STEEL - ibef.org ?· Steel High Carbon Steel Construction Steel Rail Steel . 9 Steel For updated information,…

  • Published on
    07-Sep-2018

  • View
    213

  • Download
    0

Embed Size (px)

Transcript

  • For updated information, please visit www.ibef.org May 2018

    STEEL

  • Table of Content

    Executive Summary...3

    Advantage India......4

    Market Overview ...6

    Recent Trends and Strategies ...17

    Growth Drivers.............22

    Opportunities.........30

    Industry Associations.......36

    Success Stories....33

    Useful Information........38

  • For updated information, please visit www.ibef.org Steel 3

    EXECUTIVE SUMMARY

    Total crude steel production in India has increased at a CAGR of 5.43 per cent during FY1218, with countrys

    output reaching 102.34 million tonnes per annum (MTPA) in FY18.

    The country became the 3nd largest crude steel producer in 2017, as large public and private sector players

    strengthen steel production capacity in view of rising demand.

    Moreover, capacity has increased to 134.6 million tonnes (MT) in 2017-18 while in the coming ten years the

    figure is anticipated to rise to 300 MT of steel.

    3rd largest producer of

    crude steel

    Source: World Steel Association, Ministry of Steel, Aranca Research

    Indias comparatively low per capita steel consumption and expected growth in consumption due to growing

    infrastructure construction, automobile and railways sectors has offered scope for growth

    National Mineral Development Corporation is expected to increase the iron ore production 75 million tonnes

    per annum (MTPA) until 2021 indicating new opportunities in the sector

    Domestic players investments in expanding and upgrading manufacturing facilities are expected to reduce

    reliance on imports. In addition, the entry of international players would provide benefits in terms of capital

    resources, technical know how and more competitive industry dynamics

    Note: MTPA Million Tonnes Per Annum

    Strong growth

    opportunities

    Rising domestic and

    international investments

  • Steel

    ADVANTAGE INDIA

  • For updated information, please visit www.ibef.org Steel 5

    ADVANTAGE INDIA

    Demand would be supported by growth in

    the domestic market

    Infrastructure, oil and gas and automotives

    would drive the growth of the industry

    Lower per capita consumption compared to

    international average

    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.

    301 MoUs have been signed with various

    states for planned capacity of about 486.7

    MT.

    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 worlds 3rd largest

    producer of crude steel (up from 8th in

    2003). Indias steel production in 2017

    stood at 101.4 MT.

    Easy availability of low-cost manpower

    and presence of abundant iron ore

    reserves make India competitive in the

    global set up

    100 per cent FDI through the automatic

    route is allowed. Large infrastructure

    projects in the PPP mode are being formed

    National Steel Policy (NSP) implemented to

    encourage the industry to reach global

    benchmarks

    Policy clarity and stability expected in

    respect of mining leases and forest

    clearances

    20 per cent safeguard duty on steel imports

    ADVANTAGE

    INDIA

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

  • Steel

    MARKET OVERVIEW

  • For updated information, please visit www.ibef.org Steel 7

    EVOLUTION OF THE INDIAN STEEL SECTOR

    Notes: (1)TISCO - Tata Iron and Steel Company; IISC - Indian Iron and Steel Company; SAIL - Steel Authority of India Ltd;

    1907-18 1923-48 1973-92 1954-64 2015-18 1993-2014

    Production of steel started in

    India (TISCO was setup in 1907)

    IISC was set up in 1918 to

    compete with TISCO

    Hindustan Steel Ltd and Bokaro Steel Ltd

    were setup in 1954 and 1964, respectively

    In the early 1990s, the public sector

    dominated steel production

    Private players were in downstream

    production mainly producing finished steel

    using crude steel products

    Foreign players began entering the Indian steel

    market

    No license requirement for capacity creation

    Imposition of export duty on iron ore, to focus more

    on catering growing domestic demand

    Decontrol of domestic steel prices

    Launch of Scheme for promotion of Research and

    Development in Iron and Steel sector

    Mysore Iron and Steel Company

    was set up in 1923

    According to the new Industrial

    Policy Statement (1948), new

    ventures were only undertaken by

    the central government

    SAIL was created in 1973 as a holding company

    to oversee most of India's iron and steel

    production

    In 1989, SAIL acquired Vivesvata Iron and Steel

    Ltd

    In 1993, the government set plans in motion to

    partially privatise SAIL

    In 2017, India ranked as the 3nd

    largest crude steel producer in the

    world, leaving behind United States.

