STEEL CONSUMPTION IN INDIA & LIKELY GROWTH PATTERN OF DOMESTIC STEEL INDUSTRY

Transcription

1 Steel Summit 2009 STEEL CONSUMPTION IN INDIA & LIKELY GROWTH PATTERN OF DOMESTIC STEEL INDUSTRY Bhaskar Roy The author is with M. N. Dastur & Company (P) Ltd, Consulting Engineers, Kolkata

2 PAST APPARENT STEEL CONSUMPTION 2

3 Take-off point! Steady growth Accelerated growth Apparent Steel Consumption Trend Quantity, mill. tons

4 60 Quantity, mill. tons CAGR.. 9.5% Growth of Apparent Steel Consumption 4

5 Quantity, million tons 1,300 1,200 1,100 1, World India Apparent Steel Consumption India vs World China 5

6 Indian share, % Growing Share of India in World Steel Consumption 6

7 LIKELY FUTURE STEEL DEMAND 7

8 2008 1,198 mill. tons Actual consumption ,104 mill. tons WSA estimate; 8.6% drop over ,206 mill. tons WSA forecast; 9.2% growth over ,430 mill. tons 9% growth considered between 2010 & 2012 Quantity, million tons 1,600 1, ,198 1,104 1,206 1, Global Steel Consumption Forecast Short Term 8

9 Observation: National Steel Policy target likely to be advanced by 4-5 years! mill. tons Actual consumption mill. tons Considering 6.5% CAGR between & mill. tons (1) As per National Steel Policy 2005; target production 110 mill. tons 110 mill. tons Considering 7% CAGR between & mill. tons Considering 9% CAGR between & (1) Excludes provision for exports. 140 Quantity, mill. tons % of world steel Likely Future Steel Demand Scenario in India

10 Year Population Domestic consumpn/demand Total Per capita ,155 mill. 52 mill. tons 45 kg ,195 mill. 65 mill. tons 54 kg ,265 mill. 90 mill. tons 71 kg ,315 mill. 110 mill. tons 84 kg 200 Per capita, kg Current global average Likely Future Per Capita Steel Consumption Levels in India 10

11 DOMESTIC STEEL DEMAND BASIC CONSIDERATIONS FOR ENSURING GROWTH 11

12 Year Population, mill (1) Per capita steel, kg Total steel, mill. tons Urban Rural Urban Rural Urban Rural National Per capita steel, kg Urban Rural Total steel, m ill. to n s Rural Urban The Rural-Urban Steel Divide in India 12

13 Efforts by INSDAG at promoting steel usage in rural areas: Rural culverts for National Rural Roads Development Agency. Steel bullock carts. Mass housing projects involving extensive use of steel. Designs for hospitals, health centres & sub-centres in rural areas with steel framing and no brickwork. Model steel villages around steel plants, having steel houses and toilets, steel schools, panchayat-meeting space, water tanks, bus-stops etc. Other possibilities: Steel silos for better & safer grain storage. Replacement of asbestos sheets with GI steel sheets for roofing.

14 Price elasticity: Measure of change in demand as a result of change in price. Elasticity = (% change in demand) / (% change in price) Elasticity > 1 means demand affected by price. Elasticity < 1 means demand is insensitive to price. According to Dr. Dastur If steel is available at affordable price, it will result in enhanced consumption/demand, i.e. elasticity >1. GDP elasticity: Measure of change in demand as a result of change in GDP. ERU 2009 estimate GDP elasticity = 1.2 Conclusion: Steel demand has positive elasticity values with respect to both price & GDP. Elasticity of steel demand 14

15 % Contribution Agriculture Services Transport & communication Mining & quarrying Manufacturing Construction Structure of Indian Economy Sectoral Contributions to GDP Elec, Gas & Water supply Note: At constant prices ( ) 15

16 Overall GDP Services Transport & communication Construction Elec, gas & water supply Manufacturing to to to to Mining & quarrying Agriculture % CAGR Note: At constant prices ( ) GDP Sectoral Growth Patterns 16

