Steel Report

1
2 | Indian Secondary Steel Industry

3
5
Table of Contents
Background / Preface 34
Acknowledgement 5
I. Introduction 67
II. Global Steel Industry 13
15
i. Leading Steel Producing Countries 13
16
III. Overview of Indian Steel Industry 16
19
i. Industry Structure 17
21
ii. Secondary Steel Sector 18
22
IV. Technology in Indian Steel 29
33
V. Challenges of the Secondary Steel Sector 44
49
i. Raw Material 45
51
ii. Trade Issues 47
53
iii. Transport and Logistics 48
54
iv. Quality Order 49
55
v. Operational Issues 50
56
vi. Policy Issues 51
57
vii. Financial Issues 52
58
VI. Recommendations Way Forward 54
59
i. Raw Material 55
61
ii. Trade 55
61
iii. Operations 56
62
iv. Transport and Logistics 56
62
v. Finance 56
62
VII. Sector Outlook 58
63
31
Background / Preface
Secondary steel accounts for 55 per of India, organized a conference on The government of India has taken
cent of overall steel industry in the Roadmap to 300 Million Tonnes: up various measures to improve the
India through different technologies. Opportunities & Challenges in steel sector in India such as opening
Steel is the integral part of the August15 for Secondary Steel up the sector for FDI, National Steel
growth of Indian economy. The per Producers in the presence of the Policy etc. Earlier this year, India
capita consumption of steel in India Union Finance Minister, Mr Arun imposed anti-dumping duty of up to
has been steadily increasing, and Jaitley, Union Minister of Steel and $316 per tonne on imports of certain
steel production has doubled in last Mines, Mr Narendra Singh Tomar and steel products from three countries,
ten years- from 43.44 million tonnes Minister of State of Steel and Mines, including China, to protect domestic
in 2004-05 to 88.12 million tonnes in Mr Vishnu Deo Sai in New Delhi. producers from below-cost inbound
2014-15. The steel sector contributes shipments.
nearly 2 per cent of countrys GDP The conference witnessed
and the secondary steel sector is an participation from all Secondary Steel The industry is still currently under
important contributor to the vision of industry stakeholders along with the stress and this reports identifies the
reaching the capacity of 300 million representatives of the government. various solution measures that are
tpa. The objective of the conference was required to be taken up to ensure that
to discuss the challenges faced by the Indian Secondary Steel Industry
India has become the third-largest the Secondary Steel Producers and stays competitive.
steel producer in the world and projected contribution by them for
envisions being the second largest achieving the target of 300 million
producer soon. India is looking tonnes by 2025
forward to triple its production
capacity from 110 million tpa This report summarizes the discussion
presently to about 300 million tpa in points of that conference, highlighting
the next 10 years. the importance of the secondary
sector to India, various issues plaguing
To achieve this vision of 300 Million the sector and the remedial action
Tonnes, Ministry of Steel, Government points.
3
4 Indian Secondary Steel Industry
Acknowledgement
Federation of Indian Chambers of and associations in the secondary

Commerce and Industry (FICCI) would steel sector for sharing their insights
extend its heartfelt thanks to the and contributing to the development
Ministry of Steel, Government of India of the report
for providing it with an opportunity
to be a part of its conference on A special mention for M N Dastur
Secondary Steel Sector dated 22 & Company who have contributed
August 2015 titled Roadmap to 300 for the chapter on technological
Million Tonnes: Opportunities & perspective for the secondary steel
Challenges. The conference provided sector. The information contained
great insights for furthering the therein is all credit to them
growth of Indian secondary steel
sector in India for the next decade The acknowledgement would be
incomplete without a mention for the
Basis the issues and opportunities individual experts from the industry
discussed during the conference and and the Ministry of Steel; whose
various other information received by views have contributed immensely in
different associations in the secondary finalizing the report
steel sector, FICCI has detailed out
the challenges, opportunities and
recommendations for the development
of secondary steel sector in India
FICCI would like to convey its sincere

thanks to the various organizations
5
5
I. Introduction
7
I. Introduction
Todays modern world and human existence revolves around steel. Take a closer perspective at the things, and you will
find steel everywhere. There is no building in the world that has no component of steel in it nor there is any automobile
that one drives which does not have steel. Moving on to the national horizon, steel industry is one of the basic industries
of the country and plays an important role in strengthening the economy; providing boost to the national GDPs. Today
the world moves with steel and globally it is one of the most important metals for human existence and national growth;
as highlighted further
Top 5 crude steel producers (2014)
However, taking into perspective the 2004-05 to 88.12 million tonnes in

latest production trends, especially 2014-15. The steel sector contributes
the first six months of CY 2015, India nearly 2 per cent of countrys GDP
has become the third largest steel and the secondary steel sector is an
producer in the world with 44.96 important contributor to this.
million tonnes (MT) of production.
India envisions to be the second
India is amongst the leading steel largest steel producer soon. It
producing countries in the world. is looking forward to triple its
Steel is the integral part of the growth production capacity from 110 million
of Indian economy. The per capita tpa presently to about 300 million tpa
consumption of steel in India has in the next 10 years.
been steadily increasing, and steel
production has doubled in last ten
years- from 43.44 million tonnes in

Changes in the global
market to shape the Surplus Chinese
Indian steel Industry steel scrap
Shale gas
Manufacturing emerging as
To date, the Indian steel sector has
been relatively insular; however,
competitiveness cheaper source
it will increasingly be impacted by of fuel
developments in global steel, raw Global Steel
material and energy spaces. Dynamics
The sector is fraught with Global pricing New emission
challenges in quality, environmental of inputs such norms for
conformance, old technology, as iron ore, end-use
operational efficiency, under presence coke, etc. products
in flat steel segment etc. Stricter
environmental
regulation
Indian secondary steel
sector
The secondary steel sector in the iron Indian Steel Market
and steel industry is composed of
production units which are a diverse
lot with widely varying product range,
technology and scale of operation
and include major product/industry
segments such as pig iron produced
by mini blast furnaces (MBFs), sponge
iron, steel produced in electric arc
(EAFs) or Induction Furnaces (IFs),
standalone cold rolled steel sheets and
coils producers, re-rollers producing 55%
hot rolled long products such as
rebars, wire rods and structurals, 45%
standalone GP/GC and color coated
steel sheets/coil producers, wire
drawing units, standalone tinplate
producers etc. The units covered
under the Secondary Sector produce
either a product that serves a basic
raw material to steel making such
as pig iron or sponge iron or they
use a semi finished or intermediate
steel product to convert the same to
Integrated Producers Secondary Producers
another product of higher value. The
sector also includes crude steel (semi plants and are widely dispersed across consumption in India (60.8 kg)
finished products such as ingots, the country. and gearing up to meet the local
billets and blooms) produced using demand, specially required in rural
electric arc or induction furnaces The prospects for the secondary and semi-urban areas of the country,
using scrap or DRI in capacities less steel sector lie in addressing the thereby helping growth in rural steel
than one million tonne a year. These opportunity offered by the current consumption/offtake.
units are generally small in size (low) level of per capita finished steel
compared to the integrated steel
79
Indian growth story to be driven by the
Secondary Steel sector
The steel sector in India contributes capita consumption of total finished
nearly two per cent of the countrys steel in the country has risen from
gross domestic product (GDP) and 51 Kg in 2009-10 to about 59 Kg in
employs over 600,000 people. The per 2014-15.
Steel is a critical input to the key

industries in India
Steel consumption pattern in India

There is enormous scope for
increasing steel consumption
in almost all sectors, e.g.,
15% Construction
infrastructure, automobiles,
Infrastructure packaging, irrigation and
10% 35% water supply, engineering and
Capital Goods
capital goods, real estate and
Automobiles transportation.
12% Manufacturing in India is driven by
Pipes and Tubes
the key sectors such as Automobiles
Other and Capital Goods.
8% 20%
Steel a key component for the
success of Make in India.
Source: India Steel Asia Insight: Still in the Doldrums,

But Tata Looks Sound, Morgan Stanley
Indian secondary steel industry is poised to play an important

role for the success of Make in India

However, the industry The outlook for the domestic steel
industry remains robust and the
In India, the steel Industry is passing
through a challenging phase. The
needs to overcome prospect of capital investments demand for steel is at its lowest.
are bright, subject to, however, the Domestic consumption is severely
few challenges to timely intervention by policy makers affected due to lack of activity in
achieve this growth to remove the constraints faced by infrastructure, as well as in the
the industry. These include ease of manufacturing space. The biggest
story doing business, land acquisition, challenge facing the domestic steel
environmental clearances, resource industry is to have the per capita steel
allocation, availability of finance at consumption in India at par with the
competitive rates and infrastructure average global standards.
bottlenecks, among others.
Raw Material Constraints
Regulatory Bottlenecks
Challenges
Dumping from other countries such as China
Dumping from
High
other
Costcountries
of Capital
such as China
Quality Issues
Logistics Constraints
Interventions required rekindling the Industry

growth
The new Government at the center Key steps should be taken to

has, however, rekindled hope in the ensure uninterrupted supply of raw
industry. The ambitious infrastructure material at economic prices to the
projects and the thrust in end-use plants. More mines should
manufacturing through the Make in be opened to make raw material
India campaign are steps in the right available to industries. Other issues
direction. The plan for smart cities, that require immediate attention
improved road and rail connectivity are rationalisation of logistics as per
by building highways, bridges and international norms and incentive for
dedicated freight and superfast rail the local industry.
corridors have huge potential to spur
domestic steel demand.
11
9
Issue / Challenge Suggested Measures Time Duration
Raw Material Security Sufficient allocation of coal and iron ore mines with Medium Term
eligibility of iron and steel producers for the auction process
Process of price discovery of iron ore to be made transparent Medium Term

and scientific
Trade Free Trade Agreements with Japan and South Korea to be Medium Term
revisited
Import restrictions (anti-dumping) to safeguard the domestic Short Term

players
Curtail import of sub-standard steel Short Term
Well defined Product Specific Rules (PSR) must be Short Term

incorporated into the RCEP agreement
Imported steel to be quality compliant as per the BIS Short Term
Special package to be introduced under Make in India for Medium Term

Alloy steel to make it export competitive
Operations Various government clearances for doing business to be made Short Term
efficient and time bound
Land acquisition is still a significant challenge for the Medium Term

industry
Environment Clearances not to apply for induction furnaces Medium Term
below 100,000 TPA
Transport & Logistics Along with development of roadways, focus should be given Long Term
on strengthening coastal/water ways for domestic transport,
which is relatively cheaper
Railways to treat steel industry as a Long Term

priority sector and consider setting up
dedicated tracks
Setting up of inland container depots Medium Term
Financing Alternative credit arrangements like bonds Medium Term

should be facilitated and encouraged
Concessions on interest rates for steel sector Short Term
Establishment of Steel Finance Corporation Medium Term

Sector outlook
The Indian steel industry is expected The target calls for a concerted effort
to grow moderately in the near future from all stakeholders. This paper
as end-user demand starts to pick up. highlights the various interventions
Domestic steel capacity is expected to that are required in the industry from
correspondingly mirror the growth of regulatory framework, financing,
end-user industries. The Government trade, infrastructure & logistics and
plans to unveil a policy that targets environmental reforms.
300mtpa in a decade from now.
Vision 2025
Worlds second
largest steel producer
with a capacity of 300MT
Triple its current Equal industry

