Steel Industry Analysis is an important aspect of steel industries around the globe because the needs and the technologies are subject to rapid change with the passage of time. Steel Industry Analysis is required for maintaining the competitive advantage of a country over the other. The demand for steel is always on the upside because of constant increased want for steel in the following sectors :-
· Construction sector
· Infrastructure sector
· Automobile sector
Steel Industry Analysis is mostly concerned about making the steel more user friendly such as making it light weighted, etc. Another important aspect associated with the Steel Industry Analysis is the constant concern for environment. The analysis helps the industry experts to evaluate the aspects for reduction of pollution related with the production of steel.
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The invention of the recycling process of steel is the outcome of Steel Industry Analysis. This analysis also helps the experts in identifying the market share of each country in the production of steel. It shows that after the end of World War 2, the position of USA in the world arena slid slowly but steadily from the largest single producer of steel. Its place was taken over by China after the 1980s. Steel Industry Analysis is generally performed by consultancy firms where the professionals and experts in this field perform all sorts of physical and economic analysis on different forms of steel and alloys. Some of the aspects on which the Steel Industry Analysis is done involve :-
· Consumption pattern of steel in the domestic as well as foreign market
· Demand structure of steel in different countries
· Existence of market for steel for the intermediary goods
· Existence of market for steel for the final goods
· Cost of production of steel by each firm on a country wise stratification
· Prospect of trade in the steel industry all over the world
· Comparative analysis of the price variation of steel between different countries
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World Steel Industry
World Steel Industries
World Class Steel Makers
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World Steel Industry : Steel, the recycled material is one of the top products in the manufacturing sector of the world.
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The Asian countries have their respective dominance in the production of the steel all over the world. India being one among the fastest growing economies of the world has been considered as one of the potential global steel hub internationally. Over the years, particularly after the adoption of the liberalization policies all over the world, the World steel industry is growing very fast. Steel Industry is a booming industry in the whole world. The increasing demand for it was mainly generated by the development projects that has been going on along the world, especially the infrastructural works and real estate projects that has been on the boom around the developing countries. Steel Industry was till recently dominated by the United Sates of America but this scenario is changing with a rapid pace with the Indian steel companies on an acquisition spree. In the last one year, the world has seen two big M&A deals to take place :-
· The Mittal Steel, listed in Holland, has acquired the world's largest steel company called Arcelor Steel to become the world's largest producer of Steel named Arcelor-Mittal.
· Tata Steel of India or TISCO (as listed in BSE) has acquired the world's fifth largest steel company, Corus, with the highest ever stock price.
It has been observed that Steel Industry has grown tremendously in the last one and a half decade with a strong financial condition. The increasing needs of steel by the developing countries for its infrastructural projects has pushed the companies in this industry near their operative capacity. The most significant growth that can be seen in the Steel Industry has been observed during the period 1960 to 1974 when the consumption of steel around the whole world doubled. Between these years, the rate at which the Steel Industry grew has been recorded to be 5.5 %. This roaring market saw a phase of deceleration from the year 1975 which continued till 1982. After this period, the continuous fall slowed down and again started its upward movement from the early 1990s. Steel Industry is becoming more and more competitive with every passing day. During the period 1960s to late 1980s, the steel market used to be dominated by OECD (Organization for Economic Cooperation and Development) countries. But with the fast emergence of developing countries like China, India and South Korea in this sector has led to slipping market share of OECD countries. The balance of trade line is also tilting towards these countries. The main demand creators for Steel Industry are Automobile industry, Construction Industry, Infrastructure Industry, Oil and Gas Industry, and Container Industry.
New innovations are also taking place in Steel Industry for cost minimization and at the same time production maximization. Some of the cutting edge technologies that are being implemented in this industry are thin-slab casting, making of steel through the use of electric furnace, vacuum degassing, etc. The Steel Industry has enough potential to grow at a much accelerated pace in the coming future due to the continuity of the developmental projects around the world. This industry is at present working near its productive capacity which needs to be increased with increasing demand. For more information on the subject please browse through the following links :-World steel industry and Crude Steel Production The following table gives a clear picture upon the major crude steel producers in the world as of the year 2004.
Country
Crude Steel Production (mtpa)
China
272.5
Japan
112.7
United State
98.9
Russia
65.6
South Korea
47.5
F.R.Germany
46.4
Ukraine
38.7
Brazil
32.9
India
32.6
Italy
28.4
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In the year 2004, the global steel production has made a record level by crossing the 1000 million tones. Among the top producers in the steel production, China ranked 1 in the world. Production of steel in the 25 European Union countries was at 16.3 mmt in January 2005. Production in Italy increased by 11.5 per cent in comparison to the same month in 2004. Italy produced 2.5 mmt of crude steel in January 2005. Austria produced 646,000 metric tones. In Russia it increased by 4.0 per cent to reach at 5.5 mmt in January. In case of the North America region particularly in Mexico it was 1.5 mmt of crude steel in January 2005, up by 8.0 per cent compared to the same month in 2004. Production in the United States was 8.3 mmt. Brazil had produced 2.6 mmt of crude steel in January 2005. In South America region it was 3.7 mmt for January 2005. According to rating made by the " World Steel Dynamics", Indian HR Products are categorized in the Tier II category quality of products. Both EU and Japan have ranked the top. USA and South Korea comes as like India.
Steel
Last Updated: July 2009
Sector structure/Market size
The Indian steel industry entered into a new development stage from 2005–06, resulting in India becoming the 5th largest producer of steel globally. Producing about 53 million tonnes (MT) of steel a year, today India accounts for a little over 7 per cent of the world's total production.
India is the only country worldover to post a positive overall growth in crude steel production at 1.01 per cent for the January-March period of 2009. The recovery in steel production has been aided by the improved sales performance of steel companies. The steel sector grew by 5.3 per cent in May 2009.
According to a report from Barclays Capital, China and India are going to provide the impetus for steel demand for the next few years.
Production
Steel production grew at 1.2 per cent in the January-March quarter of 2008-09 over the same period last year. The fourth quarter saw most of the large steel companies such as SAIL, Tata Steel, Essar and JSW operating at full capacity.
The National Steel Policy has a target for taking steel production up to 110 MT by 2019–20. Nonetheless, with the current rate of ongoing greenfield and brownfield projects, the Ministry of Steel has projected India's steel capacity is expected to touch 124.06 MT by 2011–12. In fact, based on the status of Memoranda of Understanding (MOUs) signed by the private producers with the various state governments, India's steel capacity is likely to be 293 MT by 2020.
In the first 10 months of 2008-09, India's steel production went up to 46.8 MT up by 1.1 per cent from last year.
Consumption
India accounts for around 5 per cent of the global steel consumption. Almost 70 per cent of the total steel used is for kitchenware. However, its use in railway coaches, wagons, airports, hotels and retail stores is growing immensely. Steel consumption grew at 5.2 per cent during the first quarter of 2009-10 as against 3.8 per cent in the January-March quarter last year.
A Credit Suisse Group study states that India's steel consumption will continue to grow by 16 per cent annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion.
The World Steel Association has forecast a 2 per cent growth in the country's steel consumption in 2009, making it the only major economy to post an increase in a year that will see global consumption of the metal fall by around 15 per cent. India is expected to consume 53.5 MT of steel in 2009.
The scope for raising the total consumption of steel is huge, given that per capita steel consumption is only 35 kg – compared to 150 kg across the world and 250 kg in China.
Steel players like JSW Steel and Essar Steel are increasing their focus on opening up more retail outlets pan India with growth in domestic demand. JSW Steel currently has 50 such steel retail outlets called JSW Shoppe and is targetting to increase it to 200 by March 2010. They expect at least 10-15 per cent of their total production to be sold by their retail outlets.
Essar Steel also has 150 such retail outlets of which 65 are hypermarts across India with the latest one being opened in Orissa.
Exports
Out of India’s annual iron ore production of more than 200 MT, about 50 per cent is exported.
Iron ore exports increased 17 per cent to 12.6 MT in February 2009 from 10.8 MT in the same month a year ago, owing to a moderate revival in demand from Chinese steel producers, as per the latest data compiled by a group of top Indian mining firms.
Earlier, according to a study, with the rise in demand for steel in China, India’s iron ore exports went up by 38 per cent to reach 13.6 MT in December 2008 against 9.8 MT in December 2007. Around 50-60 per cent of India’s iron ore is exported to China.
India’s exports during April-December 2008 were 64.4 MT. The government has reduced export duty on iron ore lumps from 15 per cent to 5 per cent, which has given a further fillip to exports. Further, the reduction in railway freight has also benefitted the domestic iron ore miners.
Investments
A host of steel companies have lined up major investment proposals. Furthermore, with an expanding consumer market, the Indian steel industry is likely to receive huge domestic and foreign investments.
According to the Investment Commission of India investments of over US$ 30 billion in steel are in the pipeline over the next 5 years.
Arcelor-Mittal, the largest steel maker of the world, is planning to set up a captive port near Paradip in Orissa. The port will be used to serve two mega integrated steel plants of the company proposed in Orissa and Jharkhand.
Tata Steel has raised US$ 500 million by issuing 'global depository receipts' (GDRs) aiming at expansion of its Jamshedpur plant and overseas mining projects.
Japanese steel major, Kobe Steel, has decided set up a subsidiary in Kolkata to market its steel production machinery in India.
Steel companies have committed US$ 122.50 million for setting up sponge iron units in Koppal and Bellary in Karnataka.
SAIL will invest US$ 724.12 million to set up a 4-million tonne per annum steel mill at its Bhilai Steel Plant.
Government Initiative
Subsequent to the recent fall in international prices of commodities and to protect Indian producers, the Indian government has announced some changes in customs duty rates, which were effective from November 2008.
The government has removed full exemption of customs duty on some industrial and agricultural commodities. Iron and steel products like pig iron, spiegeleisen, semi-finished products, flat products and long products are now subject to a basic custom duty of 5 per cent ad valorem.
The Indian government plans to invest over US$ 350 billion in industries related to infrastructure and construction which will give a fillip to the steel sector.
Moreover, in the Union Budget 2009-10, the government has made a 23 per cent hike in allocation for highway development and US$ 1.034 billion increase in budgetary support to Railways which will further promote the steel industry.
Road ahead
While the demand for steel will continue to grow in traditional sectors such as infrastructure, construction, housing automotive, steel tubes and pipes, consumer durables, packaging, and ground transportation, specialised steel will be increasingly used in hi-tech engineering industries such as power generation, petrochemicals, fertilizers, etc. The new airports and railway metro projects will require a large amount of stainless steel.
According to an estimate, with the growing need for oil and gas transportation infrastructure, a US$ 118 billion opportunity is waiting to be tapped by steel manufacturers in the next five years. Indian steelmakers are set to make the most of booming global demand for steel pipes and tubes with the government withdrawing the 10 per cent duty on the exports of these products. According to a study by ICICI Direct, Indian steel companies are likely to get 19 per cent of the total global demand in the years to come.
Exchange rate used: 1 USD = 48.43 INR (as on June 2009)
Indian Steel industry has shown the second highest growth rate for steel production in Asia after China in 2006. With a GDP growth of around 8% in 2005-06, Indian economy as well as the industrial development got a boost and this helped to shape the increasing steel demand and production in India. The report "Opportunities in Indian Steel Industry” by RNCOS undertakes a detailed analysis of the forces that have shaped the Indian steel industry in order to predict the future trends and prospects.Industry PerformanceThis section gives a detailed analysis of steel industry in India. This section looks into the factors that have influenced the industry over a period of time, like steel production and raw materials, steel consumption, and export-import of steel products etc. The section also puts forth a comprehensive analysis on the fluctuating performance of the Indian steel industry.Key Players AnalyzedIn this section, business overview and financial facts of key players including, Steel Authority of India, Tata Iron & Steel Company Limited, Ispat Industries Limited, and Essar Steel Limited, are provided for better understanding of the competitive environment in the indsutry.Key Issues and Facts Analyzed - What will be the future demand and production capacity for steel industry? - What are the growth opportunities for the steel manufacturers? - What are the major driving factors for the steel industry? - What will be the major constraints for future growth of steel industry? - Who are the key competitors in the Indian steel industry?Key Findings - Indian steel industry is closely linked with domestic economic growth. - India housing and construction industry is likely to grow in India, which is one of the major steel consuming industries. - Growing Indian automobile industry, which depends on steel industry for parts manufacturing, will lead to a strong steel demand in future. - The high cost of electricity in India may hamper the steel industry’s production level. - Recent increase in production capacity and foreign investment in India is pushing the Indian steel production. - Demand is expected to rise in future with economic and industrial growth.Research Methodology UsedInformation SourcesThe information has been compiled from various authentic and reliable sources like books, newspapers, trade journals, and white papers, industry portals, government agencies, trade associations, monitoring industry news and developments, and access to more than 3000 paid databases.Analysis MethodMethods like historical trend analysis, linear regression analysis using software tools, judgmental forecasting, and cause and effect analysis have been used to prudently analyze the report.
STEEL INDUSTRY ANALYSIS
We have produced confidential client studies covering the main sectors of the steel industry in the major producing areas. These include:-
Stainless Steels
Tool Steels
Utilitarian Steels
Speciality Steels
Nickel Alloys
Micro-Alloyed Steels
Alloy Steels
General Steels
Duplex Steels
MEPS are able to offer a comprehensive range of consultancy services. The unique combination of steel demand forecasting, market analysis and the impact of technological change, is used extensively by our clients in the steel manufacturing and consuming sectors worldwide. We have prepared client studies on the following topics for different geographical areas:-
Crude Steel
Blast Furnace Iron
Iron Ore
Ferro Alloys
Direct Reduced Iron
Alloying Metals
Refractories
Clients engaged in the supply of raw materials, plant and equipment and support services require evaluations of the steel operations. Our studies have included strategic evaluation of:-
Manufacturing Costs
Manufacturing Processes
Product Substitution
Company Viability
New Technologies
The experience we have gained in all facets of the global steel industry allows us to see the "big picture" as it emerges in this volatile industrial sector. Our clients gain from the INDEPENDENT VIEWPOINT that we provide. We commence our research from a point high on the learning curve. Nevertheless, we can provide lateral thinking to the evaluation of our researched data - free from the constraints imposed in line management.
We have investigated the changes and developments in the following segments of manufacture.
Integrated Iron and Steelmaking
Scrap Based Electric Steelmaking
Secondary Metallurgy
Continuous Casting
Thin Slab Casting
In-line Strip Processing
Coating Technology
Government restricts import of more Steel Items
With a motive of preempting dumping process from the China, the government has come up with a measure of slapping the restrictions on more specific steel imports, which is more widely used across the automobile, construction and oil industries. Due to the shifting of the seamless tubes and pipes from the list of 'Free' to 'Restricted' items, now the user industries are required to obtain license from the government for importing the spatiality steel. Import curbs have already been placed on the hot rolled coils and the mother steel items apart from the 5% imposition of custom duty on the specified iron and steel products. As per the notification issued by the Directorate General of Foreign Trade, wood and wood products also come under the head of the 'Restricted' list. The government has brought seamless tubes and pipes under the heading Restricted' list. With these implications, the items now cannot be imported for any trading activities. The international financial meltdown has resulted into the changes in the fortunes of the local steel industry which has the capacity of more than 55 million tonnes. It has witnessed the declination of more than 30% in the demand generated. It has been found that because of the fall out of the export demand due to the available surpluses in the China after Olympics, the steel market has transited into the buyer's delight. The price structure at the global front has witnessed the high correction from $1250 tonnes to come down at $500 tonne, which has forced the steep erosion at the price in the domestic marketplace. With the erosion of demand, many steel leading producers like Ispat, Essar and JSW have seen a cut in the production for avoiding the situation of inventory piling up. They fear that the China, equipped with the capacity of more than 10 times larger than that of the India may start dumping its products in the Indian territory. The recent government imposition has received as a welcoming note and has given some sort of relief to the industry. Giving the positive response on the government imposition, the managing director of Jindal SAW, one of the India's largest SAW Pipes producer, MR. Indresh Batra siad that "Had the imports been allowed without restrictions, the Indian market would have been flooded with cheap Chinese products" The seamless tubes and pipes can now be imported by the actual users only after obtaining license from the government. Calling the government import restrictions of non use, Mr.H L Bhardwaj, secretary general of the Federation of Indian Industries, said that "The move is illogical because India’s import of pipes and tubes is negligible".With the transfer of items from the free import list to the restricted import list, the traders would be barred from importing of items and thus make imports more accessible to the local industry. Even when the government has taken up several measures for checking down imports of the cheaper steel, the industry is still hoping from the ministry to levy on custom duty of 10 % or more than of it,for protecting the sector. India's domestic companies are apprehending the dumping process by the companies from the China, Ukraine and Thailand.
