An Overview of Steel Sector

AN OVERVIEW OF STEEL SECTOR

Global Scenario | Domestic Scenario | Production | Demand - Availability Projection | Steel Prices | Imports | Exports | Levies on Iron & Steel | Opportunities for growth of Iron and

Steel in Private Sector

Global Scenario

In 2011 the world crude steel production reached 1518 million tonnes (mt) and showed a growth of 6.2% over 2010. (Source: World Steel Association or WSA)

China remained the world’s largest crude steel producer in 2011 (684 mt) followed by Japan (108 mt), the USA (86.4 mt) and India (72.2 mt; prov) at the 4th position (72.2 mt).

The WSA has projected that global apparent steel use will increase by 3.6% to 1422 Mt in 2012, following growth of 5.6% in 2011. In 2013, it is forecast that world steel demand will grow further by 4.5% to around 1486 Mt. China’s apparent steel use in 2012 and 2013 is expected to increase by 4% in both the years. For India, growth in apparent steel use is expected to grow by 6.9% in 2012 and by 9.4% in 2013.

Per capita finished steel consumption in 2011 is estimated at 215 kg for world and 460 kg for China.

Domestic Scenario

The Indian steel industry has entered into a new development stage from 2007-08, riding high on the resurgent economy and rising demand for steel.

Rapid rise in production has resulted in India becoming the 4 th largest producer of crude steel and the largest producer of sponge iron or DRI in the world.

As per the report of the Working Group on Steel for the 12 th Plan, there exist many factors which carry the potential of raising the per capita steel consumption in the country, currently estimated at 55 kg (provisional). These include among others, an estimated infrastructure investment of nearly a trillion dollars, a projected growth of manufacturing from current 8% to 11-12%, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market for steel currently consuming around 10 kg per annum buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others.

At the time of its release, the National Steel Policy 2005 had envisaged steel production to reach 110 million tonnes by 2019-20. However, based on the assessment of the current ongoing projects, both in greenfield and brownfield, the Working Group on Steel for the 12 th Plan has projected that the crude steel steel capacity in the county is likely to be 140 mt by 2016-17 and has the potential to reach 149 mt if all requirements are adequately met.

The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid developments in the domestic steel industry (both on the supply and demand sides) as well as the stable growth of the Indian economy since the release of the Policy in 2005.

Production

Steel industry was delicensed and decontrolled in 1991 & 1992 respectively. Today, India is the 4 th largest crude steel producer of steel in the world. In 2011-12 (prov), production for sale of total finished steel (alloy + non alloy) was 73.42

mt. Production for sale of Pig Iron in 2011-12 (prov), was 5.78 mt. India is the largest producer of sponge iron in the world with the coal based route

accounting for 76% of total sponge iron production in the country (20.37 mt in 2011-12; prov.):

Last five year's production for sale of pig iron, sponge iron and total finished steel (alloy + non-alloy) are given below:

Indian steel industry : Production for Sale (in million tonnes)

Category 2007-08 2008-09 2009-10 2010-11 2011-12*

Pig Iron 5.28 6.21 5.88 5.68 5.78

Sponge Iron 20.37 21.09 24.33 25.08 20.37

Total Finished Steel (alloy + non alloy) 56.07 57.16 60.62 68.62 73.42

Source: Joint Plant Committee; *provisional

Demand - Availability Projection

Demand – Availability of iron and steel in the country is projected by Ministry of Steel in its Five Yearly Plan documents.

Gaps in availability are met mostly through imports. Interface with consumers by way of a Steel Consumers’ Council exists, which is

conducted on regular basis. Interface helps in redressing availability problems, complaints related to quality.

Steel Prices

Price regulation of iron & steel was abolished on 16.1.1992. Since then steel prices are determined by the interplay of market forces.

Domestic steel prices are influenced by trends in raw material prices, demand – supply conditions in the market, international price trends among others.

An Inter-Ministerial Group (IMG) is functioning in the Ministry of Steel, under the Chairmanship of Secretary (Steel) to monitor and coordinate major steel investments in the country.