17 End-use Sector Construction Automobile & auto component Infrastructure Consumer durables Potential as demand driver 12-14% growth rate achieved; likely to maintain past growth trend. Automobile - Second fastest growing market after China; likely to continue as a major demand driver. Auto component - 19% CAGR over last 5 years; past trend likely to continue. Huge investments planned; support long product demand. Past growth at around 10% annually; expected to sustain growth. Principal Drivers of Steel Demand in India 17

18 60 Steel intensity of GDP constrn ,000 20,000 22,000 24,000 26,000 28,000 30,000 Per capita GDP, Rs Steel intensity = kg steel per Rs crore of GDP constrn Note: At constant prices With the economy continuing on its growth path, construction sector expected to be a significant steel demand driver. 18

19 Automobiles - Second fastest growing market after China. CAGR of Automotive Industry 11.5% over last 5 years Production, million Mumbai & Pune Delhi Chennai & Bangalore Kolkata & Jamshedpur Automobile Production in India 19

20 Per cap steel in infrastructure, kg ,500 2,500 3,500 Per cap GFCF Infra, Rs Steel Consumption vs GFCF Infrastructure Share of GFCF in GDP expected to rise substantially by end of Eleventh Plan Boost steel Boost steel consumption. 20

21 IIP value IIPConsumer durables Between & , IIP Consumer durables almost quadrupled! Between & , index recorded a CAGR of about 9%! 21

22 LIKELY DEVELOPMENT PATTERN OF INDIAN STEEL INDUSTRY 22

23 IRON MAKING BLAST FURNACE HOT METAL STEEL MAKING COREX HOT METAL BOF (INCL. EOF) DR-SHAFT FURNACE DRI OPEN HEARTH EAF LIQUID STEEL DR-ROTARY KILN DRI INDUCN FCE PROCESSES ADOPTED IN INDIAN STEEL INDUSTRY 23

24 India has embarked on ambitious steel development programme. Major part of additional capacity likely to be through new green-field plants Need for judicious selection of process route taking cognizance of techno-economic factors Stringent demands on steelmaking raw materials, including iron, at affordable costs. Environmental concerns to be adequately addressed. 24

25 Brown-field 40% Green-field 60% LIKELY PATTERN OF STEEL MAKING CAPACITY AUGMENTATION 25

26 Larger plant capacities of mtpy. Adoption of iron making technologies less dependent on metallurgical coal. Bigger blast furnaces: 4,000 4,500 cu m. Larger BOF converters of 300-ton heat size. Increased attention towards more environment friendly technologies/processes. Use of hot metal in EAF to reduce power consumpn. Higher production of near net shape cast products. Gas based DR technology utilising coal gasification. TRENDS IN PLANNING FOR NEW STEEL CAPACITIES 26

27 Direct reduction Coal based Available Processes Smelt - reduction Gas based Rotary kiln Rotary hearth Shaft furnace Fluidised bed Single reactor Multiple reactors Alternative ironmaking processes in operation 27

28 CONCLUDING REMARKS 28

29 Global economic turmoil has affected world steel industry; although, India only major economy to register positive growth. India s domestic steel demand likely to grow from about 52 mill. tons presently to about 65 mill. tons in short term & about mill. tons in longer term. Per capita consumption expected to increase significantly; however, concerted efforts required to promote rural consumption, presently at insignificant level. Likely major demand drivers : Construction. Automobiles & auto components. Infrastructure. Consumer durables. 29

30 Major enablers for ensuring growth in steel consumption: Assured major raw materials availability at stable prices. Availability of steel to consumer at affordable prices. Proper legislation for land acquisition keeping in view concerns of stake holders. Development of required infrastructure. Augmentation of steel capacity through judicious mix of green-field & brown-field capacities. Preference for process routes less dependent on metallurgical coal. Imperative to ensure development of resources on sustainable basis, giving due importance to environmental considerations. 30

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