Metal Industry in India Metal industries are the indispensable part of an economy; they form the backbone of industrial development of any country. In India the industrial development began with the setting up of Tata Iron and Steel Company (TISCO) at Jamshedpur in 1907. It started its production in 1912. Then came up Burnpur and Bhadrawati Steel Plants in 1919 and 1923 respectively. It was, however, only after the Independence that the steel industry gas been able to find its feet. Barring the Jamshedpur plant of the Tatas, all are in public sector and looked after by the Steel Authority of India Ltd. (SAIL). Bhilai and Bokaro plants were set up with the Soviet collaboration. Durgapur and Rourkela came up with British and German technology know-how respectively. Iron and steel industry is by nature a heavy industry. Proximity to raw materials and access to efficient transportation network are crucial to this industry. The Chhotanagpur plateau bordering West Bengal, Bihar, Orissa and Madhya Pradesh, therefore has been the natural core of this industry. Besides, iron and steel industry, heavy engineering and machine tools industries are the main dealers of metals. These industries have witnessed a phenomenal growth and produce a whole range of capital goods and consumer durables. The capital goods required for textile industry, fertilizer plants, power projects, cements, steel and petro-chemical plants, mining, construction and agricultural machineries such as equipment for irrigation projects, diesel engines, pumps and tractors, transport vehicles, etc. are being produced indigenously. The Heavy Engineering Corporation Ltd., set up at Ranchi in 1958 fabricates huge machines required for the iron and steel industry. Locomotives are manufactured by three units, viz. Locomotive Works, Chittaranjan (West Bengal), Diesel Locomotive Works, Varanasi (Uttar Pradesh), and Tata Engineering and Locomotive Co. Ltd. (TELCO), Jamshedpur. The Hindustan Machine Tools Ltd. (HMT) is a major manufacturer of a wide range of machines and tools. It has its units in Banglore, Pinjore(Haryana), Kalamassery(Kerala), and Hyderabad. The HMT also produces a wide range of watches. The Bharat Heavy Electricals Ltd. (BHEL) is a public sector undertaking which produces power generation equipments. Its manufacturing plants are located at Bhopal, Tiruchirapalli, Hyderabad, Haridwar, Ranipet, Banglore and Jagdishpur (Uttar Pradesh). The Hindustan Aeronautics Ltd., Banglore has acquired capability of manufacturing aircrafys of different types.It has its manufacturing units at Banglore , Kanpur, Nasik, Koraput, Hyderabad, and Lucknow.
Transcript
Metal Industry in India
Metal industries are the indispensable part of an economy; they form the backbone of industrial development of any country.
In India the industrial development began with the setting up of Tata Iron and Steel Company (TISCO) at Jamshedpur in 1907. It started its production in 1912. Then came up Burnpur and Bhadrawati Steel Plants in 1919 and 1923 respectively. It was, however, only after the Independence that the steel industry gas been able to find its feet. Barring the Jamshedpur plant of the Tatas, all are in public sector and looked after by the Steel Authority of India Ltd. (SAIL).
Bhilai and Bokaro plants were set up with the Soviet collaboration. Durgapur and Rourkela came up with British and German technology know-how respectively.
Iron and steel industry is by nature a heavy industry. Proximity to raw materials and access to efficient transportation network are crucial to this industry. The Chhotanagpur plateau bordering West Bengal, Bihar, Orissa and Madhya Pradesh, therefore has been the natural core of this industry.
Besides, iron and steel industry, heavy engineering and machine tools industries are the main dealers of metals. These industries have witnessed a phenomenal growth and produce a whole range of capital goods and consumer durables. The capital goods required for textile industry, fertilizer plants, power projects, cements, steel and petro-chemical plants, mining, construction and agricultural machineries such as equipment for irrigation projects, diesel engines, pumps and tractors, transport vehicles, etc. are being produced indigenously.
The Heavy Engineering Corporation Ltd., set up at Ranchi in 1958 fabricates huge machines required for the iron and steel industry. Locomotives are manufactured by three units, viz. Locomotive Works, Chittaranjan (West Bengal), Diesel Locomotive Works, Varanasi (Uttar Pradesh), and Tata Engineering and Locomotive Co. Ltd. (TELCO), Jamshedpur. The Hindustan Machine Tools Ltd. (HMT) is a major manufacturer of a wide range of machines and tools. It has its units in Banglore, Pinjore(Haryana), Kalamassery(Kerala), and Hyderabad. The HMT also produces a wide range of watches.
The Bharat Heavy Electricals Ltd. (BHEL) is a public sector undertaking which produces power generation equipments. Its manufacturing plants are located at Bhopal, Tiruchirapalli, Hyderabad, Haridwar, Ranipet, Banglore and Jagdishpur (Uttar Pradesh). The Hindustan Aeronautics Ltd., Banglore has acquired capability of manufacturing aircrafys of different types.It has its manufacturing units at Banglore , Kanpur, Nasik, Koraput, Hyderabad, and Lucknow.
Vishakhapatnam, Mumbai, Calcutta and Kochi are the major center of ship-building industry.
Steel Company,India Steel Company, Steel Authority of India,Steel Companies, Steel Company in India
MAJOR PLAYERS
Steel Authority of India Limited (SAIL) is the leading steel-making company in India.