The Government also took various fiscal and other measures for stabilizing steel prices like significant reduction in import duties o n steel, major raw materials, including mineral products and ores and concentrates in last few years. Also, excise duty for steel is currently at 12%. The government has also imposed export duty of 30% on iron ore fines and lumps in order to control ad-hoc exports of the mineral and conserve it for long term requirement of the domestic steel industry.

For ensuring quality of steel several items have been brought under a quality control order issued by the Government. The matter to bring more steel items under this order is under examination. Imports

Iron & steel are freely importable as per the extant policy. Last five year’s import of total finished steel (alloy + non alloy) is given below:-

Indian steel industry : Imports (in million tonnes)

Category 2007-08 2008-09 2009-10 2010-11 2011-12*



Exports

Iron & steel are freely exportable. Advance Licensing Scheme allows duty free import of raw materials for exports. Duty

Entitlement Pass Book Scheme (DEPB) was introduced to facilitate exports. Under this scheme exporters on the basis of notified entitlement rates, are granted due credits which would entitle them to import duty free goods. The DEPB benefit on export of various categories of steel items scheme is currently applicable for steel exports.

Last five year’s export of total finished steel (alloy + non alloy) is given below:-

Indian steel industry : Exports (in million tonnes)

Category 2007-08 2008-09 2009-10 2010-11 2011-12*



Levies on Iron & Steel

SDF levy

This was a levy started for funding modernisation, expansion and development of steel sector. The Fund, inter-alia, supports :

1. Capital expenditure for modernisation, rehabilitation, diversification, renewal & replacement of Integrated Steel Plants.

2. Research & Development 3. Rebates to SSI Corporations 4. Expenditure on ERU of JPC

The SDF levy was abolished on 21.4.94 Cabinet decided that corpus could be recycled for loans to Main Producers Interest on loans to Main Producers is set aside for promotion of R&D on steel etc. An Empowered Committee has been set up to guide the R&D effort in this sector.

EGEAF – Was a levy started for reimbursing the price differential cost of inputs used for engineering exporters. Fund was discontinued on 19.2.96.

Opportunities for growth of Iron and Steel in Private Sector

The New Industrial Policy Regime

The New Industrial policy opened up the Indian iron and steel industry for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are now freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of a facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.

The Growth Profile

(i) Steel

The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrepreneurs to set up fresh greenfield projects in different states of the country.

Crude steel capacity was 89 mt in 2011-12 (prov) and India, the 4 th largest producer of crude steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. The country is expected to become the 2 nd largest producer of crude steel in the world by 2015-16, provided all requirements for creation of fresh capacity are adequately met.

(ii) Pig Iron

India is also an important producer of pig iron. Post-liberalization, with setting up several units in the private sector, not only imports have drastically reduced but also India has turned out to be a net exporter of pig iron. The private sector accounted for 91% of total production for sale of pig iron in the country in 2011-12 (provisional). The production of pig iron has increased from 1.6 mt in 1991-92 to 5.78 mt in 2011-12 (provisional).

(iii) Sponge Iron

India is the world’s largest producer of sponge iron with a host of coal based units, located in the mineral-rich states of the country. Over the years, the coal based route has emerged as a key contributor and accounted for 76% of total sponge iron production in the country (20.37 mt in 2011-12; prov.). Capacity in sponge iron making too has increased over the years and stands at around 35 mt.

HISTORY

The BeginningThe modern iron and steel industry in India owes its origin to the grand vision and perseverance of Jamsetji Nusserwanji Tata. The Tata Iron and Steel Company Limited (Tata Steel) was registered in Bombay on 26th August 1907. The construction of the steel plant was then taken up in earnest with the first stake being driven in February 1908. R.G. Wells, an American with steel plant construction experience took over as the General Manager in 1909. Success came when the first blast furnace was blown-in on 2nd December 1911, and the first ingot rolled on 16th February 1912.

