IRON AND STEEL INDUSTRY

KV SRIRANGA ABHISHEK(128923)

N RAJASHEKAR REDDY(128934)

BACKGROUND

• INDIA is ranked 4th in iron and steel production in the world.

• Production grew at 8% annually from 46.46 mtpa in 2005-06 to 73.79 mtpa in 2011-12

• INDIA remained net importer of steel.• The performance of ministry of steel for FY 2011-12

according to results framework document given by high power committee is Excellent.

HISTORY• 27TH august 1907 TISCO JEMSHEDPUR• IISCO 1918 Burnpur; production from 1922• Public sector:

1. Rouricela, Orissa

2. Bhilai, MP

3. Durgapur, WB

4. Bokaro, Bihar

5. Vizag, AP

CAPACITY ADDITION• Capacity of crude steel production expanded from 51.17

mtpa in 2005-06 to 89.29 mtpa in 2011-12 increased by nearly 75%.

• MoU between Ministry of steel, GOVT of India and Ministry of Mines, Islamic Republic of Afghanistan.

• SAIL lead consortium AFISCO won the mining exploration rights at Hajigak project as “preference bidder”.(expected reserves-1.28 billion tons of high grade iron ore)

• MoU between USM and Kobe Steel Limited for ITmK3 technology: JVC- SAIL KOBE IRON INDIA Pvt ltd.

Instalation of 0.5 mtpa ITmK3 technology based plant at Durgapur.• JVC “International Coal Venture Pvt ltd” has been set up

to acquisition of coal mines overseas with an equity of Rs. 3500 crs and leverage of Rs 7000 crs as debt

PRICE• Indian steel price rising despite of fall in demand growth.• Reasons for growing price:

1. SC banned three major Iron ore production districts in Karnataka

2. The inventory in these mines was auctioned which increased the cost price by 25%.

3. Rupee depreciation of almost 10% against dollar since beginning of September 2013.

RUPEE DEPRECIATION• As a depreciating rupee benefits exporters, steel

companies are planning to avail of the situation by tapping the foreign markets, where demand is raising.

• Coaking coal is one of the major raw material used by the domestic steel industry which contributes significantly towards the cost of production of the alloy.

GLOBAL DEMAND SCENARIO• World Steel Association(WSA) announced that the world

steel demand achieved a growth of 5.6% in 2011. • Japans demand growth decreased by 2.2% in 2013 due

to the impact of exchange rate appreciation.• The emerging economies demand grew by 45% from

2007 to 2013.• India is expected to increase its steel consumption by

6.9% in 2012 and 9.4% in 2013.

INFRASTRUCTURE SPENT TO BOOST THE GROWTH OVER THE LONG TERM• MoU for ITmK3 technology• Delhi-Mumbai Industrial corridor project work not only

creating a good infrastructure but also bringing in huge demand in domestic market.

• To encourage benefit of Iron ore firms in the country, basic custom duty on the plants and equipment required for initial setting up or substitution expansion of iron ore has reduced from 7.5% to 2.5% W.E.F 17 march 2012.

• MOS with aim to highlight the gap in R&D and steel technology 8 R&D projects approved in 2012, So far total 73 projects.

Election Budget Impact• The welcome decision in extension of full exemption from

export duty for galvanized steel sheets.• This enables the industry to get more competitive in global

markets.• Companies are demanding for nil import duties on iron

ore.•  The priority accorded to infrastructure in the 12th Plan,

and "the expectation that the private sector would contribute half of the envisaged investment of Rs 50 lakh crores, the Budget should also look at introducing special incentives to encourage capital goods industries".

CONCLUSION• According to the SBI securities, the gap between

domestic price and landed price of Imported steel is currently $ 50-100 a tone .

We believe there is still room for upward price movement as the gap between domestic price and landed price of imported steel still exists.

• Steel projects, including those planned by ArcelorMittal, Posco and many others, worth around Rs 3 lakh crore could not take off because of various issues like land acquisition, delay in environmental clearances, among others. So process should be fasten to get advantage of the situation.

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