Presentation on theme: "MONNET ISPAT & ENERGY LTD."— Presentation transcript:
1 MONNET ISPAT & ENERGY LTD. CHALLENGES IN GROWTHOFINDIAN STEEL INDUSTRYSHRI AMITABH S MUDGALSR. VICE PRESIDENT ( MKTG & CORPORATE AFFAIRS)MONNET ISPAT & ENERGY LTD.11th August 2010Hotel Le-MeridianNew Delhi
2 INDEX Global Steel Scenario Global Steel Production 2009 Emerging Economies Scaling UpIndian SteelSustained Steel Production over yearsHolistic Steel PrognosisGrowth DriversIndicatorsInfrastructure SpendingMineral Resources- Catalyst to Steel GrowthProspects For Indian Steel IndustryIndian –An Attractive Destination For Steel HubProduction Route-Distribution ChartBrownfield & Greenfield Expansion CurveSponge Iron In The Growth Of Indian Steel IndustryMONNET-Doing Its Bits In DRI Production GrowthKey Challenges & Road AheadLandsMinerals & MiningEnvironmentInfrastructureOthersConclusion
3 GLOBAL STEELSCENARIOGlobal steel moved from sunset to sunrise industry between with sustained 8% demand growth.Global crude steel production : Mn. Mt ; Mn. Mt- decline of 8 %China- the largest crude steel producer in the world - production Mn. Mt, a growth of 13.5 % over 2008.The global recession and sever meltdown in the late shifting the fortunes of global steel from the advanced to emerging markets.
6 Crude steel production (in Mn. Mt) Growth rate over last year (%) INDIAN STEELSUSTAINED STEEL PRODUCTION OVER YEARSYearCrude steel production (in Mn. Mt)QuantityGrowth rate over last year (%)46.466.9650.819.3853.865.9858.448.50*64.8811.02Source: Joint Plant Committee (JPC); * =Provisional
7 INDIAN STEEL HOLISTIC STEEL PROGNOSIS 2004-05 43.5 2.3 4.7 36.4 41.1 YearProduction for saleImportExportConsumptionNet AvailabilitySurplus188.8.131.526.4184.108.40.206.841.4220.127.116.11.246.852.25.418.104.22.1685.922.214.171.1242.458.66.2126.96.36.1996.563.8Surplus Availability could have factored in on account of duplicate accounting of HR & CR Coil Production in certain terms ( All figures in Mn. Mt )Difference between global and domestic price evens out over a quarter in free market scenario.Low priced stock requirement and non-prime material are also imported and then segregated and sold as prime materials and this further exert pressure on price.Owning to excess availabilities and increase in raw material price, the margins of steel producers are increasingly under pressure for over one year.
8 GROWTH DRIVERS INDICATORS Current Domestic steel consumption was at 56.5 Mn. Mt increased by 7.8 per cent, which is likely to maintain its growth momentum.Present per capita consumption ( Year 2008) :India : 47 kgWorld :190 kgDeveloped Countries : 400 kgIn , per capita steel consumption in urban areas was 145 Kg, rural areas-only 3 Kg.70% of Indian population in rural areas- increased steel usage for rural housing, panchayat hall, rural bridges, water and storage tanks etcThe sectors like manufacturing,construction,consumer durables, capital goods, intermediate goods coupled with infrastructure spending to fuel growth in steel sector.
9 Infrastructure allocation (Rs. Lakh crore) GROWTH DRIVERSINFRASTRUCTURE SPENDINGYearInfrastructure allocation (Rs. Lakh crore)As % of Plan Allocation0.3433.90.3631.80.5444.90.6041.50.7048.60.8146.90.8641.90.9739.81.5547.71.7346.5Allocations For Infra In The Union Budget
10 GROWTH DRIVERS MINERAL RESOURCES- CATALYST TO STEEL GROWTH World’s India is largely sufficient in raw materials for Iron and Steel Industry25 billion tonnes of iron ore reserves - the fifth largest reserve base in the world253 billion tonnes, (96 billion tonnes proven reserves) Coal- 4th largest proven coal reserves in the worldWorld’s2nd largest Mn reserves (240 million tonnes).3rd largest Cr reserves (57 million tonnes).4th largest bauxite reserves (2.4 billion tonnes).India is relatively under-explored in terms of mineral prospecting.
11 PROSPECTS FOR INDIAN STEEL INDUSTRY INDIA-AN ATTRACTIVE DESTINATION FOR STEEL HUBIndia -currently the 5th largest producer of crude steel in the world and is expected to become the 2nd largest producer of crude steel in the world byThe Iron and Steel Industry :Around 2 % of the Gross Domestic Product (GDP)Around 6.2%- its weight in IIP.Around %- its weight in WPIGDP growth pegged at 8.5 % in the current year and higher in the subsequent year.The growth rate in steel consumption in India would be highest in the world surpassing China in
12 PROSPECTS FOR INDIAN STEEL INDUSTRY PRODUCTION ROUTE- DISTRIBUTION CHARTDistribution Pattern is likely to be similar after completion of capacity expansion upto 124 Mn Mt.
