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STEELFor updated information, please visit www.ibef.orgJanuary 2019
Table of ContentExecutive Summary . . .3Advantage India . . .4Market Overview . .6Recent Trends and Strategies . .16Growth Drivers .20Opportunities . . . 26Key Industry Associations .29Useful Information . .31
EXECUTIVE SUMMARY Total crude steel production in India has increased at a CAGR of 5.43 per cent during FY12–18, with country’soutput reaching 103.13 million tonnes per annum (MTPA) in FY18.Third largest producer ofcrude steel The country remained the third largest crude steel producer in 2017, as large public and private sector playersincreased steel production in view of rising demand. Moreover, capacity has increased to 137.98 million tonnes (MT) in 2017-18 while in the coming ten years thefigure is anticipated to rise to 300 MT of steel.Strong growthopportunitiesRising domestic andinternational investments India’s comparatively low per capita steel consumption and expected growth in consumption due to growinginfrastructure construction, automobile and railways sectors has offered scope for growth National Mineral Development Corporation is expected to increase the iron ore production 75 million tonnesper annum (MTPA) until 2021 indicating new opportunities in the sector Domestic players’ investments in expanding and upgrading manufacturing facilities are expected to reducereliance on imports. In addition, the entry of international players would provide benefits in terms of capitalresources, technical know how and more competitive industry dynamicsNote: MTPA – Million Tonnes Per AnnumSource: World Steel Association, Ministry of Steel, Aranca Research3SteelFor updated information, please visit www.ibef.org
SteelADVANTAGE INDIA
ADVANTAGE INDIA Demand would be supported by growth inthe domestic market To achieve steel capacity build-up of 300million tonnes per annum (MTPA) by 2030,India would need to invest US 156.08billion by 2030-31. Infrastructure, oil and gas and automotivewould drive the growth of the industry Lower per capita consumption compared tointernational average The industry is witnessing consolidation ofplayers which has led to investments byentities from other sectors. The ongoingconsolidation also presents an opportunityto global players to enter the Indian market. India’s finished steel consumption isanticipated to increase to 230 MT by 203031 from 90.68 MT in 2017-18 As of 2017, India is the world’s thirdlargest producer of crude steel (up fromeighth spot in 2003). India’s steelproduction in 2017 stood at 101.4 MT. Easy availability of low-cost manpowerand presence of abundant iron orereserves make India competitive in theglobal set up. India is home to the fifth-highest reservesof iron ore in the world.#ADVANTAGEINDIA 100 per cent FDI through the automaticroute is allowed National Steel Policy (NSP) 2017implemented to encourage the industry toreach global benchmarks 20 per cent safeguard duty on steel imports An export duty of 30 per cent has beenlevied on iron ore* (lumps and fines) toensure supply to domestic steel industry.Notes: MT - Million Tonnes, FDI – Foreign Direct Investment, National Steel Policy 2017, #USGS Mineral Commodity Summaries 2018, *except low grade (below 58 per cent)Source: Metallurgical and Materials Engineering Division Board, Aranca Research5SteelFor updated information, please visit www.ibef.org
SteelMARKET OVERVIEW
EVOLUTION OF THE INDIAN STEEL SECTOR Production of steel started inIndia (TISCO was setup in 1907) IISC was set up in 1918 tocompete with TISCO1907-18 Hindustan Steel Ltd and Bokaro Steel Ltdwere setup in 1954 and 1964, respectively In the early 1990s, the public sectordominated steel production Private players were in downstreamproduction mainly producing finished steelusing crude steel products1923-48 Mysore Iron and Steel Companywas set up in 1923 According to the new IndustrialPolicy Statement (1948), newventures were only undertaken bythe central government1954-64 Foreign players began entering the Indian steelmarket No license requirement for capacity creation Imposition of export duty on iron ore, to focus moreon catering growing domestic demand Decontrol of domestic steel prices Launch of Scheme for promotion of Research andDevelopment in Iron and Steel sector1973-921993-2014 SAIL was created in 1973 as a holding companyto oversee most of India's iron and steelproduction In 1989, SAIL acquired Vivesvata Iron and SteelLtd In 1993, the government set plans in motion topartially privatise SAIL2015-18 In 2017, India ranked as the thirdlargest crude steel producer in theworld. During 2017-18, 9.62 MT of steelwas exported from India.Notes: (1)TISCO - Tata Iron and Steel Company; IISC - Indian Iron and Steel Company; SAIL - Steel Authority of India Ltd;7SteelFor updated information, please visit www.ibef.org
