Nadu
Telangana,
Uttar Pradesh,
Uttarakhand
Bihar, Jammu and Assam, Goa,
North East ex Kashmir, Kerala, Himachal Pradesh,
ML Assam Madhya Pradesh,
West Bengal
Punjab, Rajasthan

Sikkim
L
L ML MH H

Economic growth potential

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Geography of economic vs steel demand potential
▪ Eastern states are expected to catch up in economic development.
▪ Infrastructure will be a pan-India steel demand driver, driven by various government initiatives.
▪ Strong manufacturing potential are shown in a limited number of states.
▪ Gujarat, Maharashtra, Haryana show strongest, balanced potential.

Potential for economic growth Potential for steel demand

Potential for steel demand
growth, infrastructure driven growth, manufacturing driven

Potential for growth:

low
medium low medium high

Source: Project Team Analysis

high

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When will India’s demand take off?
Steel demand per capita, kg/ person India 2018 to 2030

350
China 2008
300
India
Inflection imminent
250 2005

200
Inflection later
150

100 1993 Status quo continued

2000

50 2014 2018
1990

2000
0
0 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000

GDP per capita, USD/ person

Source: IHS Markit, worldsteel, Project Team Analysis

 Thank you for your attention.
For further information contact:

Dr Nae Hee Han | Director, Economic Studies and Statistics

World Steel Association
han@worldsteel.org | T: +32 (0)2 702 8913 | worldsteel.org

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