1 a preliminary survey on the development of the indian steel industry after the economic...
TRANSCRIPT
1
A preliminary survey on the development of the Indian steel industry after the
economic liberalisation
Hajime SATO
Institute of Developing Economies
2
Overview
• Crude Steel Production in India in 2004 was 32.6 million tonnes, the ninth largest in the world.
• The steel industry in the total manufacturing;– 10% in the value added (fluctuating)– 8% in the employment but decreasing to 6%
after 1991
3
Features of the Indian steel Industry
• Abundant supplies of raw materials
• Integrated plants located inland
• Development designated to public sector up to 1991
• Highly regulated and protected markets till 1991
• Relatively slow technological up gradation
4
Brief history
• Before 1945, iron making developed, steel making weak
• After independence, strong state initiatives and controls (IPA)– IDRA (industrial licenses for entry, expansions etc.)
• Succeeded in installing integrated plants(Bhilai, Rourkela, Durgapur) in the early 1960s. The three expanded and Bokaro and VSP added in 70s and 80s. But after all, stagnated from the mid-1960s to 1990.
5
Policy Changes
• Industrial and Trade Policy Resolutions in 1991 with regard to the Steel industry– Exempted from industrial license system
– Abolition of price controls
– Liberalising conditions for FDIs
– Liberalisation of imports and exports
– Lowering tariff level
• In short, steel companies compete more freely in domestic and international markets than before
6
Changes in Technology
• Steel making process• Iron making : Rise of DRI(HBI/sponge
iron) production• Steel making: Replacement of OHF
with BOF/EAF, Introduction of CC • Rolling: Introduction of flat making
capacity(hot strip mill, cold rolling lines)• Labour Productivity: increasing
7
Structural Changes
• Public v. Private: New entry of private firms
• Integrated v. non-integrated: New types of integrated makers, EAF-Rolling makers, Iron makers, Small EIF makers
• Dual structure efficient? Integrated and big EAF makers v. Small EAF and EIF makers
8
Consumption and Trade
• Apparent consumption per head extremely low• Relative increase of flat products consumption
domestically• Imports stable up to 2003, hot rolled coils
decreasing while hot rolled sheets increasing• Exports increasing, not least hot rolled coils• Exporters: The share of SAIL, RINL and
TISCO decreasing, new comers exporting.
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ConclusionChanges after the economic
liberalisation• Steel production and
export increased much faster than before
• This increase attributable to new comers
• Technology catching up rapidly
• New type of steel firms appeared
• Flat products imported and exported
Problems faced• Raw materials• Infrastructure• Labour• Environment• Finance
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Table 1. Crude Steel Production (Top ten countries in 2004, million tonnes)
1975 1980 1985 1990 1995 2000 2004
USSR 141.3 147.9 154.7 154.4 - - -
China 23.9 37.1 46.8 66.3 95.4 127.2 280.5
Japan 102.3 111.4 105.3 110.3 101.6 106.4 112.7
US 105.8 101.5 80.1 89.7 95.2 101.8 99.7
Russia - - - - 51.6 59.1 65.6
South Korea 2.0 8.6 13.5 23.1 36.8 43.1 47.5
Germany 40.4 43.8 40.5 38.4 42.1 46.4 46.4
Ukraine - - - - 22.3 31.8 38.7
Brazil 8.4 15.3 20.5 20.6 25.1 27.9 32.9
India 8.0 9.5 11.9 15.0 22.0 26.9 32.6
Italy 21.9 26.5 23.9 25.5 27.8 26.8 28.6
World 643.4 716.1 718.9 770.5 750.2 847.4 1068.6
Source: International Iron and Steel Institute (I ISI), Steel Statistical Yearbook, various
issues
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Figure 1. Share of the steel industry in total manufacturing sector (1963-2002, %)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
Number of employees Value added
Source: UNIDO (2006), Industrial Statistics Database INDSTAT3 back
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図2 インドの粗鋼生産(1948 年から 2002 年)(1000 トン)
0
5000
10000
15000
20000
25000
30000
出所:I ISI , Steel Statistical Yearbook. various issues
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Blast furnace
OHF/ BOF
Continuous caster
Hot strip mill/Plate mill
Bar mill Pipemill/ Tube millCold strip mill
Iron oreDirect Reduction Process
SpongeIron
Scrap
EAF/ EIF
SlabsBllets/Blooms
Ingots
Surfacetreatment Line
Longproducts
Plates, Hotrolled coilsand sheets
Surfacetreatment
plate
Cold rolledcoils and
sheet
Pipesand
Tubesback
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Table 2. Production of Direct Reduced Iron (1000 tonnes)
