lack of research in indian steel industry

8/8/2019 LACK OF RESEARCH IN INDIAN STEEL INDUSTRY

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LACK OF RESEARCH IN

INDIAN STEEL INDUSTRY


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INTRODUCTION

The current global steel industry is in itsbest position in comparison to the last

decades. The price has been rising

continuously. The demand expectationsfor steel products are rapidly growing

for coming years. The shares of steel

industries are also in high pace.


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OBJECTIVE OF THE

RESEARCH

To find out why India is lagging behind in

contribution of steel to the world andhow timely research can help India to

improve the quality of its steel products

and thus, enhance its export prospects.


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RESEARCH ANALYSIS

18%

8%

3%

9%

8%

4%

37%

13%

EUROPE

USA

BRAZIL

JAPAN

CIS

INDIA

CHINA

OTHERS

STEEL PRODUCTION


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STEEL PRODUCTION

SCENARIO The countries like China, Japan, USA are at

the top

China accounts for one third of total

production i.e. 419m ton

Japan accounts for 9% i.e. 118m ton

India accounts for 60m ton

Chinas production is around 7 times more

than India


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BASIC FEATURES- CURRENT

STATUS

Current size- 60 metric tons

Major players

- SA

IL, TISCO

, Jindal,E

ssar Middle players- Mukand, Kalyani Steel

Minor players- Shyam Steel, Visa Steel

Per Capita Consumption- 60 kg while theglobal average of160 kg


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DEMAND AND SUPPLY

MISMATCH

3.5

3.6

3.7

3.8

3.9

4

4.1

4.2

2005 - 2006 2006 - 2007

MISMATCH

MISMATCH in mt


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IMPLICATIONS OF MISMATCH

Demand is higher than supply and in future

this gap is expected to widen

Resettlement problems and poor working

conditions are some of the anticipatedreasons behind this

India would find it cost competitive to meet

its domestic demand increases throughcreation of domestic capacity rather than

through imports


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FACTORS HOLDING BACK THE

INDIAN STEEL INDUSTRY Insufficient energy supply

700 Mega Watt electricity is required which is expected to be

provided by 2020

Inefficient transport systemExcessive freight charges & difficulty in reaching all places

Substitution of steel

Steel is getting substituted by lighter materials like aluminium and

plastic Land Acquisition Problems

For example, Posco is doing rethink on its mega investment inOrissa, after delays occurred in the handing over of the mines andland.


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RAW MATERIAL RESERVES

AND CONSUMPTION

0

100

200

300

400

500

600

700

800

900

1000

India Australia Brazil USA China World

Per Capita Iron Ore Reserves (Series 1) & Steel Consumption(Series 2) for 5 Countries

Series1

Series2


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RAW MATERIAL

CONSTRAINTS Indias per capita iron ore reserve is 10 tones as

against 120 tones for Brazil

Domestic raw material sources are insufficient

to supply the Indian steel industry Considerable amount of raw materials are

imported

Iron ore deposits are finite and there are

problems in mining sufficient amounts of it

Indias entire known reserves of high grade ironore would be exhausted in less than 20 years


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Indias hard coal deposits are of low quality

For this reason hard coal imports have

increased in the last five years by a total of

40% to nearly 30 million tons. Almost half of this is coking coal (the

remainder is power station coal).

India is the worlds sixth biggest coalimporter.


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MAJOR CONSUMER

INDUSTRIES OF STEEL IN

INDIA

43%

32%

5%

20%

CONSUMPTION

CONSTRUCTION

MECHANICAL

ENGINEERING

AUTOMOTIVE

ENGINEERING

OTHERS


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POSITIVE STIMULI FROM

CONSTRUCTION INDUSTRY

Focus should be more on Constructionindustry

This industry is one of the key drivers of

Indias economic growth Up to 10 million new homes need to be built

each year

Government has announced that some

40hotels are to be built

Overall demand for steel in the constructionsector would be 65-85 mT by 2020.


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RESEARCH PROBLEMS

Raw material prices are rising

Raw material sources are insufficient to

supply the Indian steel industry

Cost differential required to switch fromdomestic supply to imports is about 35%

Low blast furnace productivity compared to

other countries Threat of substitution


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FINAL ANALYSIS

Demand- Supply Gap

Lack of innovation

Inefficient Production system

Rising cost of raw materials and factors

Threat from aluminium & plastic


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RECOMMENDATIONS

Recycle Steel Undertake research & development to

improve the quality of steel products and toincrease productivity of blast furnace

Forecast demand in each sector and procurematerials in economic lots, at competitiveprices

Focus on increasing the consumption of steelin the rural areas

Deploy modern production systems


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CONCLUSION

Outlook for Indian Steel Industry is expected tobe stable. And to keep at pace with growingeconomies it has to conduct timely research.This will enable the players to know the market

& understand trends better. Research isparticularly required in areas like analysis ofdemand in major sectors, identification ofcompetitive & unexploited sources of raw

materials, understanding customerneeds, keeping up to date with technology, andanalysis of competition.


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DATA SOURCES

1. http://steel.nic.in/overview.htm.

2. Joint India/OECD/IISI Workshop on Steel, 16

M

ay 2006,N

ewD

elhi3. SAIL NEWS. November-December 2006, p 23

4.http://wikipedia.org

5. http://www.thehindubusinessline.com6. hhttp://www.rncos.com/Report/IM540.htm

7. IISI


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lack of research in indian steel industry

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