It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets. The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its "Navratna" status, enjoys significant operational and financial autonomy. Major units of SAIL are as under:
Integrated Steel Plants
Bhilai Steel Plant (BSP) in ChhattisgarhDurgapur Steel Plant (DSP) in West BengalRourkela Steel Plant (RSP) in OrissaBokaro Steel Plant (BSL) in Jharkhand
Special Steel Plants
Alloy Steels Plants (ASP) in West BengalSalem Steel Plant (SSP) in Tamil NaduVisvesvaraya Iron and Steel Plant (VISL) in Karnataka
Subsidiaries
Indian Iron and Steel Company (IISCO) in West BengalMaharashtra Elektrosmelt Limited (MEL) in MaharashtraBhilai Oxygen Limited (BOL) in New Delhi
Joint VentureSAIL has promoted joint ventures in different areas ranging from power plants to e-commerce.
NTPC SAIL Power Company Pvt. LtdSet up in March 2001, this 50:50 joint venture between SAIL and the National Thermal Power Corporation (NTPC) operates and manages the Captive Power Plants-II of the Durgapur and Rourkela Steel Plants which have a combined capacity of 240 MW.
Bokaro Power Supply Company Pvt. LimitedThis 50:50 joint venture between SAIL and the Damodar Valley Corporation formed
in January 2002 is managing the 302-MW power generation and 1880 tonnes per hour steam generation facilities at Bokaro Steel Plant.
Bhilai Electric Supply Company Pvt. LimitedAnother SAIL-NTPC joint venture on 50:50 basis formed in March 2002 manages the 74 MW Power Plant-II of Bhilai Steel Plant which has additional capacity of producing 150 tonnes of steam per hour.
UEC SAIL Information Technology LimitedThis 40:60 joint venture between SAIL and USX Engineers & Consultants, a subsidiary of the US SteelCorporation, promotes information technology in the steel sector.
Metaljunction.com Private LimitedA joint venture between SAIL and Tata Steel on 50:50 basis, this company promotes e-commerce activities in steel and related areas.
SAIL-Bansal Service Center Pvt. Ltd.SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a service centre at Bokaro with the objective of adding value to steel.
North Bengal Dolomite LimitedA joint venture between SAIL and West Bengal Mineral Development Corporation ltd on 50:50 basis was formed for development of Jayanti Dolomite Deposit, Jalpaiguri for supply of Dolomite to DSP and other plants.
Romelt-SAIL (India) LtdA joint venture between SAIL, National Mineral Development Corporation (NMDC) and Russian promoters for marketing Romelt Technology developed by Russia for reducing of iron bearing materials, which is carried out with carbon in single stage reactor with the use of oxygen.
Others major steel producers are
Tisco ( Tata Iron and Steel Corporation ltd)Essar SteelJindal Vijaynagar Steels LtdJindal Strips LtdJISCOSaw PipesUttam Steels LtdIspat Industries Ltd Mukand LtdMahindra Ugine Steel Company LtdTata SSL Ltd
Since independence, the Indian government has concentrated on promoting the development of different industries in the country and the steel industry has always remained in the priority list.
The Indian steel industry enjoys a significant position in the global arena and the importance of India in global crude steel production has grown significantly over the years.
The efforts to develop the steel industry in India started during the first five year plan but the real developments started happening from 1980s onwards. The development of the sector can be traced from the fact that although the Indian steel industry increased its production, but in the 90s India imported huge quantity of steels to meet the growing demand of steel in the country.
This scenario was totally changed in 2004 when India stood at the ninth position in terms of crude steel production in the whole world and in 2006, India was at the seventh place among the crude steel producing companies.
According to the released data by the International Iron and Steel Institute, contribution of India in global crude steel production was about 40.9 million tonnes in 2005. This quantity was increased by 7.6% in 2006 and the country produced nearly 44 million tonnes of steel.
This development of the industry was further speeded up in 2007 and the total production of crude steel was nearly 50 million tonnes. This growth in the production has also helped the country to gain the fifth position among global crude steel producing countries.
There are different factors that are responsible for this development. Firstly, the Indian government has taken some reformatory steps that have helped the Indian steel industry to grow at a good pace. The Indian government has set a target to
increase the crude steel production and till 2019-20, the Indian steel industry is expected to produce nearly 110 million tonnes of crude steel.
Another important reason of this development is the deregulation factor. The national as well as state governments in India are playing the role of a facilitator. At the same time, the national policies regarding the steel industry are also reformed and this has encouraged investments in the industry.
Conclusion on Indian Steel Industry
The Indian steel industry is among the upcoming industries of the world. It has a number of iron ores, which means that it has plenty of resources from which to draw its raw material.
The rate of production of steel in India has been going up at a steady rate in the last few years. In the recent times Orissa and Jharkhand have been identified as the potential steel destinations of India - the ones that would provide the Indian steel industry with its necessary raw material. There are also a number of steel companies in India like Tata and ArcelorMittal that are either coming up or have established themselves as prominent forces in the world steel scenario.
In the recent times a lot of foreign direct investment is being made in the Indian steel industry. In fact the rate of investment has increased in the last few years and, to a certain extent, this increase has been contributed to by the growth potential of the steel industry of India that is thought of as being impressive in the international steel circle.
In the recent years a number of major steel corporations of the world have come flocking to India to avail the benefits of the flourishing steel industry of India. The number of steel projects in India has increased as well and this implies that the number of companies lining up to participate in these projects would be increasing too.
There are certain challenges that are being faced by the Indian steel industry of late. There are certain issues regarding the condition of the infrastructural facilities available and the skill level of the members of the steel fraternity.
The levels of skill of the various technical people associated with the steel industry has been found to be wanting and this has been a result of the inability of the Indian steel industry to attract the best people from the world of engineering and technology. The state of infrastructure needs to be improved so that the production of steel can be taken to the next level.
