STEEL INDUSTRY

BY- Mithil Joshi

Khyati Patel
INTRODUCTION
• Metals have been one of the core drivers of industrialization.
Among metals, steel has historically held a dominant
position.
• the steel industry has always been at the forefront of
industrial development and forms the backbone of any
economy.
• In ancient times, the steel and power were regarded as main
foundation for nation’s future development.
• True to their vision, most of India’s modern infrastructure
was built using steel, which cemented the industry’s key
position in the nation’s growth story.
• Today, India has replaced Japan as the second largest steel
producing country, and it is on course to become the second
largest consumer of steel globally.
• In 20th century, independent India became the self
reliant under the adopted model of a mixed
economy.
• To achieve this goal, the primary (raw materials),
secondary (manufacturing) and tertiary (services)
sectors had to be developed simultaneously. . As a
raw material and intermediate product, steel was
the common link between all three sectors.
• steel is probably the most extensively used input in
manufacturing.
• Due to its high corrosion resistance, steel finds
wide usage in many Today, the steel industry
contributes slightly more than 2% to the GDP of
the country.
• The steel industry employs nearly half a million
people directly and two million people indirectly.
• As per the World Steel Association, globally, for every two jobs created in the steel
industry, 13 more jobs are created across the supply chain . India is currently the
world’s second largest producer of crude steel, with 110.92 MT produced in 2018–
19 (up from 103.13 MT in 2017–18). The country has strengthened its domestic
steel industry considerably over the last decade.
• Though steel usage in India dates to ancient times, production of steel using modern
technology began only during the late-nineteenth century.
• In 1875, the Bengal Iron and Steel Company employed modern methods in the
manufacturing of pig iron which was a first in India.
• But the official establishment of the Indian steel industry can be traced back to the
setting up of the Tata Iron & Steel Company (TISCO) in Bihar in 1907. The Indian
steel industry was further strengthened post-independence, with the establishment
of Steel Authority of India Ltd. (SAIL) in 1973.
NATIONAL STEEL POLICY 2017
• On May 4, 2017, the Union Cabinet approved the National Steel Policy,
2017 with focus on enhancing high quality domestic steel production and
making the sector globally competitive. This policy has now replaced the
National Steel Policy 2005 (NSP 2005).

Features of National Steel Policy 2017

•  Encourage adequate capacity additions
• Development of globally competitive steel manufacturing capabilities
• Cost-efficient production
•  Facilitating foreign investment
• Enhancing the domestic steel demand.
 Some Highlights of New Steel Policy

• The Indian steel sector has grown rapidly over the past few years
and presently it is the third largest steel producer globally,
contributing to about 2% of the country’s GDP.
• The New Steel Policy, 2017 aspires to achieve 300MT of steel-
making capacity by 2030. This would translate into additional
investment of Rs. 10 lakh Crore by 2030-31.
• The Policy seeks to increase consumption of steel and major
segments are infrastructure, automobiles and housing. New Steel
Policy seeks to increase per capita steel consumption to the level
of 160 Kgs by 2030 from existing level of around 60 Kg.
• Potential of MSME steel sector has been recognized. Policy
stipulates that adoption of energy efficient technologies in the
MSME steel sector will be encouraged to improve the overall
productivity & reduce energy intensity.
• Steel Ministry will facilitate R&D in the sector through the establishment of
Steel Research and Technology Mission of India (SRTMI). The initiative is
aimed to spearhead R&D of national importance in iron & steel sector utilizing
tripartite synergy amongst industry, national R&D laboratories and academic
institutes.
• Ministry through policy measures will ensure availability of raw materials like
Iron ore, Coking coal and non-coking coal, Natural gas etc. at competitive rates.
• With the roll out of the National Steel Policy-2017, it is envisaged that the
industry will be steered in creating an environment for promoting domestic steel
and thereby ensuring a scenario where production meets the anticipated pace of
growth in consumption, through a technologically advanced and globally
competitive steel industry. This will be facilitated by Ministry of Steel, in
coordination with relevant Ministries, as may be required.
The Structure Of Indian Steel Industry  

• The iron and steel industry in India is organized into three

categories: main producers, other major producers, and
secondary producers.
• In 2004-05, the main producers i.e. SAIL, TISCO and RINL
had a combined capacity of around 50% of India’s total steel
production capacity and production.
• The other major producers — ESSAR, ISPAT and JVSL —
account for around 20% of the total steel production capacity.
Steel Plants Of India
• Mini steel plants are smaller, have electric furnaces and use steel scrap as
well as sponge iron. They have re-rollers that use steel ingots as well. They
produce Carbon steel and alloy Steel of certain specifications. There are
around 650 mini steel plants in India.

