Evlving Landscape f Indian Steel Industry 17 th 18 th Nvember 2016 1
Evlutin f Indian Steel Industry TISCO 1907 IISC 1918 Mysre Irn and Steel Cmpany 1923 Hindustan Steel Ltd 1954 Bkar Steel Ltd 1964 SAIL 1973 SAIL acquired Vivesvata Irn & Steel Ltd 1989 Emergence f MSP, Rerllers, Galvanisers Entry f Freign players Decntrl f dmestic steel prices Exprt duty n irn re fr dmestic value additin Encurage ment t beneficiati n and pelletisatin f irn re fines Infrastructur e & prts build-ut, freight crridrs t bst cnsumpti n 3 rd largest prducer Cmpetitin frm cheap imprts Dip in prices & prfits Several Gvt. measures Increasing demand amidst negative grwth glbally 1907-1918 1923-1948 1954-1964 1973-1992 1993-2014 2015 2015 nwards Surce: IBEF Nte: TISCO - Tata Irn and Steel Cmpany; IISC - Indian Irn & Steel Cmpany; SAIL - Steel Authrity f India Ltd, MSP Mini Steel Plants 2
Rapid Structural Changes pst 1991-92 Steel Capacity Cntributin f Private Sectr in Steel Capacity Per Capita Cnsumptin 61 Kg 80% 17 Kg 118 MT 39% 1991-92 2015-16 22 MT 1991-92 2015-16 Steel capacity grew frm 22 MT in 1991-92 t 118 MT in 2015-16 Surce: Jint Plant Cmmittee 80% capacity in private sectr in 2015-16; grwn frm 39% in 1991-92 1991-92 2015-16 Per capita cnsumptin increased frm 17 Kg in 1991-92 t 61 Kg in 2014-15 3
3 rd Largest Prducer f Steel Glbally On track t becme 2 nd largest Prducer after China Largest Prducer f DRI Glbally Steel industry cntributes ver 2% t India s GDP ~20 Lakhs emplyed in Steel/Allied sectrs >50% capacity in secndary sectr with mre than 2000 units Current market size f Rs. 6.38 Lakh Crres Investment f ~ Rs. 5 Lakh Crres in past 10-12 Years Large dmestic end market; Nt exprt dependent Strng manufacturing capabilities, including future steels 4
USD/tnne Mst Cmpetitive Glbally; 2 nd nly t CIS 500 400 Glbal average = 387 300 200 100 0 CIS India Suth Krea Surce: Wrld Steel Dynamics China Japan USA Inherent Advantage due t 5 th largest resurces f irn re glbally Large resurces f thermal cal Yung wrkfrce, lw labr cst Large dmestic market; Nt dependent n exprts 5
Steel: Strategically imprtant fr any industrial natin.. Others 20% Current Presence in Wide Applicatins Engineering 12% Cnstructin 16% Cnsumer Durable 5% Infrastructure 29% Pipes & Tubes 10% Autmbile 8% Surce: NMDC, Industry Surces 6
Demand fr steel expected t grw further 90 88 86 84 82 80 80 78 76 5.4% Steel Demand (MT) 84 5.7% 74 2015 2016 (f) 2017 (f) Surce: Wrld Steel Assciatin Demand Drivers Immense pprtunity t grw Steel usage frm 61 Kg t 208 Kg/capita GDP expected t grw 5 flds by 2032 Steel penetratin in rural & urban areas expected t increase 89 Manufacturing cntributin twards GDP t grw frm 17% t 25% by 2025 7
Fcus f Gvernment t strengthen steel industry 1 Ease f Ding Business 2 Tackle Overcapacity & Imprts 3 Affrdable Raw Materials 4 Develpment f New Steel Prducts 5 Sustainable Prductin f Steel 6 Initiatives facilitating Steel Demand 8
Ease f Ding Business Glbal Scenari China, Clmbia, Egypt, Arab Republic, India, Pland, Gergia, Rwanda made big strides in business regulatin indices Steel cmpanies embracing glbalizatin with custmizatin will emerge as sectr leaders in lng run Steelmakers nw seeking ecnmies f scale, glbal synergies, expanded prduct prtflis and an extended value chain in respnse t glbalizatin India Assigned High Pririty status facilitating autmatic apprval fr investment upt 100% - FDI 100% FDI in asset recnstructin cmpanies (ARC) under autmatic rute E-Platfrm MSTC Metal Mundi launched t facilitate sale f finished & semi-finished steel prducts Surplus availability t cmpetitive labrs 9
