Sharad Mahendra, JSW Steel Limited. Developments in the Indian Coated and Galvanized Markets: Where is it Heading?

Transcription

1 Sharad Mahendra, JSW Steel Limited Developments in the Indian Coated and Galvanized Markets: Where is it Heading?

2 The Economic Environment 1

3 Short Term Global Growth will Appear in Emerging Markets only GDP Growth (in % terms) Source: IMF Advanced Economies = Stagnant/Modest Growth Emerging Economies = To Navigate Global Growth 2

4 Rapid Economic Development in India Indian GDP Growth India foresees strong economic growth as well.steel growth at a rate of 8-9% in line with GDP growth Ratio to GDP Growth Growing Investment and Domestic Saving Rate will boost the economic growth as well as steel demand Source: CSO,PMEAC 3

5 STEEL : Supply ~ Demand Scenario 4

6 Steel Production Pattern Figures in MnT China contributes 44% to the world output continues to set the tone for global steel dynamics Source: World Steel Association, WSD 5

7 Finished Steel Consumption Outlook : Region-wise Finished steel growth Trend (MnT) % Share in World Output 23% Advance Economies steel growth foresees a downfall 73% Emerging Economies steel growth foresees an upward trend Source: World Steel Association China expected to continue a 5% growth in production and demand whereas India is expected to grow by 9-11 %. 6

8 Steel Capacity and Production Pattern: India India Crude Steel Capacity Figures in MnT India Crude Steel Production Indian steel industry is ranked 4 th in global steel production and is likely to grow at a rate of 9-11% in next 5 years Source: JPC 7

9 Steel Consumption Growing Trend Bound to Boost Demand Historical Trend 65.6 Global Slowdown Forecast Steel demand expected to CAGR till 2020 from growing demand by semi urban and rural areas Source: Ministry of Steel, JPC 8

10 India Continues to Drive Demand Growth in the Long Run STEEL POTENTIAL India s per capita steel consumption has grown from 30 kg to 54.9 kg over the last decade ( ) - but it is still far below world average of kg. China, on the other hand has seen more than four times rise in its per capita steel consumption during the same period ( ) STEEL SATURATED India has one of the lowest per capita Finished Steel consumption which leads towards opportunities for excellent growth in future Source: World Steel Association 9

11 Indian Coated and Galvanized Steel Market : Where is it Heading? 10

12 Flat and Long Distribution Pattern : World World = 1,284 MT Source: World Steel Association, CRU 11 World = 117 MT

13 Flat and Long Distribution Pattern : Europe Europe = 175 MT Germany is the biggest producer in Europe which accounts 26% of total coated steel produced in Europe Source: World Steel Association, CRU 12

14 Flat and Long Distribution Pattern : India Coated Steel accounts for only 14% of total Flat Steel products consumed in India India = 65.2 MT Value added product like Color Coated & Galvalume accounts for 16% of total Coated Steel consumption in India which is growing fast Source: JPC 13 India (coated) =4.7 MT

15 Steel Production and Consumption Pattern : China Vs. India China Largest producer and consumer in Asia contributing 28% of total world coated steel output Figures in MnT China s coated steel production has grown at 18% CAGR between India- Far Way to go India s coated steel production has grown at 7% CAGR between Source: JPC,WSD 14

16 Indian Consumption has grown at a faster pace Historical Trend Global Slowdown CAGR of 11% Forecast Source: JPC Consumption is likely to grow at 14-16% in next 5 years 15

17 Indian Galvanising Industry % Capacity Break-up of Top players Total Installed Capacity = 6.1 MT JSW Steel holds the biggest position in Coated steel industry with a total capacity of 1.4 MT Source: JPC 16

18 Domestic Coated Steel Has Excess Capacity India a Net Exporter of Coated Steel Country-wise Export Break-up (FY11) Export decrease in FY11 by 3% Africa, CIS and Middle East captures 32% of the export Growth In Exports has decreased in FY11 as compared to FY10 Source: JPC, Figures in MnT 17

19 Share of Coated Exports in Finished Steel Exports has risen FY11 Source: JPC 18

20 Imports of Coated Steel is Growing Imports growing steadily Country-wise Import Break-up (FY11) Almost 66% import is from Asia Imports have grown steadily but the share of value added products in Coated Steel needs to be increased by Indian players Source: JPC, Figures in MnT 19

21 Coated Steel Sectoral Share in Consumption Sectoral Share (FY11)- World Sectoral Share (FY11)- India In India Consumption of Coated Steel is yet to take root in Auto sector. Source: WSD, World Steel Association, JPC 20

