Agenda

Introduction to PEST analysis

Impact on steel industry
Conclusion

Introduction
PEST analysis stands for

Political analysis

Economical analysis

Social analysis

Technological analysis

Political Factors - Challenges

The 5 major challenges (listed below) facing the

iron and steel industry have their genesis in the
political environment in the country.

Availability of raw materials Ban imposed by the

Supreme Court on mining in Goa, partial ban in
Karnataka, and Odisha constrain resource
availability. Iron ore production had declined from
218 MT in 2009-10 to 140 MT in 2012-13

Impending policies Draft Steel Policy 2012 not

yet finalised. Delay in consolidating the mining
laws.

Political Factors - Challenges

Long and complex regulatory clearances - 3-7

years to set up a greenfield project including land
acquisition, rehabilitation, environmental
clearances and tying up mineral supplies. Industry
experts believe that this time period could be
easily reduced to half if the procedures were to be
streamlined

Land Acquisition Passing of land acquisition bill

has made acquisition of land difficult and
expensive. Consent of 70% for PPP and 80% for
private acquisitions.

Slowdown in demand growth Caused by delay in

awarding infrastructure projects and falling
significantly short of set targets

Political Factors- Favorable

Resource Security and Development Plan as

envisaged in the National Steel Policy 2012 is
likely to resolve availability of raw materials

The Mines and Minerals (Development) Bill 2011 is

set to consolidate mining related laws in a single
place in the Parliament

Increase in export duties on iron ore will make

larger share available to domestic steel
manufacturers

Creation of Cabinet Committee on Investment to

expedite clearances to large infrastructure
projects

Economic Factors

Steel is the back bone of human civilization, it is

very crucial in development of a modern economy.
The per capita consumption of steel shows the
living standard of people in any country.

Steel consumption increases when economies are

growing, as governments invest in infrastructure
and transport, and build new factories and houses.
Economic recession meets with a dip in steel
production as such investments falter.

The steel industry of India has capital investments

Of more than Rs 100, 000 crores. The total
employment in the industry is more than two
million.

Global Scenario

In 2012 the World Crude Steel output reached

1547.8 thousand metric tons and showed a
growth of 4% over the previous year. It is the third
consecutive year that world crude steel production
grew by more than 4%.

China remained the worlds largest Crude Steel

producer in 2012 also (716.5 thousand metric
tons) followed by European Nations (169.4
thousand metric tons).India occupied the 4 th
position (76.7 thousand metric tons).

it is forecast that world steel demand will grow

further by 4% and will reach 1,600 Mt.The National
Steel Policy has estimated steel production to
reach 110 million tonnes by 2019-20.

Economic Factors-Demand &

Supply

The demand is derived from sectors that include

infrastructure, consumer durables and
automobiles.

With trade barriers having been lowered over the

years, imports play an important role in the
domestic markets.

Steel industry shows oligopoly Market

FDI in steel industry

Economic Factors

In the current scenario there is RBI is Increasing

repo rates so capital would be available at higher
cost and decrease their production.

The exchange rates play a major role in EXIM

trade.

Inflation: the inflation has grown to about 9.84

percent so there is rise in price of all the goods,
and also production efficiency has decreased.

Price sensitivity &Demand volatility: The demand

for steel is derived demand and thepurchase
quantity depends on end-use requirements. The
traders are price sensitive andbuy when there are
discounts

Social Factors

Increase in
Urbanization
27.81% in 2001 Census
to 31.16% in 2011
Census

Increase in disposable
income results into
increase in
consumerism. PCI has
grown by 6.7% during
2006 to 2012

Social Factors

Land acquisition
difficulties eg POSCO

Environmental issuesair (1 ton primary steel

results into 2 tons of
CO2), water and noise
pollution. Health issues
like -Asthma

Social Factors

Rehabilitation and
resettlement issues,
eg- Bokaro steel city

Change in workforce
preferences from core
sectors to services
sectors.

Technology Factors

With globalization and an

ofoperations,
technological
become a necessity.

increasing scale
self-reliance
has

Research & Development Funding in the industry

by government.

Focus on technology aimed at emission reduction

and compliance to changing environment norms

Technology Factors

Investment in Breakthrough technologies for long

term solutions . For ex Tata Steel multi million
dollar investment in a project aimed at reduction
of ash content in Indian coal from present 35 % to
around 7-8%

Easy of technology transfer and entry of foreign

players . For ex. JSW getting into a technology
agreement
with
Japanese
firm
JFE
for
manufacturing of electrical grade steel.

Thank You