• Integrated steel plants are large, handle everything in one complex - from
putting together raw material to steel making, rolling and shaping. Iron
ore, coke, and flux are fed into the blast furnace and heated. The coke
reduces the iron oxide in the ore to metallic iron, and the molten mass
separates into slag and iron. Some of the iron from the blast furnace is
cooled, and marketed as pig iron; the rest flows into basic oxygen furnaces,
where it is converted into steel. There are about five integrated SAIL plants
in India.
 Name Location operator
Jindal Steel and Power Raigarh, Chhattisgarh JSPL
Limited
Tata Steel Limited Jamshedpur, Jharkhand Tata Steel
Durgapur Steel Plant Durgapur, West Bengal SAIL
Bhilai Steel Plant Bhilai, Chhattisgarh SAIL
Bokaro Steel Plant Bokaro, Jharkhand SAIL
IISCO Steel Plant Asansol, West Bengal SAIL
Alloy Steel Plant Durgapur, West Bengal SAIL
JSW Steel Plant Tarapur, Maharashtra JSW Steel
Essar Steel India Limited Hazira , Gujarat Essar Steel India Limited
Rourkela Steel Plant Rourkela, Odisha SAIL
Salem Steel Plant Salem, Tamil Nadu SAIL
Vizag Steel Plant Visakhapatnam, Andhra Rashtriya Ispat Nigam
Pradesh Limited
DOMESTIC SCENERIO
• The Indian steel industry has entered into a new development stage, post
deregulation, riding high on the resurgent economy and rising demand for
steel.
• Rapid rise in production has resulted in India becoming the 2nd largest
producer of crude steel during 2018 and 2019, from its 3 rd largest status in
2017.
• The country was also the largest producer of Sponge Iron or DRI in the
world and the 2nd largest finished steel consumer in the world after China
& USA in 2019, based on rankings released by the World Steel Association.
• In a de-regulated, liberalized economic/market scenario like India the
Government’s role is that of a facilitator which lays down the policy
guidelines and establishes the institutional mechanism/structure for creating
conducive environment for improving efficiency and performance of the
steel sector.
• In this role, the Government has released the National Steel
Policy 2017, which has laid down the broad roadmap for
encouraging long term growth for the Indian steel industry,
both on demand and supply sides, by 2030-31. The
Government has also announced a policy for providing
preference to domestically manufactured Iron & Steel
products in Government procurement.
Production
• Steel industry was de-licensed and de-controlled in 1991 &
1992 respectively.
• In 2019-20, production of total finished steel (alloy/stainless
+ non alloy) was 102.62 million tones (MT).
• Production of Pig Iron in 2019-20 was 5.42 MT, a decline of
15.5% over last year.
• India was the largest producer of Sponge Iron in the world in
2019. The coal based route accounted for 82% of total Sponge
Iron production (37.10 MT) in the country in 2019-20. Indian
steel industry: Import of Total Finished Steel (in million tones)
Demand - Availability
• Industry dynamics including demand – availability of iron
and steel in the country are largely determined by market
forces and gaps in demand availability are met mostly through
imports.
• Interface with consumers exists by way of meeting of the
Steel Consumers’ Council, which is conducted on regular
basis.
• Interface helps in redressing availability problems, complaints
related to quality.
• These all factors helps in creating the demand in the market
for the steel.
 Steel Prices
• Price regulation of iron & steel was abolished on 16.1.1992. Since then
steel prices are determined by the interplay of market forces.
• Domestic steel prices are influenced by trends in raw material prices,
demand – supply conditions in the market, international price trends
among others
• As a facilitator, the Government monitors the steel market conditions and
adopts fiscal and other policy measures based on its assessment. Currently,
GST of 18% is applicable on steel and there is no export duty on steel
items.
• A Steel Price Monitoring Committee has been constituted by the
Government with the aim to monitor price rationalization, analyze price
fluctuations and advise all concerned regarding any irrational price
behavior of steel commodity.
• To avoid any distortion in prices in view of ad-hoc and rising imports, the
Government had taken several steps including raising import duty and imposed
a gamut of measures including anti-dumping and safeguard duties on a host of
applicable iron and steel items. In a further move to curb steel imports, the
Indian government banned the production and sale of steel products that does
not meet Bureau of Indian Standard (BIS) approval
Imports
• Iron & steel are freely importable.
• Data on import of total finished steel (alloy/stainless + non alloy) is given
below for last five years:

