The country s crude steel production at 97.15 million tonne (MT) in the first 11 months of the current fiscal has attained growth of 3.8% over last year. At this rate, it is likely to be 108-110 MT in FY19. The imports of total steel (including semis) at 7.2 MT during the period, which is a 2% increase as compared to the previous year, is likely to end the year with 8.6-8.8 MT.
The export of total steel (including semis) at 7.8 MT during the period, a fall of 35%, would reach 8.5-8.6 MT by the end of the current year. This makes the finished steel consumption at 88.12 MT in the first 11 months of the current year that grew 7.4% as against the previous year to reach 98-100 MT in FY19. India, which is the third largest global consumer of steel after China and USA, is to attain growth in the consumption of finished steel in the coming year that appears to be the highest in the world.
An annual review of India s steel production, consumption and foreign trade should also include an analysis of the role of the major and small and medium enterprise (SME) sector. In terms of the process route, the blast furnace-basic oxygen furnace (BF-BOF) route had a share of 46% in FY18 and the balance 54% is held by the electric arc furnace/induction furnace (EAF/IF) route, with IF at 28.3%.
The ongoing capacity augmentation in the BF-BOF route by major steel producers is likely to make some changes in the relative share of process routes and though some indications have been provided in National Steel Policy 2017, it would be an interesting analysis how the scenario would actually be emerging in the coming years based on the comparative suitability/viability in terms of costs, availability of raw materials, power, scrap and environment regulations.
In the post-Independence era, the steel industry was predominated by PSU steel plants and Tata Steel. It became apparent around late 70s and early 80s that there was a need of allowing small EAF/mini BF units (<= 0.5MT) to come up in various parts of the country to cater to small private demands.
There was a need for small rerolling industries without steel-making units to meet requirements for the reinforcement steel, light gauge beams and channels as it became increasingly apparent that large units for their commercial viability would build plants near raw material sources and also near coastal region for aiding exports.
This was reflected in the setting up of steel plants by RINL, Essar steel, JSW and JSPL. The need for steel-making facilities in the SME sector became imperative as the supply of semi-finished steel from large steel plants as well as from import became irregular and expensive.
Rising cost of steel and the push for more finished steel output by large steel plants for their own economic viability called for own steel-making facilities by rerolling units which are less expensive and this paved the way for the emergence of induction furnace (IF)-based units.
As India had become a leader in direct reduced iron (DRI)/sponge iron production and both coal- and gas-based DRI plants emerged on the scene, it was necessary to find out domestic utilisation of DRI rather than indulging in soft option of exports.
The easy availability of sponge iron (India produced 30.5 MT of sponge iron in FY19) lent a good support to the IF segment as domestic availability of scrap became scarce and the import costs of melting scrap from Australia, Malaysia, the Netherlands, South Africa, USA, UK and UAE became prohibitive. The use of non-coking coal by IF units, available aplenty indigenously, was an added advantage.
While the EAF route can roll out special value-added steel, mostly in alloy, stainless and long products, the product profile of IF route is primarily confined to long products. In addition, the higher content of phosphorous and sulphur in steel products is a stiff challenge against brittleness and other impurities. In the past few years, UN Development Programme-funded projects facilitated upgradation of the furnaces in the SME plants, thanks to the efforts by the ministry of steel, and some of these plants had come forward to instal secondary refining facilities in their units to improve quality.
In FY18, the share of SME sector was 64% in bars and rods (non-alloy) that comprised TMT bars, rounds and wirerods. In case of structurals (angles, channels and beams), the share of SME in FY18 was 76%.
The same percentage share also holds good for FY19. In respect of alloy steel, the SME sector currently has 88% share in long products and in stainless steel segment of long products, they hold 100% share.
Bars and rods, and structurals are largely consumed by the construction and infrastructure sector (housing, industrial and commercial complexes, roadways), engineering and capital goods sector and therefore, the role of the SME sector in nation-building is enormous. In the total long products category, large players have a share of 36% and the balance 64% is held by SMEs which would continue to dominate in this area in the coming years as well.
(Views expressed are personal)