The company was originally constructed for a capacity of 160,000 tonnes of pig iron, 100,000 tones of ingot steel, 70,000 tones of rails, beams and shapes, and 20,000 tonnes of bars, hoops and rods. The plant essentially consisted of a battery of 180 non-recovery coke ovens and 30 by-product ovens with a sulphuric acid plant, two blast furnaces (each of 350 tonnes per day capacity), one 300 tonne hot metal mixer, four open hearth furnaces of 50 tonne capacity each, one steam engine driven 40-inch reversing blooming mill, one 28-inch reversing combination rail and structural mill with re-heating furnaces, and one 16- inch and two 10-inch rolling mills. Besides, the steel works had a power house, auxiliary facilities and a well-equipped laboratory. The cost of the plant as erected came to around Rs.23 million.

The War YearsSoon after the outbreak of the First World War in 1914, the plant was geared to meet the priority needs of the government. It worked on a 24 hour schedule, and sold its product to the government at a fraction of the price prevailing in the open market. Two more open hearth

furnaces of 60 tonnes capacity each were added to make more steel. Tatas supplied 1500 miles of rails and 300,000 tonnes of steel to the allies’ war effort. During this period, Tata steel embarked on an expansion of the works. The greater extension programme was taken up in 1917 to raise the steel production to 500,000 tonnes. This phase saw the then latest Duplex process of steelmaking being introduced along with an electric driven blooming mill.

The programme was delayed due to the war and could be completed only in 1924. As against the original estimate of Rs.67.6 million, the final cost came to Rs. 196 million.

The company progressively added new units such as the third Duplex furnace in 1929, two new roughing and finishing mills in 1933, and a new blast furnace along with coke ovens in 1935. Simultaneously, mining leases were renewed or obtained afresh and attention was given to ancillaries and, a capacity of 800,000 tonnes of saleable Steel was attained by 1939. At that time, Tata Steel came to be regarded as the largest Steel plant in the British Empire and also the cheapest exporter of pig iron in the world (the latter reminiscent of the state in 1999).

During the years of the Second World War between 1939 and 1945, Tata Steel contributed in a big way towards supplying war materials. This was a result of successful experimentation and innovation with existing resources. At the instance of the Government, in 1941, Tata Steel put up a wheel, tyre and axle plant to meet the requirements of the railways; in 1942 a mill to manufacture 1,000 tonnes per month of armour plates for defence carriers was added; a benzol recovery plant for producing toluene needed for the manufacture of explosives was put up in 1943; special quality sheets of alloy Steel and of high silicon were made in 1944-45 along with Steel for the famous “Tatanagar” tanks.

Subsequently, Tata Steel was looking for new areas of diversification and for modernizing the works.

Expansion to Two Million TonnesThe Steel target of six million tonnes of ingot Steel per annum in India set for the second five year plan included expansion of the existing Steel plants. Tata Steel was permitted to go in for an expansion to two million tonnes of ingot Steel per annum. Tata Steel’s expansion programme, the largest project in the private sector, was started in 1955 and completed by December 1958.

The rated daily capacity of the five blast furnaces in existence prior to TMP was 4200 tonnes. Blast furnace F, with a rated capacity of 1650 tonnes per day, provided sufficient hot metal for the two million tonne programme.

By providing sintered ore, blast furnace production increased by 10% to an annual output of 1,870,000 tonnes. Blast furnace F was completed and put in operation on October 10, 1958. One of the largest and most modern furnaces in the world, it was designed for high top-pressure operation and the use of sinter in the burden. The blowing-in ceremony of blast furnace F was regarded as the official christening of TMP.

A huge Steel Melting shop no. 3 (closed down in 1999) comprising two 800 tonne hot metal mixers, three 32 tonne Bessemer converters and seven 200 tonne open-hearth furnaces (with the possibility of adding an eighth furnace) was the corner stone of steelmaking under TMP.