    During 2017-18, 9.62 MT of steel

    was exported from India.

  • For updated information, please visit www.ibef.org Steel 8

    STRUCTURE OF THE STEEL SECTOR

    Source: Report on Indian steel industry by Competition Commission of India, Aranca Research

    Steel

    Form Composition End use

    Liquid Steel Crude Steel Finished

    Steel Alloy

    Non-alloy Steel

    Structural Steel

    Ingots

    Semis

    Flat

    Non-flat

    Stainless

    Silicon electrical

    High Speed

    Low carbon Steel

    Medium carbon Steel

    High Carbon Steel

    Construction Steel

    Rail Steel

  • For updated information, please visit www.ibef.org Steel 9

    STEEL PRODUCTION IN INDIA HAS BEEN GROWING

    AT A FAST PACE0

    53

    .68

    57

    .81

    61

    .94

    64

    .92

    71

    .77

    71

    .87

    78

    .91

    75

    .30

    17.0 16.5 16.5 16.8

    17.2 17.9 18.5 17.9

    0

    20

    40

    60

    80

    100

    120

    FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P

    Private Sector Public Sector

    Source: Ministry of Steel Annual Report

    In FY18, crude steel production in India was 102.34 MT, with the

    total crude steel production growing at a CAGR of 5.43 per cent over

    the last 7 years.

    The steel sector contributes over 2 per cent to the GDP of the nation

    and provides 20 lakh jobs in the country.

    During 2017-18, finished steel production for sale in India stood at

    104.98 MT respectively.

    Steel manufacturing output of India is expected to increase to 128.6

    MT by 2021, accelerating the countrys share of global steel

    production from 5.4 per cent in 2017 to 7.7 per cent by 2021.

    55

    .37

    63

    .18

    68

    .86

    74

    .24

    79

    .34

    78

    .00

    96

    .39

    92

    .46

    13.3 12.5

    12.8 13.4 12.8 13.0

    14.9 14.6

    0

    20

    40

    60

    80

    100

    120

    FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P

    Private Sector Public Sector

    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

    1

    1

    Total finished steel production (million tonnes)*

    2CAGR 8.39%

    Total crude steel production (million tonnes)

    CAGR 5.49%

  • For updated information, please visit www.ibef.org Steel 10

    SHARES IN PRODUCTION: SAIL AND TATA LEAD THE

    WAY

    Source: Ministry of Steel Annual Report 2016-17, Aranca Research

    As of FY17, SAIL dominated Indias steel sector, with the company

    accounting for 11.40 per cent of countrys finished steel production

    and 14.59 per cent of countrys crude steel production. During FY17,

    Tata Steel accounted for 11.46 per cent of finished steel production

    and 12.46 per cent of the countrys crude steel production

    In January 2017, Indian government inaugurated Universal Rail Mill

    (URM) worth US$ 178.49 million at SAILs Bhilai steel plant. The

    production of the worlds longest single rail of 130 meters from the

    new URM also commenced in the new mill.

