SURGE IN INDIAN STEEL INDUSTRY :
CHALLENGES OF INPUT SECURITY
Dr Subir Bhattacharya, Senior Manager
U. K. Vishwakarma, DGM
A. P. Singh DGM I/c
&
K. K. Mehrotra, Director (Engineering)
MECON Limited, Ranchi 834002, India
International Conference on INDIAN METAL INDUSTRY – SHAPING THE NEXT
DECADE, organized by The Indian Institute of Metals, Pragati Maidan, New Delhi
PREAMBLE
Indian steel industry has entered the high growth phase…& Ministry of
Steel, Government of India, is foreseeing a huge steel market of ahead
(by 2020)
Here, the thought process begins on some crucial issues
What about the supply side?....is the expected supply of steel
products going to match the demand by 2020? If it is so,
A very important issue arises…..
Input security !! ….. How secured India is with respect to availability of
steel-makers’ inputs. Without this, where will we land up?….
What needs to be done to bring the success for Indian steel industry
in future years to come ?
…………….
This presentation deals with these queries
Conclusions
This presentation, through its enquiry, would be reaching the
following conclusions………
By 2020, a demand of around 180 Mt seems attainable……..
The supply side also indicates a positive response as per the proposed
brown field and green field projects
Demand – supply analysis of steel industry’s inputs suggests scarcity
on account of almost all the major steel industry inputs…..
Indian steel industry does not seem to have much input security
..iron ore, coking coal, power, natural gas, water, land, human
capital, engineering & consultancy etc. etc……..
……………. Unless meticulous Strategic Planning is done,
meeting even a conservative domestic demand, by 2020, will be
a distant reality……
WE ARE AT THE ROCK BOTTOM OF THE SEA……..
Low
High
Consolidation
High consolidation
Economic growth
Developing
world
Globalization & high competition
High
Developed
world
Low
Product Demand
Changing dynamics of global steel market
Low
High
Competition
Economic growth caused shifting of steel demand from developed world
to the developing world
High globalization and competition leading to high consolidation in the
global steel market
THE DEMAND SIDE
Pattern of finished steel consumption in India 1980-81 to 2009-10
70
59.9
Demand (Mt)
60
50
30.6
GR
A
C
40
30
0
:1
.1%
14.9
2002-03
: 8.3%
CAGR
9.6
20
10
1993-94
%
CAGR : 3.7
1981-82
-1
0
09
20
07
-0
8
-0
6
20
05
20
20
03
-0
4
-0
2
01
00
20
-2
0
99
19
97
-9
8
-9
6
19
95
19
93
-9
4
-9
2
19
91
19
89
-9
0
-8
8
19
87
19
85
-8
6
-8
4
19
83
19
19
81
-8
2
0
There is a dip in 1993-94 and
significant up-turn since 2002-03 in the Pattern of steel consumption in
India
Forecasts on finished steel demand in India
………..”India, a Tiger awaken”……….
250
200.2
Demand (Mt)
200
156.5
150
100
50
76.7 84.5
48.7
0
200607
Realistic
201112
201920
Optimistic
Demand projections were made using econometric modelling technique. Separate
demand functions were fitted to historical data for all major categories of steel
products. The best fitted models (selected on the basis of R2 and t-test of the
parameters) were used for making projections. Category-wise demands were added to
obtain the total demand.
Producer-wise crude steel capacity in India…by 2015-16
this is likely to increase further by 2019-20…
A . M a in p ro d uc e rs
22.9
S A IL
R IN L
6.3
13
14.5
Ta t a S t e e l
Es s a r S t e e l
Is p a t Ind us t rie s
Producers
JS W
JS PL
B PS L
B hus ha n S t e e ls
S A IL- P OS C O
S A IL- KO B E
S A IL J a g d is hp ur
NM DC
B . S ma lle r EA F s / IF s
4.2
11
10.45
2.8
6
4.5
0.5
0.5
3
35.35
135
To t a l
Crude steel capacity (Mtpa)
International Forecasters say…
India emerging as a big player in global steel market
Global community also says, ….”yes”…
India, the tiger awaken….
X
O
B
S
W
NE
A World Steel
Dynamics report
says, India is
one of the
best country
for building
new steel plant
Buoyant supply & demand side ahead….
India to play the Key role in
Steel Market dynamics
(
)
Now the problem begins……Achieving the high target
production generates huge demand for steel-makers’ inputs and
the issue of input security crops up…??!!!……
Mining Infrastructure
Iron ore
Coking coal
Limestone
Dolomite etc.
External Infrastructure
Power, natural gas
Water
Railways
Roads
Ports
Human capital
Engineering &
Consultancy etc.
A demand – supply analysis of the inputs…
needed…….
is
19000
350
18500
300
18000
250
17500
200
17000
.