To become the
production capacity participation
second largest
steel producer
13
11
II. Global Steel Industry
15
II. Global Steel Industry
Global Crude Steel Production
2004 2014
The global crude steel production (100% = 1064 million tonnes) China (100% = 1665 million tonnes)
stood at 1,665 million tonnes in 2014. NAFTA 6.60%
China is the largest steel producer in 10.60%
CIS
12.20%
the world. Its share has increased from 11.10%
25.60%
Other Europe
25.6% in 2004 to 49.4% in 2014. 8.10% EU (28)
5.70%
49.40%
India contributes approximately 5% to 12.50% Others

10.20%
the global crude steel production. 19.00%

Other Asia
10.70% 2.30%
Japan 6.40%
7.20%
2.40%
i. Leading Steel Producing countries

The top 5 countries (China, Japan, India occupies a central position into global raw material sources. India
United States, India and South Korea) on the global steel map with the has overtaken the US to become the
account for 70% of the global crude establishment of new state-of-the- third-largest steel producer in the
steel production. Indias share in 2014 art steel mills, acquisition of global world with a production of 44.96
stood at approximately 5%. scale capacities by players, continuous million tonnes (MT) in the first six
modernisation and up gradation months of the current calendar year,
of older plants, improving energy 2015
efficiency and backward integration
900
822 822.7
800 Crude Steel Production (in mt)
700
600
500
400
300
200
110.6 110.7 88.2
86.9 81.3 86.5 66.1 71.5
100
0
China Japan United States India South Korea
2013 2014

13
Luxemburg-based ArcelorMittal is the worlds largest steel producer, with all other top 10 producers
located in Asia, in particular China
Crude steel production by producer (MT)

2012
ArcelorMial 98.088
Nippon Steel and Sumitomo Metal 49.3
Hebei Steel Group 47.094
Baosteel Group 43.347
POSCO 41.428
Shagang Group 35.332
Ansteel Group 34.348
Wuhan Steel Group 33.053
JFE Steel Corporaon 31.406
Shougang Group 30.777
0 20 40 60 80 100 120
2012
2000
Nippon Steel 28.4

POSCO 27.7
Arbed 24.1
LNM 22.4
Usinor 21
Corus Group 20
Shanghai Baosteel 17.7
ThyssenKrupp 17.7
NKK 16
Riva 15.6
0 10 20 30
1990
Nippon Steel 28.8

Usinor Sacilor 23.3
POSCO 16.2
British Steel 13.8
USX 12.4
NKK 12.1
ILVA 11.5
Kawasaki 11.1
Sumitomo 11.1
Thyssen 11.1
0 10 20 30 40
Source: World Steel Association
14 Indian Secondary Steel Industry 17
15
III. Overview of
Indian Steel Industry
19
III. Overview of Indian Steel Industry
90 Indian Crude Steel Production (in mt)
Steel is the backbone of any modern 80
economy. The level of per capita 70
consumption of steel is often 60
50 61.94 64.92
considered an important index of the 40 49.13 53.68 57.81
49.79
level of economic development. 30
20
10 16.71 16.99 16.48 16.48 16.77 12.6
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 (Till
During the period FY10 to FY14, Dec)
the Indian crude steel production Public Sector Private Sector
has increased at a CAGR of 5.54%.
The share of the private sector has
increased from 75% in FY10 to 80%
Production of finished steel (in mt)
in FY14. 100 86.00%
87.675 85.60%
90 81.682 85.00%
80 75.698 84.70%
84.30% 84.00%
The public sector crude steel 70
68.62
83.50% 65.196
60 83.00%
production increased at a CAGR of 50 82.00%
0.09% during FY10 FY14, while the 40
30 80.70%
81.00%
private sector production increased 20

80.00%
10 79.00%
at a CAGR of 7.22% during the same 0 78.00%
period. 2010-11 2011-12 2012-13 2013-14 2014 -15 (till Dec)
Production in mt % share of Pvt Sector
The production landscape is largely India is predicted to triple its

dominated by integrated steel production capacity from roughly
producers who make steel from iron 100 MT presently to about 300 MT
and by using the basic ore. These iron in the next 10 years. As per the
based producers usually make steel projections the Integrated Steel
through the blast furnace (BF) route. Producers are slated to reach a
Moreover, there are a significant production capacity of roughly
number of smaller steel producers 210 MT while the remaining 30
who make steel not using the blast percent or about 90 MT are to be
furnace route and even not always contributed by the latter category,
using iron ore as the primary feed. which we term as the Secondary
These producers, who do not make Steel Producers.
steel from iron, can be put into three
categories. The first is the Sponge
Iron producers which are produced
using the Direct Reduced Iron (DRI)
route, and using iron ore. Steel is
also produced using the Electric
Arc Furnace (EAF) route and the
Induction Furnace route where scrap
replaces iron ore to a large extent as
the primary raw material.

Induction Furnace (IF). Apart from
i. Industry Structure Integrated Producers:
Steel Producers starting their these two, other manufacturing units
operation from iron making like like independent hot and cold rolling
The Indian iron and steel industry units, re-rolling units, galvanizing
production of hot metal or sponge
can be divided into two main sectors and tin plating units, sponge iron
iron using iron ore and producing
Public sector and Private sector. producers and pig iron producers are
crude steel of standard specifications,
Further on the basis of routes of covered under secondary producers or
with processing facilities. They are the
production, Indian steel industry value adders. These largely produce
only one who converts ore to steel.
can be divided into two types of long steel products.
producers.
Secondary Producers:
These producers make use of steel
scrap, sponge iron or hot briquetted
iron (HBI). They mainly comprise of
the Electric Arc Furnace (EAF) and
2004-05 (MT) 2013-14 (MT) 2014-15 (MT) INCREASE (MT)

(A) (B) (C) (A&C)
Capacity 48.00 100 110 62.00

Production 43.44 81.69 88.12 44.68
Consumption 34.39 74.09 76.36 41.97
Exports 4.71 5.98 5.59 0.88
Imports 2.29 5.45 9.32 7.03
Capacity utilization (%) 90.50 81.69 80.10 -10.40
Source: Industry, 2014
Table 1.1 shows the various was only 0.88 MT increase in exports The Indian steel industry is currently
parameters of the Indian Steel from 4.71 MT in 2004-05 to 5.59 MT working at a capacity level of 110 MT.
Industry. The capacity level has in 2014-15. The capacity utilization however is
increased to 110 MT in 2014-15 from hovering around only 80%. Keeping
100 MT in 2013-14. The production Looking at the above table it is in mind the current ratio, if the
has also increased from 81.69 MT in evident while the capacity has country projects to have a capacity
2013-14 to 88.12 MT in 2014-15. increased by 62 MT in the last decade; of 300 MT by 2025, it will be able
the production grew only by 45 MT to produce only around 240 MT. In
The production capacity in 2004-05 (largely suffering due to the non- 2013-14, the ratio of the BF and EAF/
was 48.00 MT which increased by availability of the raw material). Also, IF route was 43%:57%. Assuming
62.00 MT to 110 MT in 2014-15. the Free Trade Agreement with Japan this ratio to be 70:30 in sync with the
The production has also increased by and Korea have hurt the domestic expansion planned by the integrated
44.68 MT from 43.44 MT in 2004-05 steel industry in a big way; with the steel producers for the blast furnace
to 88.12 MT in 2014-15. imports almost doubling in last one route of production, the production of
year and exports going down (though crude steel through BF and EAF/IF will
The imports have risen from 2.29 MT marginally). The surge in imports be 168 MT and 70 MT respectively.
in 2004-05 to 9.32 MT in 2014-15. and production not able to match Therefore from the current production
There has been a huge increase in the capacity expansion has led to of around 45 MT to 70MT by 2025, it
imports of 7.03 MT over the last ten reduction in capacity utilization from is important that we understand the
years while, the exports have not 90% a decade back to current levels sectors dynamics and work together
increased in the same manner. There of 80%. to achieve the said target.
21
17
ii. Secondary Steel sector
The secondary steel sector contributes 1. Electric Arc Furnace: lined vessel, usually water-cooled in
around 57% of the total steel The electric arc furnace operates as larger sizes, covered with a retractable
production in Indian Steel industry. a batch melting process, producing roof, and through which one or more
This sector uses the production batches of molten steel known as graphite electrodes enter the furnace.
techniques that make use of the steel heats. These furnaces exist in all The electric arc furnace operating
scrap or the sponge iron/DRI. The sizes (1 ton to 400 tons approx.) cycle is called the tap-to-tap cycle.
following techniques are used for and can have temperatures risen up The operations of the electric arc
production of steel. to 1800 Celsius. The one used for furnace are explained below:
steelmaking consists of a refractory-

Fig. 1.2 Operation of Electric Arc Furnace
Scrap bay Taken to melt shop,

Baskets
Receives scrap roof is swung off
(large buckets)
metal Scrap metal Scrap basket furnace & furnace is
with clamshell
Located next to charged with scrap
doors for base
melt shop from basket.
After charging
More slag formers are Another bucket of Roof is swung back
introduced & oxygen scrap is charged into Scrap melted over the furnace
is blown into the bath, the furnace and & meltdown
burning out impurities melted down. commences.
and chemistry
Correct temp.
Steel is tapped out

into preheated ladle During & after tapping Furnace is turned around
through tilting furnace
23
19
Table 1.2: Production and Capacity of EAF
Year Capacity (MT) Production (MT) Capacity utilisation (%)

2004-05 11.13 10.23 92
2005-06 12.39 11.27 91
2006-07 12.40 10.16 82
2007-08 14.80 13.46 91
2008-09 16.32 14.61 90
2009-10 18.94 16.46 89
2010-11 19.63 17.67 90
2011-12 25.76 18.93 74
2012-13 26.19 19.25 74
2013-14 28.88 18.75 65
2014-15 29.90 19.44 65
Source: SFAI, 2015
The above table explains the The contribution of EAF sector in

production and capacity of Electric arc domestic steel industry is about
furnace route of production. As can be 25%. Based on this target, the steel
seen, the capacity utilization that was production through EAF route will be
around 90% till 2010 has come down increased to 60 MT out of targeted
drastically to around 65%; largely production of 300 MT of crude steel
due to the non-availability of raw by 2025-26. The targeted production
materials and inputs. also includes production by large
integrated steel producers.
2. Electric Induction Furnace:

It is a type of melting furnace that cooled by a water system to avoid
uses electric currents to melt metal. overheating or melting. It ranges in
These furnaces are ideal for melting size, shape and design. Small furnaces
and alloying a wide variety of metals are used for very precise alloys and
with minimum melt losses, however, large furnaces are used to produce
little refining of the metal is possible. clean metal for many different
It requires an electric coil to produce applications.
the charge which is eventually
replaced. The crucible in which the
metal is placed is made of stronger
materials that can resist the required
heat, and the electric coil gets

Construction of induction
furnace:
The electrical coil is placed around

or inside of the crucible, which holds
the metal to be melted. Often this
crucible is divided into two different
parts. The lower section holds the
melt in its purest form (the metal as
the manufacturers desire it), while the
higher section is used to remove the
slag or the contaminants that rise to
the surface of the melt. Crucibles may
also be equipped with strong lids to
lessen how much air has access to the
melting metal until it is poured out,
making a purer melt.
Fig. 1.4 Operation of Induction Furnace
Induction Furnace Eddy currents,