A new rolling mill complex was constructed consisting of soaking pits, Blooming Mill no.2 and a sheet Bar and Billet mill (this was closed in early 1999). Between the two mills, the primary capacity was nearly three million tones of ingots per annum. The continuous sheet bar and billet mill no.2 was the main mill for semi-finished products for feeding the sheet mills, tin bars for the tinplate company and gothics for the manufacture of seamless tubes.

The Medium and Light Structural mill, which was also installed along with the other mills, was capable of rolling diversified products in wide ranges and was designed to roll 350,000 tonnes of blooms per annum. The products manufactured were to be mainly beams, channels, angles, junior beams and parallel flange beams-the last two for the first time in country. The revamping of the rail and structural mill (closed down in 1989), sheet bar and billet mill no.1 (closed down in 1998) and the merchant mill were also undertaken. A new merchant mill no.2 was commissioned in 1962. The additional service facilities included water supply arrangement, power supply and distribution to meet the total maximum demand of 125,000 kW and railway track facilities. The two million tonne programme was completed on schedule and involved no major delay.

Period between 1960-80During the decade of the sixties, consideration was given to the expansion of Tata Steel in the private sector. In July 1961, Tata Steel obtained an industrial license for setting up alloy steel

Sinter plant: A new 1.37 mtpa sinter plant (SP2) to raise the total sinter production to 2.5 mtpa and thereby, increase sinter in blast furnaces to around 65%.

Coke ovens: A coke oven battery with 54 ovens using stamp charging technology to make coke of internationally acceptable quality was established. Stamp charging has given following advantages:

Superior coke strength after reaction (CSR) compared with top charged coke, as well as higher bulk density.

Higher yield of sized coke for the blast furnaces. Improved blast furnace productivity because of usage of coke with better room

temperature and high temperature properties.

Waste recovery: 1 Mtpa Waste recycling plant to recover metallics from the plant was established

Ancillary technologies: The main technology improvement in phase II was the introduction of coal injection in blast furnaces. The limited reserves of coking coal in India have always spurred Indian iron makers to strive for lower coke rates. Tata Steel commissioned a coal injection unit in 1991 for its F blast furnace. The system developed by Kloeckner Sstahl Technik (KST) was adopted on the success of coal injection in F blast furnace; the technology was extended to G blast furnace as a part of modernisation phase III and thereafter, also incorporated in D blast furnace.

Modernization phase III The success of modernization phases I and II and the need to enter the flat product market, provided the necessary impetus to embark on the crucial third phase of modernization. Keeping in view the international and domestic Steel scenario, it was felt necessary for Tata Steel to set up an internationally competitive flat products complex. Apart from a one million tonne hot strip mill, a new one million tonne G blast furnace was also installed. The landmarks during this phase were:

Ironmaking: To augment steelmaking capacity, a corresponding increase in hot metal production was necessary. Hence, a highly automated blast furnace of 1 mtpa capacity, called the G blast furnace, was commissioned in November 1992.

Steelmaking: A new LD shop 2 with two 130t capacity LD vessels, with one out of two operating at any given moment, was commissioned.

New Cold Rolling Mill at Tata SteelIn addition to modernization, Tata Steel has defined its vision for the next millennium and has embarked on an unprecedented expansion in flat products. As a first step, taking into account the doubling of the capacity of the HSM, a 1.2 million tonnes cold rolling complex has been commissioned in Jamshedpur towards the middle of the year 2000. Some of the salient features of this new development are highlighted.

Facilities in the cold rolling complexInternationally, the technology of cold rolling has developed to an extremely sophisticated level. This progress has been augmented by the work on technology by equipment suppliers around the world, focused on further improving the processes to produce better products, thereby propelling cold rolled strips to higher levels of quality and cost competitiveness.

The major facilities include a pickling-cum-tandem cold rolling mill, an annealing facility, and galvanizing lines.