Government restricts import of more Steel Items
With a motive of preempting dumping process from the China, the government has come up with a measure of slapping the restrictions on more specific steel imports, which is more widely used across the automobile, construction and oil industries. Due to the shifting of the seamless tubes and pipes from the list of 'Free' to 'Restricted' items, now the user industries are required to obtain license from the government for importing the spatiality steel. Import curbs have already been placed on the hot rolled coils and the mother steel items apart from the 5% imposition of custom duty on the specified iron and steel products. As per the notification issued by the Directorate General of Foreign Trade, wood and wood products also come under the head of the 'Restricted' list. The government has brought seamless tubes and pipes under the heading Restricted' list. With these implications, the items now cannot be imported for any trading activities. The international financial meltdown has resulted into the changes in the fortunes of the local steel industry which has the capacity of more than 55 million tonnes. It has witnessed the declination of more than 30% in the demand generated. It has been found that because of the fall out of the export demand due to the available surpluses in the China after Olympics, the steel market has transited into the buyer's delight. The price structure at the global front has witnessed the high correction from $1250 tonnes to come down at $500 tonne, which has forced the steep erosion at the price in the domestic marketplace. With the erosion of demand, many steel leading producers like Ispat, Essar and JSW have seen a cut in the production for avoiding the situation of inventory piling up. They fear that the China, equipped with the capacity of more than 10 times larger than that of the India may start dumping its products in the Indian territory. The recent government imposition has received as a welcoming note and has given some sort of relief to the industry. Giving the positive response on the government imposition, the managing director of Jindal SAW, one of the India's largest SAW Pipes producer, MR. Indresh Batra siad that "Had the imports been allowed without restrictions, the Indian market would have been flooded with cheap Chinese products" The seamless tubes and pipes can now be imported by the actual users only after obtaining license from the government. Calling the government import restrictions of non use, Mr.H L Bhardwaj, secretary general of the Federation of Indian Industries, said that "The move is illogical because India’s import of pipes and tubes is negligible".With the transfer of items from the free import list to the restricted import list, the traders would be barred from importing of items and thus make imports more accessible to the local industry. Even when the government has taken up several measures for checking down imports of the cheaper steel, the industry is still hoping from the ministry to levy on custom duty of 10 % or more than of it,for protecting the sector. India's domestic companies are apprehending the dumping process by the companies from the China, Ukraine and Thailand.
Government restricts import of more Steel Items
With a motive of preempting dumping process from the China, the government has come up with a measure of slapping the restrictions on more specific steel imports, which is more widely used across the automobile, construction and oil industries. Due to the shifting of the seamless tubes and pipes from the list of 'Free' to 'Restricted' items, now the user industries are required to obtain license from the government for importing the spatiality steel. Import curbs have already been placed on the hot rolled coils and the mother steel items apart from the 5% imposition of custom duty on the specified iron and steel products. As per the notification issued by the Directorate General of Foreign Trade, wood and wood products also come under the head of the 'Restricted' list. The government has brought seamless tubes and pipes under the heading Restricted' list. With these implications, the items now cannot be imported for any trading activities. The international financial meltdown has resulted into the changes in the fortunes of the local steel industry which has the capacity of more than 55 million tonnes. It has witnessed the declination of more than 30% in the demand generated. It has been found that because of the fall out of the export demand due to the available surpluses in the China after Olympics, the steel market has transited into the buyer's delight. The price structure at the global front has witnessed the high correction from $1250 tonnes to come down at $500 tonne, which has forced the steep erosion at the price in the domestic marketplace. With the erosion of demand, many steel leading producers like Ispat, Essar and JSW have seen a cut in the production for avoiding the situation of inventory piling up. They fear that the China, equipped with the capacity of more than 10 times larger than that of the India may start dumping its products in the Indian territory. The recent government imposition has received as a welcoming note and has given some sort of relief to the industry. Giving the positive response on the government imposition, the managing director of Jindal SAW, one of the India's largest SAW Pipes producer, MR. Indresh Batra siad that "Had the imports been allowed without restrictions, the Indian market would have been flooded with cheap Chinese products" The seamless tubes and pipes can now be imported by the actual users only after obtaining license from the government. Calling the government import restrictions of non use, Mr.H L Bhardwaj, secretary general of the Federation of Indian Industries, said that "The move is illogical because India’s import of pipes and tubes is negligible".With the transfer of items from the free import list to the restricted import list, the traders would be barred from importing of items and thus make imports more accessible to the local industry. Even when the government has taken up several measures for checking down imports of the cheaper steel, the industry is still hoping from the ministry to levy on custom duty of 10 % or more than of it,for protecting the sector. India's domestic companies are apprehending the dumping process by the companies from the China, Ukraine and Thailand.
AN OVERVIEW OF STEEL SECTOR
Global Scenario Domestic Scenario Production Demand - Availability Projection Steel Prices Imports of Iron & Steel Exports of Iron & Steel Levies on Iron & Steel Opportunities for growth of Iron and Steel in Private Sector
Global Scenario
In 2007 the World Crude Steel output reached 1343.5 million metric tons and showed a growth of 7.5% over the previous year. It is the fifth consecutive year that world crude steel production grew by more than 7%. (Source: IISI)
China remained the world’s largest Crude Steel producer in 2007 also (489.00 million metric tons) followed by Japan (112.47 million metric tons) and USA (97.20 million metric tons). India occupied the 5 th position (53.10 million metric tons) for the second consecutive year. (Source: IISI)
The International Iron & Steel Institute (IISI) in its forecast for 2008 has predicted that 2008 will be another strong year for the steel industry with apparent steel use rising from 1,202 million metric tonnes in 2007 to 1,282 million metric tonnes in 2008 i.e. by 6.7%. Further, the BRIC ( Brazil, Russia, India and China) countries will continue to lead the growth with an expected increase in production by over 11% compared to 2007.
Domestic Scenario
The Indian steel industry have entered into a new development stage from 2005-06, riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the 5 th largest producer of steel.
It has been estimated by certain major investment houses, such as Credit Suisse that, India’s steel consumption will continue to grow at nearly 16% rate annually, till 2012, fuelled by demand for construction projects worth US$ 1 trillion. The scope for raising the total consumption of steel is huge, given that per capita steel consumption is only 40 kg – compared to 150 kg across the world and 250 kg in China.
The National Steel Policy has envisaged steel production to reach 110 million tonnes by 2019-20. However, based on the assessment of the current ongoing projects, both in greenfield and brownfield, Ministry of Steel has projected that the steel capacity in the county is likely to be 124.06 million tonnes by 2011-12. Further, based on the status of MOUs signed by the private producers with the various State Governments, it is expected that India’s steel capacity would be nearly 293 million tonne by 2020.
Production
Steel industry was delicensed and decontrolled in 1991 & 1992 respectively.
Today, India is the 7th largest crude steel producer of steel in the world.
In 2007-08(Apri-June''07), production of Finished (Carbon) Steel was 12.088 million tonnes(Prov).
Production of Pig Iron in 2007-08(April-June'07) was 1.165 Million Tonnes (Prov).
The share of Main Producers (i.e SAIL, RINL and TSL) and secondary producers in the total production of Finished (Carbon) steel was 33% and 67% respectively during the period 2007-08 (April-June, 2007).
Last 4 year's production of pig iron and finished (carbon) steel is given below:
(in million tonnes)
Category
2003-04
2004-05
2005-06
2006-07 (Provisional)
2007-08 (April-June'07) (Prov.estimated)
Pig Iron
3.764
3.228
4.695
4.960
1.165
Finished Carbon Steel
36.957
40.055
44.544
49.391
12.088
(Source: Joint Plant Committee)
Demand - Availability Projection
Demand – Availability of iron and steel in the country is projected by Ministry of Steel annually.
Gaps in Availability are met mostly through imports.
Interface with consumers by way of a Steel Consumer Council exists, which is conducted on regular basis.
Interface helps in redressing availability problems, complaints related to quality.
Steel Prices
Price regulation of iron & steel was abolished on 16.1.1992. Since then steel prices are determined by the interplay of market forces.
There has been an up-trend in the domestic steel prices since 2006-07 and the trend accentuated since January this year.
Rise in raw material prices, strong demand in the international and domestic market and up-trend in the global steel prices have been some of the reasons cited by the industry for increase in the steel prices in the domestic market.
The mismatch in demand and supply is considered to be the main reason on the demand side for the rise in steel prices. Honourable Steel Minister has held discussion with all major steel investors including Arcellor-Mittal, POSCO, Tata Steel, Essar, Ispat and also SAIL, RINL to explore the possibility of expediting the ongoing as well as envisaged steel projects.
The Government also took various fiscal and other measures for stabilizing the steel prices like exempting pig iron, non alloy steel and steel making inputs like zinc, ferro-alloys and metcoke from customs duty; withdrawing DEPB benefits on export of various categories of steel products and bringing back railway freight on iron ore from classification 180 to 170 for domestic steel producers.
In May 2008, the Government imposed 15% export duty on semi-finished products, and hot rolled coils/sheet, 10% export duty on cold rolled coils/sheets and pipes and tubes and 5% export duty on galvanized steel in coil/sheet form in order to further curtail rising prices and increase supply of steel in the domestic market.
Imports of Iron & Steel
· Iron & Steel are freely importable as per the extant policy.
· Last four years import of Finished (Carbon) Steel is given below:-
Year
Qty. (In Million Tonnes)
2003-2004
1.540
2004-2005
2.109
2005-2006
3.850
2006-07(Prov. estimated)
4.100
2007-08 (Apr-June, 207) (Prov. estimated)
0.800
(Source: JPC)
Exports of Iron & Steel
· Iron & Steel are freely exportable.
· Advance Licensing Scheme allows duty free import of raw materials for exports.
Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports. Under this scheme exporters on the basis of notified entitlement rates, are granted due credits which would entitle them to import duty free goods. The DEPB benefit on export of various categories of steel items scheme has been temporarily withdrawn from 27th March 2008, to increase availability in the domestic market.
Exports of finished carbon steel and pig iron during the last four years and the current year is as :
(Qty. in Million Tonnes)
Finished (Carbon) Steel
Pig Iron
2002-2003
4.506
0.629
2003-2004
4.835
0.518
2004-2005
4.381
0.393
2005-2006
4.478
0.440
2006-2007(Prov.estimated)
4.750
0.350
2007-2008(April-June 07) (Prov.estimated)
1.310
0.120
(Source : Joint Plant Committee)
Levies on Iron & Steel
SDF LEVY- This was a levy started for funding modernisation, expansion and development of steel sector.
The Fund, inter-alia, supports :
1. Capital expenditure for modernisation, rehabilitation, diversification, renewal & replacement of Integrated Steel Plants.
2. Research & Development
3. Rebates to SSI Corporations
4. Expenditure on ERU of JPC
SDF levy was abolished on 21.4.94
Cabinet decided that corpus could be recycled for loans to Main producers
Interest on loans to Main Producers be set aside for promotion of R&D on steel etc.
An Empowered Committee has been set up to guide the R&D effort in this sector.
EGEAF – Was a levy started for reimbursing the price differential cost of inputs used for engineering exporters. Fund was discontinued on 19.2.96.
Opportunities for growth of Iron and Steel in Private Sector
The New Industrial Policy Regime
The New Industrial policy has opened up the iron and steel sector for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.
The Growth Profile
(i) Steel
The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new/greenfield steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies.
At present, total (crude) steel making capacity is over 34 million tonnes and India, the 8th largest producer of steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. As per the ratings of the prestigious " World Steel Dynamics", Indian HR Products are classified in the Tier II category quality products – a major reason behind their acceptance in the world market. EU, Japan have qualified for the top slot, while countries like South Korea, USA share the same class as India.
(ii) Pig Iron
In pig iron also, the growth has been substantial. Prior to 1991, there was only one unit in the secondary sector. Post liberalization, the AIFIs have sanctioned 21 new projects with a total capacity of approx 3.9 million tonnes. Of these, 16 units have already been commissioned. The production of pig iron has also increased from 1.6 million tonnes in 1991-92 to 5.28 million tonnes in 2002-03. During the year 2003-04, the production of Pig Iron was 5.221 million tonnes.
India in Global Crude Steel Production
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Since independence, the Indian government has concentrated on promoting the development of different industries in the country and the steel industry has always remained in the priority list. The Indian steel industry enjoys a significant position in the global arena and the importance of India in global crude steel production has grown significantly over the years. The efforts to develop the steel industry in India started during the first five year plan but the real developments started happening from 1980s onwards. The development of the sector can be traced from the fact that although the Indian steel industry increased its production, but in the 90s India imported huge quantity of steels to meet the growing demand of steel in the country.This scenario was totally changed in 2004 when India stood at the ninth position in terms of crude steel production in the whole world and in 2006, India was at the seventh place among the crude steel producing companies.
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According to the released data by the International Iron and Steel Institute, contribution of India in global crude steel production was about 40.9 million tonnes in 2005. This quantity was increased by 7.6% in 2006 and the country produced nearly 44 million tonnes of steel. This development of the industry was further speeded up in 2007 and the total production of crude steel was nearly 50 million tonnes. This growth in the production has also helped the country to gain the fifth position among global crude steel producing countries. There are different factors that are responsible for this development. Firstly, the Indian government has taken some reformatory steps that have helped the Indian steel industry to grow at a good pace. The Indian government has set a target to increase the crude steel production and till 2019-20, the Indian steel industry is expected to produce nearly 110 million tonnes of crude steel. Another important reason of this development is the deregulation factor. The national as well as state governments in India are playing the role of a facilitator. At the same time, the national policies regarding the steel industry are also reformed and this has encouraged investments in the industry.
The Tata Iron and Steel Company (TISCO)
Steel Authority of India (SAIL)
Rashtriya Ispat Nigam Limited (Visakhapatnam Steel Plant)
THE TATA IRON AND STEEL COMPANY
Corporate Office: Bombay House, 24 Homi Modi Street, Mumbai 400 001Tel: 91-(22)-2049131Fax: 91-(22)-2049522 The Tata Iron and Steel Company, located at Jamshedpur is the best known symbol of India's industrial growth. The company has exported products worth more than US $ 182.3 million in 1996-97. Tata Steel remains India's largest single explorer of value added high quality steel products. It is a blue chip company, and has successfully raised US $100 million through Euro Bonds. Tata Steel is India's single largest integrated steel works in the private sector with a market share of over 13% . It has, over the years, employed state-of-the-art know-how and processes to manufacture a wide range of steel and engineering products as well as minerals and Ferro-alloys. Its steel products include HR coils, tubes, bars, rods, structurs, strips, sheets and bearings. The steel plant is integrated with activities ranging from mining of raw materials to finished rolling of steel. Over the years the company has promoted several associate companies in related areas such as engineering, refractors and rolls. Turnover: Rs 64,335 million Year of Establishment: 1907 No. of Employees: Works 29,648(Total 68300).
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STEEL AUTHORITY OF INDIA LIMITED
Steel Authority of India Limited,Ispat Bhavan,Lodi Road,New Delhi 110003, INDIA Tel : 91-(11)-4367776 / 4367481 Fax: 91-(11)-4367015 / 4366069 SAIL is India's largest integrated producer of Iron and Steel contributing over 44% of its total crude steel output. It is also the 11th largest steel producer in the world. Its vertically integrated production facilities produce a wide range of saleable steel products and the company has a turnover of around Rs.150 billion(about US $3.5 billion).Recent modernisation of the integrated steel plants of SAIL costing about US $3.0billion has led to superior product quality as well as productivity.In 1998-99 SAIL exported half a million tonnes of iron and steel worth about US $130 million to over 20 countries.
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RASHTRIYA ISPAT NIGAM LIMITED (VISAKHAPATNAM STEEL PLANT)
Visakhapatnam Steel Plant,RINL,Visakhapatnam-530031,India.Tel : 91-(891)- 518226 / 518376Fax: 91-(891)- 518316
No technology can lay claim to being the latest if it cannot help bring pollution down to 'zero' emission status. At VSP, the state-of-the-art achieved at every level is a synergy that has helped RINL set records very few steel companies in the world can match. A steel complex that comprises the tallest of Coke Oven Batteries; the largest of Blast Furnaces; the most efficient of Converter Shops; and the most trouble free, high speed mills. All designed to work in unison and produce 5.6 lakh tonnes of Pig Iron; 2.32 million tonnes of Saleable Steel; and offering a wide range of Long Steel Products. In the area of pollution control equipment and measures, VSP is in the forefront of the Indian Industry. The total cost of these measures work out to Rs.4,600 million. Or nearly 8% of the total cost of the Steel Plant. Right from having the only smoke less charging process in Coke Ovens to Dry Quenching of Coke, from Extensive Gas Cleaning facilities to highly efficient Dust Extraction systems, from elaborate Water Treatment Plants to Noise Abatement systems, all of which means that all toxic solids, liquids and gases are reduced to harmless compounds and by-products with commercial value.
Steel is the most widely used of all metals, with uses ranging from concrete reinforcement in highways and in high-rise buildings to automobiles, aircraft, and vehicles in space. Steel is iron combined or alloyed with other metals or nonmetals such as carbon. Steel is more ductile (able to deform without breakage) and durable than cast iron and is generally forged, rolled, or drawn into various shapes.
Since the beginning of the Iron Age, about 1000 B.C., mankind's progress has been greatly dependent on tools and equipment made with iron. The iron tools were then used to fashion many other much needed goods. Eventually, this was followed by the Industrial Revolution, a period of change beginning in the middle of the eighteenth century in England where extensive mechanization of production systems resulted in a shift from home manufacturing and farms to large-scale factory production. Machine tools and other equipment made of iron and steel significantly changed the economy of both farm and city.
The history of iron and steel began at least 6,000 years ago. It is speculated that early mankind first learned to use iron from fallen meteorites. Many meteorites are composed of iron and nickel, which forms a much harder metal than pure iron. The ancients could make crude tools and weapons by hammering and chipping this metal. Because this useful metal came from the heavens, early human beings probably did not associate it with the iron found in the ground. It is likely that metallic iron was found in the ashes of fires that had been built on outcroppings of red iron ore, also called iron oxide. The red ore was called paint rock, and fires were built against banks of ore that had been exposed to wind and weather. Iron ore is found worldwide on each of the seven continents.