Nonconductive Coil creates circular electric
crucible AC current Magnetic field currents, inside the
reversing magnetic
Holds charge metal field that metal, by
Surrounded by penetrates metal electromagnetic
copper wire induction
Melted metal
Eddy currents cause

Required metal
vigorous stirring of
is made
melted metal
25
21
The capacity and production of the 40
36.49
electric induction furnace route has 35 33.95
increased from 25.8 MT and 19.82 MT 30

30.24 31.02
Capacity & Production (MT)

27.29
in 2009-10 to 36.49 MT and 27.29 25.8 25.66
25 23.94
MT in 2013-14 respectively, but the 22.94
19.82
capacity utilisation has remained the 20
Capacity
same around 75%-77% for the same 15 Production
period.
10
0
2009-10 2010-11 2011-12 2012-13 2013-14
Year
Fig 1.5: Capacity and Production of Electric Induction Furnace
3. Direct Reduced Iron:

India is the largest producer of sponge
iron or DRI. It is produced from direct
reduction of iron ore (in the form of
lumps, pellets and fines) by a reducing
gas produced from natural gas or
coal. The reducing gas is a mixture
of hydrogen and carbon monoxide
which are the reducing agents of this
technique. The process of reducing
the iron ore in solid form by reducing
gases is called the direct reduction.
It is a manufactured metallic material
produced by the reduction of iron
oxide at temperatures below the
melting point iron (1536 degree
Celsius). The iron oxide in either lump
or pellet form is reduced at (800-
1050 degree Celsius) by interaction
with reducing agents. The methods of
production include the following three
types:
A. MIDREX direct reduction

B. HYL direct reduction Source: Industry, 2015
C. SL/RN direct reduction

The MIDREX and HYL direct reduction Year Gas Based (MT) Coal Based (MT) Total (MT)
make use of the natural gases while
2004-05 4.6 5.42 10.06
the SL/RN direct reduction makes
use of the coal for the production 2005-06 4.54 7.27 11.82
processes. India currently has 5 gas 2006-07 5.26 11.01 16.27
based plants and 369 coal based
2007-08 5.85 14.14 19.99
plants.
2008-09 5.28 16.05 21.33
2009-10 6.17 16.82 22.99
2010-11 6.19 17.06 23.25
2011-12 5.15 15.41 20.56
2012-13 3.93 14.74 18.67
2013-14 2.61 15.49 18.10
2014-15 3.14 14.32 17.46
Table 1.4: Production of DRI Source: SIMA, 2015
Table 1.4 shows the production of As mentioned earlier, with a targeted

direct reduced iron for 2004-05 to production of 240 MT by 2025 with
2014-15. The total production, by gas secondary sector to produce around
based and coal based, in 2004-05 was 72 MT, the requirement for sponge
10.06 MT which steadily increased iron at 1.2 input ratios is 85 MT by
to 23.25 MT by 2010-11. However, 2025.
since then there has been a gradual
reduction in the production largely
due to the non- availability of raw
materials.
4. Stainless steel:
Stainless steel is a steel alloy with a when exposed to air and moisture. carbon, nitrogen, and manganese.
minimum of 10.5% chromium content Stainless steel contains sufficient Properties of the final alloy are
by mass which does not readily chromium to form a passive film tailored by varying the amounts of
corrode, rust or stain with water as of chromium oxide, which prevents these elements. Nitrogen improves
ordinary steel does. However, it is further surface corrosion by blocking tensile properties like ductility. It also
not fully stain-proof in low-oxygen, oxygen diffusion to the steel surface improves corrosion resistance, which
high-salinity, or poor air-circulation and blocks corrosion from spreading makes it valuable for use in duplex
environments. There are different into the metals internal structure. stainless steels.
grades and surface finishes of Due to the similar size of the steel and
stainless steel to suit the environment oxide ions, they bond very strongly
that the alloy must endure. It is and remain attached to the surface.
used where both the properties of
steel and corrosion resistance are Stainless steels are made of some of
required. It differs from carbon steel the basic elements found in the earth:
by the amount of chromium present. iron ore, chromium, silicon, nickel,
Unprotected carbon steel rusts readily
27
23
Figure 1.7 below represents the
production of stainless steel from
the 2004-05 to 2014-15. While
the growth in production during
2009-2013 was steady, the same
has come down in the last 2-3
years
Fig. 1.7 Production Process
Cleaned and polished

Iron ore, chromium, to give the desired
Melted together Electric Arc Furnace Steel heated
silicon, nickel, etc. finish (blooms, billets
and slabs)
Packaged
Sent to manufacturers.
They weld & join
steel to produce
Source: Industry, 2015 desired shapes.

Fig 1.8: Production of Stainless Steel
3.5
2.95 2.85 2.86
3
2.67
2.42 2.54
2.5
Production (MT)
1.92 2.03 2.01

2 1.71 1.82
1.5
0.5
Source: ISSDA, 2015
Fig 1.9: Forecasted Production of Stainless Steel
10
8.02
8 7.36
6.76
Producon (MT)
5.66 6.19
6 4.74 5.18
3.97 4.34
3.64
4
0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: ISSDA, 2015
The figure above shows the forecast

of the stainless steel production for
the next 10 years. The production is
expected to grow to 3.64 MT in 2016,
further increasing to 8.02 MT in 2025.
29
25
5. Alloy Steel: 7 Fig. 1.10: Production of Alloy steel
6.0
6 5.7
5.3
Under this, the steel is alloyed with a 5
5
Production (MT
variety of elements in total amounts 4.21
4 3.53
between 1.0% and 50% by weight 2.9 2.89
to improve its mechanical properties. 3 2.27 2.3 2.5
Alloy steels are broken down into two 2
groups: low-alloy steels and high- 1
alloy steels.
0
The simplest steels are iron (Fe)

alloyed with carbon (C) (about 0.1%
to 1%, depending on type). However,
the term alloy steel is the standard Source: ASPA, 2015
term referring to steels with other
alloying elements added deliberately Keeping the current growth trend
in addition to the carbon. Common of alloy steel production in mind,
alloyants include manganese (the a healthy growth can be predicted
most common one),nickel, chromium, for the industry. The production is
molybdenum, vanadium, silicon expected to double by 2025 from
and boron. Less common alloyants 6.0 MT in 2014-15 to 12.63 MT. The
include aluminum, cobalt, copper, following graph shows the forecast of
cerium,niobium, titanium, tungsten, the alloy steel production from 2015
tin, zinc, lead, and zirconium. to 2025.
There has been a gradual rise in the

alloy steel production since 2004-05. Fig 1.11: Forecasted Production of Alloy Steel
The production has risen to 6 MT in
2014-15 from 2.27 million tonnes
14
in 2004-05. Figure 1.6 below shows 12.63
11.8
the production level of the alloy steel 12
11.03
10.31
industry. 10 9.63
9.00
8.42
Production (MT)
7.86
8 7.35
6.87
6.42
6
0
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26
Year
Source: AIIFA, 2015

The segment-wise production of the
Indian secondary steel sector is given
below:
Segment-wise Production of Secondary Steel Sector during 2014 - 15
Sl. No. Type of Industry No. of Units Annual Capacity Production Capacity
(000 tonnes) (000 tonnes) Utilisation (%age)
1 Mini Blast 43 13909 7238 52.0
Furnace - Hot
Metal
- Pig Iron 7809
2 Sponge Iron 360 30265 17861 59.0
3 Electric Arc 39 9531 10259 107.6
Furnace
4 Induction Furnace 1244 36561 27769 76.0
5 MBF (Steel) 3 2733 961 35.2
6 Re-rolling Mill 1628 43107 35088 81.4
7 Wire Drawing 50 1330 986 74.1
8 HR Product 15 3517 2319 65.9
9 CR Product 144 5695 4604 80.8
10 GP/GC Sheets 14 2362 1735 73.5
11 Colour Coated 3 380 398 104.7
31
27
IV. Technology in Indian Steel
33
IV. Technology in Indian Steel
the deficiencies, drawbacks and affecting the secondary steel sector
Productivity, limitations that have long plagued the the lack of incentives, awareness
Efficiency and sector and prevented it from achieving and motivation to upgrade and
global standards of efficiency, need to innovate for enhanced productivity
sustainable production be addressed on an urgent basis. and profitability. Without adequate
through technology, perspective on technical innovations
A majority of the secondary steel units in the sector, there is reluctance to
Innovation & R&D in the country, especially those based disturb the status quo approach to
on induction furnace, are in some production, inhibiting the sector from
With a substantial portion of cases small-or medium-sized family- achieving its full potential. Attendant
Indias steel capacity attributed run units having lack of cohesive and to the issue of incentives is the lack
to the secondary steel sector, the forward-looking corporate vision. A of adequate technical and managerial
performance of the secondary steel large number are still struggling with capability to operate and maintain
sector assumes significance in the obsolete and inefficient technologies modern technology and processes.
context of the countrys target to and processes, leading to poor product Exhibit 2-1 on gives the present
achieve a domestic steel capacity quality. As the UNDP report observes, capacity and future projections for
of 300 million tons. Accordingly, this is symptomatic of a wider malaise secondary steel sector:
Exhibit2-1
Ehibit 2-1-Secondary
Secondary Steel
Steel Sector:
Sector: Present
Present and
and Future
Future Capacity
Capacity Projections
Projections
Coal-based Gas-based
Ferrous scrap DR Plant DR Plant
DRI
EAF IF
Liquid steel
Steel Capacity
(Mt) -300
Refining facilities
80%
LF VD/VOD/RH
110
90
Crude/Semi-
finished products Caster 50 55% Type
+80%
Productivity
45%
Semi-
finished products
Hot rolling Cold rolling Galvanising
mill 2014 2025
mill unit
Source JPC, Dastur

29
Further, in terms of performance, It is in this context that technology, steel sector is saddled with a huge
pollution abatement and emissions innovation, R&D, sustainable and emission load a burden that can
control, the lack of exposure to efficient methods of production with be easily avoided by implementing
modern technology has reduced the minimum economies of scale assume energy-efficient technologies (EETs)
secondary sector to one of the most greater importance. and processes. Similarly, quality issues
modestly performing industrial sectors plague a majority of the secondary
in the country with average margins. When compared with global small steel producers adopting the IF
Limited awareness of sustainable scale steel industry benchmarks, it route, especially in terms of refining
business practices at the managerial is found that re-rolling mills in India capability which helps in expanding
level, and the absence of workable tend to consume up to 1.8 times more the product basket in the form of
regulatory frameworks compound the fuel oil. When coal is used instead alloy and special steels. Investments
issues further. These issues directly of fuel oil, the difference is as much in technologies are not small, and the
impact bottom lines, and as a result, as three times. While this disparity lack of workable incentive regimes for
the sector ends up being flagged as directly affects the competitiveness adopting technology and processes
having poor investment potential. of Indian re-rollers, the implications for energy efficiency, quality and
This, in turn, reduces access to credit, of this excessive energy consumption productivity enhancements makes re-
inhibiting the secondary steel sector go beyond the balance sheet. With rollers all the more reluctant to invest
from modernizing or upgrading. coal being the preferred fuel of most in technologies. Exhibit 2-2 presents
re-rollers, the Indian secondary comparison of present indices with
best-in-class (BIC).
Benchmarking of Indices
Oil consumption Coal consumption Gas consumption Productivity of furnace
45 80 50 350
-15 -30 30 50 20 30 200
150
Current B-I-C Current B-I-C Current B-I-C Current B-I-C

