Study of Market Structure- Indian Steel Sector

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Market Structure- Steel sector in India
Indian Steel Sector: An Overview

Steel is crucial to the development of any modern economy and is considered to be the backbone of human civilization. The level of per capita consumption of steel is treated as an important index of the level of socioeconomic development and living standards of the people in any country.

The Indian steel industry has made a rapid progress on strong fundamentals over the recent few years. The industry is getting all essential ingredients required for dynamic growth. Even in the tough times of economic slowdown, the industry succeeded to sustain its positive growth momentum on the strong fundamentals of domestic demand from construction, automobile and infrastructure sectors:

World Crude steel production (million tonnes):|
Rank| Country/Region| 2007| 2008| 2009| 2010| 2011|
 | World| 1,351.3| 1,326.5| 1,219.7| 1,413.6| 1,490.1| 1| China| 494.9| 500.3| 573.6| 626.7| 683.3|
2|  Japan| 120.2| 118.7| 87.5| 109.6| 107.6|
3|  United States| 98.1| 91.4| 58.2| 80.6| 86.2|
4|  India| 53.5| 57.8| 62.8| 68.3| 73.4|
5|  Russia| 72.4| 68.5| 60.0| 66.9| 6.0|
(Source:http://www.worldsteel.org/)|
Domestic Scenario
* The Indian steel industry has entered into a new development stage from 2007-08, riding high on the resurgent economy and rising demand for steel. * Rapid rise in production has resulted in India becoming the 4th largest producer of crude steel and the largest producer of sponge iron or DRI in the world. * The per capita steel consumption in the country is still 55 kg only. The India’s rural per capita consumption is just ten kg. The per capita world steel consumption is estimated at 250 kg for world and 460 kg for china. * The future outlook for Indian steel sector is quite positive with an estimated infrastructure investment of nearly a trillion dollars, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana etc. * The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid developments in the domestic steel industry (both on the supply and demand sides) as well as the stable growth of the Indian economy since the release of the Policy in 2005. * Joint Plant Committee (JPC) is the only institution in the country, which is officially empowered by the Ministry of Steel / Government of India to collect data on the Indian iron and steel industry, resulting in the creation and maintenance of the only basic, complete and non-partisan databank on this industry. Production

* Steel industry was delicensed and decontrolled in 1991 & 1992 respectively. * Today, India is the 4th largest crude steel producer of steel in the world. * In 2011-12, production for sale of total finished steel (alloy + non alloy) was 73.42 mt. * Production for sale of Pig Iron in 2011-12 was 5.78 mt. * India is the largest producer of sponge iron in the world with the coal based route accounting for 76% of total sponge iron production in the country. * Last five year's production for sale of pig iron, sponge iron and total finished steel (alloy + non-alloy) are given below: Indian steel industry : Production for Sale (in million tonnes)| Category| 2007-08| 2008-09| 2009-10| 2010-11| 2011-12*| Pig Iron| 5.28| 6.21| 5.88| 5.68| 5.78|

Sponge Iron| 20.37| 21.09| 24.33| 25.08| 20.37|
Total Finished Steel (alloy + non alloy)| 56.07| 57.16 | 60.62 | 68.62| 73.42| Source: Joint Plant Committee; |
Steel Prices
* Price regulation of iron & steel was abolished on 16.1.1992. Since then steel prices are determined by the interplay of market forces. * Domestic steel prices are influenced by trends in raw material prices, demand – supply conditions in the...
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