B. P. Sarkar Editor & Publisher Steel Tech journal, India
GLOBAL SCENARIO Steel production has been rising globally. In last 10 years, The world crude steel production has gone up by 340 million tonnes (Mt). The Chinese steel production has also gone up by the same tonnage of 340 Mt showing its effect on world steel production. The global effect of recession during 2008-09 did not affect China or India in their steel production. The effect was more on Euro Zone, Japan and South Korea (Table 1-a). Table 1-a: Global crude steel production - Top 10 countries (2007-2017) Rank Country 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1 China 489.7 512.3 577.1 638.7 701.9 731.0 822.0 822.3 803.8 808.3 831.7 2 Japan 120.2 118.74 87.53 109.59 107.6 107.2 110.6 110.66 105.1 104.7 104.7 3 India 53.46 57.8 63.52 68.97 73.47 77.26 81.29 87.29 89.02 95.477 101.4 4 USA 98.10 91.4 59.38 80.49 86.39 88.69 86.87 88.17 78.84 78.47 81.6 5 Russia 72.38 68.51 60.01 66.94 68.85 70.20 69.00 71.46 70.89 70.80 71.3 6 South Korea 51.51 53.6 48.57 58.91 68.52 69.07 66.06 71.54 69.67 68.57 71.1 7 Germany 48.55 45.83 32.67 43.83 44.28 42.66 42.64 42.94 42.67 42.08 43.6 8 Turkey 25.75 26.80 25.30 29.14 34.10 35.88 34.65 34.03 31.51 33.16 37.5 9 Brazil 33.78 33.71 26.50 32.94 35.22 34.52 34.16 33.89 33.25 31.27 34.4 10 Italy 31.55 30.59 19.84 25.75 28.73 27.25 24.09 23.71 22.01 23.37 24.0 World 1348.1 1343.4 1238.7 1433.4 1538.0 1560.1 1650.3 1669.4 1620.0 1628.0 1691.2
EVOLUTION OF CHINA & INDIA If we see crude steel production from 1950 onward, both China and India were at the same level of about 1 Mtpa capacity in 1950.. However China is now producing almost 50% of world steel and its meteoric rise was mainly from 2000 onward. In case of India, there has been slow but steady growth throughout the period ( Fig.1). The steel production doubled within 11 years from 50 Mt 2006 to over 100 Mt in 2017 and poised to grow faster in the near future. Fig. 1: India s share in crude steel production in the World 1800 1600 1400 1200 1000 800 600 World India China 400 200 0 1950195519601965197019751980198519901995200020012002200320042005200620072008200920102011201220132014201520162017
EVOLUTION OF CHINA & INDIA During January to April 2018, India became the second largest producer of crude steel globally as shown below. Table 1-b:Global crude steel production-top 10 countries: January-April 2018 Rank Country Apr'17 Apr'18 YoY Jan-Apr'17 Jan-Apr'18 YoY 1 China 73195 76698 4.6% 273223 287495 5.0% 2 India 8228 8692 5.3% 33956 35381 4.0% 3 Japan 8755 8723-0.4% 34985 35129 0.4% 4 United States 6691 6930 3.5% 26983 27747 2.8% 5 Russia 5891 6030 2.3% 23575 23797 0.9% 6 South Korea 5503 5893 6.6% 22818 23696 3.7% 7 Germany 3842 3775-1.8% 14817 14785-0.2% 8 Turkey 3046 2953-3.2% 11886 12492 4.9% 9 Brazil 2895 2949 1.8% 11143 11594 3.9% 10 Italy 1988 2061 3.6% 8164 8486 3.8%
PER CAPITA CONSUMPTION Although India is now the second largest steel producer globally (January-April, 2018), the per capita consumption of steel in India is abysmally low compared to most of the countries and world average (Table 2). This is because of large population in the country and very low consumption at the rural sector. Table 2: Per capita consumption of finished steel: World top 5 in 2016 Rank Country Qty. (kg.) 1 S. Korea 1130 2 Taiwan, China 782 3 Czech Republic 635 4 Germany 500 5 Japan/China 493 World 207.9 India 65.25 Source: Worldsteel
JOURNEY OF INDIA S STEEL INDUSTRY AFTER INDEPENDENCE India s steel industry journey from 1947 onwards can be described in the following six phases: 1947-1991: Pre-deregulation In 1947, the steelmaking capacity was slightly over 1 Mt, mainly from Tata Steel. GOI decided to set up 3 integrated steel plants each with 1 Mtpa capacity at Bhilai, Rourkela and Durgapur. Later two more integrated steel plants were set up at Bokaro and Vizag. There were price and distribution controls for products of SAIL and Tata Steel. There was no such control for smaller units. Small EAFs and Induction furnaces came during the time. However due to high power cost in India, small EAFs were not viable and closed down. Coal-based DRI plants started in end 70 s and then a large no of these were set up with capacity of 100-300 tpd. 1992-1996: De-regulation / De-control GOI declared decontrol and deregulation. This encouraged setting up of large integrated steel plants with modern technologies, mainly in the private sector. Steel consumers had the opportunity of choosing steel from an array of suppliers and there was competition which improved cost competitiveness and quality of products.