150
16500
100
16000
15500
50
15000
0
Iron ore requirement (‘000t)
in “line”
Iron ore reserve (Mt) in ” bars”
Iron ore poses the first challenge…the situation
is not very healthy……
2050 / 55/
60….
?
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 201910 11
12 13
14 15 16
17 18
19 20
Fast exploration required….with host of new
techniques…otherwise;……..
1000
500
New mines to
be acquired
1500
Iron ore
Requirement
(BF grade) ,
if finished steel demand in
India grows by 8.4% p a &
SAIL retains 35% share in All
India crude steel
production
Re
ser
ve
2019-20
Mt
2000
2029-30
SAIL may have deficits in iron ore by 2029-30 unless it acquires new
mines……or, enters into long-term contracts with mining companies
for acquisition of mines in India & abroad……..
3000
Demand 223.4 Mt
IL
A
S
F
O
Supply 150.8 Mt
E
S
A
C
Reserv
2500
e
THE
20
09
-1
0
20
11
-1
2
20
13
-1
4
20
15
-1
6
20
17
-1
8
20
19
-2
0
20
21
-2
2
20
23
-2
4
20
25
-2
6
20
27
-2
8
20
29
-3
0
20
31
-3
2
20
33
-3
4
0
-500
Requirement of iron ore and depletion of captive reserve….?
Coal requirement is quite high to achieve target steel production….
Proved reserve of coking coal is 16.5
Bn tonnes, though of poor quality
Coking coal requirement
(Mt)
120
97
100
78.6
80
60
44.1
35
40
20
5.6
8.7
3.5
Steel
Plants are
now
importing
80-90% of
their Coking
Coal
9.8
0
2011-12
Pig iron
2019-20
BF-BOF Route
EAF/IF Route
Total
Demand for non-coking coal in steel industry : 25Mt by 2011-12, 50Mt by
20190-20… Non-coking coal is abundant (proven reserve 79 Bn
tonnes)…. But availability of the desired quality for production of DRI is
restricted…….we are still importing Non-coking coal
Natural gas demand will soar due to increase in production of
steel products from EAF /IF route…..&
sponge iron industry….
18
16
(MMSCMD)
Natural gas requirement
20
14
12
Meeting the natural
gas requirement will
be a
tough Job……
10
8
6
17.3
7.86
6
4
2
0
2007-08
2011-12
2019-20
Present supply : 111 MMSCMD; it is likely to increase to 192.4
MMSCMD by 2011-12 & then, at All India level, there will be a
deficit of 88 MMSCMD….Extensive exploration efforts needed…
Alarming situation in case of water infrastructure……
250
200
(‘000 m3 / day)
Water demand
215
150
100
100
50
0
2011-12
2019-20
Present water resource potential : 1123 Bn cubic meter
National Perspective Plan envisage increase in utilizable
water by about 200 Billion cubic meter
Challenges are many….Land…..Human
capital…… Engineering & Consultancy…..etc.
etc……
Availability
Availability
of
of Land
Human Capital
Land acquisition
Even the best
Metallurgical
Engineer is now
Engineering
in IT sector
& Consultancy
Services
Heavily
constrained
Meticulous Strategic Planning is needed………
• Gradual reduction in iron ore exports
Iron
Ore
• Exploration to be accorded highest priority
with necessary incentive & removal of various
legal and porcedural constraints
• Adoption of latest technology for beneficiation
• Priority in allocation of mines to the existing
steel plants without captive mines
• Indigenously available coal need to be blended
Coal
with imported coal to make these more suitable
for metallurgical operations
• Acquiring mines overseas
• Indian steel-makers may enter into long-term
contracts with coal majors
• Alternative technologies like coal tar injection,
PCI into BF to reduce dependence on imports
Meticulous Strategic Planning required…….
Natural
gas
Power
• More efforts on exploration of natural
gas Strengthening & expanding the
distribution network
• More deepening of the power sector
reform
• Capacity built up by promoting captive
power plants, through incentives / tax
breaks and by removing various porcedural
constraints
• Small producers may be encouraged to
pool their efforts as consortium for
such activities
Meticulous Strategic Planning required…….
Human
capital
Engineering
&
consultany
• Increase in salary
• Extensive man-hunt through visits
to the standard engineering institutes
• Better training
• More private initiatives
• Collaboration with foreign
consultancy
organizations
• More R&D effort
Strategic Planning is required, in an integrated
Framework combining various ministries……
Ministry of
Mining
Ministry of
Power
Ministry of
Petroleum &
Natural gas
Ministry of Steel
Strategic
Planning Team
Ministry of
Railways
Ministry of
Water
resources
Ministry of Shipping,
Surface transport &
Highways
.....thought process to bring success for Indian steel industry is on…. as
………..for every day there is a tomorrow
& tomorrow never dies……
..…so is the thought process…….