(Litres/T) (Kg/T) (Nm3/T) (Kg/m2/h)
Scale loss Power consumption Yield Utilization of mill
3 100 95 85
20 80 90 5 70 15
-2 -1
Current B-I-C Current B-I-C Current B-I-C Current B-I-C

(%) (kWh/T) (%) (%)
Exhibit 2-2 Comparison of present indices with Best-In-Class
Therefore, a combination of low achieving its full potential, both as

awareness, lack of technical capacity, a globally competitive powerhouse
and absence of incentives and of finished steel products, as well
government support is preventing the as a sustainable environmentally
Indian secondary steel sector from conscious industry.
35
to scrap based process and longer
Sponge Iron Sector processing time in EAF/IF.
Sponge Iron, or Direct Reduced

The two typical reducing agents
Iron (DRI), is obtained from direct
utilised in direct reduction are non-
reduction of iron oxide, and has iron
coking coal and natural gas, based on
content in the range of 80-90%.
which either coal-based or gas-based
Oxygen in the iron oxide is removed
DR plants are installed. Share of coal-
during the process of reduction,
based DR plants in India is more than
leaving void space which results in a
80% of total installed direct reduction
spongy internal structure. Hence the
capacity. Inadequate availability of
term sponge iron.
natural gas from domestic sources and
low priority to this sector is affecting
Sponge iron is an important gas-based production of sponge iron.
raw material (substituting or Recent discoveries of shale gas in US
supplementing scrap) for steel making has shown great potential for gas-
through the electric arc furnace (EAF) based DR plants, and with further
or electric induction furnace (IF) route advancement in drilling and extraction
of secondary steel production. It is techniques, this appears to be a
an ideal substitute with its higher promising energy source for sponge
metallization, balanced carbon iron industry in future. Exhibit 2-3 on
content, low sulphur and phosphorous the next page shows the production
levels, but has the limitation of of direct reduced iron for the period
higher power consumption compared 2004-05 to 2014-15.
Year Gas Based (MT) Coal Based (MT) Total (MT)

2004-05 4.64 5.42 10.06
2005-06 4.54 7.27 11.82
2006-07 5.26 11.01 16.27
2007-08 5.85 14.14 19.99
2008-09 5.28 16.05 21.33
2009-10 6.17 16.82 22.99
2010-11 6.19 17.06 23.25
2011-12 5.15 15.41 20.56
2012-13 3.93 14.74 18.67
2013-14 2.61 15.49 18.10
2014-15 3.14 14.32 17.46
Exhibit 2-3 - Production of direct reduced iron for the period 2004-05 to 2014-15
Source: SIMA, 2015

31
Worldwide gas-based DR plants are
based mainly on use of reducing
gas generated by reforming natural
gas. The two processes in industrial
operation are the Midrex process
and the Energiron process. Efforts
are on to utilise coke oven gas as the
reductant. A recent development is
the worlds first MIDREX plant set
up by JSPL at Angul, Odisha, based
on reducing gas generated through
gasification of local high ash non-
coking coal. If this plant is able to
establish its commercial viability
through sustained operation, it
will significantly impact the direct
reduction industry in India.
Exhibit 2-4 - Production of direct reduced iron
Coal based sponge iron industry in

It is essential for downstream the coal, or by using imported low ash
India has adopted both imported and
secondary steel producers to install coals in blend with local coals.
indigenous technologies. Coal based
refining facilities to produce quality
DR plants are generally using iron
steel. The DR industry in India
ore lumps as raw material and non-
faces the twin problem of limited
coking coal as reductant, and the
availability of hard ore with high
product is in lump or granular form.
Fe content, and high ash in Indian
The reduction is carried out in rotary
coals. The limited availability of high
kiln and this route requires low capital
grade hard ore has resulted in some
investment compared to gas based
plants switching to use of pellets. The
route since the unit size of a rotary
problem of high ash in Indian coals is
kiln module is comparatively much
being circumvented either by washing
smaller.
37
Electric Arc Furnace
With the rapid growth in electric to improving the overall economics
steelmaking, a significant evolution of the EAF steel industry. Exhibit 2-5
has emerged in the EAF technology gives the geographical concentration
and the way steel is produced through of Electric Arc Furnaces in India.
it. EAF based steel plants have so
far responded very positively to
adopting new environment friendly
technologies . Sustained efforts
are being made at reducing waste
generation, and effective utilisation
of the generated wastes, with a view
Electric Arc Furnace
West 15 Units
East 17 Units
5.3 6.9
6.8
5
105% 99%
India 42 Units
Capacity Production Capacity Production
(Mt) (Mt) (Mt) (Mt)
13.7
13.2
North 9 North 1
Units Units 103%
1.4
1.2
123% .02 .02 Capacity Production
(MT) (MT)
Capacity Production Capacity Production
(Mt) (Mt) (Mt) (Mt)
Geographical concentration of IF in India

Exhibit 2-5 Geographical concentration of Electric Arc Furnaces in India.

33
Exhibit 2-6 and Exhibit 2-7 gives a pictorial representation of the Electric Steel Making route and typical AC Electric Arc
Furnace respectively.
Exhibit 2-6 - Electric Steel Making route
Exhibit 2-7 Schematic of a typical AC Electric Arc Furnace

The technological developments in EAF steelmaking are discussed in Exhibit 2-8 below:
Period Technological Techno-Economic Parameters

Development Tap-to-Tap Time Electricity Electrode
(Minutes) Consumption, kWh/t Consumption, kg/t
1965-70 Oxygen lancing 180 630 6.5
1970-80 - Water cooled panels 105 490 3.5
- High power
operation (UHP)
1980-85 - Ladle furnace 80 450 2.5
- Foamy slag
- Eccentric bottom
tapping
- Scrap pre-heating
1985-95 - Oxygen carbon 60 410 2.0
injection ( lance
manipulator)
- Pneumatic bath
stirring
1995-2005 - Oxygen carbon/ 55 280-320 1.6
oxyfuel side wall
injection
- Use of hot metal as

charge material
2005- date - Improvement of 40-45 280-300 1.2

above operating
parameters
Exhibit 2-8 - Technological developments in EAF

35
All the above technologies have led If the produced CO is burnt in the The major wastes generated during
to decrease in energy consumption, EAF, it is possible to recover the heat, steelmaking through EAF route may
resulting in resource savings, lower thereby reducing the heat load on the be broadly classified as solid waste,
costs and reduction of carbon off-gas system. gaseous waste and liquid waste. The
footprints/greenhouse gas emissions. solid waste includes slag, dust, sludge,
Adoption of EAF bottom stirring, hot- refractories, oil and skull. The gaseous
About 20% of the energy input to heel practice and slag-free tapping emissions contain carbon monoxide
EAF is lost in the form of off gas. result in higher operating efficiency (CO), carbon dioxide (CO2), sulphur
Scrap preheating technology helps in and lower operating costs. Similarly, dioxide (SO2), oxides of nitrogen
reducing the power consumption in process automation and optimisation (NOx) and particulate matter. The
the EAF by making use of the waste maximises utilisation of power, liquid waste generated is mainly the
heat in the furnace off gas. increases productivity and reduces polluted water. The typical EAF slag
production cost. composition is given in the Exhibit
Oxygen injection technologies 2-9 below:
contribute to increased energy
efficiency in the melting and heating Component %
processes, and reduce the fuel CaO 47.38
consumption and CO2 emissions. Also,
Free lime 1.14
with oxygen combustion, the low
calorific gases which are generated MgO 11.83
can be effectively used to further MnO 7.50
improve the overall energy efficiency. Total Fe 55.00
Metal Fe 11.40
Foamy slag practice also helps in
reducing energy by covering the arc SiO2 20.00
in a layer of slag. Since the arc is Al2O3 13.90
hielded, more energy is transferred to
the bath instead of being radiated to Exhibit 2-9 - Typical EAF slag composition
the side walls.
The emissions from EAF can be Harmful Substances Average Concentration, Amount of Products
reduced by employing improved and mg/m3 Exhausted, g per ton of
well maintained fume extraction Steel
system and control technologies. This
Oxides of carbon 13.5x 103 1350.0
includes installation of equipment like
secondary fume collection system, Oxides of nitrogen 550.0 270.0
dog house enclosure, electrostatic Oxides of sulphur 5.0 1.60
precipitator and suitable furnace off
Cyanides 60.0 28.40
gas analysis system. The analysis of
the furnace off-gas provides insight Fluorides 1.2 0.56
into the combustion processes in EAF
for ensuring optimised practices and Exhibit 2-10 - Harmful gaseous products in process gases exhausted from EAF
dynamic energy control. The contents
of harmful gaseous products in
process gases exhausted from EAF are
presented in Exhibit 2-10 below.
41
Fig. 1.4 Operation of Induction Furnace
Induction Furnace Exhibit 2-11 Process flow for IF
Induction Furnace (IF) is ideal for Induction Furnace Eddy currents,

Nonconductive Coil creates circular electric
melting and alloying a wide variety crucible AC current reversing magnetic Magnetic field currents, inside the
of metals with minimum melt losses, Holds charge metal field that metal, by
Surrounded by penetrates metal electromagnetic
while, limited refining of the metal is copper wire induction
possible. Small furnaces are used for
very precise alloy composition and
Melted metal
large furnaces are used to produce
clean metal for many different
applications. Exhibit 2-11 presents
process flow for IF. Required metal
Eddy currents cause
vigorous stirring of
is made
melted metal
There are more than 1,200 units

of induction furnace in small
and medium steel sectors. With
constant improvements in energy
efficiency, substantial growth is being
experienced for melting in Induction
furnace, triggered by demands for
further reduction of CO2 levels.
Exhibit 2-12 below presents the
geographical concentration of IF in
India.
Source: JPC2014-15
Exhibit 2-12 Geographical concentration of IF in India
IF plants require less capital and lower Presently, induction furnace units at peak efficiency. This can be done
space requirement. Induction furnace are meeting the demand of ordinary by development of energy policy
is generally used as a melting unit and grade mild steels. However, for more and engagement of an energy
very limited refining is accomplished. stringent quality requirement for management system, regular energy
So it becomes imperative that the producing special or alloy grades, audits and implementation of the
charge material for the furnace should appropriate secondary metallurgy recommendations made. This can also
have low impurity. In general, scrap is facilities will be required. be done by optimization of induction
melted in these furnaces. Nowadays, furnace operation, management of
DRI has proved to be a potential For improving efficiency of IFs, it will maximum demand and management
substitute for scrap. India being the be necessary to have in place proper of power factor. Improvement in
leading DRI producing country in the energy management system aimed the performance of the auxiliary
world, many units operate with high at managing energy consumption systems will also contribute to energy
percentage of DRI in the charge mix. efficiency.
42 | Indian Secondary Steel Industry 37