JOURNEY OF INDIA S STEEL INDUSTRY AFTER INDEPENDENCE 1996-2001: Slowdown The decline in domestic economy s growth rate accentuated by developments in the global economy like economic devastation of Asian financial meltdown and import of steel from steel surplus countries like CIS countries. This resulted low steel prices and dwindling bottom lines of steel plants in India. 2002-2007: China and Resurgence Recovery started from 2002 due to improvement in the global steel scenario. China had spectacular economic growth and rapid expansion in steelmaking capacity and sharp increase in demand for steel. Steel prices improved. Profits of domestic steel producers soared. GOI announced National Steel Policy in 2005 which emphasised on becoming self reliant in steel requirement, be globally competitive and made a vision statement to produce 110 Mt of steel by 2019-20 from the 2004-05 level of 38 Mt In view of high demand, good margin and availability of rich iron ore, both existing steel producers and foreign producers lined up plan to increase capacity and set up Greenfield steel plants in India. Thus Posco and ArcelorMittal announced setting up of 12 Mtpa steel plants in the eastern region of India. Tata Steel planned to set up green field steel plants at Chhatisgarh and Jharkhand. Tata Steel took over Anglo-Dutch Corus Group for $13 billion. Other steel plants also attempted to buy steel plants abroad. Some of them purchased iron ore and coal mines abroad. India also became the largest producer of DRI.
JOURNEY OF INDIA S STEEL INDUSTRY 2008-2012 : Global Recession Sparked off by the sub-prime crisis originating in USA around mid-2008, the world plunged into deep recession. The situation got aggravated by dismal Eurozone that shook global growth and reduced prospects of early recovery. Indian steel industry was however remained insulated due to stable domestic demand and less exposure to trade. However from 2011 onward, the industry was under pressure due to inflationary pressure, lower GDP growth. 2013-2016 : Crisis for domestic steel producers Slowdown hit Indian economy in 2012-13. Iron ore mining was affected due to restriction imposed by supreme court. Not only export of iron ore affected severely, some plants had to import ore. The steel industry reeled under the impact of cheap Chinese steel that brought down domestic prices to a level at which all producers were making loses. There was record import of steel. Bank s NPS soared. GOI took some policy decision to impose restriction on cheap imports by way of Minimum import price and introduction of anti dumping duties on steel. From late 2016, the global scenario improved with restricted export of steel from China, duties imposed by many developed countries and China s domestic demand also increased. All these helped in raising steel prices and local demand. Globally, India made confident strides, emerging as the 3rd largest crude steel producer an also the largest producer of DRI 2016-17 onward, the steel plants started making profit and planning to expand their production capacity. However except Tata Steel and JSW Steel, all other steel plants were unable to repay bank of their huge debt and now under NCLT. In the first 4 months of 2018, India s production has been on the rise and already became the 2nd largest steel producer surpassing Japan though it is much lower compared to China and per capita consumption is abysmally low compared to most of the countries and world average
NATIONAL STEEL POLICY (NSP), 2017 The Indian Ministry of Steel has released draft National Steel Policy (NSP), 2017. The problems identified in this sector include: Steel companies are plagued with huge debts Lack of domestic demand. Low quality of metallurgical coke for blast furnace iron making. High input costs. Cheap imports from China, Korea and other countries are also a matter of concern for domestic producers. The policy proposes setting up Greenfield Steel Plants along the Indian coastline under the Sagarmala Project. This has been proposed in order to tap cheap imported raw materials such as coking coal and export the output without incurring huge cost burden. The policy has also proposed the idea of gas-based steel plants and use of electric furnaces in order to bring down the use of coking coal in blast furnaces. The policy targets to achieve production of 300 Mt by 2030-31(Table 3).
NATIONAL STEEL POLICY (NSP), 2017 Table 3: Projected steelmaking in India by 2030-31 Sr. No. Parameters Unit Projections 1 Total crude steel capacity Mt 300 2 Total crude steel demand / production Mt 255 3 Total finished steel demand / production Mt 230 4 Domestic finished steel demand Mt 206 5 Exports of finished steel Mt 24 6 Per capita finished steel consumption Kg 158 Steel producers are progressing with their ambitious capacity expansion program. Leading global banks projected further betterment of India s economic growth. The huge allocation in this year s budget will increase domestic demand for steel significantly. Make in India program, preference for domestic steel for Govt. procurement will have positive impact for steel demand Global steel prices are encouraging enabling profits for steel producers.
