Steel
India became world's third largest crude steel producer in 2017.

Iron & Steel Industry in India

Latest update: June, 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: June, 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 finished steel consumption grew at a CAGR of 5.69 per cent during FY08-FY18 to reach 90.68 MT.

India’s crude steel and finished steel production increased to 102.34 MT and 104.98 MT in 2017-18, respectively.

In 2017-18, the country’s finished steel exports increased 17 per cent year-on-year to 9.62 million tonnes (MT), as compared to 8.24 MT in 2016-17. Exports and imports of finished steel stood at 0.99 MT and 1.22 MT, during Apr-May 2018.

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:

  • Vedanta Star Ltd has outbid other companies to acquire Electrosteel Steels for US$ 825.45 million.
  • Tata Steel won the bid to acquire Bhushan Steel by offering a consideration of US$ 5,461.60 million.
  • 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.
  • Liberty House Group, a UK based business, is aiming to acquire Bhushan Power and Steel which will help the conglomerate to enter the Indian market.
  • 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.
  • 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 has envisaged achieving 300 MT of annual steel production capacity by 2030.

Steel consumption is expected to grow 5.7 per cent year-on-year to 92.1 MT in 2018.

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$ 0.0155 as on March 30, 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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