India has traditionally been regarded as one of the top steel producers of the world. In 2004 it was ranked as the seventh largest producers of steel in the world, which is testimony to the standing of the Indian steel industry of the world. India is also supposed to have the best growth potential in the context of steel and is preceded only by China, which is a prominent steel producing and consuming country of the world.
Government Provision on Steel Exports
In the recent times the government has been taking a lot of steps on issues related to export of steel. The national government has been mulling over the removal of excise duties. This step has come after the Indian steel companies have been reducing the prices of the steel products in order to counter the inflation.
The national government was supposed to come up with a decision in pretty quick time. The ministers at various levels of Indian government have also been discussing about this issue.
The manufacturers of steel have reduced the price of the flat products by four thousand rupees per ton and the worth of the structural steel and reinforcement bars by two thousand rupees.
The steel industry is expected to maintain the prices for a period of the coming two to three months so that their requests for lowering the excises on steel imports may be considered by the national government.
The notification to the Finance Ministry of the Indian government was absolutely important as if it had not been made the excise duty rate would have stayed at 20% like before. A certain amount of excise duty has already been levied by the Indian government as per the suggestions of the Finance Bill in some other areas. The Finance Bill had been approved by the Indian President and was passed in the latest session of the Indian parliament.
The government of India has also been considering putting a stop to the export of steel from India and bringing down the prices of products made out of metals and metal alloys.
All this is being done in order to fulfill two motives - lowering and stabilizing the price of steel and also building up some resistance against the inflation that is supposed to be a major threat. In fact the rise of the inflation has been brought about, to a certain extent, by the increase in the prices of steel.
Challenges before Indian Steel Industry
There are certain challenges before the steel industry of India in the recent times. India has been one of the major producers of steel in the world and has also been attracting a lot of foreign direct investment.
A few issues would need to be attended to if India wants to be counted as one of the major and most economical producers of steel. The three areas that need to be improved upon in the view of the exports are the infrastructure, ability to draw the top names in steel, and wealth creation issues.
The condition of the infrastructural facilities of the steel industry in India is not at all conducive to a sustainable growth and development of the steel industry of the India.
The methods that are adopted for the creation of wealth in the Indian steel industry are also supposed to act as hindrances to the growth and development of the Indian steel industry. The Indian steel industry has also not been able to draw the best professionals in the steel industry and that has been a major drawback of the industry.
The experts are also of the opinion that not enough policies or measures have been adopted to amend the situation in case of the infrastructural facilities available in the steel sector. Even though India is capable of producing steel at a good rate and also increase the volume of production there is not enough land available to support such activities. One of the major reasons for such problems is the consistently increasing population of India.
The design institutions in India have not been successful at recruiting the best of engineers and metallurgists in India. This has affected the technological aspect of the Indian steel industry.
The experts are of the opinion that this issue has to be countered in order to reduce the dependence on the overseas technological assistance. The steps taken by Tata Steel are instructive in such a context. The company has been increasing public awareness about the steel industry through books and educational sessions at the Indian Institute of Technology at Kharagpur.
Top Companies in Indian Steel Industry
The performance of the Indian steel industry has been quite satisfactory over the last decade. Aided by the cutting-edge technology, the steel industry in Asia has made advancements in all areas of operation. There has been a substantial increase in demand for Indian steel products in the global market in the recent times.
This has helped in the growth of Indian steel industry. The industry recorded the highest growth rate in the period from 2004-2005, when the growth rate of the steel sector was 4%. The increased consumption of the finished steel products in the domestic market acted as a positive catalyst in the growth process of the Indian steel industry. The favorable market condition has helped the companies operating in Indian steel industry to expand their operations and earn huge profit.
The top companies of the Indian steel sector mostly operate in four different forms like producers of pig iron, producers of stainless steel, producers of finished steel products, and producers of semi-finished steel. The companies functional in the steel industry of India are both public sector companies and private sector companies.
Some of the leading companies in Indian steel industry are as follows: Ahmedabad Steel Craft: Producer of windows, ventilators, steel doors and the like
Ambica Steel: Producer of carbon steel, alloy, and stainless steel
Apollo Tubes: Manufacturer of steel tubes and pipes
Bengal Industries: Producer of hoses made up of stainless steel
Bokaro Steel Plant: Steel manufacturer
Beehive Kowtha Group: Manufacturer of castings, towers, and steel buildings
Central Steel Corporation: Producer of alloy and tool steels
Bharat Impex: Manufacturer of stainless steel kitchenware
Allied Ferromelt: Producer of non alloy and alloy steel
Anchor Engineers' Files: Producer of steel files for engineers
Essar Steel: Producer of sponge iron, steel and iron ore pellets
ColdFab: Producer of pre-fabricated buildings of steel
Govind Steel: Producer of ductile and grey iron
Gaysons: Producer of steel rolls
Devson Steels: Fabricates storage tanks
Hisar Metal: Producer of strips and stainless cold rolled steel coils
Buyao Info: Producer of steel products and re-rolled iron
Jindal Iron & Steel: Producer of galvanized steel products
Kanoi Group: Dealer of corrugated sheets and steel coils
Jindal Steel & Power: Manufacturer of mild steel slabs and sponge iron
Lloyds Steel: Producer of corrugated sheets and steel coils
Metalman Industries: Producer of tubular and flat steel items
Steel Authority of India: Manufacturer of steel and iron
Tata Steel: Producer and supplier of wire rods, bars, and steel flats
Vizag Steel: Producer of pig iron and steel.
India’s Steel Industry
India's Steel Industry is more than a century old. Before the economic reforms of the early 1990s the Indian steel industry was a predominantly regulated one with the public sector dominating the industry.
