Group Number: 6

Bodhisattwa Ganguly (115)

Manoj Kumar (128)
Ranjitha Sridharan (142)
Rishikesh Kumar (129)
Roshith Nambiar (135)
Sahil Sharma (150)
Sumantra Banerjee (103)
Vinnu Priya (138)

An Overview of the Steel Industry

Submitted to:
Dr. SNV Siva Kumar
TABLE OF CONTENTS:

HISTORY OF STEEL INDUSTY......................................................................................4

GOVERNMENT POLICY AND REGULATORY FRAMEWORK.................................4

MAJOR PLAYERS.............................................................................................................5

GROWTH OF STEEL INDUSTRY IN INDIA..................................................................5

IMPACT OF STEEL ON ECONOMY...............................................................................6

CURRENT STATUS OF INDIAN STEEL INDUSTRY...................................................6

FUTURE OF INDIAN STEEL INDUSTRY......................................................................7

CONCLUSION....................................................................................................................8

REFERENCE......................................................................................................................9

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ABSTRACT

Steel has had a major impact on our lives, the cars we drive, the buildings we live and
work in and countless other places. Steel is by far the most important, multi-functional
and most adaptable of materials. The backbone of developed economies was laid on the
strength of steel. Steel industry is very cyclic and is impacted by economic policies. It has
a direct impact on GDP of our country. The global steel industry is in the grip of mergers
spree.
This report covers various aspects of the Indian Steel Industry like history, Government
Policy Framework, its impact on economy, current and future prospects of the Steel
Industry.

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HISTORY OF STEEL INDUSTRY
The Indian steel industry – backbone of the Indian economy:
The Indian Steel Industry is almost 100 years old now. Till 1990, the Indian steel industry
operated under a regulated environment with insulated markets and large-scale capacities
reserved for the public sector. Production and prices were determined and regulated by
the government and SAIL and Tata steel were the main producers. The first integrated
steel plant was set up in 1907 in Jamshedpur by TISCO. Since then the Indian steel
industry has emerged as one of the core sectors in the Indian economy with a very
significant impact on economic growth.
The 90’s were a very turbulent time for the Indian economy. With the liberalization of the
economy in 1992 a number of domestic and private players entered, adding fresh
capacities especially between 1990-2005. Last decade saw the Indian steel Industry
integrating with the global economy and evolving considerably to adopt world-class
production technology to produce high quality steel. The total investment in the Indian
steel since 1990 has been over Rs 25000 crores.
The years between 1997 and 2001 saw a downturn in the global steel industry due to
demand-supply mismatch, unremunerative prices and erosion of bottom lines. The
industry recovered in 2002. Today, India produces international standard steel of almost
all grades/ varieties and has been a net exporter for the past few years.
Global Scenario:
In 1913, production of stainless steel in the world was only a few tons. It reached 0.6 MT
in 1938 and increased to about 2.5MT in 1963. It crossed the 10MT mark in 1986. China
is presently the world’s largest producer and consumer of steel.
TOTAL WORLD PRODUCTION = 1132.8 MT

MAJOR PLAYERS
The major steel producing companies in India with capacities of over 1MT & known as
Integrated Steel Produces (ISPs) are the following companies:
Revenue
(Rs in Crores) Production
Industries FY06-07 (Tonnes) Location
Bhilai, Rourkela,
Steel Authority of India Durgapur,IISCO,Bokaro,S
Limited (SAIL) 39,189 12.6 alem,
Tata Steel 27,437 5 Jamshedpur
Jindal Steel (JSW) 9337 4 Tarapur, Bellary

Rashtriya Ispat Nigam

Ltd (Vizag steel) 9151 3.6 Visakhapatnam

Essar Steel 9002 4 Hazira Steel Complex

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GROWTH OF STEEL INDUSTRY IN INDIA
After liberalization, there have been no shortages of iron and steel materials in the
country. Today, India is the 7th largest producer of steel in the world.
China has been an important export destination for Indian steel. The steel industry is
buoyant due to strong growth in demand particularly by the demand for steel in China.
The Indian steel industry also went through an extremely turbulent phase in the backdrop
of a global economic Production And Consumption Trend of Steel in
recession. During the Ninth India

( i n m i l l io n t o n n e s )
Plan (1997-2002), while 60

the installed capacity of the 50

Q u a n tity
40
industry went up to 35 MT, 30
Production
Consumption
a slowdown in almost all 20
10
industrial segments of the 0

Indian Economy and

depressed global demand Year
resulted in mismatch
between installed capacity and demand. This led to a crash in steel prices. All major
producers barring Tata Steel went into red and in 1999-2000 questions were being asked
whether the steel industry would survive.

Fig 1. Shows that the

profitability of the Indian
Steel Industry had eroded
considerably during this
phase.