STRUCTURE OF THE STEEL SECTORSteelFormLiquid SteelCrude SteelCompositionFinishedSteelAlloyEnd useNon-alloySteelStructural SteelIngotsFlatStainlessLowcarbonSteelConstruction elRail SteelHighSpeedHighCarbonSteelSource: Report on Indian steel industry by Competition Commission of India, Aranca Research8SteelFor updated information, please visit www.ibef.org
STEEL PRODUCTION CAPACITY HAS EXPANDEDRAPIDLYRoute-wise Crude Steel Production Capacity in FY18(in million tonnes)Crude Steel Production Capacity (in million tonnes)300.00 CAGR Y17FY16FY15FY14FY1340.24FY12FY08 59.843253002752502252001751501251007550250 India’s steel production capacity has expanded rapidly over the past few years, growing at a CAGR of 8.71 per cent from 59.84 million tonnes inFY08 to 137.98 million tonnes in FY18. The National Steel Policy 2017 has envisaged achieving up to 300 million tonnes of production capacity by 2030-31. Out of the total, BF-BOF route is expected to contribute 65 per cent of capacity, while the remaining 35 per cent is expected to come from EAF &IF routes. Expansion of production capacity to 300 million tonnes will translate into additional investments worth Rs 10 lakh crore (US 156.08 billion) by2030-31.Note: FY - Indian Financial Year (April - March), P – Projection, CAGR is up to FY18, BF-BOF – Blast Furnace-Blast Oxygen Furnace, EAF – Electric Arc Furnace, IF – Induction FurnaceSource: Joint Plant Committee, Ministry of Steel, Aranca Research9SteelFor updated information, please visit www.ibef.org
STEEL PRODUCTION IN INDIA HAS BEEN GROWINGAT A FAST PACETotal finished steel production (million tonnes)#120FY19P .444053.866065.848081.69100 CAGR 6.47%101.81 CAGR 6.71%FY08120FY17Total crude steel production (million tonnes) The steel sector contributes over 2 per cent to the GDP of the nation. Also, it employs 500,000 people directly and 2.50 million indirectly. In FY18, crude steel production in India was 103.13 MT, with the total crude steel production growing at a CAGR of 6.71 per cent during FY08FY18. Crude steel production during Apr-Dec 2018 (P) reached 78.98 million tonnes. During 2017-18 (P), finished steel production for sale in India stood at 104.98 MT. Output during Apr-Sep 2018 (P) reached 53.90 million tonnes. Steel manufacturing output of India is expected to increase to 128.6 MT by 2021, accelerating the country’s share of global steel production from5.4 per cent in 2017 to 7.7 per cent by 2021.Notes: FY - Indian Financial Year (April – March), MT - Million Tonnes, CAGR - Compound Annual Growth Rate; P – Provisional, #net of own consumption by producers, CAGR is up toFY18P, *up to December 2018, up to September 2018Source: Joint Plant Committee, News Articles, Ministry of Steel, World Steel Association10SteelFor updated information, please visit www.ibef.org
DEMAND HAS OUTPACED SUPPLY OVER THE LASTFIVE YEARSConsumption of finished steel (in million tonnes)#CAGR100.00Per-capita consumption of steel (in 455.0051.00FY18P*FY110.00FY10FY19P .4880.0040.003.96%70.0090.0050.00#CAGR India’s finished steel consumption grew at a CAGR of 5.70 per cent during FY08-FY18 to reach 90.70 MT. Finished steel consumption duringApr-Dec 2018 stood at 71.82 million tonnes. Steel consumption is expected to grow 7.5 per cent year-on-year to 95.4 MT in 2018. Further, India is slated to surpass USA to become theworld’s second largest steel consumer in 2019 with total steel consumption of 102.3 million tonnes**. It is expected that consumption per capita would increase supported by rapid growth in the industrial sector and rising infra expenditure projects inrailways, roads and highways, etc. India’s per capita consumption of steel grew at a CAGR of 3.96 per cent from 46 kgs in FY08 to 68.00 kgs in FY17. The figure stood at 68 kgs (P)during Apr 2017-Feb 2018. The National Steel Policy aims to increase per capita steel consumption to 160 kgs by 2030-31.Note: MT - Million Tonnes, – up to December 2018,* - up to February 2018, #CAGR- up to FY17, **As per the World Steel Association, P – Provisional, kg - kilogramsSource: JPC India Steel, Ministry of Steel, World Steel Association11SteelFor updated information, please visit www.ibef.org