Steelmaking and castingMajor developments in the steelmaking and casting area includes the following:

Switchover from duplex and open hearth steelmaking to the oxygen process. Adopting optimum KD vessel configuration (to accommodate the high slag volume as a

result of high silicon and phosphorus in hot metal) and use of bottom inert gas agitation. Strategy to make low phosphorus Steel. Improvement of vessel lining life from 160-180 heats to over

1000 heats Adoption of continuous casting through billet and slab casters.

Tata Steel TodayAs a result of innovations and technological upgradation, Tata Steel, has become a well-run ultra modern plant - one of the best in the world. Fundamental changes in some metallurgical parameters have brought about this remarkable transformation. Necessity became the mother of invention and numerous innovations invoked improvement. The metallurgical changes introduced were essentially centered around:

Reducing alumina level in sinter from 4.4 to 2.5 %. Improving in coke quality Making changes in the fluxes used in sintermaking essentially to decrease the alkali

input. Adopting the optimum LD vessel configuration and blowing conditions to accommodate

the high slag volume required to deal with high silicon and phosphorus in Indian hot metal.

Increasing the yield during LD steelmaking Introducing continuous casting (CC) instead of ingot casting to increase the net yield.

All these factors have made Tata Steel internationally cost competitive. In terms of hot metal costs, Tata Steel is amongst the lowest in the world and has a clear advantage over other major integrated producers. The cost of conversion from hot metal to a finished product such as hot rolled coils where Tata Steel has not been very competitive so far would be taken care of in the near future as investments already made to achieve the results foreseen. High ash in coke, poor room temperature and high temperature strengths of coke, high alumina in the iron oxide feed, high silicon in hot metal, low yields during steelmaking, low yield of finished products, high energy consumption, high manpower, etc. have been the weaknesses not only of Tata Steel but of the Indian Steel industry as a whole.

Appropriate steps taken by the Company have already resulted in better yield lower energy consumption, lower silicon in hot metal, lower silicon in hot metal, lower lime consumption in steelmaking, higher vessel life, etc., all of which augur well for the Steel Company in future.

Tata Steel in The New Millennium

Tata Steel is all set to establish itself as the supplier of choice by delighting all its customers with its products and services. The Organisation is envisaged to become the most cost competitive Steel plant to serve the community and the nation. Where Tata Steel would venture, others will follow. The 21st century will certainly see a new Tata Steel - an integrated Steel plant in India with truly world class facilities along with a will to win amongst a committed and streamlined workforce.

Iron and steel industry

INTRODUCTION:Iron and Steel Industry in India is on anupswing because of the strong global anddomestic demand. Indias rapid economicgrowth and soaring demand by sectors likeinfrastructure, real estate and automobiles,at home and abroad, has put Indian steelindustry on the global map. According to thelatest report by International Iron and SteelInstitute (IISI), India is the 4th largeststeel producer in the world. HISTORY OF IRON AND STEEL INDUSTRY ININDIAIron and Steel industry in the country has experienced asustainable growth since the independence of the country.A humble beginning of the modern steel industry wasreached in India at Kulti in West Bengal in the year 1870.But the outset of bigger production became noticeable withthe establishment of a steel plant. It started plant inJamshedpur in Bihar in 1907. it started production in 1912.The new township was named after Jamshed ji Tata.It was, however, only after Independence that the steelindustry was able to find a strong foothold in the country.Excluding the Jamshedpur plant of the Tatas, all are in thepublic sector and looked after by Steel Authority of India Ltd.(SAIL). SOME OTHER INDUSTRIES:Bhilai and Bokaro Steel plant were set up withSoviet alliance. Durgapur and Rourkela came upwith British and West German technicalexpertise, respectively. THE PRESENT SCENARIO OF THE INDUSTRYIndia has one of the richest reserves of all the raw materialsrequired for the industry, namely land, capital, cheaplabour, iron ore, power, coal etc. Yet we are 4th in the worldranking for production of steel. We produced 66.8 milliontonnes in 2010-11, while China, at the top of thelist, produced 626.7 million tonnes. Our per capitaconsumption of steel in India (at 50 kg per annum) is wellbelow the world average (at about 200 kg per annum) andmuch below that of the developed world (around 350 kg perannum). VISION 2020 OF THE STEEL INDUSTRY IN INDIAThe National Steel Policy – 2005 aims at increasing thetotal steel production of the country to 110 million tonnesper year (in 2019-20) from 38 million tonnes (in 2004-05).This was supposed to require a compounded annualgrowth of about 7.3%. The total production in 2010 was66.8 million tonnes. The compounded annual growth from2005 to 2010 has been more than 9% which is better thanthe expected growth. But most of these are a result of thebrownfield expansion projects of the existing steelcompanies. But to continue with the same growth rate, weneed new Greenfield projects. INDIA’S EXPORT OF IRON AND STEEL