STRUCTURE OF INDIAN STEEL INDUSTRY The Indian steel industry is characterised by the presence of a large no. of small steel producers who utilise DRI, melting scrap and non coking coal (EAF/IF route) for steelmaking. As of March 2016, there were 308 sponge iron producers that use iron ore/pellets and non-coking coal providing feedstock for steel production; 1175 EAFs and IFs that use DRI, melting scarp to produce steel and 1392 re-rollers that rolls out semi finished and finished products. Table 4: Crude Steel production by process route, % Process 2016-17, Mt % of share Total No. of Furnaces Capacity, Mt BOF 42.00 43 17 50.85 EAF 28.96 30 48 37.81 IF 26.97 27 1126 39.62 Total 97.936 135.00 BF 55 73.79 Sponge Iron Units 28.76 320 46.00 Re-rolling units 51.448 1166 62.00
PRODUCTION OF CRUDE STEEL Table 5: Production of crude steel: plant-wise in 2017-18 Producer Crude steel, Mt Capacity Remarks SAIL 15.022 17.5 RINL 4.731 6.3 1 Mt to be added in 2018-19 NMDC 3.0 Under construction Total Public sector at present 19.753 27.7 Tata Steel-Jamshedpur 9.7 12.459 (Total) Tata Steel-Kalinganagar 3.0 Under expansion to 8.0 Mt Essar 6.082 10.0 JSW Steel-Dolvi 5.0 Under expansion to 10 Mt by 2020 JSW Steel-Bellary 17.099 (Total) 12.0 Capacity enhanced in FY 2017-18 JSW Steel-Salem 1.0 JSPL-Raigarh 3.2 4.021(Total) JSPL-Odisha 6.0 Bhushan Steel 5.6 Taken over by Tata Steel recently Bhushan Power & Steel 3.2 Electrosteel, Bokaro 2.5 Monnet Ispat 1.5 NINL, Odisha 1.0 Uttam Galva, Nagpur 1.0 Total Production 102.338 135 Capacity Utilisation 78.0% *Production figure for some integrated steel plants like Bhushan Steel, BPSL, etc. are not reported separately in JPC report.
IMPORT AND EXPORT OF STEEL Indian steel plants mainly cater to the domestic demand. Special steels which are not manufactured in the country are imported like CRGO, HSS, Steels for defence, space, nuclear sectors, etc. where special steels in various grades and smaller quantities are required. However, due to dumping of steel at very cheap prices by some foreign countries, low quality steels also get imported at prices not remunerative to domestic steel producers. The export normally consists of semi-finished steels and ordinary grades of HRC, Rebars, etc. The total quantities of import and export are within about 10 Mt and balance out except for the period 2014-16. Table 6: Import and Export of Steel Year Import, Mt Export, Finished steel, Mt 2010-11 6.66 3.64 2011-12 6.86 4.59 2012-13 7.93 5.37 2013-14 5.45 5.98 2014-15 9.23 5.596 2015-16 11.71 4.079 2016-17 7.224 8.243 2017-18 7.482 9.62
TECHNOLOGY The steel plants in India have adopted several modern technologies. SAIL s plants set up in end fifties were with technical and financial help from various countries. Design, equipments and operational guidelines came from them. Bhilai, Bokaro and RINL got help from Russia. Rourkela got from Germany and Durgapur from British group of companies. Recent plants ordered equipment from multiple foreign companies mostly from SMS, Primetals, Danieli and also from China. Indian steel plants have thus various routes for iron & steelmaking as shown in Table 7.
Table 7: Technologies adopted at Indian Steel Plants TECHNOLOGY Areas Technology Remarks Stamp charging Coke Ovens Dry quenching of coke Heat recovery ovens Iron Ore Sinter Plant-Large machines, use of micro-fines, WH recovery Agglomeration Pellet Plant. Use in DRI & BF Natural gas based Essar Steel, JSW Steel-Dolvi provisioned to use CO gas Direct Reduction Corex gas-based Bhushan, BPSL, JSPL-Raigarh, etc. use batteries of Coal-based, WH recovery for power plant large capacity rotary hearth furnaces for making DRI Coal Synthesis gas-based JSPL-Angul Smelting Reduction Corex Process Essar Steel & JSW Steel, Vijayanagar Large capacity BFs with >4000 cum capacity and facility for Blast furnace PCI All new BFs are large capacity MBFs also exist in many smaller plants to supply hot metals Usha Martin for spl steels in EAF UHP with EBT and continuous DRI charging EAF Hot DRI & Scrap Preheating Essar, Bhushan, JSPL-Angul etc. Oxy fuel burners Essar, JSW Dolvi, Bhushan Conarc technology Induction Furnaces High capacity furnaces with flexibility for refining Many medium and small players BOF BF-BOF route for large steel plants with all latest technologies. LD of 300t are now being installed SAIL, Tata, RINL, JSW Steel, JSPL-Angul etc Secondary LF/CAS-OB, EMS, RH degasser, VD/VOD/VAD and also ESR for Metallurgy Special Steels All large steel plants Continuous Casting Shrouding of metal stream, AMLC, Thin Slab &net strip/beam casting Several major and medium sized companies Rolling Endless Casting & Rolling, Hot charging, Online quenching & tempering with latest Automation at all sections All large steel plants
TECHNOLOGY With the adoption of above technologies, companies have acquired capability to produce both ordinary and sophisticated products at competitive costs. The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels.
