10-May-2011

Indian Steel Industry

An Overview
70th OECD PARIS Steel Committee Meet

12-13 May 2011

Indian Steel Demand Buoyant

Steel CAGR in last 5 yrs 9.6%

Steel consumption growth in last 5 yrs was range bound at 9-13%, Per capita steel use is 53 kg vis-a-vis 35 kg in 2005 Steel demand expected to continue @10%+ CAGR till 2020

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Steel Demand Driver GDP Growth

GDP growth to continue at 8-9% Huge infrastructure investment by Govt. ~ $500 billion

12-13 May 2011

Indian Steel Demand on High Pedestal

165 140 115

Long-term GDP Growth target rate ~9%

148 113 105 133

GDP @9% GDP @8%

90
57

78 52 26 33 59 75

65 40 15

1999-00

2003-04

2007-08

2009-10

2012-13

2016-17

2019-20

High GDP growth - support to steel demand Steel intensity to go up with more fixed asset investment

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Indian Steel Demand Likely Sources

Sector-wise incremental steel demand by 2012 (million MT)
100 90 80 70 60 50 40 30 20 10 0 4 30 5 3 1 ~100

52

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08

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Source: In-house

Private sector investment growing at 15% plus Large infrastructure projects in Public-Private Partnership (PPP) mode Foreign investment of nearly $40 billion committed in steel sector
5 12-13 May 2011

Domestic Steel Production of Finished Steel

Source: JPC

Steel consumption in FY 2011 rose by 10.6% y-o-y Capacity augmentation to meet domestic demand
6 12-13 May 2011

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Indian Steel Capacity By 2020

2009 SAIL JSW TATA ESSAR ISPAT RINL
6.8 4.6 3.0 2.0 2.9 3.9 8.1 12.8 7.8 3.2 6.2 9.9 12.0 9.2 16.1 6.0 12.0 21.0 20.5

2012

2020
35.2
60.0 32.0 33.5 20.5 17.0 16.0 26.5

JSPL 2.4 BSL 0.6 5.4 POSCO ARCELOR SECONDARY 0.0

BSPL 1.22.8 3.0

3.0 18.0 30.0 22.0 6.5

Additional capacity by 2020 ~230-240 million MT

(million MT)
14.0

7.0 9.0 12.0 24.0 42.4

10.0

20.0

30.0

40.0

50.0

60.0

Source: MoS

Current capacity ~ 78 million metric tonnes By the year 2012, Crude Steel Production Capacity Likely to be 110-120 million tns.
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Key Developments: New National Steel Policy

National Steel Policy (NSP 2005) was launched in November, 2005 NSP 2005 projected a consumption growth of 6.9%

Actual consumption growth during past 5 years is 9.4%

Consumption growth estimated to exceed 10% during next decade Gaps and deficiencies in several key policy areas need to be addressed

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Key Developments: New National Steel Policy (Contd)

Draft policy document will address the following key areas: Economic & Financial Technology, Environment, R&I

Raw Materials
Infrastructure, Facilitation. The draft documents will be prepared by Independent Committees headed by Eminent Experts.
9 12-13 May 2011

Indian Steel Policy Imperatives

Liberal policy regime import duty at 5% Export of raw materials exceeding domestic consumption 100% foreign investment allowed through automatic route even in mining sector Focus on capacity building and consumption Large Infrastructure Project in Public-Private Partnership (PPP) mode. Demand Booster from infrastructure, housing, automobile, gas and oil pipelines, capital goods (machinery) and consumer goods.

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Indian Steel Impediments

Capacity addition hindered by difficulty in land acquisition Uncertain Time frame for land accquisition, enviornmental clearances. Concerns on depleting raw materials reserves

Need for higher spending on infrastructure (roads, railways & ports)

Significant infrastructure constraints in roads, railways, ports, power.

11 12-13 May 2011

The Roadmap
Accelerated capacity building in steel, through Brownfield route to meet demand in the medium term Fast-tracking of Greenfield projects by way of better coordination & monitoring New legal policy regimes on mining, land acquisition & rehabilitation Encourage value addition and production of value added steel products

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The Roadmap (Contd.)

Encourage beneficiation methods for utilization of low grade iron ore & fines Energy efficiency, carbon emission reduction and new technology for higher productivity Higher emphasis on resource optimization Spread to niche international markets through quality steel products Worlds third largest steel producer by 2014
13 12-13 May 2011

Thank You