IMPORTS:Iron & steel are freely importable as per the extant policy.Last five year’s import of total finished steel (alloy + non alloy) is given below:-Indian steel industry : Imports (in million tonnes)Category 2007-08 2008-09 2009-10 2010-11 2011-12*Total Finished Steel (alloy + non alloy) 7.03 5.84 7.38 6.66 6.83Source: Joint Plant Committee; *provisional TATA STEELTata Steel is a top ten global steelmaker and the world’s secondmost geographically diversifiedsteel producer.Tata Steel was founded in India in1907. Since 2004 the Companyhas expanded globally, acquiringAsian steel producers NatSteeland Millennium Steel (now calledTata Steel Thailand) as well asEurope’s second largest steelproducer Corus (now called TataSteel Europe Limited). Tata Steel is part of the Tata Group, India’s largestindustrial conglomerate. Both Tata and Tata Steelhave a long history of charitable donations andsocial responsibility, with Tata spendingapproximately 4% of the Company’s profit aftertax on corporate social responsibility initiatives.Tata Steel endeavors to improve the quality of life inthe communities in which the Companyoperates. Tata Steel’s charitable projects havetouched the lives of over 800,000 people in India. Tata Steel is the worlds 6thFACTS ABOUT TATA STEEL An existing annual crude steel capacity of 28largest steel company. Indias largest Asias first integrated steel plant andmillion tons. integrated private sector steel company isnow the worlds second most Tata Steel plans to grow andgeographically diversifiedsteel producer. Its 5 million tonnes perglobalise through organicandinorganic routes. annum (MTPA) JamshedpurWorks plans to double its capacity by 2010. INDUSTRY STRUCTUREThe Iron and steel Industry in Secondary Integrated producersIndia has 2separatedivisions: producersIntegrated Producers: Amongst the Integratedproducers, themajor producers include Tata Iron and Steel Company Limited(TISCO), Rashtriya Ispat Nigam Limited (RINL) and SteelAuthority of India Limited (SAIL), who generate steel byconverting iron ore.Secondary Producers: The Secondary producers like IspatIndustries, Lloyds steel and Essar Steel, create steel throughthe process of melting scrap iron. These are mainly small steelplantsand produce steel in electric furnaces, using scrap and sponge DuringII WORLD WAR IMPACT ON STEEL INDUSTRIES sharply because of steelsWorld War II, industry productionincreased importance to warmobilization.Some of this increase was a result Indiaofproduction returning to full capacity afterthe depression. Meanwhile,pushed forward for making Iron and SteelforJapanese Army. the United States controlled 60 THE PROBLEMS FACED BY THE INDUSTRY IN PRESENT TIMESMany steel giants signed for opining new industries withseveral state governments (especiallyJharkhand, Orissa, Chattishgarh and West Bengal) for newprojects but none of them have materialised. It has taken 5long years for Tata Steel’s Kalinganagar (Orissa) project tocomplete the rehabilitation and resettlement process. JSW’sproposed Salboni plant (W.B) hasn’t been allotted the requiredamount of land, and moreover the government, recently, tookcontrol over about 400 acres of land bought by the companybecause of a state rule that any outsider can’t buy more than24 acres of village land. POSCO is facing massive resistancefrom the natives of Jagatsinghpur (Orissa) for land acquisitionwhile many other steel plants are awaiting aid from thegovernment in terms of either land or infrastructure. Mining is thePROCESSING OF IRON AND STEELMINING Earth is excavated deepfirst step in the production of iron and steel. Breaking and cutting of iron ore takes place