    Notes: RINL - Rashtriya Ispat Nigam Limited ; (1)Provisional; Figures mentioned are as per latest data available

    Indias crude steel market share by production FY171

    Indias finished steel market share by production FY171

    14.59%

    12.46%

    4.47%

    68.49%

    SAIL

    TATA

    RINL

    OTHERS

    10.40%

    10.46%

    3.22%

    75.91%

    SAIL

    TATA

    RINL

    OTHERS

  • For updated information, please visit www.ibef.org Steel 11

    52

    .12

    52

    .40

    59

    .34

    66

    .42

    70

    .92

    73

    .48

    74

    .10

    76

    .99

    81

    .52

    84

    .04

    90

    .68

    0.00

    10.00

    20.00

    30.00

    40.00

    50.00

    60.00

    70.00

    80.00

    90.00

    100.00

    FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

    DEMAND HAS OUTPACED SUPPLY OVER THE LAST

    FIVE YEARS

    Total consumption of finished steel was 90.68 MT in FY18 as

    compared to 83.90 MT in FY17.

    Steel consumption is expected to grow 5.7 per cent year-on-year to

    92.1 MT in 2018.

    It is expected that consumption per capita would increase supported

    by rapid growth in the industrial sector and rising infra expenditure

    projects in railways, roads and highways, etc.

    The consumption of real steel has grew at a CAGR of 5.69 per cent

    during FY08-FY18

    Indias per capita consumption of steel grew at a CAGR of 4.75 per

    cent from 45 kgs in FY09 to 65.25 kgs in FY17. The figure stood at

    68 kgs (P) during April-February 2017-18.

    Consumption of finished steel (in million tonnes)

    CAGR 5.69%

    Source: JPC India Steel, Ministry of Steel, Aranca Research

    Note: MT - Million Tonnes, FY18*-Up to February 2018, 2CAGR- up to FY17, P Provisional, kg - kilograms

    45

    .00

    58

    .20

    59

    .30

    59

    .56

    61

    .15

    63

    .99

    65

    .25

    68

    .00

    0.00

    10.00

    20.00

    30.00

    40.00

    50.00

    60.00

    70.00

    80.00

    FY09 FY12 FY13 FY14 FY15 FY16 FY17 FY18P*

    Per-capita consumption of steel (in kgs)

    2CAGR 4.75%

  • For updated information, please visit www.ibef.org Steel 12

    TRENDS IN IMPORTS AND EXPORTS OF STEEL

    Indian Government imposed Anti-Dumping Duty on 47 steel products

    for five years beginning from August 2016.

    In 2017-18, the countrys 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.

    During the same period, the countrys finished steel imports rose 3.5

    per cent year-on-year to 7.48 MT, as compared to 7.23 MT in 2016-

    17.

    6.8

    6 7

    .93

    5.4

    5

    9.3

    2

    11

    .71

    7.2

    3

    7.4

    8

    4.5

    9 5.3

    7

    5.9

    9

    5.6

    0

    4.0

    8

    8.2

    4

    9.6

    2

    0.00

    2.00

    4.00

    6.00

    8.00

    10.00

    12.00

    14.00

    FY

    12

    FY

    13

    FY

    14

    FY

    15

    FY

    16

    FY

    17

    FY

    18

    Imports Exports

    Finished steel exports and imports (in million tonnes)

    Source: Joint Plant Committee, Aranca Research

    Note: FY - Indian Financial Year (April - March)

  • For updated information, please visit www.ibef.org Steel 13

    KEY PLAYERS OF THE INDUSTRY

    Source: Aranca Research

    Company Products

    Tata Steel Ltd Finished steel (non-alloy steel)

    SAIL Finished steel (non-alloy steel)

    JSW Steel Ltd Hot-rolled coils, strips and sheets

    Jindal Steel and Power Ltd Iron and steel

    Ispat Industries Ltd Hot-rolled coils, strips and sheets

    Welspun-Gujarat Stahl Rohren Ltd Tubes and pipes

    Bhushan Steel Ltd Cold-rolled coils, strips and sheets

    Visa Steel Ltd Ferro Chrome, coke and special steel

  • For updated information, please visit www.ibef.org Steel 14

    KEY STEEL PLANTS IN INDIA

    Alloy and special steel plants

    under SAIL (Bhadrawati and

    Salem); iron and steel plant

    at Visvesvaraya

    Steel integrated plants

    under SAIL (Bhilai, Rourkela,

    Bokaro, Durgapur and

    Burnpur)