Smelting iron, a primitive direct reduction method of separating iron from its ore using a charcoal forge or furnace, probably began in China and India and then spread westward to the area around the Black Sea. Unlike copper ores, which yielded molten copper in these furnaces, iron would not melt at temperatures below 2,799°F (1,537°C) and the highest temperature that could be reached in these primitive smelters appears to have been about 2,192°F (1,200°C). Iron ore subjected to that temperature does not melt, but instead results in a spongy mass (called "sponge" iron) mixed with impurities called slag. The iron worker removed this spongy mass from the furnace and then squeezed the slag out of it by hammering. This "wrought" iron had less tendency to corrode and had a fibrous quality from the stringers of slag which gave it a certain toughness.
The Hittites, an ancient tribe living in Asia Minor and northern Syria, produced iron starting about 2500 B.C. The Chalybes, a subject tribe of the Hittites, invented a cementation process about 1400 B.C. to make the iron stronger. The iron was hammered and heated in contact with charcoal. The carbon absorbed from the charcoal produced a much harder iron. With the fall of the Hittite empire, the various tribes scattered, carrying the knowledge of smelting and the cementation process with them to Syria, Egypt, and Macedonia. Widespread use of iron for weapons and tools began about 1000 B.C., marking the beginning of the Iron Age.
The ancient Egyptians learned to increase smelting temperature in the furnace by blowing a stream of air into the fire using blowpipes and bellows. Around 500 B.C., the Greek soldiers used iron weapons which had been hardened by quenching the hot metal in cold water. The Romans learned to reheat the iron after quenching in a process called tempering which made the iron less brittle.
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During the Middle Ages, from about A.D. 500 to A.D. 1500, the old methods of smelting and cementation continued. Early blacksmiths made chain mail, weapons, nails, horseshoes, and tools such as iron plows. The Stückofen, a furnace first developed by the Romans, was made larger and higher for better air draft. This was a forerunner of the modern blast furnace. Waterwheels came into use for ironmaking between A.D. 1200 and A.D. 1350. The waterwheels converted the energy of swift stream currents into work that moved air bellows, forcing blasts of air into the furnace. The resulting higher temperature melted the iron, which was then formed into "pigs" (so named because as the pig iron was cast, the runners and series of ingots resembled pigs suckling their mother) of cast iron. As time progressed, these early blast furnaces were built larger and better, reaching 30 ft (9 m) in height and able to operate continuously for weeks at a time.
About A.D. 1500, ironmakers faced wood shortages that affected their source of charcoal. Increased warfare and the resulting demand for more iron weapons forced ironmakers to use coal as an alternate source of fuel. A major problem with coal was that it contained impurities such as sulfur and phosphorus that tended to make the iron brittle. In 1709 Abraham Darby of England used "coke," the residue left after soft coal was heated to remove impurities, to successfully smelt pig iron. Crucible cast steel was invented around 1740 by Benjamin Huntsman of England. A clay crucible, or cup, of iron ore was placed in a furnace and when molten, was cast. The resulting cast steel was of very high purity since the molten steel did not come into contact with the fuel. In 1784 another improvement was made by Henry Cort, an English ironmaker, who invented the puddling of molten pig iron. Puddling involved stirring air into the liquid iron by a worker who stood near the furnace door. A reverberatory furnace was used in which the coal was separated from the iron to prevent contamination. After the pig iron had been converted into wrought iron, it was run through a rolling mill which used grooved rollers to press out the remaining slag. Cort's rolling mill was patented in 1783 and could make iron bars about 15 times faster than the old hammer method.
From 1850 to 1865, great advances were made in iron and steel processing. Steel was gaining more popularity than iron beginning around 1860 as less expensive manufacturing methods were discovered and greater quantity and quality were being produced.
William Kelly of the United States, and Henry Bessemer of England, both working independently, discovered the same method for converting iron into steel. They subjected molten pig iron to a blast of air which burned out most of the impurities and the carbon contained in the molten iron acted as its own fuel. Kelly built his first converter in 1851 and received an American patent in 1857. He also went bankrupt the same year and the method finally became known as the Bessemer process. In 1856 Bessemer completed his vertical converter, and in 1860 he patented a tilting converter which could be tilted to receive molten iron from the furnace and also to pour out its load of liquid steel. The Bessemer converter made possible the high tonnage production of steel for ships, railroads, bridges, and large buildings in the mid-nineteenth century. However, the steel was brittle from the many impurities which remained, especially phosphorus and sulfur, and by the oxygen from the air blast. An English metallurgist, Robert F. Mushet, discovered in 1856 that adding an iron alloy (spiegeleisen) containing manganese would remove the oxygen. Around 1875, Sidney G. Thomas and Percy Gilchrist, two English chemists, discovered that by adding limestone to the converter they could remove the phosphorus and most of the sulfur.
In England, another new furnace was introduced in 1861 by two brothers, William and Frederick Siemans. This was the open-hearth furnace, also known as the regenerative open-hearth because the outgoing hot gases were used to preheat the incoming air. Pierre Émile Martin of France improved the process in 1864 by adding scrap steel to the molten iron to speed purification. During this period hardened alloy steels came into commercial use; Mushet made a high carbon steel in 1868 which gave tools longer life in France, a chromium steel alloy was produced in 1877 and a nickel steel alloy in 1888. An Englishman, Sir Robert Hadfield, discovered in 1882 how to harden manganese tool steel by heating it to a high temperature and then quenching it in water.
Around 1879, the electric furnace was developed by William Siemans. This furnace was used very little prior to 1910 because of the high electrical costs and the poor quality of electrodes used to produce the arc for melting.
The open-hearth furnace was the most popular method of steel production until the early 1950s. Pure oxygen became more economical to produce in large quantities and in 1954 the first basic oxygen process facility opened for production in the United States. Today, most of the world's steel is made by either a basic oxygen furnace or an electric furnace.
Steel - Raw Materials
The ores used in making iron and steel are iron oxides, which are compounds of iron and oxygen. The major iron oxide ores are hematite, which is the most plentiful, limonite, also called brown ore, taconite, and magnetite, a black ore. Magnetite is named for its magnetic property and has the highest iron content. Taconite, named for the Taconic Mountains in the northeastern United States, is a low-grade, but important ore, which contains both magnetite and hematite.
Ironmaking furnaces require at least a 50% iron content ore for efficient operation. Also, the cost of shipping iron ores from the mine to the smelter can be greatly reduced if the unwanted rock and other impurities can be removed prior to shipment. This requires that the ores undergo several processes called "beneficiation." These processes include crushing, screening, tumbling, floatation, and magnetic separation. The refined ore is enriched to over 60% iron by these processes and is often formed into pellets before shipping. Taconite ore powder, after beneficiation, is mixed with coal dust and a binder and rolled into small balls in a drum pelletizer where it is then baked to hardness. About two tons of unwanted material is removed for each ton of taconite pellets shipped.
The three raw materials used in making pig iron (which is the raw material needed to make steel) are the processed iron ore, coke (residue left after heating coal in the absence of air, generally containing up to 90% carbon) and limestone (CaCO3) or burnt lime (CaO), which are added to the blast furnace at intervals, making the process continuous. The limestone or burnt lime is used as a fluxing material that forms a slag on top of the liquid metal. This has an oxidizing effect on the liquid metal underneath which helps to remove impurities. Approximately two tons of ore, one ton of coke, and a half ton of limestone are required to produce one ton of iron.
There are several basic elements which can be found in all commercial steels. Carbon is a very important element in steel since it allows the steel to be hardened by heat treatment. Only a small amount of carbon is needed to produce steel: up to 0.25% for low carbon steel, 0.25-0.50% for medium carbon steel, and 0.50-1.25% for high carbon steel. Steel can contain up to 2% carbon, but over that amount it is considered to be cast iron, in which the excess carbon forms graphite. The metal manganese is used in small amounts (0.03-1.0%) to remove unwanted oxygen and to control sulfur. Sulfur is difficult to remove from steel and the form it takes in steel (iron sulfide, FeS) allows the steel to become brittle, or hot-short, when forged or rolled at elevated temperatures. Sulfur content in commercial steels is usually kept below 0.05%. A small quantity of phosphorus (usually below 0.04%) is present, which tends to dissolve in the iron, slightly increasing the strength and hardness. Phosphorus in larger quantities reduces the ductility or formability of steel and can cause the material to crack when cold worked in a rolling mill, making it cold-short. Silicon is another element present in steel, usually between 0.5-0.3%. The silicon dissolves in the iron and increases the strength and toughness of the steel without greatly reducing ductility. The silicon also deoxidizes the molten steel through the formation of silicon dioxide (SiO2), which makes for stronger, less porous castings. Another element that plays an important part in the processing of steel is oxygen. Some large steel mills have installed their own oxygen plants, which are located near basic oxygen furnaces. Oxygen injected into the mix or furnace "charge" improves and speeds up steel production.
Steel can be given many different and useful properties by alloying the iron with other metals such as chromium, molybdenum, nickel, aluminum, cobalt, tungsten, vanadium, and titanium, and with nonmetals such as boron and silicon.
Steel production in India, in 2002-03 grew by 9.9 per cent to reach a level of 33.7 million tons as compared to 30.6 million tonnes a year ago.
Domestic demand for steel posted a growth of 4.7 per cent during 2002-03 at 28.6 million tons from 27.3 million tonnes in 2001-02.
During the current year steel production is expected to cross 35 million tons and apparent consumption would exceed 32 million tons.
There has been an impressive growth in finished steel exports from India with exports rising from 2.7 million tons in 2001-02 to 4.5 million tons in 2002-03, say a growth of 66 per cent.
The per capita consumption of steel in India is 27-29 Kg. a way below the world average of 140 Kg. and the Asian average of 100 Kg.
Steel - Manufacturing Processes
Most steel is produced using one of four methods: Bessemer converters, open-hearth furnaces, basic oxygen furnaces, and electric furnaces. The basic oxygen process is the most efficient, while the Bessemer and open-hearth methods have become obsolete. Electric furnaces are used to produce high quality steels from selected steel scrap, lime, and mill scale (an iron oxide that forms on the surface of hot steel and falls off as black scale).
Until 1909, most steel made in the United States came from Bessemer converters. A Bessemer converter looks like a huge pear-shaped pot and can hold anywhere from 5-25 tons. It is balanced on axles so that its open top can be tilted one way to take a charge and the other way to pour out steel. After the converter is charged with hot metal, it is swung to the upright position. Air is then blown through holes in its bottom at a typical rate of 30,000 cubic feet per minute. Sparks and thick, brown smoke pour from the converter's mouth as the oxygen in the blow combines with the iron, silicon, and manganese to form slag. Then 30-ft (9-m) flames replace the smoke as the oxygen combines with the carbon fuel and burns. The whole process took less than 15 minutes. Unfortunately, the blowing air contained contaminants (such as nitrogen) and also removed some desirable elements such as carbon and manganese. This was solved by adding the necessary elements back into the converter after the blow. Because of stricter air pollution regulations and more efficient processes, the Bessemer converter is no longer used.
From 1909 until the 1960s, the open-hearth process was the most popular method of steel production. Open-hearth furnaces got their name from a shallow area called a hearth that is exposed to a blast of flames that alternately sweeps across the hearth from one side for a period of time and then to the side of the furnace. To make a "heat," or one batch of steel, pig iron, limestone, and scrap steel, are initially "charged," or loaded, into the hearth. These materials are heated for about two hours at temperatures 2,700–3,000°F (1,482–1,649°C) until they begin to fuse. Then the furnace is charged with many tons of molten pig iron. Scrap is placed in the furnace with a charging machine which usually serves a series of open hearth furnaces in a single building. Other elements, such as fluxing agents, carbon (usually in the form of anthracite coal pellets), and alloying materials, are then added to improve the steel. These elements can be added either in the furnace charge, the melt or "bath," ladle, or the ingot molds to meet the desired chemical composition of the finished steel or to eliminate or counteract the effect of oxides or other impurities. Fluxing agents (primarily lime, added in the form of either limestone or burnt lime and supplemented by magnesia, MgO, and lime from the furnace bottom and sides) melt and combine with the impurities to form slag at the top of the melt which is poured off into a separate slag pot. Mill scale, a form of iron oxide (Fe3O4), is used to reduce carbon content. Aluminum ferrosilicon is added if the steel is to be "killed." A killed steel is one that has been deoxidized to prevent gas evolution in the ingot mold, making a more uniform steel. "Rimmed" steel is steel that has not been deoxidized and gas pockets and holes from free oxygen form in the center of the ingot while the rim near the surface of the ingot is free of defects. Rolling processes are used in later operations to remove these defects. Semikilled steels are a compromise between rimmed and killed steels and are mainly limited to steels to be rolled into sheet bar, plate, and structural sections. The quantity of deoxidizers used must be closely controlled to allow a limited evolution of gas from the carbon-oxygen reaction.
When the contents of the heat are acceptable and the temperature is right, the furnace is tapped and the molten metal is poured into a ladle. An open-hearth furnace is tapped through a hole in the furnace's bottom. A heat is refined into steel during an 8-12 hour time period. Oxygen released from the ore and additional injected oxygen combine with carbon in the molten pig iron to form carbon gases. These, along with any additional gases from the burned fuel, are used to heat incoming air and this is why the open-hearth process is sometimes called the regenerative open-hearth.
The basic oxygen converter resembles a Bessemer converter. It receives materials from the top and tips to pour off the finished steel into ladles. The main element is a water-cooled oxygen lance, which is placed into the top of the converter after it is charged with scrap steel, molten pig iron, and fluxing agents. The lance, lowered to within a few feet of the charge, directs high-purity oxygen at supersonic speeds into the molten metal. This burns out the impurities and also enables the making of steel with a minimum amount of nitrogen, which can make steel brittle. The oxidation of the carbon and impurities causes a violent rolling agitation which brings all the metal into contact with the oxygen stream. The furnace ladle is first tipped to remove slag and then rotated to pour molten steel into a ladle. The speed and efficiency of the oxygen process has had a significant impact on the steel industry. An oxygen converter can produce a heat of quality steel in 30-45 minutes. An open-hearth furnace without an oxygen lance requires as much as eight hours to produce steel of a similar quality. Recent advances in refractory "brick," the insulating ceramics that protect vessels from the hot steel, have allowed injection of oxygen from the bottom of a vessel without a large complicated lance. This allows for a much more efficient use of the oxygen and can lower the capital costs in constructing a basic oxygen facility, especially if the building and cranes of a retired open-hearth facility is used.
High-quality carbon and alloy steels, such as tool and stainless steels, are produced in electric arc furnaces. These furnaces can make 150-200 tons in a single heat in as little as 90 minutes. The charge is melted by the arcing between carbon electrodes and high quality scrap steel. Some of the electrodes can be 2 ft (0.6 m) in diameter and 24 ft (7.2 m) long. The entire electric furnace is tilted during a tapping operation in which molten steel flows into a waiting ladle. Electric furnaces are the most competitive where low-cost electricity is available and where very little coal or iron ore is found.
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After the steel in the ladle has cooled to the desired temperature, the ladle is moved by a traveling crane to either a pouring platform for ingot production or to a continuous caster. Ingots may be square, rectangular, or round and weigh anywhere from a few hundred pounds to 40 tons. A small amount of steel is cast directly into the desired shape in molds of fine sand and fireclay. Small rail cars carrying a series of heavy cast iron ingot molds wait alongside the pouring platform. The steel is "teemed" or poured into the molds through a fire-clay nozzle in the bottom of the ladle. After the steel in the molds has solidified, the cars are pulled under a stripping crane. The crane's plunger holds down the ingot top as its jaws lift the mold from the glowing hot ingot. The ingots are then taken to soaking pits for further processing.
An underground soaking pit is used to heat the steel ingots to a uniform temperature throughout. The ingots must be the same temperature throughout so that they can be easily plastically deformed and to prevent damage to the heavy machinery of the mills. The jaws of the crane clamp onto the ingots and lower them into the open soaking pits. The roof of the pits is then closed and burning oil or gas heats the ingots to about 2,200°F (1,204°C). After "soaking" in the pits for several hours, the ingots are then lifted out by crane and transported by rail to the blooming and slabbing mills.
The mechanical working of steel, such as rolling, forging, hammering, or squeezing, improves it in several ways. Cavities and voids are closed, harmful concentrations of nonmetallic impurities are broken up and more evenly disbursed, and the grain structure is refined to produce a more homogeneous or uniform product. Some ingots are sent directly to a universal plate mill for immediate rolling of steel plates. Most ingots, however, are sent to semifinishing mills (also known as slabbing or blooming mills) for reduction and shaping into slabs, blooms, or billets. A slab is generally a large flat length of steel wider than a bloom, a bloom is a length of steel either square or rectangular with a cross-sectional area larger than 36 in (90 cm), and a billet is generally two to five inches square, although some billets can be round or rectangular. The exact sizes of slabs, blooms, and billets depend on the requirements of further processing.