IMPACT OF STEEL ON ECONOMY

The Discovery of Iron Brought about a paradigm shift in human civilization. The
Discovery of steel further enhanced human living standards, so much so that Per Capita
consumption of steel is measured as a test of a country’s economic development.
Global Perspective:
 Steel has been the basic raw material for development; it has also played a major
role in determining result of wars. Employment in Major Steel Producing Nations

 Steel industry generates growth and 2335

employment in other industries like 2500

2000 1388

automobiles, construction etc. For every 1019 985 946 908 885
Thousands

1500

1 Man-Years of steel industry generates 1000

500
3.5 man-years elsewhere 0
1974 1990 1996 1997 1998 1999 2000
 Due to advent of information technology Years

steel industry has moved from labor

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 intensive industry to knowledge and process intensive industry, thereby reducing
number of people employed.
 Developing countries (Like India and China) are increasing the consumption and
production of steel. This has lead to massive financial investments to increase
installed capacity.
Indian Perspective:
 Government regulations led to creation
of giant PSUs. These PSUs have been
inefficient in past and a drain on Tax
payer’s money till recently.
 FDI inflows into steel have been
massive with many global names setting
shop
 Direct Job creation is predicted to decline at 8% pa; due to newer technologies.
(source McKinsey Report)

CURRENT STATUS OF INDIAN STEEL INDUSTRY

Key highlights:
 The Indian steel industry currently provides direct/indirect employment to over 2
million people.
 7th largest steel producing nation in the world with crude steel production of
49MT in 2006-2007.
 India is a net exporter with exports of approx. 5 MT in 2006-2007(growth of
33%).

World steel consumption is

WORLD PRODUCTION IN 2006
on a strong growth path
underpinned by the metals- 450
400
intensive phase of economic 350
300
growth that is underway in 250
MT

200
150
emerging economies such as 100
50
China and India. Today, 0

Indian producers employ

world-class standards of
technology. There is growing
acceptability for Indian steel COUNTRY

them in the international

market. Despite this however India’s share in world trade steel is a miniscule 2%. To
analyze the situation further let’s do the SWOT analysis of Indian Industry.

SWOT ANALYSIS OF THE INDUSTRY

Strengths Weaknesses
1. Availability of iron ore and coal 1. Unscientific mining

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 2. Low labour wage rates
3. Abundance of quality manpower
4. Mature production base
Opportunities
1. Unexplored rural market
2. Growing domestic demand
3. Exports
4. Consolidation
2. Low productivity
3. Coking coal import dependence
4. Low R&D investments
5. High cost of debt
6. Inadequate infrastructure
Threats
1. China becoming net exporter
2. Protectionism in the West
3. Dumping by competitors

FUTURE OF INDIAN STEEL INDUSTRY

The Growth Profile:
The liberalization of industrial policy and other initiatives taken by the Government have
given a definite impetus for entry, participation and growth of the private sector in the
steel industry. While the existing units are being modernized/expanded, a large number of
new/Greenfield steel plants have also come up in different parts of the country based on
modern, cost effective, state of-the-art technologies.
Growth Opportunities for Steel industry:
 Number of new Pipeline Projects, over 7800 km of new pipelines is expected to
be laid in the next 5-7 yrs.
 Demand surge in Automobile sector, production of cars growing by 14.5%

 Construction investments are likely to go up by 9% due to increasing thrust on

roads, water supply, hydel power projects, irrigation etc.

 SEZ/SME’s are coming up in a big way and demand for steel from them is
definitely on the upside.

 Demand for steel in India is very low and is bound to increase.

Some of the important points and predictions related to the growth of the Steel industry
are mentioned below:
 In order to support steel production of 110 MT by 2019-20, at 100 percent
capacity utilization, the required   IRON COKING NON COKING
quantities of critical inputs such as ORE COAL COAL
iron ore, coking and non-coking coal 2019-20 190 70 26
can be seen in Table below. 2004-05 54 27 13

Table: Critical Inputs for Steel Production (in MT)

 The steel producers are expected to add around 8 MT of capacity by FY 08 and 66
MT is targeted for 2011. CARE estimates that during 2006-09, demand for steel in the
domestic market would grow at a CAGR of 8.4%.

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  HR steel, due to 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. Steel will also continue to have a stronghold in traditional
sectors such as housing, ground transportation, special steels, power generation,
petrochemicals, fertilizers etc.
 Due to consolidation in the Indian steel industry for e.g. Tata - Corus Merger,
with the commissioning of these capacities demand-capacity ratio is expected to decline
in FY 09 due to excess capacity.
 The Eleventh Plan Period, which indicate that for finished non-alloy steel,
domestic steel demand would reach 70 million tonnes and steel supply would touch 77
million tonnes by the end of the terminal year of Eleventh Plan, i.e. 2011-12. These
would represent 40 per cent and 66 per cent growth rates respectively as compared to
2007-08, the first year of the Plan period.

CONCLUSION
Steel industry is one of the basic industries which have a huge impact on the country’s
economy, as seen in the steps taken by government such as liberalization and national
steel policy to encourage growth. Hence the growth in this industry has been impressive
over the past decade with Indian companies becoming global players and India becoming
net exporter of steel with Indian exports growing by over 33%. In spite of this Indian
share in consumption and world steel trade is still miniscule. However with the
realization of future prospects, while India may not become a leader in world steel
market, it can become a powerful force.

REFERENCE

 www.indiansteelalliance.com

 Ministry of Steel Govt of India website: www.steel.nic.in

 Database CMIE Prowess

 McKinsey Report on Indian Steel Industry – 2000.

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