This report provides an overview of India’s steel industry, discussing trends in the sector through H1 2013 and analyzing the market forecast through 2014. The report also review the market position of leading players including SAIL, JSW, and Tata Steel.

The Indian steel industry witnessed a major demand slowdown in FY13 after a decade of high growth. The slowdown in Chinese steel demand created a problem of global oversupply, which caused a decline in global steel prices. The differential in domestic and global steel prices triggered an increase in steel imports, negatively affecting domestic producers and subsequently bringing domestic prices down. Steel consumption in the country was subdued even in the first five months of FY14. Declines in profitability, depreciation of the rupee, rising inventories, increased finance costs, foreign exchange losses, and a ban on iron ore mining were some of the other issues that hurt domestic steel producers in the first half of 2013.

Rising imports, difficulty in resource mobilization, and the global slowdown in steel demand have emerged as the major threats for this sector. However, the outlook for India’s steel industry is stable in the medium term owing to a low per capita steel consumption and a largely untapped rural market.

Key Points:

• This report includes financial highlights and a comparative matrix for key sectoral players including the Steel Authority of India Ltd (SAIL), JSW Steel Limited (JSW), and Tata Steel Limited (Tata Steel).

• Total finished steel consumption grew at a CAGR of 10.8% during the last decade. By contrast, FY13 consumption grew by 3.3%, the second-lowest growth figure in the past ten years.

• SAIL, Tata Steel, Jindal South West Steel (JSW), Rashtriya Ispat Nigam Limited (RINL), Essar Steel, and Jindal Steel & Power Limited (JSPL) accounted for more than 55% of the country’s crude steel production in FY2013.

• Total crude steel production capacity grew at a CAGR of around 9% during the last five years. The average capacity utilization during this period was around 87%.

• Total crude steel production grew at a CAGR of 10.1% during 2007–13. The finished steel production grew at a CAGR of 11.2% during the same period. However, a subdued growth of 5% in crude steel production was recorded during FY13 due to the faltering demand.