toin search of iron ore. receive rawiron.Raw Materials from the iron ore are put in a particularly hotfire lead in the embers of the fire.This is done to get the mixture of Iron Ore and Charcoal thatis burnt with the help of a blast of air from hand workedbellows. Conclusion :We develop economic as well as engineering indicators for productivitygrowth, technical change and energy consumption that allow us toinvestigate savings potentials in specific energy use as well as carbondioxide emissions. We discuss our findings within a broader context ofstructural and policy changes in the sector. The economic analysis showsthat productivity has been decreasing over time. The decline in productivitywas caused largely by government protection regarding prices anddistribution of steel and by inefficiencies in integrated steel plants that werereserved to the public sector. With liberalization of the iron and steelindustry productivity increasedsubstantially to positive growth rates.We further introduce cost effective and low cost potentials for reducingenergy consumption as well as carbon emissions. In comparing Indianenergy consumption to best practice energy consumption we show thatenergy savings of about 50% could be achieved. However, theimplementation of initiatives towards energy efficiency is being hampered bybarriers both of general and process specific nature occurring at the macroand micro level of the economy.

Steel Industry in India

Latest update: July, 2014

Value of India’s metals and mining industryIndia’s metals and mining industry recorded a strong 19.8 per cent expansion in 2011 to touch US$ 141.9 billion.

Contribution in global crude steel productionIndia is the world’s fourth-largest producer of crude steel (2012), with a global share of 5.1 per cent.

Market value of the Indian steel sectorIn 2011, the Indian steel sector’s total market value was US$ 57.8 billion.

Sector-wise steel consumption in IndiaInfrastructure is India’s largest steel consumer, accounting for 63 per cent of total consumption in FY11.

JULY 2014

Introduction

Steel is crucial to the development of any modern economy and is considered to be one of the backbones of human civilization. The level of per capita consumption of steel is treated as an important index of the level of socio-economic development in a country.

From only three steel plants, a few electric arc furnace-based plants and a mere one million tonne (MT) capacity status at the time of Independence, India is now the fourth largest crude steel producer in the world and the largest producer of sponge iron.

Presently, steel contributes to nearly two per cent of the gross domestic product (GDP) and employs over 500,000 people. The total market value of the Indian steel sector stood at US$ 57.8 billion in 2011 and is expected to touch US$ 95.3 billion by 2016. India's per capita steel consumption stood at 57.8 kilograms in 2013, according to a World Steel Association report and is expected to rise with increased industrialisation throughout the country.

Market size

India is slated to become the second-largest steel producer in the world by 2015. Steel production in the country has increased at a compound annual growth rate (CAGR) of 6.9 per cent over 2008-2012.

India's real consumption of total finished steel grew by 0.6 per cent year-on-year in April-March 2013-14 to 73.93 MT, according to the Joint Plant Committee (JPC), Ministry of Steel.

Increasing demand by sectors such as infrastructure, real estate and automobiles at home and abroad has put India on the world map. The construction sector accounts for around 60 per cent of the country's total steel demand while the automobile industry accounts for 15 per cent.

Investments

The steel industry and its related metallurgy and mining industries have witnessed quite a few investments and developments in the recent past. Some of the notable investments are as follows:

L&T Special Steels and Heavy Forgings have entered into a five-year technology transfer agreement with Japan Steel Works. This agreement covers transfer of critical technology for steel-melting and heavy forgings made from ingots weighing up to 200 tonnes and for the hydrocarbon and thermal power sectors.

JSPL Group has commissioned a greenfield 2 MT steel plant in Sohar, Oman at an investment of US$ 800 million. The greenfield unit will be one of the largest steel plants in the Gulf region.

