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V K Mehta Executive Director Long products & International Trade Indian Steel Markets 2011 15-16 th March 2011 Gurgaon.

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Presentation on theme: "V K Mehta Executive Director Long products & International Trade Indian Steel Markets 2011 15-16 th March 2011 Gurgaon."— Presentation transcript:

1 V K Mehta Executive Director Long products & International Trade Indian Steel Markets th March 2011 Gurgaon

2 Construction Construction as a sector can broadly be divided into three major categories: CONSTRUCTION InfrastructureReal EstateIndustrial Roads, Railways, Bridges, Ports, Airports, Power, Irrigation Commercial, Retail, Housing Metal Refineries Fertilizers, Petrochemicals, Cement, Oil & Gas

3 Dominant Steel Consuming Sector Double digit growth ~10.5% in FY Still predominantly Cement based Ready to use raw materials, prefab construction gaining momentum Indian Construction Distinct shift towards quality & quality raw materials

4 Source: CRISIL Research Construction & infrastructure contribute to >60% of steel consumption

5 Expected to cross $100 billion from FY onward Source: Indian Economy, SAIL Research In $ billion

6 Investment as % of GDP constantly rising Source: Juggernaut is starting to roll…., India: Construction: Infrastructure, Goldman Sachs via Thomson Research,

7 SectorKey Opportunities PowerGovernment targets adding 100,000MW capacity by 2012 Both generation and transmission capacities being enhanced significantly Oil & gasPipeline network, city gas distribution, refinery infrastructure installation & upgrading Road & highways National Highway Development Program (NHDP) Plans to construct and upgrade >50,000 km of national highway by Dec 2015 RailwaysDedicated Rail Freight Corridor (DRFC) network expansion lagging freight growth; this needs to be expedited PortsPort traffic is estimated to increase by a CAGR of about 12% during Water & waste management The Jawaharlal Nehru National Urban Renewal Mission is expected to increase steel consumption

8 6/4/ POWER WORLD AVERAGE PER CAPITA CONSUMPTION AT 2500 kwh / YEAR INDIA - INSTALLED CAPACITY DISTRIBUTION THERMAL :65% HYDRO-POWER : 25% NUCLEAR : 2.9% OTHERS (RES) : 7.7% Opportunity for steel use in power generation, transmission and distribution Source. : MoP Power Sector PER CAPITA COMSUMPTION (Kwh/Year) Installed Capacity (,000MW) Power sector is one of biggest steel user

9 Source: IDFC-SSKI Research Traffic load in million tons Tardy growth of 3% in railways network in 15 yrs. Railways share only 30%, despite being cheap & faster. Container operations still insignificant at 1%.

10 CategoryShort term target (10-11 to 11-12) Long term target (12-13 to 19-20) Total target Doubling (Indl DFC) 1000 kms11000 kms12000 kms Gauge conversion 2500 kms9500 kms12000 kms New Lines1000 kms24000 kms25000 kms Electrification2000 kms12000 kms14000 kms New Wagons High Speed Corridors kms The vision call for around $ 310 billion of investment over next 10 years Source: Ministry of Railways

11 6/4/ Source. : Dept. Of Road Transport & Hways Transport – Road Network National Highway(000 Km) Plan 20 Km of NH per day Road Type Length 000km % share of total length Traffic Distrib ution National / Express Highways 70.72%40% State Highways %40% Major & District Roads % 20% Rural & Other Road 2, % Total % Projects under implementation NHDP-I & II – $14.3 billion NHDP- III - $17.8 billion NHDP -IV – $ 6.1 billion NHDP –V – $ 9.1 billion NHDP –VI – $ 3.7 billion

12 In million tons Source: india Transportation: sea & Land Cargo.. Nomura International Ltd Via Thomson Research GOI FY12 plan is 1 billion tons

13 Transport – Airports Source: Min of Aviation At Airports in Lakhs in 000 tons More & more modern & private airports As per estimates the steel consumption in airport building likely to grow >20% Development of Tier-II city airports will sustain consumption growth. Steel intensive construction

14 Indian economy is estimated to in in Construction growth is 7-8% presently. Distinct surplus of construction steel in India High inflation ( expected at 9%) is a huge concern. Credit squeeze also adversely affecting construction. High-end reality (Commercial, retail & housing) severely impacted.

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