Year 2015-16 2016-17 2017-18 2018-19 2019-20

Quantity 11.71 7.23 7.48 7.83 6.77

Exports
• India emerged as a net exporter of total finished steel in 2016-
17, 2017-18 and 2019-20
• Data on export of total finished steel (alloy/stainless + non
alloy) is given below for last five years: Indian steel industry:
Export of Total Finished Steel (in million tones)

Year 2015-16 2016-17 2017-18 2018-19 2019-20

Quantity 4.08 8.24 9.62 6.36 8.36

GROWTH PROSPECTS OF INDIAN
STEEL INDUSTRY

• On the back of sustained domestic demand, India’s steel industry

witnessed robust growth in the last 10–12 years.
• Since 2008, production has gone up by 75% while domestic steel
demand has grown by around 80%.
• As per data from the Joint Plant Committee, at the end of 2018– 19,
India produced 110.9 million tones of crude steel.
• In order to reach 255 million tones of crude steel production by
2030–31, production needs to grow at a CAGR of about 7.2%.
• This is easily achievable given that in 2018–19, crude steel
production grew by 7.6%.
• Therefore, the growth potential that the government has charted out in
the National Steel Policy, 2017, is in sync with the industry’s growth
trajectory.
• Naturally, the next question that arises is where the demand that can
sustain the production levels envisaged in the policy will come from.
• This requires a sectoral approach. The approximate sector-wise demand
for steel is shown below;

SECTOR DEMAND IN %
 
CONSTRUCTION 62
RAILWAYS 3
AUTOMOBILE 9
CAPITAL GOODS 15
CONSUMER GOODS 5
INTERMEDIATE 6
PRODUCTS
 Advantage Of Steel Industry
• Rise in demand – India's finished steel consumption is anticipated to increase to
230MT by 2030-31 from 98.71MT in 2018-19, demand would be supported by
growth in the domestic market and also steel per capita consumption is expected to
increase to 160kgs by 2030-31.
• Increasing investments – every sector plays a role in investing in the steel industry
which further results in profit and also invite many other investors to the Indian
market.
• Policy support – government introduced steel scrap recycling policy which aimed to
reduce imports from other countries.
• Competitive advantage – easy availability of low-cost manpower and presence of
abundant iron ore reserves make India competitive in the global set up.
 Disadvantage of Steel Industry

1. Finance:
Steel is a capital-intensive sector. Nearly INR 7,000 crore is required to
set up 1 tone of steel-making capacity through the Greenfield route.
In India the cost of finance is extremely high compared to the cost of
finance in developed countries such as China, Japan and Korea.
Steel demand is cyclical. So, during a downturn, the return on
investments gets eroded. From 2004–2011, steel demand increased at a
fast pace. This prompted most steel makers to expand existing
capacities.
The Indian steel industry faced a severe downturn between 2014 and
2016. This eventually resulted in many steel makers facing bankruptcy
proceedings in 2018.
 
• Logistics:
For most Indian steel makers, managing logistics requirements is
challenging and costly.
The primary raw material for steel making is iron ore, besides coal or coking
coal. Both are bulk minerals, and steel is also a bulk commodity.
Transportation of this bulk materials of steel to demanded places becomes
difficult for the industry.
Moreover, most Indian steel plants are located inland, unlike in China, Japan or
Korea, where they are located close to the sea. This increases the challenge of
managing logistics requirements for most steel plants in India.
• Raw materials :
Although India has abundant reserves of iron ore and coal, it has negligible
reserves of coking coal.
The National Steel Policy envisages that India will reach 300 million tones of
steel-making capacity, and 68% of that will be through the blast furnace route,
which requires coking coal.
 India largely fulfils its coking coal requirements through imports from
Australia. But due to vagaries of weather, there has been huge fluctuations
in coking coal supply as well as coking coal prices.

• Environment and energy consumption :

Increasingly, environmental concerns are taking centre stage and the Indian
steel industry is not immune to this trend.
The steel industry is energy-intensive and is the second biggest consumer
of energy globally. This leads to a higher carbon footprint and also affects
the immediate environment.
Using energy-efficient methods to produce steel will not only reduce
production costs but also improve competitiveness.
This can be achieved through highly developed energy management
systems and usage of the latest technologies in steel production.