Steel Industry in India

Steel Industry In India

India was the world's third-largest steel producer in 2017. The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India's manufacturing output.

Current situation of the steel industry in India

Currently, the Indian steel industry has a steel capacity of 122 million tonnes (2015-16) and the world is producing 1630 million tonnes of steel. India has an aspiration to take this capacity to 300 million tonnes by 2030. Today the steel industry contributes approximately 2% to our country’s GDP and employs 5 lakh people directly and about 20 lakh people indirectly.

India has quickly touched the number three spot in terms of steel production, overthrowing many industrialized developed nations such as the US, Russia and South Korea.

in terms of capacities of crude steel installed. China is a powerhouse for infrastructure spending and things happen at a very different scale there and a steel capacity of over 800 million tonnes is a testimony of that.

In spite of being the third largest steel producing country in the world, our per capita steel consumption is nothing to be proud of, we are a developing nation having high resemblance with China but our per capita steel consumption is one-eighth that of China at 63 kg per person, see the image to understand per capita steel consumption across geographies.

National steel Policy 2017 has pledged a target of achieving 160 kg of steel per person from current levels by increasing production capacities to 300 million tonnes.

Application of steel:

Steel finds applications in various sectors from infrastructure, automotive, electrical appliances to mechanical equipment. Generally, the same pattern is seen in various countries around steel consumption and when we read India’s per capita steel consumption as 63k kg’s, we can imagine very little infrastructure spending (roads, bridges, highways etc) happening in our country of 1.25 billion inhabitants.

There are essentially 3 steps to steelmaking-

1. Ironmaking Process
2. Steelmaking Process
3. Continuous Casting Process

Factors Affecting the Profitability of a Steelmaker

Steelmaking requires iron ore, metallurgical coke which is also called coking coal and limestone as input ingredients, out of these three essential raw materials India is self-sustaining on iron ore and limestone whereas about 85% of coking coal requirement of the domestic steel industry is being met through imports. Typically, it takes 1.6 tonnes of iron ore and around .450 tonnes of coke to produce a tonne of pig iron or hot metal, the raw iron that comes out of a blast furnace.

Chinese Hammer: Raw material price volatility along with dampening demand for Indian steel because of Chinese imports has taken our companies for one great ride of losses and has caused huge NPA’s problems for our state-run banks.

Even after imposition of various tariffs by Government of India on cheaper Chinese imports, Indian companies have to still battle the raw material price volatility across the globe, these price swings of essential raw material like coking coal act like a hammer on the bottom line by further squeezing it down.

Robust industrialization and increase in the population have led to the demand for housing, properties, and other commercial developments. On the same note, the government is striving to improve infrastructures like railway, road, and communication. Due to this rise in demand for steel for all these developments, India’s Steel Industry is not going down anytime soon.