MARKET SIZE India s crude steel output grew 5.87 per cent year-on-year to 102.34 Mt in FY 2017-18 and consumption of steel in the country was 90.68 Mt. As regards the demand growth, the Worldsteel in its April 2018 Short Range Outlook, has forecast India s steel demand would grow by 5.5% in 2018 from 87.2 Mt in 2017 to 92 Mt and 6% in 2019 to reach 97.5 Mt. This growth rate is highest amongst all the countries. Steel demand is expected to accelerate gradually, mainly driven by public investment. Stronger growth is held back by still weak private investment. Table 8: Worldsteel Short Range Outlook, April 2018 Mt Y-o-Y growth rates, % Zone 2017 2018 (f) 2019 (f) 2017 2018 (f) 2019 (f) World 1587.4 1616.1 1626.7 4.7 1.8 0.7 China 736.8 736.8 722.1 8.3 0.0-2.0 India 87.2 92.0 97.5 4.3 5.5 6.0 f: forecast
INVESTMENTS Steel industry and its associated mining and metallurgy sectors have seen a number of major investments and developments in the recent past. According to the data released by Department of Industrial Policy and Promotion (DIPP), the Indian metallurgical industries attracted Foreign Direct Investments (FDI) to the tune of US$ 10.419 billion in the period April 2000 - September 2017. Some of the major investments in the Indian steel industry are as follows: - JSW Steel has planned a US$ 4.14 billion capital expenditure programme to increase its overall steel output capacity from 18 Mt to 23 Mt by 2020. - Rashtriya Ispat Nigam Ltd (RINL) has signed a Memorandum of Understanding (MOU) with Kudremukh Iron Ore Company Ltd for setting up of a 1.2 Mtpa plant project at Vishakhapatnam. - Tata Steel has decided to increase the capacity of its Kalinganagar integrated steel plant from 3 Mtpa to 8 Mtpa at an investment of US$ 3.64 billion.
GOVERNMENT INITIATIVES Some of the other recent government initiatives in this sector are as follows: Government of India s focus on infrastructure and restarting road projects is aiding the boost in demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel. The Union Cabinet, Government of India has approved the National Steel Policy (NSP) 2017, as it seeks to create a globally competitive steel industry in India. NSP 2017 targets 300 Mt steel-making capacity and 160 kgs per capita steel consumption by 2030. The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs 200 crore (US$ 30 million).
SWOT ANALYSIS STRENGTH Huge deposits of rich iron ore (approx 23 billion tonnes. Over 240 billion tonnes of non coking coal Availability of skilled & cheap labour Rising demand for steel and Improved GDP growth for current and foreseeable future WEAKNESS Limited resources of coking coal. Non-coking coal has high ash content. Not much deposit of oil/gas Lack of innovations to develop suitable technology to efficient utilisation of indigenous raw materials Lack for manufacturing facility for steel plant equipment. It is dependent on imported equipment. Dependent on foreign suppliers for Technology and Automation High interest rates for capital High logistic costs Long time for getting various clearances like Land, forest dept, etc
SWOT ANALYSIS OPPORTUNITY The industry is globally competitive with adoption of latest technologies Favourable Demography Low per capita consumption and increased allocation on infrastructural spending will lift demand significantly Unexplored Rural market Export opportunity in S E Asia and Middle East countries THREATS Cheap imports from China, CIS countries and that from FTA countries with India Protection measures in the developed countries affecting India s export
ROAD AHEAD India is expected to become the second largest steel producer in the world by 2018. Based on increased capacity addition in anticipation of upcoming demand, and the new steel policy, that has been approved by the Union Cabinet in May 2017, there will be huge boost in India's steel production. Huge scope for growth is offered by India s comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors. India s aspiration to reach 300 Mt by 2030-31 is no doubt challenging but there is no doubt that the growth in the next decade will be very strong as compared to others globally and many more Greenfield steel plants will be set up besides brown-field expansion to take care of the rising demand.