Steel - Sponge Iron

India is currently the 5th largest steel producing nation in the world with production of over 53 million tonne (MT). Steel production has grown at a compounded rate of 9% during the period FY03 to FY08.However, there is low per capita consumption of steel of around 46 kgs as against 200 kgs of the world. The Indian steel sector has key advantages of domesti... more »

India is currently the 5th largest steel producing nation in the world with production of over 53 million tonne (MT). Steel production has grown at a compounded rate of 9% during the period FY03 to FY08.However, there is low per capita consumption of steel of around 46 kgs as against 200 kgs of the world. The Indian steel sector has key advantages of domestic availability of raw material and cheap labor. However, Indian steel companies have to bear additional cost pertaining to capital equipment, power and inefficiencies (low per employee productivity). The basic import duty on steel has been consistently brought down and is nil currently while the government has levied export duty on steel products. Steel is most common material and is used in infrastructure, housing, automobiles & consumer durables. The major products are semi finished product, ordinary steel products likes tube, pipes etc, hot rolled coils (HRC), cold rolled coils (CRC) & specialty steel products like stainless steel pipes & foils etc. The major steel producing countries are China, Japan, US, Russia, India, South Korea while major steel consuming countries are China, US, Japan, South Korea, India, Russia. SWOT Analysis: Strength: Availability of iron ore and coke, Low wage labour; Weakness: High cost of capital, Cyclical in nature, Low productivity, Inadequate infrastructure; Opportunity: Govt. Subsidy given to auto Industry, Infrastructure demand; Reduction in price of key raw materials and fuel; Threat: Steel prices coming down; Threat of substitute (Aluminum); Dumping from China; Slowdown of economy. hide «