Trade Analytics
Steel
India is expected to become the second-largest steel producer in the world by 2016.

Iron & Steel Industry in India

Latest update: April, 2018

  • Infrastructure, oil and gas and automotives would drive the growth of the industry
  • Steel production in India is forecast to double by 2031, with growth rate expected to go above 10 per cent in FY18
  • To achieve steel capacity build-up of 300 million tonnes per annum (MTPA) by 2030, India would need to invest US$ 156.08 billion by 2030-31.
  • Ministry of Steel plans to set up Steel Research and Technology Mission in India to promote R&D activities in the sector
  • As of 2017, India is the world’s 3rd largest producer of crude steel (up from 8th in 2003). India’s steel production in 2017 stood at 101.4 MT.
  • National Steel Policy (NSP) implemented to encourage the industry to reach global benchmarks
Growth

Notes: MT - Million Tonnes, FDI – Foreign Direct Investment, P - Provisional
Source: Metallurgical and Materials Engineering Division Board, Aranca Research

  • In FY17, crude steel production in India was 97.42 MT, with the total crude steel production growing at a CAGR of 5.49 per cent over the last 6 years.
  • As of March 2017, the capacity utilisation of steel producers is set to increase with strong export demand and signs of revival in domestic sales. Companies like JSW and Essar Steel have experienced a sharp increase in steel manufacturing in the last 2 months
  • Steel manufacturing output of India is expected to increase to 128.6 MT by 2021, accelerating the country’s share of global steel production from 5.4 per cent in 2017 to 7.7 per cent by 2021.
  • India’s steel output is expected to grow at a CAGR of 8.9 per cent during 2017-21 and India is expected to become top global steel producer^.
Growth

Notes: FY - Indian Financial Year (April – March), MT - Million Tonnes, CAGR - Compound Annual Growth Rate; P – Provisional, 1April 2017 to February 2018 , 2CAGR is till FY17, Figures mentioned are as per latest data available, ^ As per BMI Research Report, *without deducting own consumption by producers
Source: Ministry of Steel Annual Report

Last Updated: April, 2018

Introduction

India was the world’s third-largest steel producer in 2017.@ The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India’s manufacturing output.

The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels.

Indian steel industries are classified into three categories such as major producers, main producers and secondary producers.

Market Size

India’s crude steel output grew 5.87 per cent year-on-year to 101.227 million tonnes (MT) in CY 2017. Crude steel production reached 93.183 MT during April-February 2017-18.

India’s finished steel exports rose 102.1 per cent to 8.24 MT, while imports fell by 36.6 per cent to 7.42 MT in 2016-17. Exports and Imports of iron and steel stood at 14.6 MT and 13.1 MT during April-February 2017-18, respectively.

Total consumption of finished steel stood at 81.943 MT during April-February 2017-18.

Investments

Steel industry and its associated mining and metallurgy sectors have seen a number of major investments and developments in the recent past.

According to the data released by Department of Industrial Policy and Promotion (DIPP), the Indian metallurgical industries attracted Foreign Direct Investments (FDI) to the tune of US$ 10.56 billion in the period April 2000–December 2017.

Some of the major investments in the Indian steel industry are as follows:

  • In March 2018, Tata Steel won the bid for acquisition of Bhushan Steel and is awaiting approval from National Company Law Tribunal (NCLT) and Competition Commission of India (CCI). Acquisition of Bhushan Steel will help Tata Steel increase its capacity to over 18 MTPA.
  • JSW Steel has planned a US$ 4.14 billion capital expenditure programme to increase its overall steel output capacity from 18 million tonnes to 23 million tonnes by 2020.
  • Rashtriya Ispat Nigam Ltd (RINL) has signed a Memorandum of Understanding (MOU) with Kudremukh Iron Ore Company Ltd for setting up of a 1.2 million ton per annum (MTPA) plant project at Vishakhapatnam.
  • Tata Steel has decided to increase the capacity of its Kalinganagar integrated steel plant from 3 million tonnes to 8 million tonnes at an investment of US$ 3.64 billion.

Government Initiatives

Some of the other recent government initiatives in this sector are as follows:

  • Government of India’s focus on infrastructure and restarting road projects is aiding the boost in demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.
  • The Union Cabinet, Government of India has approved the National Steel Policy (NSP) 2017, as it seeks to create a globally competitive steel industry in India. NSP 2017 targets 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030.
  • Metal Scrap Trade Corporation (MSTC) Limited and the Ministry of Steel have jointly launched an e-platform called 'MSTC Metal Mandi' under the 'Digital India' initiative, which will facilitate sale of finished and semi-finished steel products.
  • The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs 200 crore (US$ 30 million).

Road ahead

India is expected to overtake Japan to become the world's second largest steel producer soon, and aims to achieve 300 million tonnes of annual steel production by 2025-30.

India is expected to become the second largest steel producer in the world by 2018, based on increased capacity addition in anticipation of upcoming demand, and the new steel policy, that has been approved by the Union Cabinet in May 2017, is expected to boost India's steel production.* Huge scope for growth is offered by India’s comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors.

Exchange Rate Used: INR 1 = US$ 0.015 as of March 01, 2018.

References: Media reports, Press releases, Press Information Bureau (PIB), Joint Plant Committee (JPC)

Note: @ - Behind China and Japan,* - According to a report by S&P Global Platts

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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