Tata Steel was the only major private sector company involved the production of steel in India. Sail and Tata Steel have traditionally been the major steel producers of India. In 1992, the liberalization of the India economy led to the opening up of various industries including the steel industry. This led to the increase in the number of producers, increased investments in the steel industry and increased production capacity. Since 1990, more than Rs 19,000 crores (US$ 4470.58 million) has been invested in the steel industry of India.
India's steel industry went through a rough phase between 1997 and 2001 when the overall global steel was facing a downturn and recovered after 2002. The major factors that led to the revival of the steel industry in India after 2002 was the rise in global demand for steel and the domestic economic growth in India.
India has now emerged as the eighth largest producer of steel in the world with a production capacity of 35MT. Almost all varieties of steel is now produced in India. India has also emerged as a net exporter of steel which shows that Indian steel is being increasingly accepted in the global market.
The growth of the steel industry in India is also dependant, to a large extent, on the level of consumption of steel in the domestic market. Steel consumption is significant in housing and infrastructure. In recent years the surge in housing industry of India has led to increase in the domestic demand for steel.
More than 3500 different varieties of steel are available in the steel industry of India. These can however be classified into two broad categories -
Flat Products - Flat products include plates and hot rolled sheets such as coils and sheets. Flat products are derived from slabs. One of the major uses of steel plates is in ship building. Long Products - Long products include bars, rods, wires, ropes and piers. These are called long products due to their shapes. Long products are made from billets and blooms. Long products are mostly used in housing and construction and also in rail tracks.
Global Demand for Steel and Indian Steel Industry
The global demand for steel is at an all time high nowadays. Much of the tremendous demand for steel around the world may be attributed to the numerous construction projects that are going on around the world.
Much of these projects are taking place in the economically developing countries of the world like India, China and Thailand. China is the place where a lot of construction is being done nowadays and much of the construction is for the purpose of the Olympics to be held in 2008 and the Shanghai World Exposition of 2010.
Along with being one of the major users of steel, China is one of the major producers of steel as well. During March, 2007 China produced a record 40.16 million tonnes of steel. The demand for steel has gone up in the United States of America as well.
This may be ascertained from the fact that in 2007 the amount of steel used was 2.2% more than what it was in 2006. Thus it may be ascertained that the supply and the demand for steel is at their respective peaks. This bodes well for the Indian steel industry as India has plenty of steel to meet up with both the domestic as well as international demand.
India has a lot of iron ores. This implies that India has a ready base for producing sufficient amount of steel and the experts are also of the opinion that the Indian steel industry would continue to grow in the coming years. In the recent times the production of steel has gone up in the country from 17 million tonnes in 1990 to 36 million tonnes in 2003.
The Indian steel industry is trying to reach the 66 million tonnes mark in 2011. The high levels of production would allow the Indian steel industry to establish a
stronghold on a number of areas like housing, construction, and ground transportation. The special steel produced by the Indian steel industry is supposed to be used in high end engineering industries like generation of power, fertilizers and petrochemicals.
The fact that India is not a voracious consumer of steel like some of the major economies like China and the United States of America means that India would be able to use the surplus steel it produces for exporting to other countries so that their demands are met. This would help the Indian steel industry to be regarded as one of the most prominent steel industries if not the leading one.
FDI in Steel Industry
The foreign direct investment in India being made in the steel industry of India has been picking up in the recent years as a result of the immense growth potential of the country's steel industry. In the Asian continent India is second only to China in terms of growth potential.
The gross domestic product of India has increased in the recent times.
This has sparked off the demand for production of steel in the country and the production has increased as well. In the recent times India has been among the top producers of crude steel of the world. All these factors are supposed to be important for attracting foreign direct investment in the Indian steel industry.
The Indian national government also has been pretty liberal with their approach to the foreign direct investment being made in the country. The Indian government has also relaxed the various foreign investment laws. This has led to more international steel giants coming to India to tap the abundant resources present in the country.
The increased interest shown by such companies has led to a growth in the steel industry of India. Research and studies have shown that Orissa and Jharkhand would be the steel junctions of India.
In the recent times these two states, which are located in the eastern part of India, have been experiencing a number of steel projects in India. These projects have been funded by the Indian national government, as well as, a number of companies that are forces to reckon with in the context of the Indian steel industry.
Since, the government has also been taking steps to make sure that the production and demand for Indian steel remains high in the international market, it may be assumed that an increasing number of companies from around the world would be interested in the Indian steel industry
Size of India’s Steel Industry
The steel industry is one of the major industries of India. It has also gained considerable importance in the global steel industry. This century old industry of India was mostly a regulated one till 1990.
The economic reforms undertaken in India in the early 1990s gave a major boost to the steel industry and it grew considerably in terms of investment, production capacity and number of producers. The industry faced a downturn during the late nineties but revived again by 2002.
The size of India's steel industry has increased considerably in recent years. According to latest available estimates, India ranks eighth among the top steel producers of the world with a production capacity of 35 MT.
The steel industry of India has capital investments of more than Rs 100, 000 crores. The total employment in the industry is more than two million (including direct and indirect employment).
Some of the major reasons that have led to the growth in the size of India's steel industry are -
Abundant availability of iron-ore in India
Good facilities for steel productionIncreased consumption of steel in the sectors like construction.
Growth Potential of India’s Steel Industry
India has traditionally been one of the major producers of steel in the world. Till the 1990s the steel industry of India was regulated and controlled by government policies.
After the economic reforms of the early 1990s, the Indian steel industry has evolved significantly to conform to global standards.
