Analysis of Indian Steel Industry & forecasting it’s Future (Demo)
Authors:
Aarush Kumar 1, Harshita Verma 2
B.Tech CSE Student, Galgotias University, Greater Noida, Uttar Pradesh, India.
B.Tech Mechanical Student, GLA University, Mathura, Uttar Pradesh, India.
Abstract
Indian Steel Development Association (ISDA) was formed in 1989 with the explicit objective of diversifying and expanding the domestic market of stainless steel. At that time, more than 90% of stainless used in the country was kitchenware but over the last two decades, stainless steel has undergone tremendous changes in perception and its increasingly growing end use application in areas such as architecture building & construction, automotive transport, process and engineering. The world production of stainless steel in 2012 is estimated at 35.4 million tonne. Asia has strongly emerged as both the world’s largest stainless steel producer and user. Among countries, China dominates the world production of stainless steel accounting for almost 45% share. However, India has outpaced global growth rates consistently over last 10 years with its stainless steel melt production in 2012 reaching almost 3 million tonnes to propel the country as 4 th largest producer after China, Europe and Japan. The potential growth of stainless steel in India is enormous, considering the fact that the per capita consumption at 1.9kg is still much lower than world average of almost 4.85kg. The per capita consumption of stainless steel has strong co-relation with per capita GDP and India is expected to more than double its per capita income over next 10 years. In addition increased urbanization, high demographic dividends and government’s manufacturing policy seeking to enhance the share of manufacturing in GDP to 25% within a decade augurs well for the future growth of the stainless steel in India. This research focuses on the growth story of Indian Stainless Steel industry and its market sector world and further explores on the strategy to increase the consumption domestically considering the fact that world is going through recession cycles resulting in excessive capacity especially China posing a major challenge to Indian Stainless industry.
1. Introduction
It was 100 years ago that stainless steels was first discovered, patented and produced. Over last few decades stainless steel has emerged as the fastest growing metallic material and in recent years its growth rate has even surpassed plastics as shown in Fig. 1. In sustainability, stainless steel is unmatched compared to other materials and can play an important role in sustainable development of Indian infrastructure. Such growth has only been possible due to inherent qualities of stainless steel such as its resistance against corrosion, high strength to weight ratio and its elegant appearance. Taking into account the recyclability, reuse, long life, low maintenance and product safety, the minimal emissions from the production and use of stainless steels, when compared to any other alternative material stainless steel is a preferred choice. Also continuous development in process technology and evolution of new grades of stainless for appropriate applications along with improvement in the people’s living standard propelled this impressive growth.
2. Global Stainless Steel Scenario & Share of India
The world Crude Stainless Steel production in 2012 [1] is estimated at 35.4 million tons. The world production has grown at a CAGR of 5.2% pa over the last 10 years. Asia has strongly emerged as both the world’s largest stainless steel producer and user. Although China dominates the production of stainless steel accounting for almost 45% share of world production, India has been a part of this impressive growth with its production reaching 3 million tons in 2012 making it the 4 th largest producer after China, Europe and Japan. India has outpaced the global growth rates consistently over last several years. The average growth in India has recorded a CAGR of almost 11.5 % over the last 10 years which is more than a double the world average growth during the period. The past world production of stainless steel and share of India is exhibited in the Fig. 2
The impact of global melt down on stainless steel consumption in the country has also been felt to some extent. While globally the impact of economic meltdown had been very severe, Indian economy by and large did not face harsh consequences of the global impact. Indian economy is mostly dependant on the overall strength of domestic demand and domestic nature of financing of investment with exposure of exports to less than 20% of GDP. This helped it to tide over the year 2008-09 with lesser impact.