In slabbing and blooming mills, the steel ingot is gradually squeezed between heavy rolls. To make billets, the steel is first shaped into blooms, then further reduced in a billet mill. Each time the ingot is forced through the rolls, it is further reduced in one dimension. Blooming mills can be classified as either two-high or three-high, depending on the number of rolls used. The two rolls of the two-high mill can be reversed so that the ingot is flattened and lengthened as it passes back and forth between the rolls. The top and bottom rolls of the three-high mill turn in one direction while the middle roll turns in the opposite direction. The ingot is flattened first between the bottom and middle rolls and ends up on a runout table. The table rises and the steel is then fed through the top and middle rolls. The continuous, or cross-country, mill is a third type of blooming mill. This mill has a series of two-high rolls. As many as 15 passes may be required to reduce an ingot 21 in2 (135 cm2) in cross section to a bloom 8 in2 (52 cm2) in cross section. The twoand three-high blooming mills roll the top and bottom of the steel in every pass. After one or two passes, mechanical manipulators on the runout table turn the steel to bring the side surfaces under the rolls for a more uniform material. After the steel is rolled, the uneven ends are sheared off, and the single long piece is cut into shorter lengths. The sheared off ends are reused as scrap. Most of the rolls used in these mills are horizontal, but there are also vertical rolls which squeeze the blooms or slabs from the sides. High-pressure water jets are used to remove mill scale which forms on the surface. Surface defects on the finished blooms and slabs are burned off, or scarfed, with an oxygen flame. The hot lengths of steel are moved from one station to another on a series of roller conveyors. The mill operations are automatically controlled by workers in an overhead glass-enclosed room called a "pulpit." The slabs, blooms, and billets are then taken to finishing mills where they are formed into special shapes and forms such as bars, beams, plates, and sheets. The steel is still not completely "finished" but it is closer to the form in which it will eventually be used in manufactured goods. Blooms and billets are finished into rails, wire rods, wires, bars, tubes, seamless pipe, and structural shapes such as I and H beams. Slabs are converted into plates, sheets, strips, and welded pipe.
After they are hot rolled, steel plates or shapes undergo further processing such as cleaning and pickling by chemicals to remove surface oxides, cold rolling to improve strength and surface finish, annealing (also known as stress relieving), and coating (galvanizing or aluminizing) for corrosion resistance.
Continuous or "strand" casting of steel eliminates the need to produce ingots and the use of soaking pits. In addition to costing less, continuously cast steels have more uniform compositions and properties than ingot cast steels. Continuous casting of steel produces an endless length of steel which is cut into long slabs or blooms that are ready for shaping in rolling mills. Molten steel is poured into the top of a continuous casting machine and is cooled by passing through a water-cooled mold. Pinch rolls draw the steel downward as it solidifies. Additional cooling is provided by water sprays along the travel path of the solidifying metal. The thickness of the steel "strand" is typically 10 in (25 cm) but new developments have reduced this thickness to 1 in (2.5 cm) or less. The thinner strand reduces the number of rolling operations required and improves the economy of the overall process. Some continuous cast machines bend the steel while it is still hot and flexible so that it comes out of the bottom in a horizontal position. Other machines cut the steel into sections while it is still in a vertical position. The continuous cast process has become the most economical method to produce large quantities of conventional steels. Small heats of alloy and specialty steels are still cast in ingots because the small size makes the continuous cast process impractical.
Some steel shapes are produced from powder. There are several chemical, electrochemical, and mechanical ways to make steel powder. One method involves improving the ore by magnetically separating the iron. A ball mill is then used to grind the ore into a powder that is then purified with hot hydrogen. This powder, under heat and pressure, is pressed into molds to form irregularly shaped objects; objects that would be hard to form any other way.
Steel - Byproducts/waste
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There are a number of waste byproducts from the steel making process. Mine tailings from the ore beneficiation process are returned to the mining site. Growing vetches (a species of plant valuable for fodder), grasses, and trees on some of these barren landscapes has been a project of biologists and foresters. Gases that are given off from the coke ovens, blast furnaces, and steel furnaces are largely recovered for reuse. After use in iron and steelmaking, most slags are used for other purposes such as railroad ballast and road fill, an ingredient in cement or blocks, insulating material, or fertilizer.
RNCOS Releases a New Report – Indian Steel Industry Outlook to 2012
(EMAILWIRE.COM, August 07, 2009 ) New Delhi, India – RNCOS has recently added a new Market Research Report titled, Indian Steel Industry Outlook to 2012 to its report gallery. India is a reputed name in the world steel industry; the country’s steel industry is catching up the pace and luring the steel majors from all over the world. The industry has gained strength from the strong Indian economy, and strong sectors like infrastructure, construction and automobile. Although India consumes less steel as compared to other Asian countries, it was ranked the fifth major crude steel producer in the world world in 2008. Thus, the country offers vast scope for the steel industry in future.
However, the current economic turmoil has dented the growth curve of various industries such as construction, which, in turn, has hit the Indian steel industry hard. But with the government’s plans to boost up the economy by injecting funds in various industries like infrastructure, construction, automobile and power, growth is well expected in near future, says Indian Steel Industry Outlook to 2012, a new report by RNCOS.
As per our research report, steel consumption in India is expected to grow considerably in the coming years. Per capita finished steel consumption in the country is estimated at around 44 Kg in 2008-09, which is projected to reach 54 Kg by the end of 2011-12, thereby representing tremendous growth potential in the coming years.
Indian Steel Industry Outlook to 2012 provides the rational analysis and extensive research on the steel industry of India. The report gives a detailed analysis of the forces which have shaped the Indian steel industry over the past years. The report also includes detailed analysis and future outlook of various industries related to the steel industry, including automotive, consumer durables, aerospace and marine, power, telecom, railways, and housing industries.
The report classifies the finished steel product market into two categories – alloy and non-alloy. It also covers the information on industry-wise steel demand, overall steel consumption, production and trading market. Apart from this, it also provides industry forecast (FY 2010 to FY 2012) on the following segments:
Finished steel consumption
Non-alloy steel products demand
Per capita finished steel consumption
Import of steel products
Stainless steel production and consumption
In the future there will be many new developments involving computer controls and automation that will improve economy and quality and lower energy consumption and pollution. More automation will also lead to more robots replacing humans in hazardous areas. Computers can be used to control several rolling mills operating as a continuous unit. The decreasing material thickness can be maintained automatically as it passes through the various mills to produce a more uniform final sheet. Continued research and development is ongoing to connect continuous casting machines with rolling mills to provide a single continuous process from molten metal to the final product. This will produce energy and cost savings because the material would not have to be reheated for processing, and result in a higher quality end product.
The use of 100% scrap in charging electric furnaces
has cut the dependence on pig iron and ores, and has resulted in the development of more small steel mills, also called mini-mills, which can be located far from natural resources to serve wider geographical areas.
More net steel shapes will be formed using powder metallurgy as direct reduction processes produce steel powders directly from iron ore, bypassing the blast furnace and making difficult shapes easier to form.
Steel - Quality Control
To specify the various physical and mechanical properties of the finished product, various tests, both destructive and nondestructive, are performed. Metallurgical, hardness, hardenability, tension, ductility, compression, fatigue, impact, wear, corrosion, creep, machinability, radiography, magnetic particle, ultrasonic, and eddy current are some of the major tests that are performed by quality control personnel.
Metallurgical testing is used to determine the quality of steel by analyzing the microstructure of a sample under a microscope. A cross section of a sample is first highly polished and then examined at a magnification from 100-500 diameters. The microstructure of steel consists of grains of different compositions and sizes. Generally, a sample of steel with fine grains is tougher than one with large grains. Different characteristics are produced through alloying the steel with other substances. It is possible to determine grain size and the size, shape, and distribution of various phases and inclusions (nonmetallic material) which have a great effect on the mechanical properties of the metal. Some grains are made of ferrite, or pure metallic iron; graphite, a crystal form of carbon; pearlite, an alloy of iron of carbon; cementite, also called iron carbide, a hard compound of iron and carbon and other carbide-forming elements; austenite, a solid solution of carbon in gamma iron, a nonmagnetic form of iron; and martensite, an extremely hard constituent of steel produced by heat-treating. The sample can also be etched to make visible many structural characteristics of the metal or alloy by a preferential attack on the different constituents. The microstructure will reveal the mechanical and thermal treatment of the metal, and it may be possible to predict its expected behavior under a given set of conditions.
Hardness is not a fundamental property of a material, but is related to its elastic and plastic properties. The hardness value obtained in a particular test serves only as a comparison between materials or treatments. The test procedure and sample preparation are fairly simple and the results may be used in estimating other mechanical properties. Rockwell and Brinell are two popular hardness tests that are widely used for inspection and control. These tests are usually performed by impressing into the test specimen, which is resting on a rigid platform, an indenter of fixed and known geometry, under a known static load.
Hardenability is a property that determines the depth and distribution of hardness induced by quenching. The standardized test used is called the end-quench hardenability test, also known as the Jominy test. A 1-in (2.54 cm) round 4-in (10 cm) long sample is heated uniformly to the austenitizing temperature (this temperature depends on the material composition, ranging from 1,500–1,900°F [816–1,038°C]). The sample is removed from the furnace and placed on a fixture where a jet of water contacts the bottom face of the sample. After ten minutes on the fixture, the sample is removed and two flat parallel surfaces are ground on the sample. Rockwell hardness readings are taken along the ground surfaces at certain intervals from the quenched end. The results are expressed as a curve of hardness values versus distance from the quenched end. Plain carbon steels tend to be hard on the surface, near the quenched end, but remain relatively soft at the core, or further away from the quenched end. Alloyed steels, in general, have an increased depth of hardenability which is one of the main advantages of using alloyed steels.
Next to the hardness test, the tensile test is the most frequently performed test to determine certain mechanical properties. A specifically prepared tensile sample is placed in the heads of a testing machine and an axial load is placed on the sample through a hydraulic loading system. The tensile test is used to determine several important material properties such as yield strength, where the material starts to exhibit plastic or permanent deformation, and the ultimate tensile or breaking strength.
Ductility of a material is indicated by the amount of deformation that is possible until fracture and can be determined by measuring elongation and reduction in area of a tensile sample that has been tested to failure.
Compression tests are performed on small cylinders, blocks, or strips to determine the ability of a material to undergo large plastic deformations (a mechanical property also known as malleability) and its limits. Stress-strain relations determined from this testing are used to predict the pressures and forces arising in industrial forming operations such as rolling, forging, or extrusion. Samples are placed between anvils or pressure plates and are compressed (friction is also a factor to consider as the material slides sidewise over the anvils).
The fatigue test is used to determine the behavior of materials when subjected to repeated or fluctuating loads. It is used to simulate stress conditions developed in materials under service conditions. The fatigue potential, or endurance limit, is determined by counting the number of cycles of stress, applied first in one direction and then another, to which the metal can be subjected before it breaks. Fatigue tests can be used to study the material behavior under various types and ranges of fluctuating loads and also the effect of corrosion, surface conditions, temperature, size, and stress concentrations.
Impact tests are used to determine the behavior of materials when subjected to high rates of loading, usually in bending, tension, or torsion. The quantity measured is the energy absorbed in breaking the specimen in one blow, two such tests are called the Charpy and the Izod, which use notched bar specimens. A swinging pendulum of fixed weight raised to a standard height is used to strike the specimen. Some of the energy of the pendulum is used to rupture the specimen so that the pendulum rises to a lower height than the standard height. The weight of the pendulum times the difference in heights indicates the energy absorbed by the specimen, usually measured in foot-pounds.
Wear resistance is represented by few standardized tests because of its complex nature. One test is the "pin on disk" method, where a pin is moved against a disk of the test material. Usually, wear testing is application specific and the equipment is designed to simulate actual service conditions.
Corrosion involves the destruction of a material by chemical, electrochemical, or metallurgical interaction between the environment and the material. Various types of environmental exposure testing is done to simulate actual use conditions, such as salt bath immersion testing. Zinc coating, or galvanizing, is commonly applied to sheet and structural steel used for outdoor applications to protect against corrosion.
Creep tests are used to determine the continuing change in the deformation of a material at elevated temperatures when stressed below the yield strength. This is important in the design of parts exposed to elevated temperatures. Creep may be defined as a continuing slow plastic flow under constant load conditions. A creep test is a tension test run at a constant load and temperature. The percent elongation of the sample is measured over time.
Machinability is the ease with which a metal may be machined. Many factors are considered in arriving at machinability ratings. Some of the more important factors are the rate of metal removal, quality of the finished surface, and tool life. Machinability ratings are expressed as a percentage, in comparison with AISI 1112 steel, which is rated at 100%. Metals which are more difficult to machine have a rating of less than 100% while metals which machine easily have a rating more than 100%.
Radiography of metals involves the use of x rays or gamma rays. The short-wavelength electromagnetic rays are capable of going through large thickness of metal and are typically used to nondestructively test castings and welded joints for shrinkage voids and porosity.
Magnetic particle inspection (also called "Magnaflux") is a method of detecting cracks, tears, seams, inclusions, and similar discontinuities in iron and steel. This method will detect surface defects too fine to be seen by the naked eye and will also detect discontinuities just below the surface. The sample is magnetized and then covered with a fine iron powder. The presence of an imperfection is indicated by a pattern that assumes the approximate shape of the defect.
Ultrasonic testing utilizes sound waves above the audible range with a frequency of 1-5 million Hz (cycles per second). Ultrasonics allow for fast, reliable, nondestructive testing which employs electronically produced high-frequency sound waves to penetrate metals and other materials at speeds of several thousand feet per second. If there is a flaw in the path of the ultrasonic wave, part of the energy will be reflected and the signal received by a receiving transducer will be reduced. Ultrasonic inspection is used to detect and locate such defects as shrinkage voids, internal cracks, porosity, and large nonmetallic inclusions.
Eddy current inspection is used to inspect electrically conducting materials for defects and variations in composition. Eddy current testing involves placing a varying magnetic field (which is produced by connecting alternating current to a coil) near an electrically conducting sample. Eddy currents are induced in the sample which then produces a magnetic field of its own. A detection unit measures this new magnetic field and converts the signal into a voltage which can be read on a meter for comparison. Properties such as hardness, alloy composition, chemical purity, and heat treat condition influence the magnetic field and may be measured through the use of eddy current testing.
Global Demand for Steel and Indian Steel Industry
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The global demand for steel is at an all time high nowadays. Much of the tremendous demand for steel around the world may be attributed to the numerous construction projects that are going on around the world.Much of these projects are taking place in the economically developing countries of the world like India, China and Thailand. China is the place where a lot of construction is being done nowadays and much of the construction is for the purpose of the Olympics to be held in 2008 and the Shanghai World Exposition of 2010. Along with being one of the major users of steel, China is one of the major producers of steel as well. During March, 2007 China produced a record 40.16 million tonnes of steel. The demand for steel has gone up in the United States of America as well. This may be ascertained from the fact that in 2007 the amount of steel used was 2.2% more than what it was in 2006. Thus it may be ascertained that the supply and the demand for steel is at their respective peaks. This bodes well for the Indian steel industry as India has plenty of steel to meet up with both the domestic as well as international demand.
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India has a lot of iron ores. This implies that India has a ready base for producing sufficient amount of steel and the experts are also of the opinion that the Indian steel industry would continue to grow in the coming years. In the recent times the production of steel has gone up in the country from 17 million tonnes in 1990 to 36 million tonnes in 2003. The Indian steel industry is trying to reach the 66 million tonnes mark in 2011. The high levels of production would allow the Indian steel industry to establish a stronghold on a number of areas like housing, construction, and ground transportation. The special steel produced by the Indian steel industry is supposed to be used in high end engineering industries like generation of power, fertilizers and petrochemicals. The fact that India is not a voracious consumer of steel like some of the major economies like China and the United States of America means that India would be able to use the surplus steel it produces for exporting to other countries so that their demands are met. This would help the Indian steel industry to be regarded as one of the most prominent steel industries if not the leading one.
India's steel demand to rise
May 24, 2005 13:48 IST
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India's domestic steel demand will remain buoyant despite international steel prices likely to remain firm at least for the next few years, according to an Assocham study.
"The domestic demand will remain buoyant," the Assocham Eco Pulse sectoral study on steel said, adding global demand would grow at 7-8 per cent per annum while production was set to increase by less than 4 per cent.
The study 'The Steel Surge' said international demand would continue to come from the growing economies of China, US and Europe.
"Domestic demand is rising on the back of development in infrastructure and growth in housing and construction sectors. A large number of high rise buildings in metros is having a demonstration effect on other cities as well," Assocham president Mahendra K Sanghi said while releasing the study.
There will be a significant demand for steel in India on account of the Commonwealth Games [ Images ] scheduled for 2010. Infrastructure, automotive, capital goods and construction sectors will be the major drivers for growth in domestic demand, according to the report.
Internationally, consumption is expected to grow in NIS (Newly Independent States) of the former Soviet Union as well as in OECD economies.
The Japanese economy is also expected to turn around after a prolonged recession, it added. Besides this, steel prices will continue to remain on the higher side owing to a rise in input costs, it said.
"The industry is expected to remain buoyant and prices are likely to remain on the upside in the foreseeable future with the increase in input costs. The global demand is also expected to be on the rise," Sanghi said.
Domestic prices of raw materials are linked to the landed cost of imports, which are also witnessing an upsurge. While increase in iron ore prices for 2005-06 is expected to lead to a rise of $16-24 per tonne of steel, rise in coking coal prices for the same year will result in a hike of $52-67 per tonne of steel, the study said.
Impacts for both these cases are excluding the effect of ocean freight, which could remain strong in the rising demanding market, it added.
While India has only 13-14 billion tonnes of iron ore reserves as compared to around 50 billion tonnes in Australia [ Images ], Brazil [ Images ] and Russia [ Images ], investments should be made to acquire iron ore and coal deposits abroad, the study said.
The government should review the national policy regarding iron ore exports. It should provide incentives to make ore available in the country, it added.
The study said with the supply crunch in raw materials, steel companies are being forced to scout for mines to bring down their manufacturing costs.