India World India's share in the world (%)
1985 102 11171 0.9
1991 1153 19607 5.9
1995 4267 31151 13.7
2000 5498 42525 12.9
2005 10635 55365 19.2
Average growth rate per annum (%)
1985-2005 26.2 8.3
1991-2005 16.0 7.2
Source: I ISI , Steel Statistical Yearbook, various issues
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Table 3. Steel production by process (% total crude steel)
India South Korea Japan
OHF BOF EF OHF BOF EF OHF BOF EF
1980 59.0 20.0 21.0 1.2 69.2 29.7 0.0 75.5 24.5
1985 41.3 33.2 25.5 0.0 68.6 31.4 0.0 71.0 29.0
1990 31.3 41.3 27.5 0.0 68.9 31.1 0.0 68.6 31.4
1995 18.7 51.3 30.0 0.0 62.2 37.8 0.0 67.7 32.3
2000 9.3 49.8 40.9 0.0 57.2 42.8 0.0 71.2 28.8
2004 5.6 50.6 43.8 0.0 56.1 43.9 0.0 73.6 26.4
Source: I ISI , Steel Statistical Yearbook, various issues
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Table 4. Production of Continuously-cast steel (1975- 2004, % total crude steel)
India South Korea Japan World
1975 - 19.7 31.1 14.2
1980 - 32.4 59.5 30.0
1985 4.1 63.3 91.1 46.3
1990 12.3 96.1 93.9 59.1
1995 37.6 98.2 95.8 75.9
2000 60.9 98.6 97.3 86.5
2004 65.9 98.3 97.8 90.0
Source: I ISI , Steel Statistical Yearbook, various issues
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Figure 4. Trend of long and flat steel products (1995-2005, 1000tonnes)
0
5000
10000
15000
20000
25000
30000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Long products Flat products
Source: I ISI , Steel Statistical Yearbook, various issues
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Table 5. Changes in employment and labour productivity (major producers
1990/91-2003/04)
1990-91 1994-95 1997-98 1999-2000 2001-02 2003-04
Numbers of employees at the end of financial year
SAIL 236079 228428 209815 185625 171065 149742
VSP 14433 14001 17354 17254 17026 16755
TISCO 44383 44736 35038 27735 23937 21203
Labour productivity (crude steel (tonnes) per man year)
Bhilai 98 121 132 121 137 179
Bokaro 87 108 109 105 116 136
Durgapur 45 49 71 88 108 131
Rourkela 56 53 46 55 67 84
IISCO 24 30 31 33 39 36
VSP 30 156 189 192 228 254
TISCO 72 80 133 179 218 277
Source: SAIL, Statistics for Iron and Steel Industry in India, various issues back
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Table 6. Share of Crude steel production by public and private sectors (%)
1991-92 1994-95 1997-98 2000-01 2003-04
Public sector 64.8 62.7 54.0 50.9 48.9
Private sector 35.2 37.2 46.0 49.1 51.0
TISCO 14.9 14.1 13.1 13.3 13.1
Others 20.3 23.1 33.0 35.8 37.8
Total 100.0 99.8 100.1 100.0 99.9
Source: SAIL, Statistics for Iron and Steel Industry in India, various issues
Note: Total errors derive from original data.
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Table 8. Trends in Market Shares (value term, %)
SAIL TISCO ESSAR JSW ISPAT RINL
Total
for the
sample
Import Market
size Export
Domest
ic
Consu
mption
1992-93 47.5 10.7 - - 1.9 3.7 87.8 12.2 100.0 - -
1993-94 47.1 10.8 - - 1.9 4.9 88.5 11.5 100.0 - -
1994-95 39.8 10.8 - - 2.0 6.0 86.4 13.6 100.0 6.2 93.8
1995-96 36.2 10.7 2.5 - 1.8 7.1 86.0 14.0 100.0 6.8 93.2
1996-97 31.5 10.2 5.6 - 1.8 6.8 86.8 13.2 100.0 7.4 92.6
1997-98 30.0 9.4 6.3 0.5 1.8 7.5 86.5 13.5 100.0 8.4 91.6
1998-99 28.7 8.6 5.0 1.3 2.8 11.4 88.5 11.5 100.0 5.7 94.3
1999-00 29.5 9.7 5.2 2.0 4.3 6.1 90.9 9.1 100.0 7.9 92.1
2000-01 28.4 9.3 5.1 2.8 4.1 6.6 92.7 7.3 100.0 9.6 90.4
2001-02 28.9 9.7 4.5 4.3 3.5 8.0 91.6 8.4 100.0 9.1 90.9
2002-03 27.0 11.1 5.5 3.7 4.3 7.2 92.8 7.2 100.0 14.2 85.8
2003-04 28.0 11.1 5.1 3.8 4.6 7.3 91.0 9.0 100.0 14.8 85.2
2004-05 27.6 10.7 6.2 5.7 5.6 5.4 88.8 11.2 100.0 15.7 84.3
Source: Economic Intelligence Service, Industry: Markets and Shares, various issues
Note: Number of sample companies are 226 up to 1993/94, 241 up to 1995/96, 368 up to
2001/02 and 433 for the rests.
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Table 9 Apparent consumption of crude steel per capita (kilograms)
India China South Korea Japan World
1975 14.0 38.0 84.0 608.0 n.a.
1980 14.0 45.0 148.0 675.0 n.a.
1985 19.2 64.9 277.2 607.2 151.3
1990 26.0 59.4 501.0 801.6 149.8
1995 28.3 81.7 822.6 672.2 139.1
2000 30.1 128.0 851.1 635.0 154.6
2005 37.6 268.6 1014.7 648.5 157.6
Source: I ISI , Steel Statistical Yearbook, various issues
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Figure 5. Exports and imports of semi-finished and finished steel products (1975-2005,
1000 tonnes)
0
1000
2000
3000
4000
5000
6000
7000
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Export Import
Source: I ISI , Steel Statistical Yearbook, various issues back