Table of Contents
This report profiles India's steel industry, discussing market trends and outlook into 2014 and beyond. The report also highlights key leading players in the sector including Steel Authority of India Ltd (SAIL), JSW Steel Limited (JSW) and Tata Steel Limited (Tata Steel).
India's steel industry saw a demand slowdown in FY14 continuing on the trend witnessed in FY13. The slowdown in Chinese steel demand created a problem of oversupply globally, which caused a decline in the global steel prices. The differential in domestic and global prices triggered an increase in imports; negatively affecting the domestic producers and bringing even the domestic prices down. However, import duty imposed by the government led to a substantial fall in steel imports.
Among some other issues that hurt the domestic steel producers in FY14 were decreasing profitability, excess supply, rising inventories, increased finance costs, foreign exchange losses and a ban on iron ore mining. Steel consumption in the country was subdued even in the first four months of FY15.
Rising imports, difficulty in resource mobilization and global slowdown in steel demand have emerged as the major threats for this sector. However, the outlook for Indian steel industry is stable in the medium term owing to a low per capita steel consumption and a largely untapped rural market.
o During the last decade, India's steel industry went through a period of steady growth backed by development in sectors like construction, real-estate, automobile etc. Total finished steel production grew at a CAGR of 9.4% during 2004-14.
o Steel Authority of India Limited (SAIL), Tata Steel, Jindal South West Steel (JSW), Rashtriya Ispat Nigam Limited (RINL), Essar Steel, and Jindal Steel & Power Limited (JSPL) were the six leading players in the Indian steel sector as of FY14. Together, these six players accounted for around 55% of the country's crude steel production.
o Total crude steel production capacity grew at a CAGR of around 8.5% during the last five years.
o The industry is going through a demand slowdown, marked by a deceleration in finished steel consumption growth during the last few years. In FY13, the consumption grew by 3.3%, while in FY14 it grew by only 0.8%.
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