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INDUSTRY & SERVICES

STEEL

Steel is vital to the development of any modern economy and is considered to be the backbone of the human civilization. The level of per capita consumption of steel is treated as one of the important indicators of socio-economic development and living standard of the people in any country. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flow and income generation. All major industrial economies are characterized by the existence of a strong steel industry and the growth of many of these economies has been largely shaped by the strength of their steel industries in their initial stages of development .

Global Ranking of Indian Steel

Global crude steel production reached 1414 million tonne in the calendar year 2010, a growth of 15 per cent over 2009. China was the largest crude steel producer in the world; with production reaching 626.56 million tone, a growth of 9.2 per cent over 2009. India is the 5 th largest producer of crude steel in the world With 66.80 million tonnes of crude steel production during April-Dec 2010, recording a growth of 11.3 per cent over 2009. India continues to maintain its lead production as the world's largest producer of direct reduced iron (DRI) or sponge iron during January-December 2010, a rank it has held since 2002. If proposed expansion plans are implemented as per schedule, India may become the second largest crude steel producer in the world by 2015-16.

Trends and Developments in Steel Sector

  • India became the 4th largest producer of crude steel in the world in 2010 as against the 8th position in 2003 and is expected to become the 2nd largest producer of crude steel in the world by 2015.
  • India also maintained its lead position as the world’s largest producer of direct reduced iron (DRI) or sponge iron.
  • Ministry’s National Steel Policy (NSP) 2005 projection of 110 million tonnes of finished steel production per annum by 2019-20 is likely to be exceeded by 2012. The country is likely to achieve a crude steel production capacity of 112 million tonnes by the year 2011-12.
  • Going by estimate of Rs.4,000 crore investment per million tonne of additional capacity, intended steel capacity build up in the country is likely to result in an investment of US$ 173.75  billion by 2020.
  • 222 MoUs have been signed with various states for planned capacity of around 276 million tonnes by 2019-20.
  • Major investment plans are in the states of Orissa, Jharkhand, Karnataka, Chhattisgarh and West Bengal.
  • The steel sector contributes to nearly 2 per cent of the GDP and employs over 5 lakh people.
  • The per capita steel consumption during the last six years has risen from 38 kg in 2005-06 to 55 kg in 2010-11.


Projections for the Steel Sector

  • In the next five years, demand of steel is likely to grow at a higher annual average growth of over 11-12 per cent as compared to the average annual growth of 8 per cent achieved between 1991-92 and 2010-11.
  • Capacity for crude steel production expanded from 51.17 million tonnes per annum (mtpa) in 2005-06 to 78 mtpa in 2010-11.
  • Crude steel production grew at 8 per cent annually (CAGR) from 46.46 million tonnes in 2005-06 to 69.57 million tonnes in 2010-11.
  • Production for sale of finished steel stood at 66.01 million tonnes during 2010-11 as against 46.57 million tonnes in 2005-06, an average annual (CAGR) growth of 7 per cent.
  • Consumption of finished steel has grown at a CAGR of 9.6 per cent during the last six years.
  • Export of finished steel during 2010-11 stood at 3.36 million tonnes while imports during 2010-11 stood at 6.54 million tonnes.

Production, Consumption and Growth of Steel

Total Finished Steel

The table below shows the trend in production for sale, import, export and consumption of total finished steel (alloy + non-alloy) in the country:

Year
Total finished steel (alloy + non-alloy)
 
(in '000 tonne)

 

Production for sale

Import

Export

Consumption

2005-06

46566

4305

4801

41433

2006-07

52529

4927

5242

46783

2007-08

56075

7029

5077

52125

2008-09

57164

5841

4437

52351

2009-10

60892

7296

3235

57675

Apr-Dec 2010-11

47296

5359

2462

44275

Source: Joint Plant Committee (JPC)

Crude Steel

Crude steel production has shown a sustained rise since 2005-06 along with capacity. Data on crude steel production, capacity and capacity utilization are given in the table below:

Crude Steel

Year

Capacity
(unit in '000 tonne)

Production
(Unit in '000 tonne)

Capacity utilisation
(per centage)

2005-06

51171

46460

91

2006-07

56843

50817

89

2007-08

59845

53857

91

2008-09

66343

58437

88

2009-10

72963

64875

89

Apr-Dec 2010-11

56597*

50594

89

Source: Joint Plant Committee (JPC); *2.5 million tonne capacity added during April-December 2010.