2.1 Production Status of Stainless Steel in India
At present, there are about 26 producers of stainless steel in India with EAF/IF melting and AOD/VOD facilities. These units contribute about 90 percent of the country‘s estimated 2.95 million tons melt production of Stainless Steel in 2012. The overall melt capacity of these producers is estimated at 5.8 million tons. Besides these manufacturers, there are about 20 Induction Furnace (IF) units in the country with estimated capacity of about 0.4 million ton which melt stainless steel scrap and produce pencil ingots without any refining facilities. India has registered a compound annual growth rate (CAGR) of 7.2% pa in production of melt Stainless Steel in the last 7 years [2]. The overall production of Stainless Steel mill products is now estimated at 2.68 million tons. Fig. 3 Indicates the past growth rates in mill product production.
2.2 Consumption Status Of Stainless Steel In India
The major end using segments that impact the growth of Stainless steel significantly includes construction, consumer durables, transportation, Engineering goods and process machinery. The current and past macro level indicators of these end use sectors are tabulated below in Table 1. Most of the sectors have performed below par over the last 2 years thus affecting the overall growth of stainless steel which normally grows much higher than the sectoral growth due to higher multiplier.
2.2.1 Consumption By End Use Sector – A Stainless Steel Grade Indicator
The main Stainless Steel consuming segments can be classified into 6 to 7 broad categories e.g.Metal products, Process and Engineering industries products; Electro mechanical and electronics;Construction, Transportation and others including medical, blades, coins etc. Out of these Metal products, Process Industries and Engineering goods etc are relatively mature applications areas whereas areas like construction and automobile are still evolving in the country and have great future potential for growth.
The automotive, railway and transport (ART) sector is now emerging as the fastest consumption segment of Stainless steel in the country. This segment has grown the fastest 32.39% over the last 8 years propelled by large requirements from railway wagon, coaches and automotive exhausts. The Indian automobile industry has grown rapidly in the past with India emerging as a major hub for small cars. All major international players are having their presence in India. Auto exhausts has been the major consumption segment for Stainless steel in this sector followed by disk brakes,cylinder head gaskets and exhaust manifold gaskets.
One of the new emerging segments for stainless steel consumption is the architecture, building and construction (ABC) sector. The ABC sector is mostly driven by growth in Indian real estate sector consisting of residential real estate, commercial real estate, retail space, entertainment space,hospitality projects and SEZs. All high quality construction projects like retail outlets, shopping malls, multiplexes, Airports, Rail Metros, IT parks, Commercial Complexes, Hotels, Fast food restaurants, High Quality Residential accommodations, Hi tech town ships and showrooms etc in the country today are finding big outlet for stainless steel in different ways and product forms such as Railings, Roofings, Barriers, signages, claddings and building facades.
3. Challenges
While the country‘s future growth prospects appear to be quite bright there are certain key issues which are hindering its realisation of true potential. Some of the main issues confronting the industry are non availability of nickel in the country and its high price volatility, growing raw material prices, lack of indigenous melting scrap, increasing competition and shrinking margins in India, Cheap imports from China etc are acting as threat to growth of Indian industry. Also the current capacity utilization of both flat and long product producers is quite low at present primarily due to large domestic capacity creation leading to surplus situation for coming few years. A large section of the market in India is price sensitive and the lack of awareness on life cycle costing results in resistance to use Stainless Steel due to high initial cost.
4. Conclusion
From being a very insignificant player in the world market about a decade ago to become world fourth largest producer the Indian market has demonstrated a steady growth in the past years. Maintaining this positive trend will require a lot of marketing and development activities. The efforts should be made to ensure that the use of Stainless Steel in infrastructure should be made mandatory by planning commission and specified in the standards. There is a need to create awareness among designers, specification writers about the benefits of stainless steel to reduce the level of ignorance about the material and thus, create new application areas using the life cycle cost benefits of specifying material. In the pursuit of the objective of increasing and diversifying end use of stainless steel in the country a collective effort by Indian Stainless Steel Development Association, its member companies, and downstream facilities will be helpful to realize the true potential of growth of stainless steel in the country.
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