About 45-70 per cent of the total manufacturing costs for steel companies, depending on the level of their integration, is accounted for by the raw materials. This move of acquiring mines will reduce manufacturing costs by around 30-50 per cent depending on the kind of royalty and mining terms, it said
Finished steel imports surges 34% in Q1
Varun Sood / New Delhi July 08, 2005
The import of finished steel for the first three months of the current financial year has increased by 34 per cent to 6 lakh tonne from 4.47 lakh tonne in the same period last year. Steel exports have decreased over the same period by 1 per cent to 9.25 lakh tonne from 9.34 lakh tonne.
Fresh on the heels of recent price cuts of 5-7 per cent announced by Indian steel majors, the ministry of steel figures points to an interesting trend which seems to be flowing against the global trend.
"The domestic demand refuses to slow down though globally companies have been cutting down production to bring in price stability", said a official of the steel ministry. "In this context, it does becomes significant," said the official.
"Growing imports is because of sustained domestic demand and also that with the year ending 31 March, many manufacturer's want to off load their stock's", says Arvind Parakh, director finance, Jindal Stainless.
Analysts attribute the marginal dip in exports to slowing global demand because of a glut of steel in certain regions and also China's demand being not up to analyst's expectations.
"Let's not forget that a majority of the imports might be getting used in bearings industry," says Deepak Jain of Anagram securities.
More importantly, "long products too appear to be enjoying higher share in imports, thanks to continued boom in the domestic housing sector and government's thrust on infrastructure activities" maintains another analyst.
At last a common unanimity in industry circles seems to have formed on the above figures being anything but a cause of worry. The turnaround the Indian steel industry has made from its last debacle in the late 1990's can be a perfect model for a case study for deeper perusal.
"Definitely, there is buoyancy in domestic market and hence there is such a beeline for steel companies announcing both green field and brown field projects", says Arvind Parakh, director finance, Jindal Stainless. Agrees CORSMA executive director S C Mathur. "To fulfill the present demand generated in domestic market, importing finished steel is the only option," says the executive director.
"The country's present per capita consumption of steel at 30 kg gives tremendous opportunity to steel manufacturers", says a Mumbai-based steel analyst. True, as the country has a long way to reach consumption levels of around 400 kg in developed nations like US and world average of 140 kg. Even, China has a per capita consumption of 190 kg.
Does this then indicate that the party for Indian Steel has begun? There is a subtle caution from industry.
"One must not forget that growing inventory is always a cause of worry and may dampen the spirits", says an analyst. It must be remembered that by the end of May 2005, the big four heavyweights- SAIL, Tata Steel, IISCO and RINL- had accumulated finished steel inventory level of 1080 thousand tonne.
"Inventories is a concern and any price correction is a direct corollary of these building inventories," says V.S Jain, chairman, SAIL.
Traders again are partly to be blamed for helping build up this un-necessary asset. An increase in finished steel imports suggests that traders, and not manufacturers, are in the lead when it comes to importing. Already the traders book on wafer-thin margins and they might be also speculating for further growth in domestic demand.
"Many a times these traders take advantage of these good times and speculate, which thereby builds up inventory levels," says Arvind Parakh. Concurring with the views says a steel analyst, "traders are in market for short term gains and do not have any long term plans. Hence this speculation should not come as a surprise to many".
Another cause of worry is the whispering debate on the correct custom prices for finished steel products. Already the import duties have been reduced to 5 per cent from 20 per cent. The traders have been further aided by the softening of steel prices globally.
"As a result of prevailing conditions, traders are raking profits while the global steel prices further nosedive," says Moosa Raza, president, Indian Steel Alliance (ISA). "The government should be proactive to see that there is no dumping of steel from Ukraine and other countries, which might de-stabilise the domestic steel market", cautions Arvind Parakh. This raises another question as to where exactly are these imports of steel taking place?
Ministry of steel does compute the "country wise" import figures but only on yearly basis and any figures for quarterly period has time lag because of the tedious nature of the process. But going by trend for previous quarters, figures reveals that Commonwealth of Independent States or CIS and Ukraine are preferred places for the traders to book their orders of finished steel. Why do traders prefer importing from CIS or Ukraine? Not that Byzantine as low costs dictate terms. CIS region is rich in iron ore and coking coal mines.
This makes the region a obvious choice for setting up of steel plants because of access to cheaper raw material. In recent years, raw material prices seem to have climbed up by as much as 300 per cent. No wonder, most of the global steel majors-from Mittal Steel to Arcelor- have some of their plants in this region.
More importantly, it is not that all the imports are done from the CIS region or Ukraine.
S.C Mathur explains, "When the requirement is for high grade Hot Rolled Coil, then countries like South Korean and Japan are opted by the traders while for Galvanised steel, CIS is the ideal location for importers".
This implies that in the present context, more steel imports are being done for making of galvanised steel.
This has made ISA to pitch on behalf of the alliance members that "a government led delegation be sent to CIS and European countries to request them to restrain from exporting steel to our country, as was done by the European Union recently". The president of ISA, Moosa Raza also asks for "restoration of customs duty on seconds and defective steel imports from 20 per cent to 40 per cent".
Though the ministry of steel seems not too much interested in the issue, after CORSMA too made its intentions of not raising any duties clear, there is a view that government should not sleep over this.
"One must not forget that the government had on previous occasions also discouraged finished steel exports to prevent domestic prices sky rocketing. Now after recent price cuts, the government should protect the industry from the onslaught of unprecedented imports," says an official at Essar steel.
India steel demand outlook improving-govt official
Tue Aug 25, 2009 7:14pm IST
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MUMBAI, Aug 25 (Reuters) - The outlook for India's steel sector has brightened as the worst of the global economic slowdown has passed, and demand is expected to show annual growth of 10 percent soon, Steel Secretary P.R. Rastogi said on Tuesday.
In July, steel consumption grew by 8.9 percent from a year earlier, the government said in a release.
For April to July, the first four months of 2009/10, consumption grew by 5.8 per cent from a year earlier, it said.
India is the world's fifth-largest steel producer and in 2008/09, it produced 56.4 million tonnes of steel. (Reporting by Ruchira Singh; Editing by John Mair)
Last Updated on : March 19, 2008
DEVELOPMENT OF INDIAN STEEL SECTOR SINCE 1991
The economic reforms initiated by the Government since 1991 have added new dimensions to industrial growth in general and steel industry in particular. Licensing requirement for capacity creation has been abolished, except for certain locational restrictions. Steel industry has been removed from the list of industries reserved for the public sector. Automatic approval of foreign equity investment upto 100% is now available. Price and distribution controls have been removed from January, 1992, with a view to make the steel industry efficient and competitive. Restrictions on external trade, both in import and export have been removed. Import duty rates have been reduced drastically. Certain other policy measures such as reduction in import duty of capital goods, convertibility of rupee on trade account, permission to mobilise resources from overseas financial markets and rationalisation of existing tax structure for a period of time have also benefited the Indian Steel Industry. Production of Iron & Steel
(a)Finished Carbon Steel Production
The total production of finished carbon steel in the country has been 30.11 million tonnes in 2001-02 as compared to 14.33 million tonnes in 1991-92, indicating an increase of 110.12%. Producer-wise production of finished steel. The high share of the secondary sector in finished steel production is largely due to substantial supplies of semis, the basic feed material from the main producers for conversion to needed shapes by rolling.
PRODUCTION OF FINISHED CARBON STEEL (In million tonnes)
Year
MainProducers
SecondaryProducers
GrandTotal
% of share ofSecondary Producers
1991-92
7.96
6.37
14.33
14.5%
1992-93
8.41
6.79
15.20
44.7%
1993-94
8.77
6.43
15.20
42.3%
1994-95
9.57
8.25
17.82
46.3%
1995-96
10.59
10.81
21.40
50.6%
1996-97
10.54
12.18
22.72
53.6%
1997-98
10.44
12.93
23.37
55.32%
1998-99
9.86
13.24
23.82
57.32%
1999-2000
11.20
15.51
26.71
58.07%
2000-2001
12.51
17.19
29.7
57.88%
2001-2002
13.05
17.58
30.63
57.4 %
2002-03
14.39
19.28
33.67
57.27 %
2003-04
15.19
21.00
36.19
58.03 %
2004-05
15.61
24.44
40.05
61.02 %
2005-06 (Prov.)
16.236
26.400
42.636
61.92 %
2006-07
17.390
32.000
49.390
64.79 %
2007-08 (Apr-Jan 08)
14.675
31.900
46.575
68.49 %
(b) Pig Iron Production The total production of Pig Iron was 3.946 million tonnes in 2001-02 as compared to 1.59 million tonnes in 1991-92 registering an increase of 148.18% during the considered period. Earlier Pig Iron was produced primarily by the integrated steel plant of SAIL and RINL. Of late, the share of stand-alone pig iron units has increased significantly.
PRODUCER - WISE PRODUCTION OF PIG IRON (In million tonnes)
Year
Mainproducers
Secondaryproducers
Grandtotal
%age share of theSecondary Producers
1991-92
1.49
0.10
1.59
6.3%
1992-93
1.68
0.17
1.85
9.2%
1993-94
1.98
0.27
2.25
12.0%
1994-95
2.01
0.78
2.79
28.0%
1995-96
1.74
1.06
2.80
37.9%
1996-97
1.73
1.57
3.30
47.5%
1997-98
1.70
1.68
3.39
49.5%
1998-99
1.37
1.60
2.97
53.87%
1999-2000
1.24
1.94
3.18
61.08%
2000-2001
0.96
2.15
3.11
69.13%
2001-2002
1.02
3.05
4.07
75.04 %
2002-2003
1.11
4.18
5.29
79.05 %
2003-04
0.97
4.25
5.22
81.48 %
2004-05
0.625
2.603
3.228
80.63 %
2005-06 (Prov)
1.006
2.850
3.856
73.91 %
2006-07
0.860
4.100
4.960
82.66%
2007-08 (Apr-Jan 08)
0.843
3.550
4.393
80.81%
(c) DRI ProductionThe production of DRI has increased from 1.31 million tonnes in 1991-92 to 5.403 million tonnes in 2001-02, registering an increase of nearly 4.12 times over the considered period. India has emerged as the second largest producer of DRI in the world after Venezuela.
PRODUCTION OF DRI (In million tonnes)
Year
Production
% increase
1991-92
1.31
-
1992-93
1.60
22.1%
1993-94
2.40
50 %
1994-95
3.39
41.3%
1995-96
4.34
28.02%
1996-97
5.05
16.4 %
1997-98
5.32
5.34%
1998-99
5.12
(-)3.8%
1999-2000
5.34
4.30%
2000-2001
5.44
1.90%
2001-2002
5.40
(-) 0.70 %
2002-2003
6.91
27.96 %
2003-04
8.08
16.93 %
2004-05
10.296
-
2005-06 (Apr-Dec)
12.50
21.4 %
2006-07
15.75
-
2007-08 (Apr-Jan 08)
15.500
Import and Export of Iron & Steel
IMPORT OF IRON AND STEEL (In '000 tonnes)
Year
Pig Iron
SteelTOTAL(CARBON)
Total Value(Pig Iron + Steel)(Rs. In Crores)
1991-92
152
1043
1441.32
1992-93
73
1115
1676.00
1993-94
21
1153
1613.00
1994-95
1
1936
2536.00
1995-96
8
1864
3181.00
1996-97
15
1822
3053.00
1997-98
3
1815
2904
1998-99
2
1637
N.A.
1999-2000
3
2200
N.A.
2000-2001
2
1632
N.A.
2001-2002
2
1375
N.A.
2002-2003
1
1510
N.A.
2003-04
2
1650
.N.A.
2004-05
8
2109
N.A.
2005-06 (Prov)
3
3765
N.A.
2006-07 (Partly Estamited)
3
4100
N.A.
2007-08 (Partly Estamited) (Apr-Jan 08)
9
5679
Although India started exporting steel way back in 1964, exports were not regulated and depended largely on domestic surpluses. However, in the years following economic liberalisation, export of steel recorded a quantum jump.
EXPORT OF IRON AND STEEL (In '000 Tonnes)
Year
Pig Iron
Semis
FinishedCarbon Steel
TotalSteel
Total Value(Rs. Crores)
1991-92
-
5
368
373
283
1992-93
16
154
741
895
708
1993-94
620
585
1020
1605
1678
1994-95
466
399
873
1272
1438
1995-96
502
395
925
1320
1939
1996-97
451
300
1622
1922
2231
1997-98
785
503
1880
2383
2512
1998-99
281
174
1770
1944
N.A.
1999-2000
290
328
2670
2998
N.A.
2000-2001
230
195
2805
3000
N.A.
2001-2002
242
270
2730
3000
N.A.
2002-2003
629
460
4506
4966
N.A.
2003-04
576
701
5221
5922
N.A.
2004-05
393
261
4381
4903
N.A.
2005-06 (Prov)
300
350
4350
4700
N.A.
2006-07 (Partly Estamited)
359
375
4750
5125
N.A.
2007-08 (Partly Estamited) (Apr-Jan 08)
368
301
3902
4203
N.A.
Apparent Consumption of Finished Carbon Steel
Apparent consumption (i.e production + imports - exports +/- variation in stocks) of finished steel, year-wise, has been shown below. Apparent consumption represents the actual demand of steel in a particular period/year. It has increased from 14.84 million tonnes in 1991-92 to 27.35 in 2001-02. Increase in apparent consumption has not been uniform, fluctuating from a high of 21.8% to low of 1.2 % reflecting uneven growth in steel demand.
APPARENT CONSUMPTION OF THE FINISHED STEEL(CARBON)(in million tonnes)
Year
Apparent Consumption of Finished Steel
1991-92
14.84
1992-93
15.00 (1.2 %)
1993-94
15.32 (2.0 %)
1994-95
18.66 (21.8 %)
1995-96
21.43 (14.8 %)
1996-97
22.12 (3.2%)
1997-98
22.63(2.3%)
1998-99
23.15(2.3%)
1999-2000
25.01(8.03%)
2000-2001
26.87(7.44%)
2001-2002
27.350 (3.1%)
2002-2003
28.897 (5.32%)
2003-04
31.169 (7.88%)
2004-05
34.389 (10.33%)
2005-06 (Prov)
38.151 (10.9%)
2006-07
43.743
2007-08 (Apr-Jan 08)
43.925
(The figures in brackets indicate the percent increase over the previous year/corresponding period.)
Additional Capacity Creation in Private Sector Since 1991
After de-licensing of Indian Iron and Steel Industry and as a result of the steps taken for creation of additional capacity in the private sector, 19 projects involving a total investment of Rs. 30,835 crores equivalent to a capacity of approx. 13 million tonnes per annum have already been cleared by Financial Institutions and are in various stages of implementation. Already 8 units with a total capacity of Approx 5.45 million tonnes have already been commissioned.
Three byproducts of the iron and steel industries can be used in the manufacture of portlandcement: foundry sand, mill scale, and slag.Foundry sand can provide silica and possibly iron for the production of clinker. Mill scalecontains iron oxides that can replace other iron-bearing materials in the kiln feed. Slagcontains high percentages of calcium oxide and silicon dioxide and varying amounts of alu-minum oxide and iron oxides. All of these components are needed in the cement manufactur-ing process. Select slags can be interground with the portland cement to produce a blendedcement product. Foundry sand and some slags can replace natural stone as an aggregate inportland cement concrete. Nearly 70% of U.S. portland cement plants use oneor more of these byproducts to produce clinker or cement.Foundry SandFoundry sand forms the mold into which molten metal is poured for casting iron, steel, andother metal components. After multiple uses, this high-quality silica sand degrades and isno longer used. In the United States, there are approximately 3,000 foundries that producecollectively 6 to 10 million short tons of foundry sand per year [FHWA 2004]. Because usedfoundry sand may contain trace amounts of metals from the castings, chemical binders usedin shaping the molds, and other impurities, portland cement plants carefully analyze andmonitor the foundry sands they use
Mill ScaleDuring the processing of steel, iron oxides will form on the surface of the metal. These oxides,known as mill scale, occur during continuous casting, reheating, and hot rolling operations.The scale is removed by water sprays and often recycled by the steel plant. Mill scale thatcannot be recycled by steel plants has been used by portland cement plants as an iron source.Although the total amount of mill scale used by portland cement plants is unknown, in 2005,51 plants were using it as a raw material in the manufacture of clinker (Figure 2).SlagThere are two major types of slag: blast furnace slag and steel furnace slag. Blast furnace slag isa byproduct from the smelting of iron ore or iron pellets with coke and a flux, such as limestoneor dolomite. The calcium in the stone combines with the aluminates and silicates in the ore andash from the coke to produce this non-metallic material [NSA undated]. The slag is removed from the furnace for further processing. Blast furnace slag can be used in the production ofclinker, blended cements, and/or as an aggregate in portland cement concrete.Steel slag is a byproduct from the processing of iron or scrap steel in a basic oxygenfurnace or electric arc furnace. Once again, limestone or dolomite is used as a flux to removeimpurities [NSA undated]. The steel furnace slag is air cooled, and after free iron products areremoved, it can be used as a raw material in the manufacture of clinker [NSA undated]. For2003, the United States Geographical Survey estimated that 8.8 million metric tons of steelfurnace slag was produced, and that over 5% of it was used by cement plants to produceclinker [USGS 2003].In 2005, 39 portland cement plants were using slag as a raw material in the manufacture ofclinker, and 11 plants were blending it into one or more cement products. (Figure 3 shows thelocations of the plants utilizing slag.)
