1. INDIAN STEEL INDUSTRY
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2. INTRODUCTION
 Steel is crucial to the development of any
modern economy and is considered to be
the backbone of human civilisation.
 It is a product of a large and
technologically complex industry having
strong forward and backward linkages in
terms of material flows and income
generation.
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3. HISTORY
Source: IISI
Stages in Global Production of Steel

4. Global Steel Industry
 The current global steel industry is in its best position in comparing
to last decades. The price has been rising continuously.
 The demand expectations for steel products are rapidly growing for
coming years. The shares of steel industries are also in a high pace.
 The subprime crisis has lead to the recession in economy of
different countries, which may lead to have a negative effect on
whole steel industry in coming years.
 However steel production and consumption will be supported by
continuous economic growth.
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5. INDIAN STEEL GROWTH
Slowly and steadily
Steel industry reforms – particularly in 1991 and 1992 – have led to strong and sustainable growth in India’s steel
industry.
Since its independence, India has experienced steady growth in the steel industry, thanks in part to the successive
governments that have supported the industry and pushed for its robust development.
40
36.5
35 Confidence
30
26.2
25 Stagnatio
24.2
n
20
15
Decontrol 14.3
12.02
10 9.36
6.75
5 Controlled 5.05
Regime 3.23
1.1 1.1 1.62
0
1951 1981 2005

6. BASED ON OWNERSHIP
PUBLIC PRIVATE
• TATA-CORUS
• SAIL • ESSAR
• VISAKHAPATNAM STEEL PLANT • ISPAT
• FERRO SCRAP NIGAM LIMITED • JSW STEEL LIMITED
• BIRD GROUP OF COMPANIES • MUKAND LIMITED
• SPONGE IRON INDIA LIMITED
• MECON LIMITED
• BHARAT REFRACTORIES
LIMITED

7. Steel production in India
• Indian steel industry is poised for rapid growth.
• India’s share in world production of crude steel
increased from 1.5% in 1981 to around 7.3% in
2008.
• The private sector is considered engine of
growth in the steel industry and technological
changes and modernization are taking place in
both the public and the private sector integrated
steel plants in India.

8. AVERAGE COST AND ECONOMIES OF SCALE
Economies of scale are the cost advantages
that a business obtains due to expansion.
• the average cost of production of
Average cost
the firm decreases as the output
level increases
• the firm would like to be at the
C
minimum average cost point
• the average cost is higher in long
C1
run than short run and company
makes higher profit producing output
Q Q1
higher and higher levels of
outputs . The increase in output from Q to Q2
causes a decrease in the average
cost of each unit from c to C1.

9. Contd……..
• Suppose in SAIL , the average cost per ton of
steel at the minimum average cost point with
the larger blast furnace may be 20 percent less
than the average cost at the minimum average
cost point with smaller blast furnace.
• Due to technological constraints the average
cost is assumed to start rising at some output
level even in the long run—that is, the average
cost curve is U-shaped even in the long run.

10. DEMAND OF STEEL
• Driven by a booming economy and
concomitant demand levels, demand of steel
has grown by 12.5 per cent during the last
three years, well above the 6.9 percent
envisaged in the National Steel Policy.
• Steel demand to grow by 8-10 pc in 2010-11:
MoS Steel . steel consumption grew at 7.6
per cent in 2009-10 to 56.32 million tonne
as against 2008-09.

11. ELASTICITY OF DEMAND OF STEEL
INELASTIC DEMAND
P
PRICE OF
STEEL
P
1
O
Q Q1
DEMAND OF STEEL

12. SUPPLY OF STEEL
• India is the world’s fifth largest steel producer and its
share is 3% plus in global steel output which is still
very low.
• China, the world’s biggest steelmaker, produces nearly
ten times as much as India.
• Over the past ten years India’s crude steel output rose
nearly 7%per year to 56.3 million tons , while global
crude steel output increased by 4% .
• ArcelorMittal plans to build greenfield steel production
capacity of 30 million tonne per annum in India. While
Orissa and Jharkhand will have 12 million tonne
capacity each, Karnataka will have a plant with a
capacity of six million tonnes.

13. DEMAND SUPPLY MISMATCH
• India is one of the world’s top ten steelmakers its
domestic output is insufficient to meet the demand
in all segments.
• Consumption of steel is very fast and as a
consequence of the prospective dynamic economic
growth.
• Secondly, there is demand for high-quality products
which India will not be able to supply in sufficient
quantities for the foreseeable future.