  • The growth was driven by capacity expansion from 47.99 million tonne per annum (MTPA)in 2004-05 to 75.463 MTPA in 2010-11 (up to December 2010).
  • Crude steel production grew at a CAGR of 8.4 per cent during five years, 2005-06 to 2009-2010.
  • The above crude steel performance has been contributed largely by the strong trends in growth of the electric route of steel making, particularly the induction furnace route, which accounted for 31 per cent of the total crude steel production in the country during 2009-10.

The process route-wise production of crude steel in the country during 2005-06, 2009-10 and April-December 2010-11 (provisional) are shown in the table below and indicates the emergence of the electric route of production compared to the oxygen route:

Crude steel production by process route
Percentage share
 

2009-10

2010-11
(April-December)

Basic Oxygen Furnace (BOF)

45

47

Electric Arc Furnace (EAF)

24

26

Induction Furnace (IF)

31

27

Total

100

100

Source: Joint Plant Committee (JPC)

Sponge Iron

India is a leading producer of sponge iron with a host of coal based units, located in the mineral-rich states of the country. Over the years, the coal based route has emerged as a key contributor to overall production; its share has increased from 69 per cent in 2005-06 into 70 per cent in 209-10. Capacity in sponge iron making has increased to 32 million tonne.

The table below shows the production of sponge iron in the country in the last five years and 2010-11 (April-December 2010) indicating the break-up of the share of coal and gas based route of production:

Production of sponge iron
(in million tonne)

Year

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11
(April-December)

Coal based

10.28

13.08

14.53

15.57

14.58

15.52

Gas based

4.54

5.26

5.84

5.52

6.16

4.48

Total

14.82

18.34

20.37

21.09

20.74

20.00

Source: Joint Plant Committee (JPC)

Pig Iron

India is an important producer of pig iron. Post-liberalization, with setting up of several units in the private sector, not only imports have drastically reduced but also India has turned out to be a net exporter of pig iron. The private sector accounts for nearly 90 per cent of total production for sale of pig iron in the country.

The domestic availability situation of pig iron is given the table below:

Pig Iron Domestic Availability Scenario
(in '000 tonne)

Year

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11 (April-December 2010)

Production for Sale

4695

4953

5284

6207

5734

4217

Import

3

3

11

8

11

7

Export

440

707

560

350

278

209

Consumption

4136

4336

4621

5870

5465

3937

Source: Joint Plant Committee (JPC)

Trends in production,Private/Public sector

Traditionally, Indian steel industry has been classified into Main Producers (SAIL plants, Tata Steel and Vizag Steel/RINL), Major Producers (plants with crude steel making capacity above 0.5 million tonne-Essar Steel, JSW Steel,Jindal Steel & Power and Ispat Industries) and Other Producers. The latter comprises of numerous steel making plants producing crude steel/finished steel (long product/flat product)/ pig iron/ sponge iron and are spread across the different states of the country.

The following table highlights the total as also the contribution of the private and public sector in crude steel production in the country:

Indian Crude Steel production
(in million tonne)
 

2005-06

2006-07

2007-08

2008-09

2009-10*

2010-11 (April-December)

Public Sector

16.964

17.003

17.091

16.372

16.714

12.579

Private Sector

29.496

33.814

36.766

42.065

48.161

38.015

Total Production

46.460

50.817

53.857

58.437

64.875

50.594

per cent share of Public Sector

36.5

33.5

32

28

26

25

Source: Joint Plant Committee (JPC)

 

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