Tackle Overcapacity & Imprts Glbal Scenari Glbal vercapacity >600 MT Glbal prductin declined by ~3% in 2015 Capacity shutdwns, jb cuts and prperty sale ffs in varius cuntries Cuntries erected trade barriers; 425 steel trade remedies are currently in frce India Natinal Steel Plicy in place t guide ratinal capacity additin Lng term visin develped fr grwth f the steel industry Develping a self-sustained dmestic market fr steel India used ant-dumping, safeguard and ther exigency measures t prvide level playing field 10
Affrdable Raw Materials Glbal Scenari Vlatility in market; fluctuatins in irn re and cal prices- increases hedging cst Regulatry challenges in mine acquisitins India Enacted MMDR Amendment Act, 2015 fr increased availability f irn re in the cuntry Enacted Cal Mines (Special Prvisins) Act, 2015 fr increased availability f cal Natinal Mineral Explratin Plicy t facilitate cmprehensive explratin Increased emphasis n beneficiatin and agglmeratin f irn re 11
New Steel Prducts Need fr light weight, high strength steel; driven by- Glbal Scenari Stringent envirnment nrms New generatin f transprt Cnstructin in earthquake prne znes Advances in defence, space and ther strategic sectrs Changing requirements in aviatin and renewable energy Changing Safety nrms fr autmbiles Steel Research & Technlgy Missin f India (SRTMI) established Cllabratins with freign players Pursuing develpment f- India CRGO Steel sheets High grade steels fr autmbiles High strength lw ally structural grade steels High strength micr-allyed grade steels 12
Sustainable Prductin f Steel Glbal Scenari Cntrlled GHG emissins Stringent regulatins n Air Pllutin and Effluent Discharge Reducing energy intensity in steelmaking Reducing use f fssil fuels fr meeting energy requirements India Stringent efficiency parameters specified Glbal Superir Energy Perfrmance Partnership (GSEP) NEDO Mdel Prjects UNDP-AUSAID-MOS Steel Prject Natinal Actin Plan n Climate Change Cmmitted t reducing GHG emissins 13
Demand Generatin Glbal Scenari Demand in majr steel cnsuming cuntries slwed dwn Develping cuntries- majr cnsumers f steel, nt grwing at the rates bserved in past decade Majr steelmaking cuntries witnessed negative grwth Steel facing substitutin by ther materials in varius applicatins India Make in India - t drive manufacturing grwth Pwer fr All - t drive electricity sectr grwth Smart cities - t drive urbanizatin Planned investment f USD 34 Bn in infrastructure- t drive grwth f infrastructure sectr 14
Grwing Investments. Surce: India Brand Equity Fundatin (IBEF) 15
Future prvides immense pprtunities. Fcus n technlgy upgradatin Grwth in ecnmy Inherent cmpetitiveness Substantial Grwth in Indian Steel Sectr Enabling envirnment 16
Thank Yu Steel being a critical prduct fr manufacturing is essential fr glbal cmpetitiveness f Make in India 17
December 2015 June 2015 Gvernment Interventins BCD increase by 2.5% n steel imprts ADD n HR flat Stainless Steel August 2015 BCD increase by 2.5% n flat steel imprts ADD n CR flat Stainless Steel MIP n 173 prduct; Extended in August and Octber March 2016 ADD n HR Cils; SD n HR Plates; ADD n CR Prducts Nvember 2016 Steel & Steel Prducts (Quality Cntrl) Order February 2016 Safeguard Duty n HR flat prducts August 2016 ADD n Wire Rds 18