Re-Rolling Sector
At present, the total share of

secondary steel producers in the long
product segment is more than 70%.
Role of re-rolling sector is thus very
vital in overall growth of secondary
steel sector for providing finished
goods. Exhibit 2-13 on the next page
presents geographical concentration
of Re-rolling Mills in India.
Exhibit 2-13
Geographical
concentration of Re-
rolling Mills in India
Source: JPC2014-15
Re-rolling industry in India started process initially, new technology rolling Mill Sector in India Project of
in 1928 at Kanpur, and since then in the field of reheating furnace UNDP/GEF (Steel) Project of Ministry
no major remarkable technology and rolling mill are now being of Steel, Government of India has
improvement took place in majority implemented. been launched with the following
of the units. As a result, re-rolling objectives - reduction of Greenhouse
industry in India is not quite energy Ministry of Steel, Government of Gas (GHG) emissions, technology
efficient, and is marked by high India, along with its technology upgradation, accelerated adoption of
emissions. Re-rolling mills contribute partner, has taken steps to identify Energy Efficient Technologies (EET),
more than 10% of the total emissions and implement Energy Efficient removal of key barriers to Energy
from steel sector. Technologies (EET) and bring down Efficiency measures in the sector.
specific energy consumption and Steel re-rolling sector has gained a
Although technology assimilation improve CO2 emission. Energy lot from this Project and continuation
by re-rolling sector has been a slow Efficiency Improvement in Steel Re- of such Projects will go a long way in
growth of this sector. The targets of
the Project are given in Exhibit 2-14
below:
Consumption of energy & other Unit Status in the beginning of Target / Expected Outcome
important performance parameters of the Project after project completion
re-rolling mills (Model Units)
Oil consumption in the reheating Lit/T 42-45 <30
furnace
Coal consumption (Pulverized) Kg/T 80-120 45-65
Gas consumption Nm3/T 48 30
Productivity of furnace Kg/m2/h 120-220 300-350
Scale Loss % 2.5-3.5 <1
Power consumption kWh/T 90-120 60-80
Yield % 89-93 94-95
Utilization of mill % 65-70 80-85
Exhibit 2-14 - Performance parameter targets of Re-rolling mills

Production of steel at competitive skilled manpower are prerequisites for Innovative technologies as mentioned
cost is vital for sustenance of re- an energy efficient operation of re- above, suitable to Indian re-
rolling industry and hence, the rolling mill furnaces. rolling industry, will enable this
requirement of setting up of new sector to reach the goals of energy
energy efficient rolling mills. Cost of In rolling mill proper, improvement in conservation, emissions and low cost
production in the rolling sector can drives, transmission system, rolls and production as the sector emerges as
be reduced by direct rolling of hot bearings, roll pass design, etc. are now one of the key drivers of growth of
continuous cast semis wherein the taking place in some of the mills. Use Indian Steel Industry.
electric induction furnace/electric of AC motors with variable frequency
arc furnace and continuous casting drives, reduction gear system (in
machine and rolling mill are located lieu of erstwhile pulley system),
Stainless Steels Sector
at one place. Direct rolling of hot improvement in roll pass design,
billets eliminates reheating furnaces improved cooling technologies, roller Stainless steel is essentially low
and reduced oil and coal consumption, bearings and fibre-bearing (in place of carbon steel containing 10% or more
thereby making them more efficient earlier used gun metal bushes), better chromium. Though there are over
and profitable by way of increase in selection of rolls, etc. are some of the 60 grades of stainless steel, they
yield and improvement in quality and technological developments which are broadly classified into 5 major
reduction of emission. The present needs to be adopted in the industry. categories viz. austenitic, ferritic,
trend world over is near net shape martensitic, precipitation hardening
casting and rolling i.e. to cast a and duplex stainless steels.
These measures are likely to not only
profile, set up by the steel plants, and improve the energy efficiency but
others are in the which is very near to also will help in improving yield by Properties of the final alloy are
the final product in size and process reducing wastes (furnace scale, mis- tailored by varying the amounts of
of acquisition of such mills. Micro- rolls and cutting losses). the constituent elements. Addition
mills of 300,000-400,000 tpa capacity of molybdenum, nickel, titanium, etc.
of long products are now being built enhances the corrosion resistance
Re-rolling industry is mainly
with such technologies by various and other properties of stainless steel.
operated by unskilled/semi-skilled
plant builders. Nitrogen improves tensile properties
personnel. While these personnel
like ductility. It also improves working
have gained experience, adequate
Selection of a suitable billet reheating properties.
training programmes need to be
furnace for the specific application organized for them specifically
is one of the most important aspect designed training modules need to In the electric arc furnace, which
in implementation of EET in rerolling be applied to increase awareness and produces the input material for the
industry. Presently, pusher type thereby adoption of energy efficient refining converter (also known as
furnaces using coal as fuel are technologies. Argon Oxygen Decarburisation) or
predominant in the industry. This the vacuum plant, the share of virgin
has resulted in very low thermal scrap varies, depending on steel grade
Energy audits for the sector should be
efficiency and energy wastage. It is to be produced. The molten metal is
made mandatory which will enable
expected that walking hearth type refined in a refining converter where
this sector to reap the benefits
furnaces using pulverized coal will carbon level is reduced by blowing
of available knowledge in energy
be implemented in future. Use of
conservation opportunities and
coal gasification units, in which coal
corresponding savings.
is gasified and used in reheating
furnaces, will ensure cleaner operation
There are no laboratories in most
of reheating furnaces. Renewable
re-rolling mills for testing of
energy like biomass may also be used
material. Those which have small
in future to improve techno-economic
laboratories are either ill-equipped
parameters. Use of low cost non-
or skilled personnel are unavailable
conventional fuels like biomass should
for operation of these laboratories.
therefore be promoted in the sector.
Wherever feasible, common testing
Scientifically designed reheating
facilities may be provided to the re-
furnaces (without over capability or
rolling sector for quality improvement.
under capability), automation and
control system and availability of
44 | Indian Secondary Steel Industry 39

oxygen and argon and final chemistry operating the following two schemes
of stainless steel is made. Stainless for promotion of R&D in Iron and
steel is then cast into continuous Steel Sector:
cast slabs or billets, which are then
rolled or forged to their final forms. i) R&D with Financial assistance
Stainless steel is also produced in from Steel Development Fund (SDF).
an electric induction furnace (IF)
where electric current is used to melt ii) R&D with Financial assistance
recycled stainless scrap and additions from Plan Fund.
of chromium, nickel and molybdenum Stainless steel Industry in India is
is made to reach desired chemistry. fully geared to meet the challenges Ministry of Steel is facilitating setting
In stainless steel production, in respect of newer applications. up of an innovative institutional
the range of charge materials is However, it is constrained by non- mechanism, namely, Steel Research
constantly growing. Depending on availability of nickel in India and & Technology Mission of India
the applications, stainless steel is its high price volatility, high price (SRTMI), to spearhead R&D activities
further processed in cold rolling mills of ferro-chrome, high tariff and of national importance through joint
where it is annealed and pickled, unreliable power supply, lack of collaborative research programmes
tension levelled, mirror polished, indigenous melting scrap, very low in steel sector on a large scale. The
slit or cut into sheets, depending on price of imported stainless steel SRTMI is proposed to be set up
requirement. from China, reluctance of industry with an initial corpus of Rs. 200
to use stainless steel due to high crore proposed to be contributed by
Per capita consumption of stainless initial cost etc. Awareness about life Ministry of Steel and by participating
steel in India is about 2 kg. as against cycle analysis will go a long way in steel companies. Rs. 100 crore will
world overage of approx. 7 kg. The promoting use of stainless steel in be given by Steel Development Fund
forecast of stainless steel production India. (SDF), Government of India and Rs.
in India is about 3.6 mtpy by 2016 100 crore will be contributed by
and 8 mtpy by 2025. Stainless steel
is finding many applications due to Research and private and government companies.
its superior properties and aesthetic Development Secondary steel sector also needs
looks. Major areas of application are
to increase its contribution towards
automotive, railway and transport
The first R&D Laboratory in the steel research and development, which
(ART), architecture, building and
sector in India was set up by Tata will be beneficial in the long run for
construction (ABC), process industry,
Steel in 1936. Steel Authority of India sustenance.
consumer durables, etc. Stainless
Limited (SAIL) set up their R&D Centre
steel is shaped into sheets, plates,
in 1972 at Ranchi. R&D facilities Areas which need special attention for
bars, wire and tubing to be used in
in relatively new plants came into research and development are listed
cookware, cutlery, hardware, surgical
being in last couple of decades, but below:
instruments, appliances, industrial
such facilities are lacking in other
equipment.
plants, especially those in secondary i) Continuous/mechanised feeding of
sector. The steel companies in India scrap/DRI
invest considerably less on R&D ii) Briquetting of DRI fines
and actual investment even in large iii) Dephosphorisation of liquid steel
steel companies varies in the range iv) Preheating of scrap
of 0.15-0.30% of their turnover v) Slag processing
as against 1-2% in leading overseas vi) Energy efficient reheating
steel companies. furnaces/induction heating in re-
rolling mills
Ministry of Steel (MOS) is encouraging viii) Hot charging of billets to re-
Research and Development activities rolling mills
both in public and private steel
sectors. At present Ministry of Steel is

Energy
As per the 2001 Energy Conservation Every sector in secondary steel
Use of regenerative burners for
Act of Govt. of India, Govt. of India production is unique and offers
reheating furnaces saves fuel by about
has the right to instruct the industry opportunities for energy conservation
0.1 GJ/ton of steel. Similarly, up to 0.5
to implement energy conservation in unique ways. For example in
GJ/ton of steel energy can be saved
measures. Designated consumers sponge iron, maximum energy saving
by use of hot charging of billets in
may perform energy conservation is possible from waste heat recovery
billet reheating furnace of rerolling
activities, achieve specified levels from kiln operations. Combustion
mills.
of energy consideration and trade air preheating or raw materials
Energy Savings (ES) certificates preheating may be one way of using
commercially. This is the basis of PAT this energy. Electric power generation
Scheme (Perform, Achieve and Trade), is another way to utilise the energy.
modified by Govt. of India in 2012, Similarly energy efficiency in electric
22% of energy saving under PAT arc furnace operation may be brought
scheme is expected to come from Iron through scrap preheating, and
& Steel Industry. Maximum energy automation and controls.
conservation potential exists in iron
making.
Environment
DRI, sourced from sponge iron plants,
elements, oil & grease, etc. In absence of continuous cast billets, direct
serve as a metallic input for secondary
of suitable control measures for input rolling of continuous cast billets, etc.
steelmaking units based on EAF & IF.
scrap quality, these contaminants also helps in reducing the energy
Environmental sustainability issues
may lead to emissions in form of poly consumption and reduce air pollution.
with respect to air pollution, solid
nuclear-aromatic hydrocarbons (PAH),
waste generation & quality of input
dioxin & furans, heavy metals, etc., As per CREP norms, 100% utilization
raw materials need to be looked into,
which are carcinogenic in nature. of Solid wastes generated from the
in order to reduce the overall impact
Proper quality control procedures need process is mandatory. One of the
on the environment.
to be implemented in order to reduce major challenges would be 100%
negative impacts on environment utilization of EAF/IF slag produced
Due to paucity of scrap, many electric from melting of scraps. from secondary steelmaking.
furnace based units use DRI/HBI as
a substitute of steel scrap, which
Rolling as a process in secondary To reduce the overall environmental
consequently increases the energy
steelmaking consumes a significant impact and curtail CO2 emission,
consumption during the melting
quantum of energy during re-heating Life Cycle Assessment (LCA) needs
operation, thereby also increasing the
and rolling operations. Various energy to be carried out at least quarterly.
overall CO2 emission.
efficient technologies like High- LCA helps in inventorisation of
efficiency recuperators, Regenerative material inputs & environmental
Scrap which is mainly sourced from burner system, employment of low- emissions and evaluation of possible
Ship breaking along with other NOx burner, Walking hearth/beam impacts associated with the inputs
sources such as cycle industry, sewing furnace, Oxy-fuel combustion system, & emissions. This in turn assists
machines, SSI engineering and other etc., may be adopted to optimize in identifying the lacunae in an
SSI units making steel based products, energy consumption & cut air operation and highlights opportunities
serves as the primary input to IF & one emissions. Process variations like use for process improvements &
of the inputs to EAF. The scrap may of coal-based producer gas, pulverized technological upgradation.
contain contaminants like hazardous coal, biomass gas as fuel; hot charging
chemicals, paints, radioactive