India has set a vision to be an economically developed nation by 2020. The steel industry is expected to play a major role in India's economic development in the coming years. The steel industry of India has a very high growth potential and is expected to register significant growth in the coming decades. India is expected to emerge as a strong force in the global steel market in coming years.
The two major aspects that are expected to play a significant role in the growth of the steel industry in India are -Abundant availability of iron ore in the country
The country has well established facilities for steel production
Steel production in India has grown from 17 MT in 1990 to 36 MT in 2003. It is expected that by 2011, the steel production in India will grow to 66 MT.
The major sectors where consumption of steel is expected to grow in the coming years are -Construction
Housing
Ground transportation
Hi-tech engineering industries such as power generation, petrochemicals, fertilizers
The current scenario of the Indian steel industry indicates that there is huge growth potential in this industry. The per capita-consumption of steel in India, according to latest available estimates, is only 29 kg. This is much less compared to the global average of 140kg. The per capita consumption level of developed nations like the United States of America is 400kg. In this respect, one of the major initiatives that need to be taken is to focus on increasing the consumption of steel in the rural areas of India. The potential for the growth of consumption of steel in the rural areas of India for purposes like rural housing, rural infrastructure, etc is high which needs to be tapped efficiently.
In order to realize the growth potential in the steel industry of India, it is essential to ensure that the industry can remain competitive. One of the major aspects in this regard is the availability of inputs. Shortage of inputs like coke has led to increase in costs earlier. Moreover proper infrastructure facilities like transport infrastructure, power etc are of prime importance in maintaining the competitiveness of the industry.
Most developed countries have regulations that are aimed to protect the domestic steel industry. The Indian steel industry has comparatively much lesser protection through regulations. Proper regulatory measures should be adopted by the government to protect the domestic steel industry.
Indian Steel Industry
Indian Steel Industry
Indian Steel Industry
Public Sector Private Sector
Integrated Producers
Secondary Producers
Integrated Producers
Secondary Producers
Iron Ore Pig Iron Sponge Iron
Flat Steel Products
Long Products
Alloy Steel Products
On the basis of routes of production, the Indian Steel Industry can be divided into two types of producers-
Integrated Producers
They are those that convert iron ore into steel. There are three major integrated steel players in India, namely
Steel Authority of India Limited (SAIL)
Tata Iron and Steel Company Limited (TISCO)
Rashtriya Ispat Nigam Limited (RINL)
Secondary Producers
They are the mini stell plants (MNPs), which make steel by melting scrap or sponge iron or a mixture of the two. The largest producers of steel through the secondary route are
Essar Steel
Ispat Industries
Lloyd’s Steel
Jindal
Based on product categories and major producers, the industry can be divided as follows:
PRODUCTS PLAYERS FEATURES
Iron Ore National Mineral Development Corporation, Sesa Goa, Tata Steel, SAIL
India ranks 6th in the production of iron in the world
HRC is used in automobile, engineering and consumer durables.
Sheets are used in LPG cyclinders, tube pipes, drums, shipbuilding and boilers.
Cold rolled coils/sheets
SAIL, Tata Steel, Ispat industries, Jindal group of companies, Uttam Steel.
Used for manufacturing coated sheets, automotive sector.
Galvanized Sheets
SAIL, Tata Steel, Ispat industries, Jindal group of companies, Uttam Steel.
Used in fabrication work like car bodies, consumer durables and roofing.
Mills are capital intensive
Long products SAIL, RINL, Tata Steel. Includes bars, structural products, wire rods, angles and rounds.
Used in construction and heavy engineering
Alloy Steel products
Mukand Steel, SAIL, Kalyani Steel, sun flag iron
Value added steel for specific application
Stainless Steel is one of the highest value added product.
Used in auto components, ball bearing, engineering items, boilers and utensils.
Categories of Steel
Steel market is primarily divided into two main categories – flat and long.
Flat product: The Flat carbon steel product is a plate product or a (hot or cold) rolled strip product.
Dimension
Plate products vary in dimensions from 10 mm to 200 mm
Thin flat rolled products from 1 mm to 10 mm.
Usage: Plate products are used for ship building, construction, large diameter welded pipes and boiler applications. Thin flat products is for end use applications in automotive body panels, domestics ‘white goods’ products, ‘tin cans’ and the whole host of other products from office furniture to heart pacemakers. Plates, HR coils and HR Sheet, CR Sheet and CR coils, GP/GC (galvanized plates and coils) pipes, etc. are included in this category.
Long product
A long product is a rod or a bar. Typical rod products are the once made from sponge iron for concrete, ingots, billets, engineering products, gears, tools, etc. Wiredrawn products and seamless pipes are also part of the long products group. Bars, rods, structures, railway materials, etc. are included in this category.
Sponge Iron/Direct reduced iron (DRI): This is a high quality product produced by reducing iron ore in a solid state and is primarily used as an iron input in electric arc furnace.
STEEL MAKING PROCESS
Electric arc furnace Blast furnace
Iron Ore
Iron Making ProcessSteel Making ProcessSteel
STEEL PLANT
USAGE OF STEEL
Transformer
Ship
Boiler for power plant
Automobile
Electric train
Factors influencing Demand & Supply of Steel
The demand for steel is dependent on the overall health of the economy and the infrastructure development activities.
The steel prices in the Indian market primarily depend on the domestic demand and supply conditions, and also international prices.
Government and different producer and consumer associations regularly monitor steel prices.
The duty imposed on import of steel and its fractions also have an impact on steel prices.
The price trend of steel in Indian markets has been a function of world’s economic activity.
Coal Coke
Sponge Iron Hot metal (Pig iron)
SCRAP
Coking
Prices of input materials for iron and steel such as power tariff, freight rates and coal prices, also contribute to the rise in the input costs for steel making.