'37'
STEEL AND CONSTRUCTION INDUSTRY – RECENT TRENDS
-V. Suresh*
Steel as a basic ingredient in construction has come a long way in the evolution chain. While the Eiffel Tower made in steel stands tall as the landmark for Paris, the Howrah bridge and Vidyasagar Setu across River Hooghly in Calcutta sing laurels to the amazing capabilities of this ingenious building material. The tallest building in the world, viz. Petronas Twin Towers of Kuala Lumpur, Malaysia have high-strength steel-reinforced concrete frame, with the exterior sheathed in stainless steel. The record-breaking height of 451.9 m has been attributed to the steel spires, forming the integral pinnacle of the Petronas towers.
An international survey conducted recently has indicated a relationship between the proportional share of steel in construction and the national Gross Domestic Product (GDP). The study has indicated that the consumption of steel in construction induces a faster pace in the growing economy. In 1996-97 the total production of finished steel in India stood at 22.72 million ton and in the fiscal year 97-98 production was at a level of 23.37 million ton. The total consumption of finished steel in 1997-98 by all sectors was indicated as 22.6 million tonnes.
The Housing construction sector besides being an opportunity for catering to the housing need is a major kick starter for the economy. For every one crore rupees of investment in housing, nearly 290 industries in the building material sector get activated besides the core manufacturing sector constituting cement, steel and bricks. The consequent employment opportunities generated amount to an order of nearly 750 man-years. Thus we achieve a three-in-one solution of employment generation, economic development and human development through investments in housing. The application of steel in construction is catching on at a fast pace in the developing world. Starting from the reinforcement as a basic ingredient of RCC, steel is being used for every conceivable application replacing timber in the provision of joinery and household furniture.
Despite construction segment being the backbone of infrastructure development, the proportionate share of domestic consumption of steel has shown a gradual but distinct decline over the past a few years. From the high of 51 per cent market share in 1982-83, it came down to 46 per cent in 1987-88. During 1997-98, it further got lowered to 41 per cent. In 1997-98, total consumption of steel by this sector was 9 million tons which was only 41 per cent of the total steel consumption in India. The per capita consumption of steel in India is one of the lowest, being around 15 Kg. compared to 700 Kg. in Japan and 500 Kg. in USA. Presently, the usage of steel in the construction segment is dominated by traditional mild steel long products. Of late, some specialised products such as corrosion resistant structural bars have come into use but the overall share of flat and special products in the pool of construction materials remains much below the international level. The alarming trend of decline in steel usage in Indian construction industry, in favour of reinforced and pre-stressed concrete in buildings, bridges and railway sleepers is contrary to the scenario in the international arena.
In India, growth of urban population during the past decade indicates higher growth for metro cities. There are 6 mega cities ( 4 million plus) and 23 metropolitan cities in the country, which are expected to increase to 40 by 2001 AD. There are also, 300 large towns (0.1 million) and 3,396 small and medium towns (less than 0.1 million population). With economic liberalisation and expected higher economic growth, rate of urbanisation in India in coming decades is likely to increase. This will put an unprecedented demand for growth of urban areas with adequate housing and associated infrastructure.
The National Buildings Organisation (NBO) had estimated the urban housing shortage in 1991 at 8.23 million dwelling units. Keeping in view trends from 1961-1991 in the nature of additionality in housing stock, the overall urban housing shortage of 7.57 million DUs was projected for 1997. As per 1991 census of India projections, out of 22.9 million housing shortage, 8.23 million DUs was in urban areas while 14.67 million DUs in rural areas. With the additionality of 16.5 million in housing stock in five years, the net shortage has been estimated to be 6.64 million DUs by 2001. The new housing demand during the period 1997-2002 has been gauged as 8.8 million dwelling units.
It is estimated that the urban housing sector alone would require a total investment of Rs.1,21,371 crores during the next five years to meet the requirement of housing shortage of 75.7 lakhs DUs, upgradation of 3.2 lakh semi-pucca EWS units and the additional construction requirement of 86.7 lakh units. The total fund requirement including rural housing need would be 1,50,000 crores whereas the total availability is Rs.52,000 crores only from the formal sector (Rs.34,000 crores for urban and Rs.18,000 crores for rural housing).
The average percentage investment of steel in normal construction is estimated as 9 per cent of the total cost of the project. This means that every crore of investment in construction requires 9 lakhs of investment in steel. This means that every crore worth of construction utilises nearly 54 tonnes of steel at prevailing market rates. Accordingly in order to meet the requirements in construction, an investment of Rs.33,423.4 crores in steel will be required to meet the infrastructural investments till year 2006.
The National Sample Statistics Organisation has estimated that the materials component accounts for more than 75 per cent to 78 per cent of the construction cost in residential housing. The break-up of the total construction cost indicates that I ron and Steel accounts for 10.35 per cent of the total construction cost in urban areas and 7.87 per cent in the rural areas. Building materials and Technology Promotion Council (BMTPC) has estimated the cumulative expenditure by households on iron and steel in the period 2001-2011 at Rs. 945,174 million in urban areas and Rs. 359,349 million in rural areas.
The aggregate demand for Steel in construction sector identified for the period 1996-2001 is 63.63 million tonnes while the projections for the period 2001-2006 is 100.57 million tonnes and for period 2006-2011 is 158.72 million tonnes. Assuming that construction sector accounts for consumption of 45 per cent of the steel produced, the projections for availability indicate 64.67 million tonnes during the period 1996-2001, 104.15 tonnes during 2001-2006 and 167.74 tonnes during 2006-2011, indicating a trend of surplus availability in the housing sector against projected demand.
According to BMTPC estimates, the requirement of finished steel during the period 1996-2001 will be 8.65 million tonnes in urban housing and 3.31 million tonnes in rural housing. The requirement for the entire construction sector would be 63.63 million tonnes. The declining uses of steel in construction sector is certainly a matter of concern for the steel industry and overall growth of economy. And therefore, there is urgent need to provide a stimulus to the uses of steel in the sector. For this, perhaps, we may have to introduce a sensitisation programme for those engaged in the construction sector to enable them to better comprehend the advantages of usage of steel in construction.
Role of Iron and Steel Industry in India GDP
The Role of Iron and Steel Industry in India GDP is very important for the development of the country. In India the visionary Shri Jamshedji Tata set up the first Iron and Steel manufacturing unit called Tata Iron and Steel Company, at Jamshedpur in Jharkhand. Iron and steel are among the most important components required for the infrastructure development in the country.
Role of Iron and Steel Industry in India GDP-Facts
The Iron and Steel Industry in India is one of the fastest growing sectors
The demand drivers for the Indian Iron and Steel industry are increase in the activities of the automobiles industry, real estates industry, transportation system, aircraft industry, ship building industry, etc.
India ranks 5th in the world in terms of production of steel
The amount of crude steel produced in 2006-07 was 50.71 million tonnes
The amount of finished steel produced in 2006-07 was 51.9 million tonnes
The production of finished steel was increased by 16.52%
The production of finished carbon steel was 24.8 million tonnes in the year 2006-07
It is expected that India would become the second biggest producer of steel within the year 2016 and the production per year would be 137 million tonnes
The exports pertaining to the steel industry was 6.26 % during the period 2006-07
Role of Iron and Steel Industry in India GDP-Consumption
The domestic consumption of steel has grown by12.5% in the past three years
The domestic steel consumption in the year 2006-07 was 41.14 million tonnes
The average growth rate of the Indian Iron and Steel Industry is 11.36%
The construction projects all over India are major consumer of steel
The per capita consumption of steel in India is 35kgs
As the per capita consumption of steel is lower than other countries, so the steel industry has huge opportunities in the future
Role of Iron and Steel Industry in India GDP-Growth in Future
The Arcelor Mittal, which is the largest steelmaker in the world, has plans of establishing two Greenfield steel projects with capacity of 12 million tonnes annually, in India
Acerinox SA, one of the important stainless steel manufacturers in collaboration with Nisshin Steel, Japan is setting up a steel plant in India
The Tata Steel ranks 5th in the world steel production and the company have plans of expanding its capacity by the year 2015
SAIL, India's biggest producer of steel has plans of increasing the production to 24.98 million tonnes annually
Sinosteel Corp, China are planning to invest US$ 4 billion to set up a 5 million tonnes capacity Greenfield steel plant
The acquisition of the Corus, the Anglo-Dutch steel manufacturer by the Tata Steel
The Algoma Steel, Canada was acquired by Essar Global for US$ 1.63 billion
The production of iron by humans began probably sometime after 2000 BCE in south-west or south-central Asia, perhaps in the Caucasus region. Thus began the Iron Age, when iron replaced bronze in implements and weapons. This shift occurred because iron, when alloyed with a bit of carbon, is harder, more durable, and holds a sharper edge than bronze. For over three thousand years, until replaced by steel after CE 1870, iron formed the material basis of human civilization in Europe, Asia, and Africa.
Iron is the fourth most abundant element and makes up more than five percent of the earth’s crust. Iron exists naturally in iron ore (sometimes called ironstone). Since iron has a strong affinity for oxygen, iron ore is an oxide of iron; it also contains varying quantities of other elements such as silicon, sulfur, manganese, and phosphorus. Smelting is the process by which iron is extracted from iron ore. When iron ore is heated in a charcoal fire, the iron ore begins to release some of its oxygen, which combines with carbon monoxide to form carbon dioxide. In this way, a spongy, porous mass of relatively pure iron is formed, intermixed with bits of charcoal and extraneous matter liberated from the ore, known as slag. (The separation of slag from the iron is facilitated by the addition of flux, that is, crushed seashells or limestone.) The formation of this bloom of iron was as far as the primitive blacksmith got: he would remove this pasty mass from the furnace and hammer it on an anvil to drive out the cinders and slag and to compact the metallic particles. This was wrought iron (“wrought” means “worked,” that is, hammered) and contained generally from .02 to .08 percent of carbon (absorbed from the charcoal), just enough to make the metal both tough and malleable. Wrought iron was the most commonly produced metal through most of the Iron Age.
At very high temperatures (rare except in a blast furnace -- see below), a radical change takes place: the iron begins to absorb carbon rapidly, and the iron starts to melt, since the higher carbon content lowers the melting point of the iron. The result is cast iron, which contains from 3 to 4.5 percent carbon. This high proportion of carbon makes cast iron hard and brittle; it is liable to crack or shatter under a heavy blow, and it cannot be forged (that is, heated and shaped by hammer blows) at any temperature. By the late Middle Ages, European ironmakers had developed the blast furnace, a tall chimney-like structure in which combustion was intensified by a blast of air pumped through alternating layers of charcoal, flux, and iron ore. (Medieval ironworkers also learned to harness water wheels to power bellows to pump the air through blast furnaces and to power massive forge hammers; after 1777, James Watt’s new steam engine was also used for these purposes.) Molten cast iron would run directly from the base of the blast furnace into a sand trough which fed a number of smaller lateral troughs; this configuration resembled a sow suckling a litter of piglets, and cast iron produced in this way thus came to be called pig iron. Iron could be cast directly into molds at the blast furnace base or remelted from pig iron to make cast iron stoves, pots, pans, firebacks, cannon, cannonballs, or bells (“to cast” means to pour into a mold, hence the name “cast iron”). Casting is also called founding and is done in a foundry.
Ironmakers of the late Middle Ages also learned how to transform cast pig iron into the more useful wrought iron by oxidizing excess carbon out of the pig iron in a charcoal furnace called a finery. After 1784, pig iron was refined in a puddling furnace (developed by the Englishman Henry Cort). The puddling furnace required the stirring of the molten metal, kept separate from the charcoal fire, through an aperture by a highly skilled craftsman called a puddler; this exposed the metal evenly to the heat and combustion gases in the furnace so that the carbon could be oxidized out. As the carbon content decreases, the melting point rises, causing semi-solid bits of iron to appear in the liquid mass. The puddler would gather these in a single mass and work them under a forge hammer, and then the hot wrought iron would be run through rollers (in rolling mills) to form flat iron sheets or rails; slitting mills cut wrought iron sheets into narrow strips for making nails.
While blast furnaces produced cast iron with great efficiency, the process of refining cast iron into wrought iron remained comparatively inefficient into the mid-1800s. Historian David Landes writes: “The puddling furnace remained the bottleneck of the industry. Only men of remarkable strength and endurance could stand up to the heat for hours, turn and stir the thick porridge of liquescent metal, and draw off the blobs of pasty wrought iron. The puddlers were the aristocracy of the proletariat, proud, clannish, set apart by sweat and blood. Few of them lived past forty. Numerous efforts were made to mechanize the puddling furnace – in vain. Machines could be made to stir the bath, but only the human eye and touch could separate out the solidifying decarburized metal. The size of the furnace and productivity gains were limited accordingly” (The Cambridge Economic History of Europe, Vol. VI, Part I, 1966, p. 447).
Another important discovery in the 1700s (by the Englishman Abraham Darby) was that coke (a contraction of “coal-cake”), or coal baked to remove impurities such as sulfur, could be substituted for charcoal in smelting. This was an important advance since charcoal production had led to severe deforestation across western Europe and Great Britain.
Steel has a carbon content ranging from .2 to 1.5 percent, enough carbon to make it harder than wrought iron, but not so much as to make it as brittle as cast iron. Its hardness combined with its flexibility and tensile strength make steel far more useful than either type of iron: it is more durable and holds a sharp edge better than the softer wrought iron, but it resists shock and tension better than the more brittle cast iron. However, until the mid 1800s, steel was difficult to manufacture and expensive. Prior to the invention of the Bessemer converter (described below), steel was made mainly by the so-called cementation process. Bars of wrought iron would be packed in powdered charcoal, layer upon layer, in tightly covered stone boxes and heated. After several days of heating, the wrought iron bars would absorb carbon; to distribute the carbon more evenly, the metal would be broken up, rebundled with charcoal powder, and reheated. The resulting blister steel would then be heated again and brought under a forge hammer to give it a more consistent texture. In the 1740s, the English clockmaker Benjamin Huntsman, searching for a higher-quality steel for making clock springs, discovered that blister steel could be melted in clay crucibles and further refined by the addition of a special flux that removed fine particles of slag that the cementation process could not remove. This was called crucible steel; it was of a high quality, but expensive.
To sum up so far: wrought iron has a little carbon (.02 to .08 percent), just enough to make it hard without losing its malleability. Cast iron, in contrast, has a lot of carbon (3 to 4.5 percent), which makes it hard but brittle and nonmalleable. In between these is steel, with .2 to 1.5 percent carbon, making it harder than wrought iron, yet malleable and flexible, unlike cast iron. These properties make steel more useful than either wrought or cast iron, yet prior to 1856, there was no easy way to control the carbon level in iron so as to manufacture steel cheaply and efficiently. Yet the growth of railroads in the 1800s created a huge market for steel. The first railroads ran on wrought iron rails which were too soft to be durable. On some busy stretches, and on the outer edges of curves, the wrought iron rails had to be replaced every six to eight weeks. Steel rails would be far more durable, yet the labor- and energy-intensive process of cementation made steel prohibitively expensive for such large-scale uses.
The mass-production of cheap steel only became possible after the introduction of the Bessemer process, named after its brilliant inventor, the British metallurgist Sir Henry Bessemer (1813-1898). Bessemer reasoned that carbon in molten pig iron unites readily with oxygen, so a strong blast of air through molten pig iron should convert the pig iron into steel by reducing its carbon content. In 1856 Bessemer designed what he called a converter, a large, pear-shaped receptacle with holes at the bottom to allow the injection of compressed air. Bessemer filled it with molten pig iron, blew compressed air through the molten metal, and found that the pig iron was indeed emptied of carbon and silicon in just a few minutes; moreover, instead of freezing up from the blast of cold air, the metal became even hotter and so remained molten. Subsequent experimentation by another British inventor, Robert Mushet, showed that the air blast actually removed too much carbon and left too much oxygen behind in the molten metal. This made necessary the addition of a compound of iron, carbon, and manganese called spiegeleisen (or spiegel for short): the manganese removes the oxygen in the form of manganese oxide, which passes into the slag, and the carbon remains behind, converting the molten iron into steel. (Ferromanganese serves a similar purpose.) The blast of air through the molten pig iron, followed by the addition of a small quantity of molten spiegel, thus converts the whole large mass of molten pig iron into steel in just minutes, without the need for any additional fuel (as contrasted with the days, and tons of extra fuel and labor, required for puddling and cementation).
One shortcoming of the initial Bessemer process, however, was that it did not remove phosphorus from the pig iron. Phosphorus makes steel excessively brittle. Initially, therefore, the Bessemer process could only be used on pig iron made from phosphorus-free ores. Such ores are relatively scarce and expensive, as they are found in only a few places (e.g. Wales and Sweden, where Bessemer got his iron ore, and upper Michigan). In 1876, the Welshman Sidney Gilchrist Thomas discovered that adding a chemically basic material such as limestone to the converter draws the phosphorus from the pig iron into the slag, which floats to the top of the converter where it can be skimmed off, resulting in phosphorus-free steel.(This is called the basic Bessemer process, or the Thomas basic process.) This crucial discovery meant that vast stores of iron ore from many regions of the world could be used to make pig iron for Bessemer converters, which in turn led to skyrocketing production of cheap steel in Europe and the U.S. In the U.S., for example, in 1867, 460,000 tons of wrought iron rails were made and sold for $83 per ton; only 2550 tons of Bessemer steel rails were made, fetching a price of up to $170 per ton. By 1884, in contrast, iron rails had virtually ceased to be made at all; steel rails had replaced them at an annual production of 1,500,000 tons selling at a price of $32 per ton. Andrew Carnegie’s genius for lowering production costs would drive prices as low as $14 per ton before the end on the century. (This drop in cost was accompanied by an equally dramatic increase in quality as steel replaced iron rails: from 1865 to 1905, the average life of a rail increased from two years to ten and the car weight a rail could bear increased from eight tons to seventy.)
