Market Structure of Steel Industry

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Profile of Steel Industry in India
(Managerial Economics)

CONTENTS
Introduction
Market Size

Investments

Government Initiatives

Steel Prices

Supply and Demand Analysis

Cost of production

Production Functions and Input:

Fixed & Variable Inputs:

Total & Average cost:

Calculating Average Total Cost

Average cost and Economics of Scale:

Market Structure of steel industry:

Price Discrimination in the Steel Market

SWOT Analysis of Steel Industry:

Indian Steel Industry a Bright Future

Understanding the Steel industry using Michael Porter’s Five Forces Model

Suggestions

Road Ahead

Major Steel Producers
Introduction

India has acquired a central position on the global steel map with its giant steel mills, acquisition of global-scale capacities by players, continuous modernisation, and improvement in energy efficiency. Steel companies from across the world have shown interest in the Indian steel industry due to its phenomenal performance.

In India, the steel industry plays a significant role in the economic growth. India is world's fourth largest crude steel producer in 2011-12 with 89 million tonnes (MT) as per provisional data and is expected to become the second largest producer of crude steel in the world by 2015-16. India is also the world's largest producer of sponge iron with a host of coal based units, located in its mineral-rich States. The major contribution of the steel industry focuses on strengthening the sectors, such as infrastructure, constructions, automobile, transportation, industrial applications etc.

Tata Steel has been named among the world's most ethical companies by an American think tank, Ethisphere Institute. Ethical business principles and practices have been the key differentiators of Tata Group and Tata Steel since inception, according to H M Nerurkar, Managing Director, Tata Steel.

Market Size

The RNCOS research report titled, 'Indian Steel Industry Outlook to 2012,' highlighted that "Indian crude steel production will grow at a compound aggregate growth rate (CAGR) of around 10 per cent during 2010-2013," whereas the finished steel consumption is estimated to grow at a CAGR of around 12 per cent during FY 2012-14.

For India, growth in apparent steel use is expected to grow by 6.9 per cent in 2012 and by 9.4 per cent in 2013. The Indian steel producers have signed 222 memorandum of understanding (MoUs) with the State Governments for a planned capacity addition of about 275.7 30 MT by 2020.

There is a net increase in foreign direct investment (FDI) inflows into India in the metallurgical sector, including steel sector, highlighted Mr Beni Prasad Verma, the Union Minister for Steel. The amount of FDI inflow into the sector for 2011- 12 was worth US$ 1,765.07 million, as per data provided by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce.

Investments

* Surana Industries Ltd (SIL) plans to invest over Rs 4,500 crore (US$ 799.29 million) in expanding its steel manufacturing capacity and in power projects. To support the investment, the company is planning to raise around US$ 120 million from private equity (PE) companies, including Sycamore Ventures LLC (Sycamore), New York. Mauritius based investor IndiaStar (Mauritius) Ltd, a PE fund managed by Sycamore Ventures, currently holds around 24 per cent of the capital of SIL

* India's largest steel maker Steel Authority of India Ltd (SAIL) and Kobe Steel of Japan have signed a memorandum of agreement (MoA) at Kobe's headquarters in Tokyo. The MoA is for setting up a 0.5 million tonne per annum (MTPA) iron nugget making plant using Kobe's patented ITmK3 technology at SAIL's Alloy Steels Plant in Durgapur, West Bengal. The SAIL-Kobe Steel JV...
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