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Steel-Report-Jan-2018.Pdf STEEL For updated information, please visit www.ibef.org January 2018 Table of Content Executive Summary……………….….…….3 Advantage India…………………..….……...4 Market Overview …………………….……..6 Recent Trends and Strategies …….……..17 Growth Drivers…………………….............22 Opportunities…….……….......………….…30 Success Stories……………....……………33 Industry Associations……………....……...36 Useful Information……….......…………….38 EXECUTIVE SUMMARY . Total finished steel production in India has increased at a CAGR of 8.39 per cent during FY12–17, with country’s steel production reaching to 111.254 million tonnes per annum (MTPA) in FY17. 2rd largest producer of . The country became the 2nd largest crude steel producer in 2017, as large public and private sector players crude steel strengthen steel production capacity in view of rising demand. Moreover, capacity has increased to 128.28 million tonnes (MT) in FY17, which is 5.17 per cent more than FY16, while in the coming ten years the country is anticipated to produce 300 MT of steel . India’s comparatively low per capita steel consumption and expected growth in consumption due to growing Strong growth infrastructure construction, automobile and railways sectors has offered scope for growth opportunities . National Mineral Development Corporation is expected to increase the iron ore production 75 million tonnes per annum (MTPA) until 2021 indicating new opportunities in the sector . Domestic players’ investments in expanding and upgrading manufacturing facilities are expected to reduce Rising domestic and reliance on imports. In addition, the entry of international players would provide benefits in terms of capital international investments resources, technical know how and more competitive industry dynamics Note: MTPA – Million Tonnes Per Annum Source: World Steel Association, Ministry of Steel, Aranca Research 3 Steel For updated information, please visit www.ibef.org Steel ADVANTAGE INDIA ADVANTAGE INDIA . Demand would be supported by growth in . To achieve steel capacity build-up of 300 the domestic market million tonnes per annum (MTPA) by 2030, . Infrastructure, oil and gas and automotives India would need to invest US$ 156.08 would drive the growth of the industry billion by 2030-31. Lower per capita consumption compared to . 301 MoUs have been signed with various international average states for planned capacity of about 486.7 MT. Steel production in India is forecast to double by 2031, with growth rate expected to go . Ministry of Steel plans to set up Steel above 10 per cent in FY18 Research and Technology Mission in India to promote R&D activities in the sector ADVANTAGE INDIA . As of 2017, India is the world’s 2rd largest . 100 per cent FDI through the automatic producer of crude steel (up from 8th in route is allowed. Large infrastructure 2003) projects in the PPP mode are being formed . Easy availability of low-cost manpower . National Steel Policy (NSP) implemented to and presence of abundant iron ore encourage the industry to reach global reserves make India competitive in the benchmarks global set up . Policy clarity and stability expected in respect of mining leases and forest clearances . 20 per cent safeguard duty on steel imports Notes: MT - Million Tonnes, FDI – Foreign Direct Investment Source: Metallurgical and Materials Engineering Division Board, Aranca Research 5 Steel For updated information, please visit www.ibef.org Steel MARKET OVERVIEW EVOLUTION OF THE INDIAN STEEL SECTOR . Foreign players began entering the Indian steel . Hindustan Steel Ltd and Bokaro Steel Ltd market were setup in 1954 and 1964, respectively . Production of steel started in . No license requirement for capacity creation . In the early 1990s, the public sector India (TISCO was setup in 1907) . Imposition of export duty on iron ore, to focus more dominated steel production . IISC was set up in 1918 to on catering growing domestic demand . Private players were in downstream compete with TISCO . Decontrol of domestic steel prices production mainly producing finished steel using crude steel products . Launch of Scheme for promotion of Research and Development in Iron and Steel sector 1907-18 1923-48 1954-64 1973-92 1993-2014 2015-17 . SAIL was created in 1973 as a holding company . In 2017, India ranked as the 2nd . Mysore Iron and Steel Company to oversee most of India's iron and steel largest crude steel producer in the was set up in 1923 production world, leaving behind United States. According to the new Industrial . In 1989, SAIL acquired Vivesvata Iron and Steel . During FY17, 8.24 MT of steel was Policy Statement (1948), new Ltd exported from India. ventures were only undertaken by the central