41
Life Cycle Assessment
Climate change and sustainable use
of natural resources are the main
challenges for society at large and LCA can assist in:
steel sector in particular. This puts
them at the top of the political identifying opportunities to improve the environmental
environmental agenda as well. aspects of products at various points in their life cycle
decision-making in respect of strategic planning, priority
LCA is a tool to assist with the setting, product or process design or redesign
quantification and evaluation of comparing alternative systems for waste management
environmental burdens and impacts selection of relevant indicators of environmental performance
associated with product systems marketing by way of environmental claim or eco-labelling
and activities, from the extraction of
raw materials in the earth to end-
of-life and waste disposal. The tool LCA, based on sound methodology
is increasingly used by industries, and transparent reporting, is an
governments, and environmental important tool to assist policy-
groups to assist with decision-making making.
for environment-related strategies
and materials selection.
47
43
V. Challenges of the
Secondary Steel Sector
49
V. Challenges of the Secondary
Steel Sector
The Indian Steel industry has been the prices in the domestic market
experiencing stress in the recent still remain high. The raw material
months. On one side, the dumping prices are significantly high, unlike in
from China has increased and, on other countries such as Japan, where
the other, domestic industry has the government and the end-use
been rendered uncompetitive due industries together decide the raw
to high input cost, freight and port material prices.
handling charges, multiple levies and
high interest rates. Globally, iron ore
and coal prices have come down;
Raw-material security
Trade-related issues
Quality products of steel
Financing Challenges
Market Development & End use transformaon

These challenges are listed in detail a. Coal: c. Natural gas issues:
below:
The secondary steel producers like The contribution of gas-based plants
i. Raw Material sponge iron manufacturers did not in production of DRI has come down
take part in the recent bidding process drastically. In 2010, it was 26.2%
India is deficient in coking coal. A as they were not eligible. At the same which has come down to 17.1% in
significant percentage of Indian steel time Coal India Limited has fallen 2014. The present availability is 1.14
production is carried out using blast short of its production target last mmscmd while the total requirement
furnaces, with coking coal used as a year. Moreover, the bulk of their coal for the DRI industry is 7.64 mmscmd.
reducing agent. India has the fourth- produce has catered to the power The imported LNG is too costly to
largest proven coal reserves in the sector. As a result there is both a afford for the steel producers in India,
world, but these are low quality and shortage and uncertainty on the especially for the secondary sector.
83% of the total reserve is non-coking availability of coal as well as on price.
coal. Over the past several years, d. Security of raw material:
the domestic supply of coking coal b. Iron ore issues:
has lagged behind robust domestic Similarly the key ingredients for
demand. As a result, India imports Inadequate supply along with supply production of stainless steel include
a large quantity of coking coal, security of this key raw material is Ferro chrome, Ferro Nickel, Pure
particularly from Australia. Coking potentially jeopardising the prospects Nickel, Charge Chrome, Ferro Moly
coal constitutes around 34% of of the sponge iron units, as India etc., Pure Nickel, Ferro Nickel, and
total coal imports. India imported 35 continues to import iron ore despite Ferro Molybdenum. These are
million tonnes of coking coal in FY12. having the worlds 5th largest iron not available in India in required
Demand for coking coal is only going ore deposits. Iron ore production quantities or are not available at
to increase as new steel capacity has fallen from 218 MT in 2010 to all. They are mostly imported for the
comes online in the next few years, 125 MT in 2014-15. In the notified production of stainless steel. The
with Indias coking coal requirement Mineral Auction Rules, 2015, iron main concern of the secondary steel
expected to reach 90 million tonnes based industry like sponge iron/pig producers is to ensure availability of
by FY20. Going forward, access to iron is ineligible to participate in the the raw materials to retain its global
coking coal is expected to have a auction of captive iron ore mines. competitive advantage.
huge impact on the margins of steel Small sponge iron units with less than
manufacturers. The Indian coke 1 MT capacity cannot participate in
industry is dominated by integrated the auction and will continue to be
steel players (ISP), as these facilities dependent on the merchant miners,
operate captive coke capacities. The which most times are inadequate.
ISPs produce around 40% of total
coke in India annually. Secondary steel
producers (SSP), which require around
10 million tonnes of coking coal per
annum, rely mostly on imported coke
as they do not possess captive coking
coal facilities.
Another important challenge in

terms of raw material is relating to
the iron ore. There is an urgent need
to expedite the auction of the raw
material under the Amended MMDR
Act, 2015 to increase and ensure
the sufficient availability of the raw
material to the Indian steel industry.
51
45
ii. Trade Issues
India has operational FTAs with Among these countries, China, Japan& offered under these agreements, India
ASEAN region and Korea since 2010 Korea may be considered as major has lowered import duties on stainless
and with Japan since 2011. Now stainless steel producers (In fact China steel flat products.
India is a partner country for the alone accounts for 50% of the global
Regional Comprehensive Economic production of stainless steel as per The applicable current status is as
Partnership (RCEP ASEAN 10 figures released by the ISSF in 2013). given below:
countries + 6 other partner countries As a part of the tariff concessions
namely China, Korea, Japan, Australia,
New Zealand & India).
FTA partner MFN duty Preferential duty

ASEAN 7.5% NIL Duty
Japan 7.5% 0.8%
Korea 7.5% 1.88%
In another two years, duties applicable Although there has been a lowering
to imports of stainless steel flat of duties on raw materials as a part
products from Korea and Japan would of the ongoing FTAs, the same has not
come down to NIL. As against this the yielded any benefit for the domestic
effective basic customs duty on steel secondary steel industry because the
products is 12.5% for Flat and 10% bulk of the raw material procurement
for long products. is from outside the RCEP region.
a. Surging Imports:
India imported more than 10 million
tonnes (MT) of steel in 2014-15, more
than 75% of which came from China,
Korea and Japan. Imports have further 9
8.14
surged by 57% in the first quarter of 8
7
the current fiscal year. This is posing
6 5.4
Import (MT)
a major threat for domestic secondary 5

4.9
4.57
4.2
steel producers as capacities are 4
3
remaining underutilized, declining
2
prices, declining net sales realizations 1
and erosion of profitability. The 0
2010-11 2011-12 2012-13 2013-14 2014-15
sponge iron producers are being
affected by the high volumes of
import of scrap which is evident in the
following graph:
53
47
b. FTAs to the detriment of (being the feed material) at market over-weight. FICCI would suggest
price. However, the units are being here for the establishment of motion
Domestic Steel Production: asked to pay duty on 110% of the weighbridge both at the start and end
cost of production as per section 4A destinations; where the investment
While countries like Japan and Korea of Central Excise Act, thus causing would be supported by industry.
have substantially increased their a lot of problems and unnecessary
steel exports to India (they have litigation, whereas, the whole exercise
surplus capacity) availing of the near is revenue neutral as both of the units
zero customs duty on steel products are registered under Central Excise b. Currently the railways are using the
that they enjoy under the existing and availing CENVAT credit. concept of CC+8+2 for loading the
Free Trade Agreements (CEPA), goods in the wagons. This restricts the
countries like China are using the
e. Credit on certain loading capacity to 68 MT in wagon.
ASEAN FTA to increase their exports Thus, with cooking coal being having
to India after circumventing the categories of iron & steel
lighter calorific value as compared
existing regulatory mechanism. Under scrap:
to thermal coal, cannot be loaded
the ASEAN FTA, the raw materials to its full capacity in a railway
have to be necessarily imported The Iron Steel Scrap which is
wagon; therefore most of the steel
from either within the RCEP region generated from non-excisable units
manufacturers importing cooking
or outside the region. It has been such as cycle industry, sewing
coal are paying dead freight to the
amply proved that within the ASEAN machines, SSI engineering, and other
extent of 2-3mt. Also, it is necessary
country it would not be possible to SSI units making steel based products,
to augment the fleet of BOST and BRN
deliver a 35% value addition in order and units located in tax free zone are
wagon which are the primary wagon
to qualify for preferential duty by a excise duty paid. On the other hand,
for steel movement; along with the
simple transformation from Hot Rolled the procurement of scrap through
deployment of specialized wagons
to Cold rolled products. However, imports, CENVAT Credit is available
for transportation of long rails, wide
it has been increasingly found that on the basis of Countervailing Duty
plates and HR/CR coils.
countries like Malaysia are certifying (CVD) paid. The indigenous steel
a 35% value addition and claiming melting scrap procured by kabaries
preferential duties for exports to India from small manufacturing unit
under the India ASEAN FTA. is available without any excise
documents. Therefore, no such Excise c. The facility of ICD (inland container
document can be submitted to the depot) is available at only 26 ports,
c. Import of Scrap: Excise Authority. In view of the above, therefore, the industries where
the Induction Melting Furnace units such facilities are not available are
In order to meet the demand for are not able to get CENVAT Credit on compelled to obtain the scrap from
domestic scrap, Indian importers steel products made out of this type the nearest ports/ICDs, located outside
rely on imported ferrous and non- of scrap. the boundary of their cluster which
ferrous metal scrap. However, there is not only time consuming but also
are various hurdles placed in imports not economically viable due to high
of metal scrap like CENVAT credit, iii. Transport and logistic charges, duties and taxes.
Therefore, necessary action should
pre-shipment inspection certification, Logistics be taken by the Government in order
higher logistic cost and cartelization
of foreign shipping lines and their to open/ establish more ICD ports in
a. The various in motion weighbridge unrepresented areas.
counterpart, problems of transactional
of Indian railways are not being
value faced at customs, problems
properly maintained and calibrated
due to FTAs, no disposal policy by
regularly. They show variation in
AERB, form 9 and reporting to state
weights when the same rakes is made
pollution control board.
to run on them at different speeds.
This has led to most steel producers
d. Section 4A of valuation not utilizing full capacity of the
Rule 2000 Rule 8, 9 & 10: wagon in fear of being penalized for
The Induction Furnace units sell the