Steel Authority of India Ltd (SAIL) has secured contracts for supplying over 117,000 tonnes of rails after successful bids for two global tenders floated by Rail Vikas Nigam Ltd (RVNL), for major upcoming passenger rail line projects in India.

JSW Steel plans to commissiona Rs 4,500 crore (US$ 748.55 million) cold rolling mill (CRM) at its integrated steel plant in Torangal, Karnataka. The unit, which will produce high-strength auto-grade steel, has an installed capacity of 2.3 million tonnes per annum (MTPA).

JSW Steel is also set to acquire WelspunMaxsteel for about Rs 1,100 crore (US$ 182.98 million) in a move aimed at sourcing cheaper raw material, bringing down production cost and enhancing its presence in the northern and western markets.

Canada has invited Coal India Ltd (CIL) to explore mining opportunities in British Columbia, as per Mr Stewart Beck, Canadian High Commissioner in India.

Government Initiatives

Ministry of Steel, Government of India, is considering setting up a strong research and development (R&D) mission/centre, virtual or otherwise, to step up innovative research and technology development in the country's steel industry.

The Centre's Steel Development Fund (SDF) and Plan Scheme presently provide financial assistance for R&D in the sector. Under the SDF scheme, 82 R&D projects have been approved with total project cost of Rs 677 crore (US$ 112.61 million) where in SDF assistance is Rs 370 crore (US$ 61.54 million). Under the Plan Scheme, eight projects have been approved with a total cost of Rs 123.27 crore (US$ 20.51 million) where in government assistance is Rs 87.28 crore (US$ 14.51 million).

In order to increase industrial activity, the Government of India, through the Ministry of Steel, has signed Memorandums of Understanding (MoUs) with all the major steel producing Public Sector Undertaking (PSU) companies such as SAIL and Rashtriya Ispat Nigam Ltd (RINL). These will help to direct the companies to achieve targets and benefit the sector as a whole.

Road Ahead

The liberalisation of the industrial policy and other initiatives taken by the government have spurred the growth of the private sector in the steel industry. While the existing units are being modernised or expanded, a large number of new steel plants have also come up in different parts of the country based on cost-effective and state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrepreneurs to set up fresh greenfield projects in different states of India.

With the increase in global population, there is a greater need for steel to build public-transport infrastructure. Emerging economies will continue to drive demand as these countries require a significant amount of steel for urbanisation and industrialisation purposes. India's steel sector is anticipated to witness investment of about Rs 2 trillion (US$ 33.26 billion) in the coming years, as per Tata Steel.

Exchange Rate: INR 1 = US$ 0.0166 as on July25, 2014

References: Media reports, Press Releases, Press Information Bureau, Department of Industry Policy and Promotion, Ministry of Steel, Confederation of Indian Industries

FUTURE

India is slated to become the second-largest steel producer in the world by 2015. Steel production in India has increased at a compound annual growth rate (CAGR) of 6.9 per cent over 2008–12. Easy availability of low-cost manpower and presence of abundant reserves make India competitive in the global setup.

The total market value of the Indian steel sector stood at US$ 57.8 billion in 2011 and is anticipated to touch US$ 95.3 billion by 2016. Attracted by the growth potential of the Indian steel industry, several global steel players have been planning to enter the market. Intended steel capacity build-up in India is set to result in investments in the range of US$ 104.2 billion to US$ 208.3 billion by 2020.

In view of the sector’s changed dynamics, globally as well as domestically, the Ministry of Steel has initiated the process of drafting a new National Steel Policy to replace the existing Policy of 2005. The Government of India is encouraging private ownership for steel operations and has therefore allowed 100 per cent foreign direct investment (FDI) through the automatic route in the Indian steel sector.

Driven by rising infrastructure development and increasing capacity addition in the automotive industry, demand for steel is expected to be robust. The estimated steel consumption in airport building is also likely to grow more than 20 per cent over the next few years with more and more modern and private airports expected to be set up.

Documents

An Overview of Steel Sector