The Bessemer process did not have the field to itself for long as inventors sought ways around the patents (over 100 of them) held by Henry Bessemer. In the 1860s, a rival appeared on the scene: the open-hearth process, developed primarily by the German engineer Karl Wilhelm Siemens. This process converts iron into steel in a broad, shallow, open-hearth furnace (also called a Siemens gas furnace since it was fueled first by coal gas, later by natural gas) by adding wrought iron or iron oxide to molten pig iron until the carbon content is reduced by dilution and oxidation. Using exhaust gases to preheat air and gas prior to combustion, the Siemens furnace could achieve very high temperatures. As with Bessemer converters, the use of basic materials such as limestone in open-hearth furnaces helps to remove phosphorus from the molten metal (a modification called the basic open-hearth process). Unlike the Bessemer converter, which makes steel in one volcanic rush, the open-hearth process takes hours and allows for periodic laboratory testing of the molten steel so that steel can be made to the precise specifications of the customer as to chemical composition and mechanical properties. The open hearth process also allows for the production of larger batches of steel than the Bessemer process and the recycling of scrap metal. Because of these advantages, by 1900 the open hearth process had largely replaced the Bessemer process. (After 1960, it was in turn replaced by the basic oxygen process, a modification of the Bessemer process, in the production of steel from iron ore, and by the electric-arc furnace in the production of steel from scrap.)
Unlike many of his competitors, Andrew Carnegie was quick to recognize the importance of the Bessemer, Thomas basic, and open-hearth processes. He was also among the first steelmakers to grasp the vital importance of chemistry in steelmaking. These became keys to his success as a steel manufacturer.
The mass production of cheap steel, made possible by the discoveries described above (and many others not mentioned), has revolutionized our world. Consider a brief and incomplete list of the products made possible (or better or more affordable) by cheap, abundant steel: railroads, oil and gas pipelines, refineries, power plants, power lines, assembly lines, skyscrapers, elevators, subways, bridges, reinforced concrete, automobiles, trucks, buses, trolleys, refrigerators, washing machines, clothes dryers, dishwashers, nails, screws, bolts, nuts, needles, wire, watches, clocks, canned food, battleships, aircraft carriers, oil tankers, ocean freighters, shipping containers, cranes, bulldozers, tractors, farm implements, fences, knives, forks, spoons, scissors, razors, surgical instruments, ball-bearings, turbines, drill bits, saws, and tools of every sort.
In view of his moral failings, can we really consider Carnegie a “portrait of human greatness?” The case for an affirmative answer is this. We are heirs to thousands of years of technological progress, and we benefit every day from the ingenuity and hard work of many thousands of blacksmiths, ironworkers, steelworkers, engineers, inventors, chemists, metallurgists, and entrepreneurs, long since deceased, one of whom was Carnegie and few of whom were saints. Our standard of living today owes much to Carnegie’s entrepreneurial drive, self-education, and genius for efficiency. Whatever his flaws – and who among us has none? – Carnegie embodied a type of human greatness that deserves our appreciation and gratitude. Without forgetting the contributions of others (especially his workers), we should make the same judgment about Carnegie that Stephen Ambrose makes about the men who built the first transcontinental railroad: “Things happened as they happened. It is possible to imagine all kinds of different routes across the continent, or a better way for the government to help private industry, or maybe to have the government build and own it. But those things didn’t happen, and what did take place is grand. So we admire those who did it – even if they were far from perfect – for what they were and what they accomplished and how much each of us owes them.” (Nothing Like It In the World [New York: Simon and Schuster: 2000], p. 382)
AN OVERVIEW OF STEEL SECTOR
Global Scenario
Market Scenario
Production
Demand - Availability Projection
Pricing & Distribution
Imports of Iron & Steel
Exports of Iron & Steel
Duties & Levies on Iron & Steel
Excise Duty
Levies on Iron & Steel
Opportunities for growth of Iron and Steel in Private Sector
Global Scenario
In 1998, World Steel output has declined by about 2.8%.
Global steel prices have also declined
While developed countries have been characterised by stable markets, SE Asian markets have been gripped by instability.
There has been a decline in exports of Indian steel to S.E. Asia.
On the other hand domestic steel production faced dumping from S.E. Asian countries in addition to CIS nations.
Slackening demand in major S.E. Asian markets led to highly competitive global market.
Japan is the top global exporter of steel followed by Germany & Russia.
USA is the top global importer of steel followed by China & Germany.
China is the world’s largest steel producer (114.3 Million Tonnes) followed by USA (97.7Million Tonnes) and Japan (93.5 million tonnes.) India occupies the 10th position(24 Million Tonnes).
Per-capita steel consumption is the highest in North America (about 450 kg. of steel). For India, it is about 22 kg.
Market Scenario
After liberalisation, there have been no shortages of iron and steel materials in the country.
Apparent consumption of steel increased from 14.84 Million Tonnes in 1991-92 to 23.54 Million Tonnes in 1998-99.
During the current year, domestic consuming industries like housing, infrastructure projects, power projects, fertilizer projects, auto sector, white good sector have shown a slump in demand for steel.
Steel industry has thus been facing a demand recession. Inventories of Main Producers have gone up.
Efforts are being made to boost demand and also increase exports.
Prices of iron and steel have declined while input costs have gone up.
Production
Steel industry was delicensed and decontrolled in 1991 & 1992 respectively.
India is the 10th largest steel producer of steel in the world.
In 1999-2000, record finished steel production – 26.71 Million Tonnes.
Pig Iron production in 1999-2000 was 3.16 Million Tonnes.
Sponge Iron Production was 5.34 Million Tonnes in 1999-2000.
32% of steel production is by public sector, 68% by private sector.
Integrated Steel Plants(Main Producers) produce 42% of finished steel and 58% from Electric Arc Furnaces, Induction Furnaces and Rerollers (Secondary Producers)
Last 4 years production, performance and projections (Million Tonnes)
1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02(P)
Pig Iron
3.29
3.39
3.00
3.18
3.11
4.65
Sponge Iron
5.00
5.32
5.11
5.34
5.44
6.18
Finished Steel
22.72
23.37
23.84
26.71
29.70
32.01
Production in 2000-01(in million tonnes)
Main Producers
Secondary Producers
Total
Pig Iron
0.96 (-22.58%)
2.15 (11.40%)
3.11 (-2.20%)
Sponge Iron
-
5.44 (1.87%)
5.44 (1.87%)
Finished Steel
12.51 (11.70%)
17.19 (10.83%)
29.70 (11.19%)
**Figures in brackets indicate % increase over last year
Demand - Availability Projection
Annual Demand - Availability of iron and steel projected by Ministry
Projection for 1999-2000& 2001-02
(Million Tonnes)
Year
Items
Domestic Demand
Availability
Gap
1999-2000
Pig Iron
3.07
2.94
(-) 0.13
Sponge Iron
?
5.154
Finished Steel
25.21
25.38
(+)0.17
2001-02
Pig Iron
3.45
4.65
(+)1.20
Sponge Iron
7.67
6.68
(-)0.99
Finished Steel
32.68
38.01
(+)5.33
Gaps in Availability are met mostly through imports.
Interface with consumers by way of a Steel Consumer Council exists. Council is headed by Steel Minister.
Interface helps in redressing - availability problems, quality complaints
At present there is no shortage of iron and steel products in the country.
Pricing & Distribution
Price regulation of iron & steel was abolished on 16.1.1992.
Distribution controls on iron & steel removed except 5 priority sectors, viz. Defence,Railways,Small Scale Industries Corporations,Exporters of Engineering Goods and North Eastern Region
Allocation to priority sectors is made by Development Commissioner for Iron & Steel.
Govt. has no control over prices of iron & steel
Open Market Prices have been generally stable.
Price increases have taken place mostly in long products mainly attributable to rise in input costs.
Imports of Iron & Steel
Iron & Steel are freely importable as per the Extant Policy.
India has been annually importing around 1.5 Million Tonnes of steel.
Last 6 year imports
Qty. in Million Tonnes
1994-95
1.93
1995-96
1.86
1996-97
1.82
1997-98
1.81
1998-99
1.64
1999-2000
2.20
2000-01 (Prov.)
1.63
Rising trend of imports during last few years is indicative of unhindered imports/dumping from CIS countries.
To check unbridled cheap imports of steel the Government has fixed floor prices for seven items of finished steel viz. HR coils, HR sheets, CR coils, Tinplates, CRNO and ASBR.
Anti dumping duty has been levied on import of HR coils from Russia and Ukraine.
Exports of Iron & Steel
Iron & Steel are freely exportable.
Advance Licensing Scheme allows duty free import of raw materials for exports.
Duty Exemption Pass Book Scheme also facilitates exports.
Iron & Steel exports showed a significant increase during last few years.
In 1998-99 exports declined.
Many steel products were subject to anti-dumping/anti subsidy duties/investigations in EU/USA during the year.
Last 6 year Exports
Qty. in Million Tonnes
1994-95
1.79
1995-96
2.00
1996-97
2.32
1997-98
2.66
1998-99
2.20
1999-2000
3.28
2000-01 (Prov.)
3.23
Steel Exporters Forum has been recently set up to boost steel exports.
Duties & Levies on Iron & SteelCustom Duties
Peak rate of custom duty has been reduced sharply during last 5 years.
At present peak rate of duty is 35% advalorem.
This has forced domestic industry to become internationally competitive.
Due to lowering of duty, steel imports have marginally increased and this has also led to Dumping of finished steel from CIS countries.
Excise Duty
Excise Duty on iron & steel has not been reduced in successive budgets.
At present excise duty on all iron and steel is 16% ad valorem called CENVAT.
High excise duty has made domestic industry unviable.
Levies on Iron & Steel
At the time of decontrol - only 3 levies
- Steel Development Fund (SDF) levy- Engineering Goods Export Assistance Fund(EGEAF) Levy- JPC CessAt present only JPC Cess continues. Others abolished.SDF- Was a levy started for funding modernisation, expansion and development of steel sector
Fund inter alia supports
1. Capital expenditure for modernisation, rehabilitabon, diversification, renewal & replacement of Integrated Steel Plants.
2. Research & Development
3. Rebates to SSI Corporations
4. Expenditure on ERU of JPC
Fund was abolished on 21.4.94
Cabinet decided that
Corpus could be recycled for loans to Main Producers
Interest on loans to Main Producers be set aside for promotion of R & D
An Empowered Committee has been recently set up to guide the R & D effort in this sector.
EGEAF -- Was a levy started for reimbursing the price differential cost of inputs used for engineering exporters.Fund was discontinued on 19.2.96
JPC Cess --A Cess was levied on erstwhile JPC categories of steel items by main producers to meet the administrative expenses of JPC.
Opportunities for growth of Iron and Steel in Private Sector
The New Industrial Policy Regime
The new industrial policy has opened up the iron and steel sector for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.
The Growth Profile
(i) Steel
The liberalization of industrial policy and other initiatives taken by the Govt. has given a definite impetus for growth of the private sector. While the existing units are being modernized/expanded, a large number of new/ greenfield steel plants are coming up in the country based on modern, cost effective, state-of-the art technologies. So far 19 new steel plants with a total capacity of approx. 13 million tonnes per annum (MTPA). Of these, 6 units with a total capacity of around of 3.5 million tonnes have already been commissioned. In addition, 4 more units have been partly commissioned and covering a total capacity of approx. 2.9 million tones. Other projects are at various stages of implementation.
Increasing role of private sector in total production can be seen from the fact that its share has increased from 51.4% in 1991-92 to approximately 67% in 1998-99. This trend is likely to continue.
(ii) Pig Iron
In pig iron also, the growth has been substantial. Prior to 1991, there was only one unit in the secondary sector. Post liberalization, the AIFIs have sanctioned 21 new projects with a total capacity of approx.3.9 million tonnes. Of these, 16 units have already been commissioned. Others are at various stages of implementation.
The production of pig iron has also increased from 1.6 million tonnes in 1991-92 to 3 million tonnes in 1998-99. The share of Private/secondary sector has been approx. 53% which is likely to increase gradually.
(iii) Sponge Iron
The growth of sponge iron sector has been phenomenal during the last 5 years in terms of both capacity and production. Installed capacity has increased from approx. 1.5 MTPA in 1990-91 to a current level of approx. 6.5 MTPA, while the production has grown from 0.9 MT 1990-91 to approx. 5.11 MT in 1998-99.
FDI in Steel Industry
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The foreign direct investment in India being made in the steel industry of India has been picking up in the recent years as a result of the immense growth potential of the country's steel industry. In the Asian continent India is second only to China in terms of growth potential. The gross domestic product of India has increased in the recent times.This has sparked off the demand for production of steel in the country and the production has increased as well. In the recent times India has been among the top producers of crude steel of the world. All these factors are supposed to be important for attracting foreign direct investment in the Indian steel industry. The Indian national government also has been pretty liberal with their approach to the foreign direct investment being made in the country. The Indian government has also relaxed the various foreign investment laws. This has led to more international steel giants coming to India to tap the abundant resources present in the country.
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The increased interest shown by such companies has led to a growth in the steel industry of India. Research and studies have shown that Orissa and Jharkhand would be the steel junctions of India. In the recent times these two states, which are located in the eastern part of India, have been experiencing a number of steel projects in India. These projects have been funded by the Indian national government, as well as, a number of companies that are forces to reckon with in the context of the Indian steel industry.Since, the government has also been taking steps to make sure that the production and demand for Indian steel remains high in the international market, it may be assumed that an increasing number of companies from around the world would be interested in the Indian steel industry
Indian and Chinese enterprises have emerged as important outward investors in recent times with their involvement in a number of prominent Greenfield investments and acquisitions. The theory of international business posits that the ownership of some unique advantages having a revenue-generating potential abroad combined with the presence of internalization and locational advantages leads to outward foreign direct investment. Conventional multinational enterprises (MNEs) based in the industrialized countries have grown on the strength of ownership advantages derived from innovatory activity that is largely concentrated in these countries. It examines the case of the steel industry that has become an important sector of overseas activity for Chinese and Indian companies with a string of major acquisitions of foreign MNEs for acquiring footprints and natural resources in order to identify the sources of ownership advantages and strategies of outward investments from emerging countries.
The effects of Globalization on Indian steel industry have been felt more profoundly in the past few years. The India steel industry is one of the major industries in India. The effects of Globalization on Indian steel industry are not same throughout the country. The effects depend on the different regions, the type of raw materials used, the condition of the markets, technological advancements, the policies of the governmental authorities pertaining to the trade and business activities of the Indian steel industry, etc. In this age of the globalization, as the other industries of the developing countries, the Indian steel manufacturing sector needs to restructure itself, in order to have a sustainable growth. This will be very helpful for providing the correct strategies for the steel industry in India. The restructuring should depend on the different requirements of the steel industry. The government played a very important role in the development of the steel industry in India. The India steel industry is experiencing a slow but steady growth. The steel industry in India has huge scopes in the future with massive scale of infrastructural development happening all across the country. The steel industry in India caters to many other industrial sectors such as construction industry, mining industry, transportation industry, automobile industry, engineering industry, chemical industry, etc. The steel segment includes the manufacturing of three different kinds of steel such as carbon steel, ferro-chrome steel, and stainless steel. The steel industry in India has further plans of development. Plans are being chalked out on setting up of three pig iron manufacturing units of the combined capacity of 6 lakh tons per year and a steel manufacturing unit of the capacity of producing 1 million tons yearly in West Bengal, with the technical and financial support of China. With all these developments steel industry in India is all set to become one of the most reputed industries not only in India but also in the international market as suggested by experts. In order to survive the immense competition under the globalization, the Indian steel industry plans a reversal of the production of steel industry. The main objectives of the strategy is the derivation of the benefit from the optimum utilization of the plant capacity, the nullification of any form of drawbacks, to track the opportunities in order to get the maximum from it and to tackle the possible threats. The strategy suggested for the reversal of the steel industry in India is double layered in nature, effecting the reversal and at the same time sustaining the reversal. The strategy has to be growth and survival oriented. The survival part would assure the survival of the industry in the fierce competitive atmosphere and the growth part would boost the sustainable growth of the industry. The two different parts of the strategy has to be integrated into one to have the expected results. The reduction of the cost is another major factor in the survival of the Indian steel industry in the age of globalization. The cost reduction would be the main aspect of the improvement pertaining to the competitiveness of the industry. The manufacturers under the steel industry in India have to focus their attention in the areas such as:
The reduction in the cost of operations
The reduction in the costs pertaining to the working capital
The reduction in the costs pertaining to the production inventory or stock that is not sold
The improvement in the economics operating in the technological aspects of production
The transposition of basic materials of production
The sources of the procurement should be different
India Key Industry
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SteelThe iron and steel industry in India is over 122 years old. However, a concerted effort to increase the steel output was made only in the early years of planning. Three integrated steel plants were set up at Bhilai, Durgapur and Rourkela. Later two more steel plants, at Bokaro and Vishakhapatnam, were set up. Private sector plants, of which the Tata Iron and Steel Company (TISCO) is the biggest, have been allowed to raise their capacity. TISCO and a large number of mini steel plants in the country contribute about 40 per cent of the steel production in the country. The Government has given a push to sponge iron plants to meet the secondary sector's requirement of steel scrap. Engineering and Machine Tools
Among the Third-World countries, India is a major exporter of heavy and light engineering goods, producing a wide range of items. The bulk of capital goods required for power projects, fertilizer, cement, steel and petrochemical plants and mining equipment are made in India. The country also makes construction machinery, equipment for irrigation projects, diesel engines, tractors, transport vehicles, cotton textile and sugar mill machinery. The engineering industry has shown its capacity to manufacture large-size plants and equipment for various sectors like power, fertilizer, and cement. Lately, air pollution control equipments are also being made in the country. The heavy electrical industry meets the entire domestic demand. ElectronicsThe electronics industry in India has made rapid strides in recent years. The country produces electronics items worth over Rs. 200 billion annually. The Software Technology Park scheme for attracting investments has proved successful. The relative low cost of production in India makes items made in India competitive in the world market.