final product Ingot to Rolling mills
54
48 | Indian
IndianSecondary
SecondarySteel
SteelIndustry
Industry
iv. Quality Order furnaces which is virtually impossible
to be adopted by even small fraction
d. Lack of centralized testing
of existing Induction furnace units. cum training centres:
Worldwide, countries are taking There is no adequate laboratory
strong measures to ensure that sub- b. Wire Steel Industry: approved by BIS for testing ferrous
standard products do not enter their and other materials as per the BIS
markets for general consumption. The production of wire rods has standard and specification, in order
Countries resort to regulatory reduced from 1.82 MT in 2002-03 to to improve the quality of the product
measures by introducing mandatory 1.10MT in 2013-14. The total installed and also help the consumers to know
standards maintained for various capacity of the domestic steel wire the products that they are procuring.
reasons, including health, safety, industry is approximately 3 MT per In order to obtain the test report of
environmental protection, etc. annum, whereas, for the last five years sample from already existing labs is
domestic steel producers supply of very time consuming.
The demand for steel products in India wire rods in the market is only 1 MT
has been increasing over the last per annum. There is no option to the
decade in sectors like architecture, domestic steel wire industry but to
construction, automobiles, railways, import wire rods to keep their mills
transportation, nuclear projects, operating and there is no opportunity/
consumer durables, and other space for growth for the domestic
industrial applications, etc. These steel wire industry. Incorporation of
industrial applications demand Steel Wire Rods under compulsory
steel of very high quality as per the BIS certification would lead to serious
prescribed technical standards. The difficulties for imports, as all imported
strategic nature of these applications wire rods would have to bear the
make it imperative to ensure that mandatory BIS certification. This
quality is not compromised in any way would aggravate the shortage of wire
since questions of national interest rods and would push many units of
and public health are involved. the domestic steel wire Industry to the
verge of closure.
Also, it is worth noting that for end
user applications like cutlery, utensils, c. Quality and Product
kitchenware, medical equipment etc.;
which largely uses stainless steel; the Development:
adherence to quality standards is very
important as such applications are Quality order notified by BIS for
used by Indian households on a daily steel products has to simultaneously
basis. Therefore, it is necessary to have address the key issue of Quality and
stricter quality control standards for Product development for the Indian
such products used as well. secondary steel producers, otherwise
it remains a trade barrier even within
a. BIS certification for the domestic sector.
induction furnace:
BIS has listed 16 products under the

BIS certification. Out of these 16
products, the two products, IS1875 &
IS7283 are applicable to the induction
furnace. By this notification, most of
the induction furnaces and integrated
rolling mills will be wiped out as
these two IS standards can only be
maintained for steels made through
LRF/VD technology or may be ARC
55
49
a tonne while the Freight rate for Also, the recent increase in electricity
v. Operational Issues Mumbai-Bangkok is USD 5 per charges announced by various states
tonne (approximately Rs 400 a specifically for steel industry is having
Every 1 tonne of steel produced tonne). Moreover, the high power a detrimental impact on the secondary
requires the transportation of 4 tariff for industries reduces the steel producers.
tonnes of material, implying that cost competitiveness of Indian steel
close to 200 million tonnes of steel makers. Poor cost competitiveness
production by FY20 would require the does not offer a level playing field
transportation of 800 million tonnes for the domestic secondary steel
of material. However, an unorganized producers in global markets or even
and fragmented road network; rake at domestic markets due to surge of
movement delays, congestion and cheap imports.
insufficient line capacity of the
railways; frequent outages and high-
voltage fluctuations in power supply b. Process of Obtaining
are some of the key logistical issues Government Clearances:
that plague the industry.
In the last few years it has been found
Lack of adequate investment in rail difficult for any steel producer to start
network is constraining the growth green field project or even brown field
of mining and metals sector in the expansion as it involves various issues
country. Over the past 15 years, there ranging from cumbersome, lengthy
has only been a 3% growth in the and costly land acquisition to number
railway network. The railway network of government clearances from state
only has a 30% transportation market and central governments, which takes
share despite being a cheaper and an unduly long time thus escalating
faster mode of freight movement than costs. Until such clearances are
road. To help the Indian Railways gain streamlined and made time-bound,
a bigger share of the freight market, meeting the vision of 300 MT will
in 2005, the Indian Government remain extremely challenging.
offered licenses to private players
to start container operations in the c. Assured supply of electric
country. However, the rail container
power at reasonable tariff:
sector accounts for only about 1% of
the cargo-handling market.
The steel making through electric
arc furnace route is electric energy
a. High Freight and Power intensive. It is, therefore, imperative
Cost: to ensure regular power supply to the
steel companies at reasonable tariff.
In India, the transportation cost
and the power cost are very high
compared to other steel making
countries. The freight rate for
MumbaiDelhi route is Rs 3,500

manufactured out of Re-rollable Steel
vi. Policy Issues Materials obtained from Ship Breaking
e. Policies to improve per
capita consumption of steel:
Industries cannot comply with this
While several players have announced stipulation. The clause forces the Re-
their plans to make significant Though, India is the third largest
rollers of TMT bars not to buy the re-
capacity additions in the coming steel making country in the world,
rollable steel materials obtained from
years, not many of the projects the per capita usage at around 60
Ship Breaking. As a result, more than
envisaged have taken off due to issues kg is below world average of 220
2.75 Million Tonnes of re-rollable steel
related to land acquisitions, mining kg. Further, the per capita usage of
materials is required to be converted
leases, forest clearances and, relief special steel like alloy steel which is
into Melting Scrap which can very
and rehabilitation (R&R) policies. used in critical application is very low.
well be used in manufacturing TMT
The demand needs to be encouraged
bar directly from recycling plates. This
by undertaking huge investment
a. Discriminatory purchase has actually made a huge disparity in
projects and also making the domestic
policy of the government: market. The Re-rollable Steel being
steel cost competitive. One support
used by Re-rollers of TMT bars have
here could be similar to policy Melt
There is a need to create level playing to be heated up to Temperature i.e.
& Manufacture adopted by the US;
field whereby the identical quality 900-1000 Degree Centigrade to
under which for all the government
finished products manufactured make it plasticize. This process is
projects, the steel products
by primary and secondary steel same whether ship recycled plates
requirement is met through domestic
producers are treated equally by the or ingot/ billet made from recycled
production by melting and production.
government procurement agencies. melting scrap, is used as raw material.
The imported products or parts for
Presently, most of the government There cannot be any remarkable
assemblage are not used. The policy
procurement institutions procure steel changes to Metallurgy of steel by that
can act as an incentive for domestic
products, such as TMT bars and mild temperature. This is also a National
production.
steel sections, only from the primary loss as the same item is produced with
producers though same BIS norms an energy input of 600-700 precious
are applied on similar products from electric units in converting melting
Secondary steel producers. scrape to ingot and makes the same
TMT from that let apart the other
process costs.
b. Lack of laws and
legislations to encourage d. Requirement of
domestic metals recycling environmental clearances:
industry:
At present, the economically viable
In India there are no laws that govern projects for production of Billet/Ingot
the recycling industry. There are no are 100,000 tpa and above. The small
guidelines to promote metal recycling scale projects of 30,000 tpa are not
in an organised and safe manner. considered economically viable. It is
difficult for these small projects to get
c. Re-rollable Steel Materials the environmental clearances. Thus, it
obtained from Ship Breaking is recommended that the project limit
should be increased to 100,000 tpa.
(Clause 1.6 of IS 1786-
2008):
According to the clause, the

metallurgical history of the inputs
should be fully documented. TMT bars
57
51
vii. Financial Issues b. Flexible structuring of
existing long term project
The sales realization of the Indian loans to infrastructure and
steel industry largely depends on core industries:
global pricing, while cost structures
in various countries are different. Reserve Bank of India (RBI) vide
Although costs such as taxes, raw circular dated December 15, 2014 has
material price movements and provided for Flexible Restructuring
logistics costs are external to any of Existing Long Term Project Loans
company, other cost elements that to infrastructure and core industries
depend on a companys decision such including steel with a minimum
as location, procurement and supply financial exposure of Rs 500-crore.
are very much under its control. While this has benefitted the
Effective cost management would be integrated steel plants, the secondary
very critical to ensure healthy rate steel sector is not covered by this
of returns for new projects and the financial ceiling. Most of the steel
viability of greenfield projects in a companies in the secondary steel
capital-intensive industry such as sector are having financial exposure
steel. of less than Rs 500-crore. Therefore,
it is recommended that the minimum
limit of the financial exposure should
a. High cost of capital:
be brought down to Rs 200-crore.
Poor demand growth for steel and
cheaper imports to India are putting
pressure on prices offered by the
domestic producers. The prices
are approaching closer to the cost
of production which is adversely
impacting the profitability of the
domestic secondary iron and steel
makers. Given the high interest
cost which is prevalent in India,
profitability is not even enough to
cover interest costs and debt servicing
is negatively being affected. The banks
are reluctant for further exposure to
the steel sector; especially for the
secondary steel producers. This is
resulting into huge shortage of funds
and delay in investments. In turn, it
will affect the domestic producers
appetite for future investments and
would be a big dent for the Indian
steel industry and to the Make-in-
India programme of the Government
of India.

VI. Recommendations
Way Forward
59
VI. Recommendations Way
Forward
1
Sufficient allocation of coal and coal mines
Raw Material
Process of price discovery of iron ore to be made transparent and scientific
2
Free Trade Agreements with Japan and South Korea to be revisited
Import restrictions (anti-dumping) to safeguard the domestic players
Curtail import of sub-standard steel
Trade Well-defined Product-Specific Rules (PSR) must be incorporated into the RCEP agreement
Special package to be introduced under "Make in India" for Alloy steel to make it export
competitive
Imported steel to be quality compliant as per the BIS
3
Various government clearances for doing business to be made efficient and time bound
Operations
Land acquisition is still a significant challenge for the industry
4
Along with development of roadways, focus should be given on strengthening coastal/water
Transport &
ways for domestic transport, which is relatively cheaper
Logistics
Railways to treat the steel industry as a priority sector consider setting up dedicated tracks
5
Alternative credit arrangements like bonds should be facilitated and encouraged
Financing
Concessions on interest rates for the steel sector