Consumption of Steel
Infrastructure & Construction Construction activities of all housing, building, factories, roads and bridges, power project and transmission systems, railways and defence projects.
Transportation Passenger cars, trucks, buses and other automotives.
Consumer items and capital goods
Consumer durables (refrigerators, washing machines, electric irons, steel furniture, LPG cylinders and kitchen wares).
Others Containers, packing for food preservation and pipelines.
COKE: Coke is one of the main inputs of steel making through the blast furnace and is a source of fuel. India does not have enough coke making capacity and has to depend on imports.
In India Merchant Coke production is a small apart of the total coke produced, as a large portion of the coke manufactured is for captive purposes. Main steel producers using coke, SAIL, Tisco and RINL have in-house coke manufacturing facilities, which meets part of their coke requirements. Secondary pig iron manufacturing, only Sesa Industries has captive coke manufacturing facilities; all the others are dependent on external sources of coke.
IRON ORE: India is one of the richest sources of iron ore in the world. It is the 5th largest producer of iron ore after China, Australia, Brazil and Russia. Due to ample domestic availability of iron ore, but rising domestic iron ore prices are pushing up the cost of steel making.
STEEL PRODUCTD AND INTERMEDIATES
SPONGE IRON: Sponge Iron is iron ore reduced in solid state by direct reduction using natural gas or non-coking coal as reductant. It is also known as direct reduced iron (DRI) or hot briquetted iron (HBI) which is in the form of birquettes.
The most important use of sponge iron is as a partial substitute for scrap in steel-making electric arc furnace.
the main raw materials required for the production of sponge iron are iron ore/ iron ore pellets and non-coking coal/natural gas. Iron ore reserves are located in Bihar, Orissa, Madhya Pradesh, Maharashtra, Karnataka, Goa, Andhra Pradesh and Rajasthan.
The various processes used in India to manufacture DRI are MIDREX and HYL III (both of which are gas-based) and SL/RN (which is coal-based).
The main onsumers of sponge iron are the mini-steel units producing steel the DR/EAF route.
DEMAND AND SUPPLY OF SPONGE IRON IN INDIA
Production
Demand
Surplus
Exports
PIG IRON: Cast iron is a generic term used to describe a family of iron alloys with carbon content 1.8-4.5%. Cast iron made into blocks or rough shapes is called pig iron.
Pig iron is used in making steel. Foundry grade pig iron is used in the manufacture of castings which in turn are used in a number of industries (notably automobiles and heavy engineering).
The major raw materials required for the production of pig iron are iron ore and coke.
DEMAND AND SUPPLY OF PIG IRON IN INDIA
Production
Imports
Exports
Apparent
Consumption
Pig iron is usually produced from iron ore and coke smelted into liquid iron in the blast furnace. In India, mini-blast furnace is also used to produce pig iron.
HR coils/sheets
Liquid steel is cast into slabs that are then cut and rolled to give HR coils/sheets
HR coils/sheets are used for making:
Automobiles
Metal products
Industrial machinery
Transport equipment
CR coils
Pipes and tubes
Electrical transformers
Rolling shutters
DD grade sheets are used for making:
Refrigerators
Colour-coated sheets
Bearings
EDD grade coils/sheets are used in automobiles and washing machines.
Demand & Supply capacity if CRcoils/sheets in India
Demand
Installed Capacity
GP/GC Sheets
Galvanished sheets are essentially CR sheets which have been coated with zinc to give them properties like good corrosion and aesthetics. Gal vanished Corrugated sheets are galvanished sheets that have been corrugated to have a wavy surface, otherwise they are called galvanished Plain sheets
ALUMINIUM INDUSTRY IN INDIA
History
Though the existence of Aluminium was first established in the year 1808,
it took almost 46 years to make its production commercially viable. The
research work of several years resulted in extracting the aluminium from
the ore. Aluminium is third most available element in the earth
constituting almost 7.3% by mass. Currently it is also the second most
used metal in the world after steel. Due to the consistent growth of Indian
economy at a rate of 8%, the demand for metals, used for various sectors,
is also on the higher side. As a result, the Indian aluminium industry is
also growing consistently. In FY09, the aluminium industry in India saw a
growth of about 9%.
The production of aluminium started in India in 1938 when the Aluminum
Corporation of India's plant was commissioned. The plant which was set
up with a financial and technical collaboration with Alcan, Canada had a
capacity of producing 2,500 ton per annum. Hindustan Aluminum
Corporation (Hindalco) was set up in UP in the year 1959; it had a capacity
of producing 20,000 ton per annum. In 1965, a public sector enterprise
Malco which had a capacity of 10,000 ton per annum was commissioned;
by 1987, National Aluminium Company (NALCO) was commissioned to
produce aluminium. It had a capacity of producing 0.218 million ton.
During the 1970s, the government started regulating and controlling the
Indian aluminium industry. Restrictions in entry and price distribution
controls were quite common in the Indian aluminium sector. Aluminium
Control Order was implemented where the aluminium producers had to
sell 50% of their products for electrical usages. However, in 1989, the
order was removed as the government decontrolling was revoked. With
de-licensing of industry in 1991, the liberal import of technologies and
capital goods was started. The liberalization resulted in a growth rate of
12% of the industry, comparing to the growth rate of 6% during the 1980.