14. MARKET ANALYSIS
 Concentration ratio of an industry is an indicator of the relative
size of firms in relation to the industry as a whole.
 The 4 firm concentration ratio of the Iron and Steel Industry is
71%.
 Both homogenous product or product differentiation are possible
 There is a price war and price rigidity
 Price output decisions are very difficult and indeterminate.
 This implies that there is oligopoly in the industry as it is
dominated by few major players

15. Export & Import of Steel in India
Quantity (in million tonnes)
5
4
3
IMPORTS
2
EXPORTS
1
0
2003-04 2004-05 2005-06 2006-07
YEAR
Exports have grown fast and at a rate exceeding 25% per annum between 1991-
92 and 2002-03. Thereafter, till 2006-07export levels stagnated at around 4-4.5
Million Tonnes per year.
On the other hand, imports followed a different growth path. In spite of progressive
reduction in customs duty levels after deregulation, imports remained around 1-2
Million Tonnes per year till 2003-04 and rose rapidly in the last two fiscals.

16. SUBSIDIES AND ISSUES OF COMPETITIVENESS
• India does not provide direct subsidies for exports, although indirect
subsidies on the nature of exemption from tax and import duty are
provided.
• The Government of India implements the Export Promotion of Capital
Goods (EPCG) scheme which provides for a reduction or exemption
of customs duties and an exemption from excise taxes on imports of
capital goods. The EPCG scheme has been countervailed in the US,
Canada, as well as the EU.
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17. SUBSIDIES AND ISSUES OF COMPETITIVENESS
• The income-tax benefits-related export activities are incorporated in
sections 80HHC, 10A and 10B of the Income Tax Act.
• The reserve bank of India has accordingly issued directions to
commercial Banks to provide export credit both at pre- and post-
shipment stages.
• India also administers a number of duty drawback schemes that
allow for the remission or drawback of import charges levied on
inputs that are consumed in the production of an exported product.
Schemes such as duty Entitlement pass book Scheme (DEPB) and
Duty free Replenishment certificate (DFRC) fall under this category.
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18. ECONOMIC PARAMETERS ARE FAVOURABLE
PERFORMANCE PARAMETERS
Forex Reserve
GOOD
Overall GDP
External Debt Service sector Growth
Financial Reforms
FUTURE OUTLOOK
Savings
New Investment inflation
FDI Inflows
Industrial Growth
Economic reforms
Internal Debt
Fiscal Deficit
Agricultural Growth
BAD CURRENT PERFORMANCE GOOD
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19. MERGERS & AQUISITIONS
• Arcelor - Mittal
– 32.2bn$ deal
– Mittal pips Severstal
• Tata-Corus
– 11.3bn$ deal
– Tatas pip CSN
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20. SWOT ANALYSIS
Strengths Weaknesses
1. Availability of iron ore and coal 1. Unscientific mining
2. Low labour wage rates 2. Coking coal import dependence
3. Abundance of quality manpower 3. Low R&D investment
4. Mature production base 4. Inadequate infrastructure
Opportunities Threats
1. Unexplored rural market 1. China becoming net exporter
2. Growing domestic demand 2. Protectionism in the West
3. Exports 3. Dumping by competitors
4. Consolidation 4. Global economic slowdown
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21. FACTORS HOLDING BACK THE INDIAN STEEL INDUSTRY
 Energy supply
 Problems procuring raw material inputs
 Inefficient transport system
 RECENT FINANCIAL CRISIS AND INDIAN STEEL
INDUSTRY
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22. IN SUMMARY..
• Indian steel industry exudes optimism but crisis should get
over as soon as possible.
• Investment in infrastructure is crucial to step up demand
for steel.
• Supply may have to be rationalized in line with the demand
(Dom + exports).
• Integrated Mills would hold the key in future growth of
Indian Steel supplies.
• New technologies to use indigenous natural resources
would have to be developed.
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23. THANK YOU
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24. Man Power in Modern Steel Plants
• In South Korea, Posco employs 10,000 people to produce
28 million tonnes. As a thumb rule, one can put the direct
employment potential at 1,000 per million tonnes.
• At present the per capita steel consumption is 35 kg,
whereas for developed countries it is 300kg.
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