The recommendations are mentioned plants. Present pricing mechanism b. The alloy steel companies cater to
in detail below: for iron ore is faulty. There is no the domestic market predominantly.
standard mechanism of fixing the They should be encouraged to
iron ore prices. There is immediate produce complex alloy steel grades
i. Raw Material need to evolve a mechanism for and export the same under Make in
the fixation of iron ore prices. To India campaign. It can be attained
a. Sufficient number of captive coal ease the availability of iron ore by offering some special incentive for
mines of high grades of coal should from domestic sources and reducing exports of alloy steel for limited time
be earmarked to meet the present dependence on the imports, the till they establish their relations in the
requirements of sponge iron industry. required environment clearances foreign market.
During the next round of competitive and other clearances should be
bidding of coal mines, sponge iron expedited.. c. There is a need to curtail the import
sector should not be clubbed with
of sub-standard steel from countries
cement and CPP sectors. Coal mines c. Gas based sponge iron plants like China, by mis-declaring the
of high grades should be exclusively which were set up to utilize goods and claiming them to be out
reserved for iron and steel sector as natural gas should be made available of the purview of BIS certification,
coal is a process necessity unlike the on urgent basis.
other sectors. Under the proposed which the local manufacturers are
mechanism of auction of coal subject to. Also, for the stainless
linkages, all sponge iron producing ii. Trade steel, the raw materials (Hot rolled
units should be covered (post 2007). stainless steel flat products) have to
CIL should earmark a certain quantity a. Imports restriction is a need of be necessarily imported. It has been
of coal to this sector and should not the hour. It can be attained through amply proved that within the ASEAN
focus on profitability only, as non- imposing safeguard or anti-dumping country it would not be possible to
coking coal is key raw material (and duties on steel products which are deliver a 35% Value addition in order
not fuel unlike the other sectors). worst hit. Also, efforts are required to qualify for preferential duty by a
Also, there should be a special to remove the steel industry from simple transformation from Hot Rolled
dispensation for the smaller units Free Trade Agreements with countries to Cold rolled products. However,
as they are unlikely to compete like Japan and South Korea and it has been increasingly found that
successfully in the proposed the forthcoming RCEP agreement. countries like Malaysia are certifying
linkage auctioning mechanism . The India has not been benefitted from a 35% value addition and claiming
gap between the auction quantity the FTAs. The signing of the FTAs preferential duties for exports to India
and actual requirement should not has only lowered protection levels under the India ASEAN FTA which
be left to the state government or on finished goods without giving would not be possible to achieve
commercial miners as there will any corresponding benefits in Raw through this route. It is therefore
be considerable time gap and high Material. Therefore, urgent review suggested that value addition as a
prices involved. Therefore, unfulfilled of all existing FTAs must be taken criteria for determining Rules of origin
requirement should be supplemented up so that a level playing field is should not be applied to stainless
by CIL sources. Railways should created. NO tariff concessions should steel goods. It is suggested that ONLY
accords same priority in allocation of be granted to China on Steel and Product Specific Rules be followed
racks to the raw material as is given Stainless steel flat products under under the RCEP negotiations.
to steel. RCEP negotiations. Provisions of
the Rules of Origin must be followed
d. The opinion about the import
b. In the Auction Rules, 2015 not strictly to avoid mis-declaration
duty is divided among different
only the sponge iron/pig iron and circumvention of duties. Well
should be included but also the defined Product Specific Rules (PSR)
requirement of sinter plant/ pellet must be incorporated into the RCEP
plant should be considered. PSUs agreement.
like NMDC, OMC, etc. should have
special dispensation to meet the
requirements of the small sponge
iron/pig iron/sinter plants/pellet
61
55
associations. It should either remain producers. recognized as Infrastructure which
unchanged or brought down to zero. legitimately, they are. The Rangarajan
f. Government of India should frame Committee has also recommended for
e. The government should kindly laws and legislation that assist, the same.
consider deemed duty paid on steel encourage and incentivize domestic
Metals Recycling Industry. The metals
scrap and allow for availing CENVAT
credit which was available to the recycling industry should be given an v. Finance
industry status.
industry till 1987.
a. Cost of capital is a major concern
for highly capital intensive business
f. In order to safeguard public health, iv. Transport and like steel. The alternative credit
safety and environment and to ensure
the safety of the stainless steel user
logistics arrangements like bonds should be
facilitated and encouraged, especially
it is imperative that compliance with for the secondary producers.
the quality order standards as notified a. Better connectivity of steel plants
to raw material reserves, ports and
by BIS be made mandatory for imports b. Maximum limit of financial
steel markets is critical for the steel
of stainless steel flat products. exposure for availing the RBIs facility
industrys competitive strength. Along
of Flexible Restructuring of Existing
with development of roadways, focus
Long-Term Loan Policy should be
iii. Operations should be given on strengthening
brought down to Rs 200 crore from
coastal/water ways for domestic
the existing Rs 500 crore limit.
transport, which is relatively cheaper.
a. The government should limit the
Dedicated railway lines should be
capacity of furnace (Induction and c. With the already high exposure to
established for steel plants. Such
Electric Arc Furnace, submerged Arc steel sector for the banks, they are
investment projects will also in turn,
Furnace) to 100,000TPA and above for generally reluctant to give further
accelerate the demand for steel.
the environmental clearances. loans to the sector. The problem is
all the more acute for the secondary
b. Inland Container Depot: The facility
b. Ministry of steel should take and small players. It is therefore,
of ICD (inland container depot) is recommended that a steel finance
initiatives in connection with
installation of centralized testing available at only 26 ports, therefore, corporation may be created that can
centers approved by BIS. the industries where such facilities act as central funding agency for the
are not available are compelled to sector.
obtain the scrap from the nearest
c. Ministry of steel should also take
ports/ICDs, located outside the
initiatives with the help of BIS to
promote and educate the buyer boundary of their cluster which is
for acceptance of ISI mark product not only time consuming but also
without specifying any route. not economically viable due to high
logistic charges, duties and taxes.
Therefore, necessary action should
d. Government clearances are major
hurdles in the growth of steel be taken by the Government in order
sector. By smoothening and bringing to open/ establish more ICD ports in
transparency in processes for land unrepresented areas.
acquisition and other government
clearances required for the setting of c. Slurry Pipeline: One environmental
factories, the project implementation friendly and convenient way to
will be faster. Moreover, the transport iron ore from the mines
clearances should be given in a time to the plants elsewhere is through
bound manner. slurry pipelines. However, in India
we do not incentivize this method of
e. The governments, both States transportation, which we need to, if
and the Central, should treat similar we are to save on fuel and already
quality of Steel in an equal manner overburdened Indian Railways. The
while making purchase decisions; slurry pipelines IN India Need to be
and adherence should not be given to
the total production capacity of the
62
56 | Indian
IndianSecondary
SecondarySteel
SteelIndustry
Industry
VII. Sector Outlook
63
VII. Sector Outlook
The targeted capacity of 300 MT for Looking at the current scenario of It is in this context and background
Indian steel industry by 2025, leads 45-47 MT production by secondary that the secondary steel sector needs
to a target of production of 240MT producers through the above to be promoted, encouraged and
pa (assuming a capacity utilisation mentioned production results and incentivized in the country to give a
of 80%). Considering the targeted taking into consideration that owing boost to the manufacturing sector
contribution of secondary steel to the financial and long-term to lead the real achievement of the
sector and expansion planned by the sustainability challenges, few of the flagship programme of Government of
integrated steel producers, we can secondary producers will shut out, India of Make-in-India, alongside the
safely assume 70%-30% contribution thereby causing a further vacuum in achievement of the target of 300MT
tilted in favour of the integrated the total production to the tune of of steel production.
steel producers. Therefore, the 10 MT pa. Thus, the expansion to be
production target for the secondary planned has to ensure doubling the
steel sector by 2025 is around 70-72 production to 70 MT by 2025.
MT pa, comprising of arc furnace and
induction furnace along with alloy
and stainless steel producers under
the category of secondary producers.
Fig 3.1 Current & Forecasted Production of Indian Steel Industry
180 168
160
140
120
Production (MT)
100
80 72
60 47 43
40
20
0
2014-15 2025-26
Secondary Producers Integrated Producers

Established in 1927, FICCI is the largest and oldest apex business organisation in India. Its history is
closely interwoven with Indias struggle for independence, its industrialization, and its emergence
as one of the most rapidly growing global economies.
A non-government, not-for-profit organisation, FICCI is the voice of Indias business and industry.
From influencing policy to encouraging debate, engaging with policy makers and civil society, FICCI
articulates the views and concerns of industry. It serves its members from the Indian private and
public corporate sectors and multinational companies, drawing its strength from diverse regional
chambers of commerce and industry across states, reaching out to over 2,50,000 companies.
FICCI provides a platform for networking and consensus building within and across sectors and is
the first port of call for Indian industry, policy makers and the international business community.
Mines and Metals Division at FICCI
The Mines and Metals Division at FICCI endeavors to support the mining and metals industries (both
steel and non-ferrous metals) in India as well as for the global players looking to foray into the In-
dian Markets. It is strongly committed to provide a platform for industry players to raise their voices
over a number of points covering investments, operations, issues & future roadmaps to the decision
making authorities. The Key Contacts for the division are.
65
Notes

Notes
67
Notes

69
Apran Gupta
Deputy Director & Head, Mines and Metals
Tel: +91 11 23487564
Mob: + 91 9810572331
Email: arpan.gupta@ficci.com
Charu Gupta
Research Associate, Mines and Metals
Tel: +91 11 23487456
Mob: +91 9582101139
Email: charu.gupta@ficci.com

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1

2 | Indian Secondary Steel Industry

Federation of Indian Chambers of and associations in the secondary

FICCI would like to convey its sincere

Top 5 crude steel producers (2014)

However, taking into perspective the 2004-05 to 88.12 million tonnes in

8 | Indian Secondary Steel Industry

Steel is a critical input to the key

Steel consumption pattern in India

Source: India Steel Asia Insight: Still in the Doldrums,

Indian secondary steel industry is poised to play an important

10 | Indian Secondary Steel Industry

Raw Material Constraints

Dumping from other countries such as China

Interventions required rekindling the Industry

The new Government at the center Key steps should be taken to

Process of price discovery of iron ore to be made transparent Medium Term

Import restrictions (anti-dumping) to safeguard the domestic Short Term

Curtail import of sub-standard steel Short Term

Well defined Product Specific Rules (PSR) must be Short Term

Imported steel to be quality compliant as per the BIS Short Term

Special package to be introduced under Make in India for Medium Term

Land acquisition is still a significant challenge for the Medium Term

Railways to treat steel industry as a Long Term

Setting up of inland container depots Medium Term

Financing Alternative credit arrangements like bonds Medium Term

Concessions on interest rates for steel sector Short Term

Establishment of Steel Finance Corporation Medium Term

12 | Indian Secondary Steel Industry

Triple its current Equal industry

India contributes approximately 5% to 12.50% Others

the global crude steel production. 19.00%

i. Leading Steel Producing countries

16 | Indian Secondary Steel Industry

Crude steel production by producer (MT)

Nippon Steel 28.4

Nippon Steel 28.8

private sector production increased 20

Production in mt % share of Pvt Sector

The production landscape is largely India is predicted to triple its

20 | Indian Secondary Steel Industry

2004-05 (MT) 2013-14 (MT) 2014-15 (MT) INCREASE (MT)

Capacity 48.00 100 110 62.00

Source: Industry, 2014

22 | Indian Secondary Steel Industry

Scrap bay Taken to melt shop,

Steel is tapped out

Year Capacity (MT) Production (MT) Capacity utilisation (%)

Source: SFAI, 2015

The above table explains the The contribution of EAF sector in

2. Electric Induction Furnace:

24 | Indian Secondary Steel Industry

The electrical coil is placed around

Fig. 1.4 Operation of Induction Furnace

Induction Furnace Eddy currents,

Eddy currents cause

increased from 25.8 MT and 19.82 MT 30

Capacity & Production (MT)

Fig 1.5: Capacity and Production of Electric Induction Furnace

3. Direct Reduced Iron:

A. MIDREX direct reduction

26 | Indian Secondary Steel Industry

Table 1.4: Production of DRI Source: SIMA, 2015

Table 1.4 shows the production of As mentioned earlier, with a targeted

Market Development & End use transformaon