Salient features of Indian Aluminium Industry
Highly concentrated industry with only five primary plants in the
country
Controlled by two private groups and one public sector unit
Bayer-Hall-Heroult technology used by all producers
Electricity, coal and furnace oil are primary energy inputs
All plants have their own captive power units for cheaper and un-
interrupted power supply
Energy cost is 40% of manufacturing cost for metal and 30% for
rolled products
Plants have set internal target of 1 – 2% reduction in specific energy
consumption in the next 5 – 8 years
Energy management is a critical focus in all the plants
Two plants have declared formal energy policy
Each plant has an Energy Management Cell
Achievements in energy conservation are highlighted in the Annual
Report of the company
Energy targets are based on best energy figures achieved in their
sector / region and by the plant itself in the past
Generally, government policies were rated as conducive to energy
management
‘Task Force’ formed by BEE in this sector to work as catalyst in
promoting energy efficiency
High cost of technology is the main barrier in achieving high energy
efficiency
Aluminium Production in India
India is world's fifth largest aluminium producer with an aluminium production competence of around 2.7 million tones, accounting almost 5% of the total aluminium production in the world. India is also a huge reservoir of Bauxite with a Bauxite reserve of 3 billion tones.
The Major Players
The Indian aluminium industry is dominated by four or five companies that constitute the majority of India's aluminium production. Following are the
major players in the Indian aluminium industry:
Hindustan Aluminium Company (HINDALCO) National Aluminium Company (NALCO)
Bharat Aluminium Company (BALCO)
MALCO
INDAL
HINDALCO: Hindalco is the biggest player in the aluminium industry in India with around 39% of market share. An Aditya Birla Group flagship company, Hindalco has its aluminium plant at Renukoot in Uttar Pradesh. It has various aluminium products with a market share of 42% in primary aluminium, 20% in extrusions 63% in rolled products, 31% in wheels and 44% in foils.
Sterlite Industries: The aluminium business of Sterlite Industries Limited comprises of two Indian aluminium giants – BALCO and MALCO. While BALCO is a partially integrated, MALCO is a fully integrated producer of aluminium. Sterlite has got a market share of around 32%.
NALCO: It is also one of the leading aluminium producers in India. Government of India has a stake of 87.15% in this company. Its aluminium refinery is located at Damanjodi. It also has a smelter located at Angul, Orissa. Currently, NALCO is concentrating on a capex programme to increase its production from 345,000 tonnes to 460,000 tonnes.
Aluminium Companies in India
Hindalco
Hindustan Zinc
Jindal Stainless
Kennametal India
Nalco
Malco
Ratnamani Metals
Sujana Metal Products
Balco
Indal
Components & Process of Aluminium
The most commercially mined aluminium ore is bauxite, as it has the highest content of the base metal. The primary aluminium production process consists of three stages. First is mining of bauxite, followed by refining of bauxite to alumina and finally smelting of alumina to aluminium. India has the fifth largest bauxite reserves with deposits of about 3 bn tonnes or 5% of world deposits. India’s share in world aluminium capacity rests at about 3%. Production of 1 tonne of aluminium requires 2 tonnes of alumina while production of 1 tonne of alumina requires 2 to 3 tonnes of bauxite.
The aluminium production process can be categorised into upstream and downstream activities. The upstream process involves mining and refining while the downstream process involves smelting and casting & fabricating. Downstream-fabricated products consist of rods, sheets, extrusions and foils.
Power is amongst the largest cost component in manufacturing of aluminium, as the production involves electrolysis. Consequently, manufacturers are located near cheap and abundant sources of electricity such as hydroelectric power plants. Alternatively, they could set up captive power plants, which is the pattern in India. Indian manufacturers are the lowest cost producers of the base metal due to access to captive power, cheap labour and proximity to abundant supply of raw material, i.e., bauxite.
The Indian aluminium sector is characterised by large integrated players like Hindalco and National Aluminium Company (Nalco). The other producers of primary aluminium include Indian Aluminium (Indal), now merged with Hindalco, and Sterlite Industries.
The per capita consumption of aluminium in India continues to remain abysmally low at under 1 kg as against nearly 25 to 30 kgs in the US and Europe, 15 kgs in Japan, 10 kgs in Taiwan and 3 kgs in China. The key consumer industries in India are power, transportation, consumer durables, packaging and construction. Of this, power is the biggest consumer (about 44% of total) followed by infrastructure (17%) and transportation (about 10% to 12%). However, internationally, the pattern of consumption is in favour of transportation, primarily due to large-scale aluminium consumption by the aviation space.
The metal has a long working life due to its propensity for recycling. Recycled metal requires significantly less amounts of energy for manufacturing of primary aluminium. Just to put things in perspective, the recycling of aluminium scrap requires 5% of the energy required for primary smelting, which is astoundingly lower, considering that power is such a high cost component.
Key Points
Supply Supply of aluminum is in excess and any deficit can be imported at low rates of duty. Currently, domestic production comfortably meets domestic requirements.
grow at 6%-8% per annum in view of the low per capita consumption in India. Also, demand for the metal is expected to pick up as the scenario improves for user industries, like power, infrastructure and transportation.
Barriers to entry
Large economies of scale. Consequently, high capital costs.
Bargaining power of suppliers
Most domestic players operate integrated plants. Bargaining power is limited in case of power purchase, as Government is the only supplier. However, increasing usage of captive power plants (CPP) will help to rationalize power costs to a certain extent in the long-term.
Bargaining power of customers
Being a commodity, customers enjoy relatively high bargaining power, as prices are determined on demand and supply.
CompetitionCompetition is primarily on quality and price, as being a commodity, differentiation is difficult. However, the recent spate of consolidation has reduced the competitive pressure in the industry. Further, increasing value addition to aluminium products has helped some companies protect themselves from the high volatilities witnessed in this industry.