TRENDS IN IMPORTS AND EXPORTS OF 2 Exports and imports of finished steel stood at 4.68 MT and 5.91 MTduring Apr-Dec 2018 (P).149.62 During the same period, the country’s finished steel imports rose 3.5per cent year-on-year to 7.48 MT, as compared to 7.23 MT in 201617.Finished steel exports and imports (in million tonnes)11.71 In 2017-18, the country’s finished steel exports increased 17 per centyear-on-year to 9.62 million tonnes (MT), as compared to 8.24 MT FY13FY12FY11FY10FY09FY080Note: FY - Indian Financial Year (April - March), FY19* - up to December 2018, P - ProvisionalSource: Joint Plant Committee, Aranca Research12SteelFor updated information, please visit www.ibef.org
KEY PLAYERS OF THE INDUSTRYCompanyProductsTata Steel LtdFinished steel (non-alloy steel)SAILFinished steel (non-alloy steel)JSW Steel LtdHot-rolled coils, strips and sheetsJindal Steel and Power LtdIron and steelIspat Industries LtdHot-rolled coils, strips and sheetsWelspun-Gujarat Stahl Rohren LtdTubes and pipesBhushan Steel LtdCold-rolled coils, strips and sheetsVisa Steel LtdFerro Chrome, coke and special steelSource: Aranca Research13SteelFor updated information, please visit www.ibef.org
KEY STEEL PLANTS IN INDIASteel integrated plantsunder SAIL (Bhilai, Rourkela,Bokaro, Durgapur andBurnpur)Tata Steel’s largest steelplant, based in JamshedpurAlloy and special steel plantsunder SAIL (Bhadrawati andSalem); iron and steel plantat VisvesvarayaRINL steel plant inVishakhapatnamSource: Company websites, Aranca Research14SteelFor updated information, please visit www.ibef.org
STEEL SEZs IN INDIADeveloperLocationProductViraj Profiles LtdThane, MaharashtraStainless steel engineering productsSAIL Salem SEZ Pvt LtdSalem, Tamil NaduSteelOrissa Industrial Infrastructure DevelopmentCorporationJaipur, OrissaMetallurgical-based engineering andancillary/downstream industryTata Steel Special Economic Zone (TSSEZ)Gopalpur, OdishaSteel and allied downstream industriesSource: Formal approvals granted in the Board of Approvals after the SEZ rules coming into force, Special Economic Zones in India website, www.sezindia.nic.in15SteelFor updated information, please visit www.ibef.org
SteelRECENT TRENDSAND STRATEGIES
NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY (1/2) Most of the companies in the industry are undertaking modernisation and expansion of plants to be more costefficient. E.g. SAIL has undertaken modernisation and expansion for its 6 plantsGrowing investments An Inter-Ministerial Group (IMG) functioning under the Ministry of Steel, is monitoring and coordinating majorsteel investments across the country The production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPA in 2025 with totalinvestment of US 24.88 billion. SAIL and Arcelor Mittal are going to form a joint venture to set up a 1.5 million tonne per annum steel plant.Strategic alliances The consortium of SAIL and National Fertiliser Ltd. (NFL) has been nominated for revival of Sindri Unit of theFertiliser Corporation of India Ltd RINL, Vishakhapatnam Steel Plant and the Power Grid Corporation of India Ltd (POWERGRID) signed anMoU to set up a JV company to manufacture transmission line towers and tower parts including R&D of newhigh-end products Attracted by the growth potential of the Indian steel industry, several global steel players have been planningto enter the marketEntry of internationalcompanies Liberty House Group, a UK based business, is aiming to acquire Bhushan Power and Steel which will help theconglomerate to enter the Indian market. The firm has already started the acquisition of Adhunik Metaliks,another Indian company. As of October 2018, VTB Bank, a Russian financial group, is interested in acquiring Essar Steel, India’s fourthlargest steel producer.Notes: MTPA - Million Tonnes Per AnnumSource: Ministry of Steel, Ministry of Railways, Aranca Research17SteelFor updated information, please visit www.ibef.org
NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY (2/2) Indian
Steel consumption is expected to grow 7.5 per cent year-on-year to 95.4 MT in 2018. Further, India is slated to surpass USA to become the world’ssecond largest steel consumer in 2019 with total steel consumption of 102.3 million tonnes**. It is expected that consumption per capita would increase supported by rapid growth in the industrial sector and rising infra expenditure projects in .