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Some of the major items manufactured in India are computers, communication equipment, broadcasting and strategic electronics, television sets, microwave ovens, and washing machines.
The compound growth of the computer industry has been 50 per cent during the last five years. With the availability of trained technical manpower, computers have been identified as a major thrust area. Special emphasis has been given to software export. The Indian software industry has developed skill and expertise in areas like design and implementation of management information and decision support systems, banking, insurance and financial applications, artificial intelligence and fifth generation systems. Recognition for the Indian computer software industry has been global. Indian software enterprises have completed projects for reputed international organisations in 43 countries. TextilesTextiles, the largest industry in the country employing about 20 million people, account for one-third of India's total exports. During 2000-01, textile exports were estimated at Rs. 49,831 crore, which is more than the export during 1999-2000.which was Rs. 40,178 crore. In recent years, several controls have been removed and in October 1996, a new Long-Term Quota policy was announced to boost exports.
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Public SectorTThe public sector contributed to the initial development of infrastructure and diversification of industrial base. It is now being exposed to competition. Part equity of some units is being disinvested. But many core and strategic areas, important for economy and self-reliance, will remain in the public sector.
THE INDIAN CAPITAL GOODS INDUSTRY
_ Origins
The development of a strong and vibrant engineering and capital goods sector
has been at the core of the industrial strategy in India since the planning process
was initiated in 1951. The emphasis that this sector received was primarily
influenced by the erstwhile Soviet Union model, which had made impressive
progress by rapid state-led industrialization through the development of the core
engineering and capital goods sector.
The ‘Mahalanobis Model’, which was a ‘supply oriented’ model with a basic
emphasis on increasing the rate of capital accumulation and saving, gave the
engineering and capital goods sector a central place. Superimposed over this
were the other objectives of balanced regional development, prevention of the
concentration of economic power and the development of small-scale industries.
One of the primary objectives was import substitution, which was pursued as a
priority.
Owing to these historical factors, today India has a strong engineering and
capital goods base. The Indian capital goods sector is characterized by a large
width of products (almost all major capital goods are domestically manufactured)
– a legacy of the import substitution policy. Even nations with advanced capital
goods sectors do not produce the entire range of capital goods, but instead focus
on segments, or sub segments. The range of machinery produced in India
includes heavy electrical machinery, textile machinery, machine tools,
earthmoving and construction equipment including mining equipment, road
construction equipment, material handling equipment, oil & gas equipment, sugar
machinery, food processing and packaging machinery, railway equipment,
metallurgical equipment, cement machinery, rubber machinery, process plants &
equipment, paper & pulp machinery, printing machinery, dairy machinery,
industrial refrigeration, industrial furnaces etc. However, the raw materials used
are largely domestic in origin and in many instances, the quality of domestic raw
materials is not up to the international standards in terms of dimensional
tolerances and metallurgical properties, which in turn affects the quality of the
final product.
Infrastructure Developments to Drive Indian Steel
On the back of various infrastructure projects and growing demand by the housing sector, Indian steel industry is expected to grow fast in coming years.
[ClickPress, Sat Aug 29 2009] According to our new research report, “Indian Steel Industry Outlook to 2012”, strong domestic demand and increased infrastructure spending by the government has been driving the steel industry in the time of recession. Thus, despite slowdown, steel output surged 3.4% in the first quarter of fiscal 2009-10 in comparison of the first quarter of fiscal 2008-09 while the steel consumption was also up by 5.3%. As per our research report, investments in India’s infrastructure development are surging on account of the government initiatives. It is expected that victory of the congress led government in the recent general elections will spur the investment in roads, ports and bridges in the rural areas, which will lift the steel demand in villages and towns. Anticipating high growth potential in the rural steel demand, JSW Steel Ltd, India’s third biggest producer, has raised it production by 60% in April 2009. Further, as per our research report, India’s urban population is rapidly increasing and is likely to grow to 360 Million by 2010 and to 533 Million by 2025. This rapidly growing urban population will create the huge demand for housing units. As housing sector is a major consumer of steel in the country, rising demand for housing units has led Indian government to lower the housing loan interest rates to ease out the financial burden on individuals and to support the housing industry. Ultimately, more houses are being constructed, which will further boost the steel demand in the country. “Indian Steel Industry Outlook to 2012” provides comprehensive information alongwith rational analysis on the Indian steel industry. It covers past, present and future information on steel production, consumption, trade and its various segments. It also covers the various related sectors like automobile, railways, housing, aerospace, etc. The report thoroughly evaluates advantages/disadvantages for India to become an attractive destination for carrying out steel business. The report investigates into the potential of the Indian steel industry by focusing on the growth prospects of steel consuming industry in terms of fresh investments. The research provides forecast on various industry segments to enable clients identify un-tapped critical opportunities available in the industry.
Infrastructure Growth to
Boost Steel Industry
- By Sanjay Sengupta
Introduction :
Infrastructure is a set of assets which underlines the society
and its economic activities especially railways, roads, bridges,
ports, water treatment plants, hospitals, school and other
facilities. Power generation and its distribution is also an
important area of social and economic development.
Infrastructure and Economic Development :
About a decade ago, the World Bank published an estimate
which stated that the services provided by the infrastructure
sector in value-added terms together account for upto 11/12
percent of G.D.P. of a century. It stated that 'Transport’ has the
largest share out of all infrastructure segment. The Bank also
found that 'Transport' was the largest provider of paid
employment absorbing up to 10 percent of all such
occupations. A cross sectional analysis revealed that
infrastructure investment typically represents about 20
percent of total investment and 40 to 60 percent of public
investment in developing countries.
GDP Growth and it's Implication in
Indian Infrastructure :
The growth of infrastructure of a country depends largely
on the growth of its Gross Domestic Product (GDP). In 2005-
06, India's GDP increased to 8.4 percent as against 7.5 percent
in the previous year. The growth of construction, however,
declined marginally from 12.5 percent in 2004-05 to 12.1
percent in 2005-06.
Between 1980-81 and 2004-05, the growth of the
Secondary Sector of GDP (including Mining, Electricity,
Manufacturing, Oil and Gas, Construction, Water Supply) has
recorded a marginal growth from 25.9 percent to 27 percent
while the Tertiary Sector of GDP (including Trade,
Hospitality, Transport, Real Estate etc.) registered a high
growth from 36 percent to 52.4 percent.)
The growth of Steel Sector and that of Manufacturing
Sector are inter-dependent. Steel economists opine that for one
percent growth of manufacturing sector share in GDP in India,
steel consumption grows by 0.97 percent and for are percent
growth of GCF in Manufacturing, Steel Consumption grows
by 0.96 percent.
The “Infrastructure Report” by the Infrastructure Reforms
Committee set up by the Central Government published in
January, 1997 made the following valuable observations :
The report also projected that India's GDP would grow by
8.5 percent by 2005-06 and would require a rise in
infrastructure project investment upto 31.5 percent by 2005-
06. Unfortunately, this has not happened and share of the
Secondary Sector of GDP remains pegged at 27 percent.
National Steel Policy and Infrastructure :
The National Steel Policy (NSP) has made the following
observations on the need of improved infrastructure for the
steel industry up to 1919-20.
Inland Transportation : It is estimated that every tonne of
steel production involves transportation of 4 tonnes of
materials. The envisaged addition of 75 million tonnes
annually implies 300 million tonnes of additional traffic. In
a globally integrated economy, minimisation of the overall
cost of transportation becomes an important instrument of
maintaining the competitive edge in both the domestic and
overseas market.
Railways : The railways transport iron ore and coal from
mines and ports to the plants, and steel to ports and
consuming areas. However, over the last decade railways
has been consistently losing traffic originating in the steel
sector to the roads. The share of railways has declined from
71.9 percent in 1991-92 to 34.4 percent in 2001-02. The
decline has been largely on account of railway's
competitive weakness in the face of challenges from other
modes of transports like roads, pipeline and costal
shipping. Replacement of the 'equalised railway freight' by
'freight ceilings' is also partly responsible for the modal
switch.
Infrastructure services are intermediate inputs to
production and any reduction in these input cost raises the
profitability of production, thus permitting higher levels of
output income and/or employmet.
The infrastructure services raise the productivity of other
factors including labour and capital. Infrastructure is,
therefore, often described as an “unpaid factor of
production”.
Brief on India steel industry and outlook - SEASI
Thursday, 14 May 2009
SEASI last month reported that India's economy is largely domestic consumption led and accordingly it has been less affected by the deceleration in global economic growth when compared to other countries. Exports account for 14% of GDP, while much of its growth is based on services, 54% of GDP.Nevertheless, the economic slowdown in the country started to surface in late 2008. GDP in the Q4 of 2008 grew at 5.3%YoY compared to 8.9%YoY for the same period in 2007. However, agriculture decreased by 2.2% in the Q3 of 2008, in comparison to the growth of 6.9% in the same period of 2007. Construction sector declined slightly with a growth of 6.7% in the Q3 as compared to the growth of 9% in 2008. There has been a decline in the growth of production index to 3% for the period of April to December 2008, in comparison to 8.7% registered for same period of the previous year. On the other hand, automobile production grew by 2.7% for the period of April 2008, February 2009 as compared to a decline of 2.8% in the previous year.The economic growth forecast made by the Prime Minister's Economic Advisory Council was 7.1% for fiscal year 2009. IMF, in its World Economic Outlook, estimated India's GDP growth at 5.1%.1. Domestic steel demandDespite the strong adverse impact of global economic meltdown, Indian steel demand remains better than in many countries. The construction industry is expected to rise further due to the government's stimulus plan. The automotive sector is doing well.Hence, it is expected that domestic steel demand is going to recover soon and for the long term as well. According to the World Steel Association, India's apparent steel use is forecasted to reach 53.5 million tonne in 2009, a 1.7% increase from 2008 and is expected to reach 58 million tonne in 2010 an increase of 8% YoY.2. Domestic steel productionCapacity expansion projects are still on track. Although some projects have been delayed, there have been no announcements of cancellation of major projects. For example, Korea's POSCO has delayed its 12 million tonne per year steel mill but there is neither cancellation nor scaling down of its plan. JSW Steel will continue its expansion plan with a new 3 million tonne blast furnace which will make it the largest blast furnace operator in India.Steel producers in India are, however, not immune to the global economic downturn and have instituted production cuts. According to the World Steel Association, crude steel production in India registered a slowdown in the Q4 of 2008 with a growth rate of 0.3% and dropped significantly in the first two months of 2009 to 8.67 million tonne, a decline of 8%YoY.However, due to a rising demand in the country, steel producers are expected to return to normal operations very soon. Industry analysts pointed out that inventory levels of steel firms increased in October to November 2008 as demand has weakened.Nonetheless, there are indicators that inventory levels have dipped recently. Thus, steel production is expected to return to normal levels in the Q1 of the fiscal year 2009.3. Iron ore and scrapIndia has large iron ore reserves and is a net exporter of iron ore, particularly to China. According to Steel Business Briefing, India's iron ore production was 123 million tonne in 2003-04 and nearly doubled in volume to 204 million tonne in fiscal year 2008. About half of its production is exported and nearly 80% of which is to China. However, domestic supply for iron ore is expected to become increasingly tight, especially with foreign companies such as ArcelorMittal, Sinosteel and POSCO investing in the country to secure iron ore supply.As for scrap, most of the demand comes from a large number of small induction furnace based producers and the supply is mainly from domestic railways which supplied up to 1.1 million tonne of ferrous and non ferrous scrap in 2008-9.Moreover, hundreds of re-rollers producing long products for the construction sector also supply bundles of scrap to the domestic steel industry annually. India's imports of scrap registered nearly 3 million tonne a year. Major sources of scrap import were the United Arab Emirates, US and South Africa. Ferrous scrap demand in India remained healthy and is expected to be steady throughout year 2009.
Indian Steel Market - Emerging Reality - Following the Global Meltdown
Monday, 14 Sep 2009
The world of steel has changed significantly with the global economic meltdown. So unexpected was the downturn and so severe was the slide that the industry globally was left with one of the worst situations in the recent history. Most experts are still busy gauging the impact the global recession has left on the steel industry. The conditions the world was unprepared for have also altered the understanding on the dynamics of the steel industry worldwide among experts. Most of the projections of future growth have become redundant.Although Indian economy and to a large extent the steel industry here, remained relatively insulated from the global turmoil, the impact could not be written off as minor. A fresh look was immediately required to examine and assess the same rationally, realistically and truthfully. It is clear, the ground reality in Indian steel has changed sharply and there is need to remain prepared for more important changes.The economics of steel projects are different today because the market is not the same as it was a year ago. The investors are a lot more cautious now. There have been announcements one after another about possible delays in completion of their projects as also of abandonment in many cases. There will be more such cases. The question more important is to know how is the industry’s growth curve shaped now and how will that be affected by the upcoming developments in the years ahead? All that we know today is that the supply side of the market remains uncertain and requires in depth analysis.Similarly, the industry is waiting to correctly understand which way the market is heading for each product specifically? The change in the economic dynamics globally and in India will importantly change the pattern of demand for steel products. New thoughts and clear forecasts are required.Indian steel prospects needed a fresh evaluation in the hands of an expert. This is what Dr AS Firoz, Strategy Consultant in Steel and Natural Resources, has done in his latest reports. One of his reports entitled “Indian Steel Market : Emerging Reality : Following the Global Meltdown” covers, in the context of the issues raised above, an analysis of the conditions of the steel market in India today in the context of the global economic meltdown and the impact it has left on the Indian economy so far and assesses the growth potential of the Indian steel industry from both the supply and the demand sides of the market, going into details for each product and each major player, the price trends for steel products in the domestic market and the current situation related to external trade and the government policy environment. The study provides forecast of steel products demand annually till 2020 under four different scenarios.
India will need 150-MT steel capacity by 2020
Steel consumption is the barometer of economic development, notes Harish Rao The Joint Plant Committee has set a target for manufacturing capacity of 100 million tonnes of steel by 2018, up from the current level of about 31 million tonnes. In other words, in the next 14 years, there will be a capacity addition to the tune of 70 mt, that is, 5 mt every year. In the past 50 years we were not able to add capacity of even 1 million tonne (on an average) every year. The task is uphill if not impossible. Keeping in mind our past track record, isn't the target too ambitious? According to R.K. Markan, Chairman and Managing Director, H&K Rolling Mill Engineers Pvt. Ltd, and a well-known authority on the steel industry, "The government is saying that steel manufacturing capacity will touch 100 million tonnes by 2020. I say it should touch 150 million tonnes if we really want to become a developed nation by then. Steel consumption is the main barometer of development. Today, our per capita steel consumption has stagnated at around 30 kg for many years. Although steel production is increasing year after year, per capita consumption is almost the same over this period because of population increase." But, where will the demand come from? "Steel and cement are a must for any infrastructure development activity. Look at the condition of our present infrastructure. If we wish to become a developed nation by 2020, all these needs to be improved which will require a lot of investment. Unless steel consumption goes up we cannot really say the country is progressing. In every part of the world growth in steel consumption is closely associated with economic development. We have to build that much capacity. Otherwise we may have to import steel as China is doing now," Markan defends. Says Vikram Amin, Executive Director, Essar Steel Ltd, "The current projections of steel demand in the country, moving up from 31 million tonnes to 60 million tonnes by 2012, is based on the growth in GDP at levels above 7 per cent for the next three-four years. It is also based on growth taking place in the consuming industries (automobile and white and brown goods) and investments in infrastructure projects both by government and private sector (highways, pipelines, construction sector etc) and the hitherto untapped rural sector." The most important factor is demand. Will there be enough demand to meet production? According to Markan, future demand in the industry will come from the ever-increasing domestic need. Says Amin, "As I said earlier, the demand would be 60 million tpa in 2012 which implies a strong and growing domestic market." Even if such a huge capacity addition is justified problems may arise due to scarcity of funds, especially when development financial institutions will be a thing of the past. But Markan doesn't agree: "Funds will not be a problem for building capacity. We should decide how to use the funds and then the funds will automatically come. China is spending trillions of dollars on development. From where are they getting the funds? Similarly, if we make our intentions clear there are so many foreign players who are willing to invest," he argues. There is a section of people who are not in favour of India exporting iron ore (instead of value added items). India is the third largest exporter of iron ore in the world after Brazil and Australia. Its withdrawal from the world iron ore market may not have much of an impact on the price of the raw material and thereby on the price of steel. As Amin states, "Indian iron ore is rich in iron content and it is imperative to cater to the domestic demand and export steel in the most value added form rather than exporting a low value item."
India will need 150-MT steel capacity by 2020
Wednesday, September 16, 2009
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