Financial Year '10
In CY09, world aluminium consumption stood at around 34 m tonnes, a sharp decline of over 8% from around 37.5 m tonnes in CY08. Global production during CY09 stood at 37.7 m tonnes against production of 40 m tonnes in CY08. After an abysmal first quarter, growth
rebounded in FY10 reaching around 36.3 m tonnes, a growth of around 2.5%. India on the other hand witnessed a smart recovery post a slowdown in FY09. A sharp turnaround in the end user segments such as automobiles, industrial and infrastructure and thrust on power sector growth propelled the aluminium industry growth. The improvement coupled with low base effect resulted in a strong 27.8% growth in domestic demand.
In FY10, LME aluminium prices staged a remarkable recovery to around US$ 2,000 levels after touching lows of sub US$ 1,400 in March 2009. The depreciating Rupee helped domestic aluminium producers partially as the prices are dollar denominated. The prices continued to rise even as inventory levels remained at their historic highs. This was the result of tightness in the physical market, with most inventories tied up at various warehouses under financing deals.
Prospects
In CY10, global aluminium demand is expected to recover back to almost 39 m tonnes, an improvement of almost 13% over 2009. Chinese demand is expected to rise by almost 18% after a relatively modest increase in CY09. US demand is expected to recover sharply while Europe is expected to recover slowly. In India, the demand is expected to increase at almost 14% with an improvement in industrial activity and automobile growth. Over the medium term, thrust on power sector spending will spur the aluminium demand.
Aluminium production is expected to increase in line with the demand. The market surplus is going to continue for a while. With unprecedented demand destruction towards the later part of FY09, prices of aluminium had declined by over 50% in less than 4 months. The recovery has also been strong. As a result, many smelters that had curtailed production are again back in action. In addition, some new smelters are on the verge of delivering.
Aluminium inventories across the globe are near all time high. But most of these inventories are reportedly bound in financing deals and are not expected to flood the market. The long term fundamentals are strong and the surplus is expected to reduce significantly in the near future.
India has the credit of being the fifth largest producer of aluminium in the world. The country has a capacity to produce more than 2.7 million tones of aluminium per year, accounting making up about 5% of the total aluminium production on the globe. India boasts of a massive quantity of Bauxite reserve of about 3 billion tones. India enjoys the eighth position among the leading producers of primary aluminium in the world. The country has been witnessing a phenomenal growth in aluminium production over the past ten years.
There was stagnation in the consumption of aluminium between the 1990s and 2002 when the consumption of the metal was estimated at 500-600 KT. However, since 2002, there has been a sharp rise in the consumption of aluminium in the nation. Chiefly, the industries that lead in the consumption of aluminium are power, infrastructure, and transportation and related firms.
In the past, the growth of alumina and aluminium industries was in the range of 2 to 3% per annum. However, the growth rate may remain minimal in developed countries like US, Canada, Europe and Japan. But its growth is bound to be reasonably high in developing economies such as BRIC countries (Brazil, Russia, India and China) and Middle East.
The Future of Aluminium Industry in India
The per capita consumption of aluminium metal at developed countries is estimated at about 20 to 30 kg. In most countries, the bauxite reserve has got almost depleted. The scenario in India is just the opposite. While the per capita consumption of the metal is only 1.3kg, the country has a huge reserve of good quality bauxite reserve. In addition, several factors including high GDP growth rate, skilled employees, highly encouraging Government policy and the favorable trade relations of the nation with a number of developed and developing countries will ensure a bright future for the aluminium industry in the country.
A study of the aluminium industry in India today reveals that most refineries will be commissioned in the subcontinent around 2020. The scenario existing suggests that India is the right place following Vietnam where aluminium industry can hope to see a bright future. All these factors indicate that there is a highly promising future for the aluminium industry in the country further stimulated by the huge global market potential that will give a thrust to the industry.
The per capita consumption of aluminium in India is only 0.5 kg as against 25 kg. in USA, 19 kg. in Japan and 10 kg. in Europe. Even the World’s average per capita consumption is about 10 times of that in India. One reason of low consumption in the country could be that consumption pattern of aluminium in India is vastly different from that of developed countries. The demand of aluminium is expected to grow by about 9 percent per annum from present consumption levels. This sector is going through a consolidation phase and existing producers are in the process of enhancing their production capacity so that a demand supply gap expected in future is bridged. However, India is a net exporter of alumina and aluminium metal at present. In order to develop a guidelines for energy management policy for the plants comprising the aluminium industry, it was decided to undertake a questionnaire survey that was followed up by plant visits.
Quantitative details:
Raw material and product type:
Bauxite and calcined petroleum coke are primary raw materials for this industry. However, alumina is raw materials for smelters and aluminium metal is raw material for fabrication units.
Fuel Usage:
Coal, Furnace oil and electricity are primary energy inputs in aluminium production. Coal is primarily used to generate steam, which is used in the process while fuel oil is mainly used in Calcination of alumina and various furnaces in fabrication plants. Electricity is the major energy input in aluminium production and is considered to be prime factor in determining economics of aluminium production. Hence, all primary metal producers have installed their own captive power plants to supply cheaper and uninterrupted power for their use. Majority of electricity consumed in this industry is supplied by their captive power plants.
Technology Status:
Invented over 100 years ago, Bayer-Hall-Heroult is the only available commercial technology, even today, for the production of aluminium. Alumina is the basic raw material for the production of aluminium metal through electrolytic process. The production of alumina obtained from bauxite, a mineral containing upto 60% in the form of mono/tribhydrate is carried out through the Bayer route, which is an extractive hydro-metallurgical process.
