02-Dec-2010

Indian Steel Industry – An

Overview

69th OECD Steel Committee Meeting

Paris
2-3 December 2010

1
 02-Dec-2010

Indian Steel Demand – Buoyant

56.5
60 52.1 52.4
Steel CAGR in
46.8
50 41.4 last 5 yrs was
36.4 29.9 9.4%
40 26.5 27.3
24.7
30 22.2 Longs
20.3
Flats
20
23 21.9 23.4 Alloys
17 19.6
10 14.1

2.1 2.2 2.5 2.7 3.2 3.1

0
2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

Steel consumption growth in last 5 yrs was range bound at 9-13%,

Per capita steel use is 48 kg vis-a-vis 35 kg in 2005

Steel demand expected to continue @10%+ CAGR till 2020

Steel Demand Driver

9.5 9.7
10.0 9.0 9.0
9.0 8.2 8.0 8.1
7.3 7.6
8.0 7.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

 GDP growth to continue at 8-9%

 Huge infrastructure investment by Govt. ~ $500 billion

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 02-Dec-2010

Indian Steel Demand on High Pedestal

165
Long-term GDP Growth 148 GDP @9%
140 target rate ~9%
133
113 GDP @8%
115
105
90 78
59
57 75
65 52
33
40 26

15
1999-00 2003-04 2007-08 2009-10 2012-13 2016-17 2019-20

• High GDP growth - support to steel demand

• Steel intensity to go up with more fixed asset investment

Indian Steel Demand – Likely Sources

Sector-wise incremental steel demand by 2012 (million MT)
3 1 ~100
100 4
30 5
90
80
70
60 52
50
40
30
20
10
0
ds

s
08

12
s

ay
ns

le
ile

oo
20

20
ab
ilw
o

ob
/C

lG

ur
U

U
Ra
m
ra
AS

AS
ta

.D
to
f

pi
In

ns
Au

Ca

Co

Source: In-house

 Private sector investment growing at 15% plus

 Large infrastructure projects in Public-Private Partnership (PPP) mode
 Foreign investment of nearly $40 billion committed in steel sector
6

3
 02-Dec-2010

Domestic Steel Availability

59.7
India: Steel Production (million MT)
60.0 52.8 53.5
50.2
50.0 44.4
41.3 29.7
38.6
40.0 26.3 27.0
24.7
22.1
20.4
30.0 19.2
Longs
20.0 Flats
26.4 26.5 30.0
22.3 25.5
10.0 19.4 21.0

0.0
2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10
Source: JPC

 Steel consumption in Apr-Sep 2010 rose by 9.8% y-o-y

 Capacity augmentation to meet domestic demand

Indian Steel Capacity By 2020

2009 2012 2020
SAIL 12.8 12.0 35.2 60.0

JSW 7.8 3.2 21.0 32.0

TATA 6.8 6.2 20.5 33.5

ESSAR 4.6 9.9 6.0 20.5

ISPAT 3.0 2.0 12.0 17.0

RINL 2.9 3.9 9.2 16.0

JSPL 2.4 8.1 16.1 26.5

BSPL 1.22.8 3.0 7.0

Additional capacity by 2020
BSL 0.6 5.4 3.0 9.0
~230-240 million MT
POSCO 18.0 12.0

ARCELOR… 30.0 (million MT) 24.0

SECONDARY 22.0 6.5 14.0 42.4

0.0 10.0 20.0 30.0 40.0 50.0 60.0 Source: MoS

 Current capacity ~ 73 million MT

 By the year 2012, Crude Steel Production Capacity Likely to be 110-120
million tonnes
8

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 02-Dec-2010

Greenfield Projects – Update

 10-15 million MT capacity at various stages where land has been acquired

 Another 50 million MT capacity at preliminary stages such as land

acquisition, statutory clearances etc.

 The Global Crisis post-Sep. 2008 has caused deferment of some Greenfield
projects

 Land acquisition has become a critical factor for a few projects

 Steel capacity by 2012 – expected to be 110-124 million MT

Indian Steel – Policy Imperatives

 Liberal policy regime – import duty at 5%

 Export of raw materials exceeding domestic consumption

 100% foreign investment allowed through automatic route even in mining

sector

 Focus on capacity building and consumption

 Large Infrastructure Project in Public-Private Partnership (PPP) mode.

 Demand Booster from infrastructure, housing, automobile, gas and oil

pipelines, capital goods (machinery) and consumer goods.
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5
 02-Dec-2010

Indian Steel – Impediments

 Capacity addition – hindered by difficulty in land acquisition

 Uncertain Time frame for land acquisition, environmental clearances.

 Concerns on depleting raw materials reserves

 Need for higher spending on infrastructure (roads, railways & ports)

 Significant infrastructure constraints in roads, railways, ports, power.

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The Roadmap

 Accelerated capacity building in steel, through Brownfield route to meet

demand in the medium term

 Fast-tracking of Greenfield projects by way of better coordination &

monitoring

 New legal policy regimes on mining, land acquisition & rehabilitation

 Encourage value addition and production of value added steel products

12

6
 02-Dec-2010

The Roadmap (Contd.)

 Encourage beneficiation methods for utilization of low grade iron ore &
fines

 Energy efficiency, carbon emission reduction and new technology for

higher productivity

 Higher emphasis on resource optimization

 Spread to niche international markets through quality steel products

 World’s third largest steel producer by 2014

13

Thank You