13 PROSPECTS FOR INDIAN STEEL INDUSTRY BROWNFIELD & GREENFIELD EXPANSION CURVECRUDE STEEL CAPACITY - Envisaged for ( In Mn. Mt)InvestorExisting CapacityExpansion PlantTotal CapacityBrownfieldGreenfieldSAIL12.8412.0024.84RINL2.903.406.30Tata Steel6.803.203.0013.00Essar4.603.906.0014.50JSW Ltd6.904.1011.00JSPL2.404.803.2510.45Ispat2.005.00BSPL1.202.804.00Bhushan Steel Ltd0.805.20MIEL0.60 1.502.10Others & Secondary22.404.4726.8764.4434..924.72124.06Given the current status, the expected capacity by is likelyto be in the region of 110 Mn. Tonne
14 PROSPECTS FOR INDIAN STEEL INDUSTRY SPONGE IRON IN THE GROWTH OF STEEL INDUSTRYLargest producers of Sponge Iron-21 Million Tonne1/3 of total steel is by DRI route.Limited reserves of coking coal, resulting in unpredictable prices.Sponge iron uses non-coking coal, and iron ore fines - palletized form or directlyDifficult availability and high cost of scrap.DRI is more consistent in composition low tramp elements and environment friendly.Uniform size of sponge iron enhance productivity and support usage of low grade scrap.Average IF furnaces uses 60 % sponge iron as metallics.
15 PROSPECTS FOR INDIAN STEEL INDUSTRY MIEL- DOING ITS BIT IN DRI PRODUCTION GROWTH2nd Largest Coal based Sponge Iron ManufactureForward integration by setting up its integrated steel manufacturingfacility of 1.5 Mn Tonne at Raigarh.Upon completion ( March’11) , through BF/DRI-EAF route will add high-quality long and flat steel :Plate : 6,00,000 tonne p.aHR Coil : 2,50,000 tonne p.aQST Rebars : 5,00,000 tonne p.aBlooms & Rounds : 1,50,000 tonne p.aNew capacity addition : 1.5 MT ( Orissa),: 1.5 MT ( Jhk)
16 KEY CHALLENGES & ROAD AHEAD LANDLimited and with multiple use.Non-willingness of owners to sell.Local issues- Social & Political.Compensation packages - amicably with fair market price & employment.Overlapping responsibilities between State and Central Govt.
17 KEY CHALLENGES & ROAD AHEAD MINERALS & MININGResources available with some of the poorest states.Mineral resources exploitation through Inclusive & SustainableApproach to improve overall well-being.Faster grant of prospecting lease-mining lease.Limited availability of Coking CoalIndian Coal with high ash has limitations in terms of CO2 emissions.Development of processes using non coking coal / natural gas.Increase usage of Iron Ore Fines-to reduce wastagesIncrease palletisation and beneficiation to augment production and productivity.
18 KEY CHALLENGES & ROAD AHEAD ENVIRONMENT ISSUESSelection of plant site-effect on neighborhood, ecology and communication facilities.Space for water treatment & recycling, solid waste disposal.Pollution control measures-Pollution can not be completely eliminated- only levels can be reduced.Upto 15% cost of capital equipment is being incurred on pollution control devices.Obtain clearances by State Govt. & other Govt. agencies (viz. pollution control board, forest deptts. etc) and Central Govt.
19 KEY CHALLENGES & ROAD AHEAD INFRASTRUCTUREAugment capacity and efficiency of rail, ports, roads to match capacity development.Steel plants to augment their infrastructure to ensure full utilization of assets of logistics providers.Explore environment-friendly transportation alternatives ( Viz Waterways, Slurry through pipes etc).Build infrastructure - to meet transport requirement for bulky equipment and finished goods.Co-ordination between producers, logistic providers and government concerning policies and execution
20 KEY CHALLENGES & ROAD AHEAD OTHERSAdequate availability of power, water.Low Level of R&D in steel in India.India mostly in seismological zone-Additional costs, earthquake resistant structures.Rising cost of inputs materials –may not be compensated by rise in steel prices.As a consequence, lower growth in production / fresh capacity than demand growth may cause severe market distortions.Rising inflationBetter governance, delivery system & effective implementation.
21 CONCLUSIONDelays and costs involved in land acquisition, Raw Material linkages, Statutory clearances and shortfalls in development of infrastructure could adversely affect project viability.This ,in turn, inhibit creation of additional capacities.For the business to survive,The production process and systems have to be efficient.Only energy-efficient process can produce finished material to tightly controlled specification at lowest cost .Imperative to address environment issues.Steel Industry in India can survive- if it is globally competitive in terms of costs and quality, which can only happen if the challenges are suitably addressed.