steel sector
DESCRIPTION
Steel Sector IndiaTRANSCRIPT
STEEL SECTOR: AN ANALYSIS
INTRODUCTION
STEEL SECTOR IN BRIEF
STEEL
It is an alloy consisting of Iron Carbon content (0.02% - 2.04%) Manganese and Tungsten
The major processes of production: Bessemer Process Basic Oxygen Steelmaking
TYPES OF STEEL Early Modern Steel
Blister steel Crucible steel
Contemporary Steel Carbon Steel High Strength Low Alloy Steel Low Alloy Steel Tool Steel TRIP Steel
HISTORY
Stages in Global Production of Steel
Source: IISI
MAJOR PRODUCTS
Semi-Finished Product like Slabs,blooms etc Ordinary Steel Products like tubes,pipes etc Hot rolled coils (HRC) Cold rolled coils (CRC) Galvanised Sheets Speciality steel products like stainless steel
pipes & foils etc
ROUTES OF STEEL PRODUCTIONPrimary/Integrated Secondary/Mini Mills
Types of raw material used
Iron ores and scrap Steel Scrap only
Mostly Used in Developing countries
Developed countries
Companies in India
SAIL,Tata Steel Essar,Ispat
MAJOR CONSUMERS OF STEEL
MAJOR PLAYERS
INDIAN COMPARISONTata Steel
SAIL JSW Essar Steel
BASED ON OWNERSHIP
PUBLIC VISAKHAPATNAM STEEL
PLANT NMDC MSTC LIMITED FERRO SCRAP NIGAM LIMITED MOIL KIOCL BIRD GROUP OF COMPANIES SPONGE IRON INDIA LIMITED MECON LIMITED HSCL BHARAT REFRACTORIES
LIMITED
PRIVATE TATA-CORUS ESSAR ISPAT JSW STEEL LIMITED MUKAND LIMITED SESA GOA
GLOBAL COMPANIES
Arcelor - Mittal
Nippon Steel JFE POSCO Bao steel- Bayi Group Tata - Corus US Steel
120 mtpa
32.7 mtpa 32 mtpa 30.1 mtpa 25.6 mtpa 24.7 mtpa 21.2 mtpa
VALUATION METRICS
M&As Arcelor - Mittal
32.2bn$ dealMittal pips Severstal
Tata-Corus11.3bn$ dealTatas pip CSN
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TRENDS
INDIAN SCENARIO
PRODUCTION IN INDIA
05
101520253035404550
Qu
an
tity
(in
mill
ion
to
nn
es
)
2003-04 2004-05 2005-06 2006-07
YEAR
Source: Joint Plant Committee
IMPORT AND EXPORT OF STEEL
0
1
2
3
4
5
Qua
ntity
(in
mill
ion
tonn
es)
2003-04 2004-05 2005-06 2006-07YEAR
IMPORTS
EXPORTS
INDIAN TRENDS Average growth rate for past 15 years 7%
pa Improved rank to 7th place Projected growth rate 7.3% pa Expected to be world's 2nd largest steel
producer by 2016
Race for the capacity
16% CAGR over 5 years Steam still left in the super cycle Steel companies in India to outperform Joined at the hip (to the globe)
Indian production growth slowed by capacity
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INDUSTRIAL REGULATIONS
Pollution Control ESI RPF Central Excise Duty Custom Duty Auxiliary Duty Sales Tax Laws under Factory Act
INDUSTRIAL REGULATION
SUBSIDIES Interest Subsidy Capital Investment
Subsidies Stamp Duty
Exemptions Electricity
Subsidies.
LICENSE Trade License Health License Fire License
SWOT FOR INDIAN STEEL SECTOR
Strength Availability of iron ore
and coke Low wage labor
availability Quality manpower Mature production
base
Weakness Unscientific mining Low productivity Coking coal import
dependence Low R&D investment High cost of debt Inadequate infrastructure
SWOT contd..
Opportunities Unexplored rural
markets Growing domestic
demand Exports Consolidation
Threats China becoming net
exporter Dumping by
competitors Protectionism from
the West
STRATEGIES FOR GROWTH
On the demand side Extensive promotional campaigns Strengthening of rural delivery chain Encouraging infrastructure development
On the supply side
Creation of additional capacity Removal of bottlenecks in the availability
of raw material Encourage R&D Invest to create professional technical man
power
TRENDS
GLOBAL SCENARIO
GLOBAL TRENDS
The global consumption of steel has increased at a pace of 7%
Chinese steel industry is booming
World’s big producers are all pursuing large-scale investment projects in India
CHINESE STEEL INDUSTRY•Heavy influence on global steel industry in past 5 yrs•Emerged as a leading producer and consumer
CHINESE STEEL INDUSTRY (contd..) Growing infrastructure and huge Govt
subsidies have fuelled this success
Challenges Overcapacity is a challenge industry
needs to tackle for future growth Non availability of iron ore reserves is a
disadvantage
RECYCLING
Reliance on steel scrap in production
Developed countries: 50-70% Emerging countries: 15-20%
RECENT HAPPENINGS & FORECASTS
Foreign Direct Investments MoU signed between POSCO and Govt.
of Orissa
Mittal has set up 2 steel plants in Jharkhand and Orissa with a capacity of 24 MT
FUTURE ROADMAPS
The fact that steel is cent percent recyclable should be used to our advantage
Ore policy in India requires pressing reform
A Presentation put together by:
Ashwin Maniyar Palak Sood Pallavi Patil Rahul Lodha Rahul Kumar Swathi Velisetty