22 Major Segmental Views and Demand Drivers India 21

23 Growth Drivers in Construction User Segment POTENTIAL Construction segment is expected to grow by 23-25% annually (mn sq mt.) (mn sq mt.) ( 000 MT) CONSUMPTION OF COATED STEEL ( 000 MT) Growth Drivers: Increased spending in infrastructure development in India Airports (terminal building), Railway stations, Ports Increasing demand for aesthetic steel roofing & walling from small industrial customers [ small scale industries, cottage industries, etc] as well as Rural areas. Source: Internal Research 22

24 Even Shift In Rural Living Pattern Will Boost Roofing Application Middle HIGH > 90 K pa Annual Income Low Middle 45K to 90K pa LOW > 45K pa Qty.of Rural houses: 138 Million out of 192 total houses Source: Housing Census 2001 LOW Rs MEDIUM Rs HIGH Rs Roofing cost (Rs./Sq mtr) Increase in Rural Consumer Spend and Life Style will provide leverage to Roofing application which is the biggest market 23

25 Growth Pattern in Consumer Durable User Segment TOTAL POTENTIAL The overall growth of consumer durables will be 16-18% in short to medium term (Mn units.) (Mn units.) ( 000 MT) CONSUMPTION OF COATED STEEL ( 000 MT) Growth Drivers Consumer durables in India are highly urban centric and have relatively low penetration levels in rural areas. Moreover changing environmental conditions like prolonged summers and increase in female working population would boost the demand for the products. Source: Internal Research 24

26 Growth Pattern in Bus Body User Segment POTENTIAL The demand for buses is expected to grow by 17-20% Bus Body ( 000 units.) ( 000 units.) ( 000 MT) CONSUMPTION OF COATED STEEL ( 000 MT) Growth Drivers: New segments City buses (low floor), Airlines buses Government expenditure on rural transportation and roads etc. Increase in Urban Population leading to increase in demand of road transport leading to increase in demand of buses. Source: Internal Research 25

27 Similarly Automobile Growth In India will Boost Demand Automobile Growth (% CAGR) 2nd fastest growing auto market after China Size of the Indian auto market is US$ 22 billion India ranks low on auto sales/person, indicating vast untapped potential Source: SIAM, Marksline 26

28 Challenges and Development 27

29 Challenges 1. In USA per capita coated steel consumption is around 42kg. In contrast India per capita coated consumption is around 4 kg whereas China is estimated to be around 17 kg which is very less compared with developing country. 2. Market evolution - Strength ~ low cost Standard Galvanized Products Indian coated steel industry heading towards Global Standards. 3. Indian producers now focusing on high value added products. 4. Special focus on Auto sector. 5. Need to educate rural people about the usefulness of coated steel w.r.t Tiles, Asbestos and Plastics. 28

30 However India Provides Excellent Growth Opportunities Indian market offers the much required Size. Entry of Foreign players Provides climatic variations appropriate for steel consumption Good growth in Construction and Automobile segments Potential awaits in Rural India primarily in Steel Roofing India potentially placed to become an Export base The emerging focus in the Indian industry is value added product development, Distribution and Consolidation to achieve world best 29

31 JSW Steel Long- Term Roadmap 30

32 ~ 2020 KARNATAKA / T.N. + MAHARASHTRA T.N. W. BENGAL JHARKAND 11 MnT 3.3 MnT 1 MnT 10 MnT 10 MnT 35.3 MnT FLAT & LONG STEEL 31 September.2011

33 JSW IS THE LEADING STEEL CAPACITY PRODUCER IN INDIA GROUP 14.3 MnT Flats 83% Longs 17% 85% 15% 100% HR Coils / Sheets HR Plates Cold Rolled Galvanised Colour Coated Rolled Products Most comprehensive Product Range : Hot Rolled > Cold Rolled > Galvanise > Galvalume > Color Slide 1

34 JSW Steel 7 th Amongst Top 35 World Class Steelmakers JSW Steel achieved the topmost ranking amongst Indian Steelmakers ahead of competitors like SAIL, Tata Steel Essar Steel, and Vizag Steel JSW Steel achieved the highest rating of 10 on the following parameters Parameter Score Conversion Costs; Yields 10 Expanding Capacity 10 Location in High-Growth Markets 10 Labor Cost 10 Overall Ranking 7 Severstal ArcelorMittal Nippon Steel NLMK Nucor Posco Steel CSN JFE SAIL Source: World Steel Dynamics (WSD) Ranking of top 35 World Class Steelmakers as on June 2011

35 Thanks for your Attention!!