    Tata Steels largest steel

    plant, based in Jamshedpur

    RINL steel plant in

    Vishakhapatnam

    Source: Company websites, Aranca Research

  • For updated information, please visit www.ibef.org Steel 15

    PORTERS FIVE FORCES FRAMEWORK

    Positive Impact

    Neutral Impact

    Negative Impact

    Low - Aluminium and plastics are being

    used in few cases in automotive and other

    consumer durable sectors. However, it

    still does not pose significant threat to

    steel

    Threat of Substitutes

    Medium - The steel industry is highly

    concentrated, with the top five players

    accounting for more than 70 per cent of

    the market share

    Steel companies usually compete on the

    basis of production capacity, economies

    of scale, access to raw material, etc.

    Competitive Rivalry

    Medium - Major steel consumption

    sectors, such as automobiles, oil and gas,

    shipping, consumer durables and power

    generation, enjoy high bargaining power

    and get favourable bulk deals. Smaller

    customers, however, do not enjoy this

    benefit

    Bargaining Power of Buyers

    Low - Capital intensive, industry players

    are large and enjoy economies of scale.

    Some have their own mines for sourcing

    key raw materials

    Several regulatory clearances required,

    including environmental, land acquisition,

    etc.

    Threat of New Entrants

    Medium - Large integrated companies

    have their own mines to source key raw

    materials

    Bargaining Power of Suppliers

  • Steel

    RECENT TRENDS

    AND STRATEGIES

  • For updated information, please visit www.ibef.org Steel 17

    NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY

    (1/2)

    Source: Ministry of Steel, Ministry of Railways, Aranca Research

    Notes: MTPA - Million Tonnes Per Annum

    Most of the companies in the industry are undertaking modernisation and expansion of plants to be more cost

    efficient. E.g. SAIL has undertaken modernisation and expansion for its 6 plants

    An Inter-Ministerial Group (IMG) functioning under the Ministry of Steel, is monitoring and coordinating major

    steel investments across the country

    The production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPA in 2025 with the total

    investment of US$ 24.88 Billion

    Growing investments

    SAIL and Arcelor Mittal are going to form a joint venture to set up a 1.5 million tonne per annum steel plant.

    The consortium of SAIL and National Fertiliser Ltd. (NFL) has been nominated for revival of Sindri Unit of the

    Fertiliser Corporation of India Ltd

    RINL, Vishakhapatnam Steel Plant and the Power Grid Corporation of India Ltd (POWERGRID) signed an

    MoU to set up a JV company to manufacture transmission line towers and tower parts including R&D of new

    high-end products

    Attracted by the growth potential of the Indian steel industry, several global steel players have been planning

    to enter the market

    National Mineral Development Corporation (NMDC) has signed an MoU with Russias 3rd largest steelmaker,

    Severstal, for a greenfield steel plant in Karnataka

    Strategic alliances

    Entry of international

    companies

  • For updated information, please visit www.ibef.org Steel 18

    NOTABLE TRENDS IN THE INDIAN STEEL INDUSTRY

    (2/2)

    Source: Ministry of Steel, Aranca Research

    Indian steel companies have now started benchmarking their facilities and processes against global standards,

    to enhance productivity

    These steps are expected to help Indian companies improve raw material and energy consumption as well as

    improve compliance with environmental and pollution yardsticks

    Companies are attempting coal gasification and gas-based Direct-Reduced Iron (DRI) production. Other

    alternative technologies such as Hlsmelt, Finex and ITmk3 being adopted to produce hot metal

    Ministry of Steel has issued necessary direction to the steel companies to frame a strategy for taking up more

    R&D projects by spending at least 1 per cent of their sales turnover on...

Recommended

View more >