STEEL SECTOR:

AN ANALYSIS
INTRODUCTION

STEEL SECTOR IN BRIEF

STEEL
It is an alloy consisting of
 Iron
 Carbon content (0.02% - 2.04%)
 Manganese and Tungsten

The major processes of production:

 Bessemer Process
 Basic Oxygen Steelmaking
TYPES OF STEEL
 Early Modern Steel
 Blistersteel
 Crucible steel
 Contemporary Steel
 Carbon Steel
 High Strength Low Alloy Steel
 Low Alloy Steel
 Tool Steel
 TRIP Steel
HISTORY

Source: IISI

Stages in Global Production of Steel

MAJOR PRODUCTS
 Semi-Finished Product like Slabs,blooms etc
 Ordinary Steel Products like tubes,pipes etc
 Hot rolled coils (HRC)
 Cold rolled coils (CRC)
 Galvanised Sheets
 Speciality steel products like stainless steel
pipes & foils etc
ROUTES OF STEEL PRODUCTION
Primary/Integrated Secondary/Mini Mills

Types of raw Iron ores and scrap Steel Scrap only

material used

Mostly Used in Developing Developed countries

countries

Companies in SAIL,Tata Steel Essar,Ispat

India
MAJOR CONSUMERS OF STEEL
MAJOR PLAYERS
INDIAN COMPARISON
Tata SAIL JSW Essar
Steel Steel
BASED ON OWNERSHIP
PUBLIC PRIVATE
 VISAKHAPATNAM STEEL  TATA-CORUS
PLANT  ESSAR
 NMDC  ISPAT
 MSTC LIMITED  JSW STEEL LIMITED
 FERRO SCRAP NIGAM LIMITED  MUKAND LIMITED
 MOIL  SESA GOA
 KIOCL
 BIRD GROUP OF COMPANIES
 SPONGE IRON INDIA LIMITED
 MECON LIMITED
 HSCL
 BHARAT REFRACTORIES
LIMITED
GLOBAL COMPANIES
 Arcelor - Mittal  120 mtpa

 Nippon Steel  32.7 mtpa

 JFE  32 mtpa
 POSCO  30.1 mtpa
 Bao steel- Bayi Group  25.6 mtpa
 Tata - Corus  24.7 mtpa
 US Steel  21.2 mtpa
VALUATION METRICS
M&As
 Arcelor - Mittal
 32.2bn$ deal QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.

 Mittal pips Severstal

 Tata-Corus
 11.3bn$ deal QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.

 Tatas pip CSN

TRENDS

INDIAN SCENARIO
PRODUCTION IN INDIA
50
45
Quantity (in million tonnes)

40
35
30
25
20
15
10
5
0
2003-04 2004-05 2005-06 2006-07
YEAR

Source: Joint Plant Committee

IMPORT AND EXPORT OF STEEL
5

4
Quantity (in million tonnes)

3
IMPORTS
2
EXPORTS
1

0
2003-04 2004-05 2005-06 2006-07
YEAR
INDIAN TRENDS
 Average growth rate for past 15 years 7%
pa
 Improved rank to 7th place
 Projected growth rate 7.3% pa
 Expected to be world's 2nd largest steel
producer by 2016
Race for the capacity
 16% CAGR over 5 years
 Steam still left in the super cycle
 Steel companies in India to outperform
 Joined at the hip (to the globe)
Indian production growth slowed by capacity

QuickTime™ and a
TIFF (LZ W) decompressor
are needed to see this picture.
INDUSTRIAL REGULATIONS

 Pollution Control
 ESI
 RPF
 Central Excise Duty
 Custom Duty
 Auxiliary Duty
 Sales Tax
 Laws under Factory Act
INDUSTRIAL REGULATION
SUBSIDIES LICENSE
 Interest Subsidy  Trade License
 Capital Investment  Health License
Subsidies  Fire License
 Stamp Duty
Exemptions
 Electricity
Subsidies.
SWOT FOR INDIAN STEEL
SECTOR
Strength Weakness
 Unscientific mining
 Availability of iron ore
 Low productivity
and coke  Coking coal import
 Low wage labor dependence
availability  Low R&D investment
 High cost of debt
 Quality manpower
 Inadequate infrastructure
 Mature production
base
SWOT contd..
Opportunities Threats
 Unexplored rural  China becoming net
markets exporter
 Growing domestic
 Dumping by
demand
competitors
 Exports
 Protectionism from
 Consolidation
the West
STRATEGIES FOR GROWTH
On the demand side
 Extensive promotional campaigns
 Strengthening of rural delivery chain
 Encouraging infrastructure development
On the supply side

 Creation of additional capacity

 Removal of bottlenecks in the availability
of raw material
 Encourage R&D
 Invest to create professional technical
man power
TRENDS

GLOBAL SCENARIO
GLOBAL TRENDS
 The global consumption of steel has increased
at a pace of 7%

 Chinese steel industry is booming

 World’s big producers are all pursuing large-

scale investment projects in India
CHINESE STEEL INDUSTRY
•Heavy influence on global steel industry in past 5 yrs
•Emerged as a leading producer and consumer
CHINESE STEEL INDUSTRY
(contd..)
 Growing infrastructure and huge Govt
subsidies have fuelled this success
Challenges
 Overcapacity is a challenge industry
needs to tackle for future growth
 Non availability of iron ore reserves is a
disadvantage
RECYCLING
Reliance on steel scrap in production

 Developed countries: 50-70%

 Emerging countries: 15-20%
RECENT
HAPPENINGS &
FORECASTS
Foreign Direct Investments
 MoU signed between POSCO and Govt.
of Orissa

 Mittal has set up 2 steel plants in

Jharkhand and Orissa with a capacity of
24 MT
FUTURE ROADMAPS

 The fact that steel is cent percent

recyclable should be used to our
advantage

 Ore policy in India requires pressing

reform
A Presentation put together by:
 Ashwin Maniyar
 Palak Sood
 Pallavi Patil
 Rahul Lodha
 Rahul Kumar
 Swathi Velisetty