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Steel

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Steel

April, 2011

Sector Structure/ Market Size

Steel industry has a major role to play in the economic growth of India. With new global acquisitions by Indian steel giants, setting up of new state-of-the-art steel mills, modernisation of existing plants, improving energy efficiency and backward integration into global raw material sources, India is now on the centre of the global steel map. Consumption of steel in the construction sector, industrial applications, and transport sector has been on the rise and special steel usage in engineering industries such as power generation, petrochemicals and fertiliser industry is also growing.

India has retained its position as the 5th largest producer in 2010 and recorded a growth of 11.3 per cent as compared to 2009. India has also emerged as the largest sponge iron/direct reduced iron (DRI) producing country in the world in 2010, a rank it has held on since 2002. Sponge iron production grew at a CAGR of 11 per cent to reach a level of 20.74 million tonne (MT) in 2009-10 as compared to 14.83 MT in 2005-06. India is expected to become the second largest producer of steel in the world by 2015-16, on account of growing steel demand, rich resources base of iron ore, skilled manpower and vast experience of steel making and the huge capacity expansion planned and being executed in the steel sector.

With the expanding consumer market, Indian steel industry is likely to receive huge domestic and foreign investments. Nearly 222 memorandums of understandings (MoUs) for planned capacity of around 276 MT have been signed between the investors and various State Governments, mostly in Orissa, Jharkhand, Chhattisgarh and West Bengal.

India has recorded a growth of over 8.6 per cent, producing 6.35 MT of steel in March 2011 as against 5.85 MT in the corresponding month in 2010, according to World Steel Association (WSA).

Steel exports has increased by 17.3 per cent as it reached an estimated 2.46 MT, while steel imports were at an estimated 5.36 MT, a growth of 2.8 per cent in 2010.

Production

Crude steel production was registered at 51.57 MT during April-Dec 2010 in the country as per Joint Plant Committee (JPC). The production is expected to be nearly 110 MT by 2012-13.

Crude steel production grew at a compound annual growth rate (CAGR) of 8.4 per cent during the five years, 2005-06 to 2009-10. The crude steel performance accounted for 31 per cent of the total crude steel production in the country during 2009-10, contributed largely by the strong trends in growth of the electric route of steel making, particularly the induction furnace route, which was a key driver in the growth of the segment. In case of total finished steel (alloy + non-alloy), production for sale was recorded at 47.30 MT, a growth of 7.9 per cent during Apr-Dec 2010.

Steel Authority of India (SAIL) Ltd has planned to enhance its hot metal production capacity from the level of 13.82 million tonnes per annum (MTPA) to 23.46 MTPA under its current phase of expansion and modernisation which is expected to be completed by financial year 2012-13. In the next phase, SAIL would increase its capacity further to 26.18 MTPA.The indicative investment for current phase is about US$ 13.28 billion. Additionally, approximately US$ 2.21 billion has been earmarked for modernisation and expansion of SAIL Mines.

NMDC Ltd plans to increase the production of iron ore from the present level of about 24 MT to 40 MT by 2014-15. Besides, setting up a 3 MTPA Integrated Steel Plant at Nagarnar in Chhattisgarh. The environmental clearance for the plant has been accorded by Ministry of Environment and Forests (MoEF).

Consumption

The Indian steel industry has been on a high-growth trajectory led by buoyancy in sectors such as infrastructure and construction, oil and gas and automobiles. The demand for steel is expected to further increase with major international automobile manufacturers setting manufacturing facilities in India.

The consumption of steel domestically was recorded at 44.28 MT, indicating further strengthening of demand during Apr-Dec 2010. The consumption of steel in the country has shown an increase of 10.3 per cent during April 2010 to January 2011 as compared to the same period of previous year.