Report Summary
Globally, crude steel production has attained an altitude of 1239.5 mn tonnes (mt) in CY 06. Share of top ten steel producing countries was about 76.4% with China, leading the pack, contributing almost 34% and India ranked 7th with a reasonable 3.5%. In the recent past, a major swing has been observed in the global steel production trend with a shift from developed countries to developing countries. During CY 03-05, the CAGR of steel production in developing economies like China (25.5%) and India (9.5%) was much higher than the CAGR of world steel production (8.1%). On the consumption aspect, globally, India has emerged as the 5th largest consumer of steel in CY 05.
Indian steel industry is characterised by fragmentation, particularly in the downstream segment, with a large number of unorganised players. Energy intensiveness of Indian steel industry is highlighted by its consumption of about 10% and 27% of total electricity & coal consumed respectively by the entire Indian industry.
Primary producers (Integrated Steel Producers (ISPs)) in the country produce majority of flat products and secondary producers (mini steel plants) produce most of the long products. Globally, 65.4% of crude steel is produced by BF/BOF route, 31.7% by EAF route and rest by Open Hearth method. In India, blast furnace/BOF route dominates with 41% share, followed by induction furnace at 31%, EAF at 25% and COREX at 3%. In FY 06, domestic steel production was apprx. 43 mt. Imports and exports as a % of steel produced stood at 8.8% (3.77 mt) & 10.2% (4.35 mt) respectively. In FY 06, India consumed about 38 mt of steel, infrastructure sector being the largest consumer. The demand for the flat steel in the country is increasing with the growth in automobile and consumer durable industries.
Cost of production of steel depends on technology employed for production and extent of backward integration, sourcing of power and raw material. Typical power consumption per tonne of steel produced ranges between 500-650 Kwh. Raw material accounts for 60-70% and energy (coal and power) 25-30% of total cost of production.
India has self sufficiency in iron ore but for coking coal, coke and scrap it has to depend upon imports. In FY 06, India produced about 166 mt of iron ore out of which 66.3 mt was consumed by domestic steel producers and the rest was exported. The demand growth of scrap is expected to be lower because of substitution by sponge iron. Since 2003, India has been the largest sponge iron producer in the world. In 2005, out of total global production of 56.05 mt of sponge iron, India produced around 11.1 mt (19.8%).
In line with production target of 110 mt of steel (National Steel Policy) by FY20, many steel producers have announced their capacity expansion plans by signing MOUs with various state governments like Chattisgarh, Orissa and Jharkhand. The steel producers are expected to add around 8 mt of capacity by FY 08. We estimates that during 2006-09, demand for steel in the domestic market would grow at a CAGR of 8.4%. HR steel because of its widespread applicability is expected to grow at a CAGR of 17.5%. During this period, major demand drivers would be Consumer durables, Automobiles and Construction.
After latent scenario till 2003, international steel prices rose to touch record highs in early 2005, mainly driven by rapid growth in steel demand from developing economies. Domestically, steel prices of flat products follow the international trend. Globally, steel prices are expected to firm up with continued growth in steel consumption. Further, the winds of consolidation have gathered pace with Arcelor-Mittal merger and latest acquisition of Corus by Tata Steel. The Indian steel industry has announced huge capacity expansions. With commissioning of these capacities demand-capacity ratio is expected to decline in FY 09 due to excess capacity. Will this lead to a drop in prices with commissioning of these capacities?
With China and India becoming the focus of major global steel companies, will the consolidation of steel industry in these countries continue?
Report Outline
1 Introduction
1.1 Global Steel Industry
1.2 Overview of Indian Steel Industry
2 Industry Characteristics
2.1 Fragmentation
2.2 Entry Barriers
2.3 Cyclicality
2.4 Volatility in prices
2.5 Labour & energy intensity
2.6 Influence of product mix
2.7 Substitute threat
2.8 Duty structure
3 Classification of Steel Industry
3.1 Productwise classification
3.1.1 Flat products
3.1.2 Long products
3.2 Producerwise classification
3.2.1 Primary producers
3.2.2 Secondary producers
3.3 Alloy steel
4 Steel manufacturing Process
4.1 Blast furnace
4.2 Electric arc furnace
4.3 Induction furnace
4.4 Comparison of processes
4.5 Processwise steel production
4.6 Sponge Iron (DRI) manufacturing
4.7 Stainless steel manufacturing
4.8 Ferroalloys manufacturing
4.9 Other processes related to steel/alloy manufacturing
5 Demand – Supply Analysis
5.1 Demand drivers
5.2 Overall demand capacity analysis
5.3 Flat products
5.4 Long products
5.5 Exports & imports
5.6 Prices
6 Cost Components
6.1 Cost of production per tonne
6.2 Power cost
6.3 Raw material cost
6.3.1 Iron ore
6.3.2 Coking coal
6.3.3 Coke
6.3.4 Scrap
6.3.5 Sponge iron
7 Outlook
7.1 Capacity addition
7.2 Future demand growth – end userwise
7.3 Demand supply scenario in future
7.4 Consolidation
8 Industry Players
8.1 Tata Steel Ltd.
8.2 Steel Authority Of India Ltd. (SAIL)
8.3 Essar Steel Ltd.
8.4 JSW Steel Ltd.
8.5 Bhushan Steel Ltd.
8.6 Jindal Stainless Ltd.
