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January, 2011

Sector structure/Market size

India became the fourth largest producer of crude steel in the world in 2010 as against the eighth position in 2003 and is expected to become the second largest producer of crude steel in the world by 2015. India also maintained its lead position as the world’s largest producer of direct reduced iron (DRI) or sponge iron.

Led by strong demand for autos and engineering services, the domestic steel demand in India remains robust, as per Moody's sectoral analysis on Asia's steel sector. According to the analysis, the outlook for the domestic operating environment is positive, driven by robust growth in infrastructure, autos and construction and constrains on additional supply by 2011.


As per provisional data released by World Steel Association (WSA), India was the fourth largest producer of crude steel during January–September 2010. India produced 50.1 million tonnes (MT) crude steel during the period under review.

Capacity for crude steel production expanded from 51.17 million tonnes per annum (mtpa) in 2005-06 to 72.96 mtpa in 2009-10. Crude steel production grew at 8.4 per cent annually from 46.46 MT in 2005-06 to 64.88 MT in 2009-10.

As per the latest estimates, the crude steel capacity in the country is likely to reach 120 MT by 2012 from 72.9 MT in the 2009-10.

Production for sale of finished steel stood at 59.69 MT during 2009-10 as against 46.57 MT in 2005-06, an average annual growth of 6.5 per cent. Production for sale of finished steel during April-October 2010-11 stood at 35.595 MT and was up by 4.4 per cent over the corresponding period of the previous year.

Public sector steel companies Steel Authority of India Ltd. (SAIL) and Rashtriya Ispat Nigam Ltd. (RINL) are in the process of expanding their crude steel capacities. SAIL envisages increasing its crude steel production from existing 12.84 Mt to 21.40 MT per annum in Phase-I to be completed by 2012-13 at an approximate estimated cost of US$ 15.23 billion including cost of mine development.

RINL is expanding its existing capacity of 2.9 MT of crude steel production to 6.3 MT per annum to be completed by December, 2011 at an estimated cost of US$ 26.60 million.

Another public sector company, NMDC Ltd., is to set up a 3 MT per annum integrated steel plant at Nagarnar, Chhattisgarh at an estimated investment of US$ 33.78 million. The Plant is likely to be commissioned in 2014.

Tata Steel registered sales of 5.9 MT during the third quarter ended December 2010, while Steel Authority of India Ltd (SAIL) sold 3.25 MT steel in Q3 FY'11, registering a growth of 10.7 per cent over Q3 FY'10. Meanwhile, JSW Steel’s production during the quarter grew by 11 per cent to 1.636 MT.


The domestic steel consumption grew by 9.8 per cent to 29.82 MT during April-September 2010 over the year-ago period, on the back of steady demand from sectors like automobile and consumer durables. As per the provisional data from the Ministry of Steel, consumption was at 27.15 MT in the same period a year ago. In September 2010, steel consumption rose 4.1 per cent to 4.72 MT, against 4.53 MT in the year-ago period.