government . In 1993, the government set plans in motion to partially privatise SAIL Notes: (1)TISCO - Tata Iron and Steel Company; IISC - Indian Iron and Steel Company; SAIL - Steel Authority of India Ltd; 7 Steel For updated information, please visit www.ibef.org STRUCTURE OF THE STEEL SECTOR Steel Form Composition End use Finished Non-alloy Liquid Steel Crude Steel Alloy Structural Steel Steel Steel Low Ingots Flat Stainless carbon Construction Steel Steel Medium Silicon Semis Non-flat carbon Rail Steel electrical Steel High High Carbon Speed Steel Source: Report on Indian steel industry by Competition Commission of India, Aranca Research 8 Steel For updated information, please visit www.ibef.org STEEL PRODUCTION IN INDIA HAS BEEN GROWING AT A FAST PACE . In FY17, crude steel production in India was 97.42 MT, with the total Total crude steel production (million tonnes) crude steel production growing at a CAGR of 5.49 per cent over the last 6 years. 120 2CAGR 5.49% 100 . The steel sector contributes over 2 per cent to the GDP of the nation 18.5 80 17.2 17.9 and provides 20 lakh jobs in the country. 16.8 16.5 16.5 14.4 17.0 60 . During April-December 2017, crude steel and finished steel 78.91 71.87 40 71.77 64.92 61.94 production in India stood at 75.498 MT and 79.294 MT respectively. 75.50 57.81 20 53.68 . As of March 2017, the capacity utilisation of steel producers is set to 0 1 increase with strong export demand and signs of revival in domestic FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P sales. Companies like JSW and Essar Steel have experienced a Private Sector Public Sector sharp increase in steel manufacturing in the last 2 months . Steel manufacturing output of India is expected to increase to 128.6 Total finished steel production (million tonnes) MT by 2021, accelerating the country’s share of global steel production from 5.4 per cent in 2017 to 7.7 per cent by 2021. 120 2CAGR 8.39% 14.9 . India’s steel output is expected to grow at a CAGR of 8.9 per cent 100 80 13.4 12.8 13.0 11.8 during 2017-21 and India is expected to become top global steel 12.8 12.5 96.39 producer^. 60 13.3 79.34 78.00 79.29 40 74.24 68.86 63.18 20 55.37 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P 1 Private Sector Public Sector Notes: FY - Indian Financial Year (April – March), MT - Million Tonnes, CAGR - Compound Annual Growth Rate; P – Provisional, 1April to December 2017 , 2CAGR is till FY17, Figures mentioned are as per latest data available, ^ As per BMI Research Report Source: Ministry of Steel Annual Report 9 Steel For updated information, please visit www.ibef.org SHARES IN PRODUCTION: SAIL AND TATA LEAD THE WAY . As of FY17, SAIL dominated India’s steel sector, with the company India’s crude steel market share by production – FY171 accounting for 11.40 per cent of country’s finished steel production and 14.59 per cent of country’s crude steel production. During FY17, Tata Steel accounted for 11.46 per cent of finished steel production 14.59% and 12.46 per cent of the country’s crude steel production . In January 2017, Indian government inaugurated Universal Rail Mill 12.46% (URM) worth US$ 178.49 million at SAIL’s Bhilai steel plant. The SAIL TATA RINL OTHERS production of the world’s longest single rail of 130 meters from the 4.47% new URM also commenced in the new mill. 68.49% India’s finished steel market share by production – FY171 10.40% 10.46% SAIL 3.22% TATA RINL OTHERS 75.91% Notes: RINL - Rashtriya Ispat Nigam Limited ; (1)Provisional; Figures mentioned are as per latest data available Source: Ministry of Steel Annual Report 2016-17, Aranca Research 10 Steel For updated information, please visit www.ibef.org GROWTH IN MARKET VALUE OF THE INDIAN STEEL SECTOR HAS ALSO BEEN STRONG . The sector has benefitted from the hike in prices and production, Market value of the Indian steel sector (US$ billion) especially since the beginning of the millennium . Over 2007–17(E), the sector’s market value is estimated to have 120 CAGR 12.76% posted a strong CAGR of 12.76 per cent 100 100.00 95.30 80 87.9 81 60 57.8 40 46.8 43 36.5 20 30.1 0 FY07 FY08 FY09 FY10 FY11 FY14 FY15E FY16E FY17E Note: E - Estimated Source: Ministry of External Affairs, Aranca Research 11 Steel For updated information, please visit www.ibef.org DEMAND HAS OUTPACED SUPPLY OVER THE LAST FIVE YEARS . Total consumption of steel was 83.9 MT in FY17 as compared to Real consumption of steel (in million tonnes) 81.5 MT in FY16. Consumption during April-December 2017 stood at 64.867 MT. 90.00 2CAGR 5.44% . Driven by rising infrastructure development and growing demand for automobiles, steel consumption is expected to reach 104 MT by 80.00 2017. 83.90 81.52 70.00 .
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