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Indian Steel Industry
Indian Steel Industry
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April 2007
1
Indian Steel Industry
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2003, India has been the largest sponge iron producer in the world. In 2005, out of total
global production of 56.05 mt of sponge iron, India produced around 11.1 mt (19.8%).
In line with production target of 110 mt of steel (National Steel Policy) by FY20, many
steel producers have announced their capacity expansion plans by signing MOUs with
various state governments like Chattisgarh, Orissa and Jharkhand. The steel producers are
expected to add around 8 mt of capacity by FY 08. CARE estimates that during 2006-09,
demand for steel in the domestic market would grow at a CAGR of 8.4%. HR steel
because of its widespread applicability is expected to grow at a CAGR of 17.5%. During
this period, major demand drivers would be Consumer durables, Automobiles and
Construction.
After latent scenario till 2003, international steel prices rose to touch record highs in early
2005, mainly driven by rapid growth in steel demand from developing economies.
Domestically, steel prices of flat products follow the international trend. Globally, steel
prices are expected to firm up with continued growth in steel consumption. Further, the
winds of consolidation have gathered pace with Arcelor-Mittal merger and latest
acquisition of Corus by Tata Steel. The Indian steel industry has announced huge
capacity expansions. With commissioning of these capacities demand-capacity ratio is
expected to decline in FY 09 due to excess capacity. Will this lead to a drop in prices
with commissioning of these capacities?
With China and India becoming the focus of major global steel companies, will the
consolidation of steel industry in these countries continue?
For comprehensive analysis and CARE’s future outlook on the sector, please refer to the
exhaustive report on the Indian Steel Industry by CARE Research.
You can contact us at: careresearch@careratings.com
DISCLAIMER
This report is prepared by CARE Research, a division of Credit Analysis & REsearch Limited [CARE]. CARE Research has taken
utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain.
However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Research operates
independently of ratings division and this report does not contain any confidential information obtained by ratings division, which
they may have obtained in the regular course of operations. The opinion expressed in this report cannot be compared to the rating
assigned to the company within this industry by the ratings division. The opinion expressed is also not a recommendation to buy, sell
or hold an instrument.
CARE Research is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of
information contained in this report and especially states that CARE (including all divisions) has no financial liability whatsoever to
the user of this product. This report is for the information of the intended recipients only and no part of this report may be published or
reproduced in any form or manner without prior written permission of CARE Research.
Published by Credit Analysis & REsearch Ltd. 4th Floor Godrej Coliseum, Off Eastern Express Highway, Somaiya Hospital Road,
Sion East, Mumbai – 400 022. Tel: +91-22-6754 3456 Fax:+91-22-6754 3457.
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April 2007
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