Begin typing your search above and press return to search.

Can we imagine a day without steel?

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  22 Sep 2015 12:00 AM GMT

Dr B K Mukhopadhyay

The Heat Is On

Is it not the fact that innovation in steel has been helping our civilization smash through new barriers, strengthen our lives, and hit new heights?

Some latest - Dutch startup company MX3D has embarked upon an exciting and innovative new project to manufacture a steel pedestrian bridge in mid-air over an Amsterdam cal using a 3-D printer. In the heart of Brazil’s Amazon rainforest, about 170 km northeast of the nearest city of Maus, stands South America’s tallest structure, the Amazon Tall Tower Observatory (ATTO). Reaching a height of 325 metres, the steel structure is 25 metres taller than the Eiffel Tower. Dubai, Shanghai, New York, London, and Moscow, all around the world, even taller and more striking new skyscrapers are being designed and built. Major cities are giving clear indications that the race to reach new heights is on. And then, among other goings - researchers at Pohang University of Science and Technology in South Korea have developed new lightweight steel which is to be as strong and as ductile as titanium!! Expected to be completed in five years, construction on what will be the world’s tallest building in the Saudi Arabian coastal city of Jeddah is under way. An estimated 80,000 tonnes of steel will be required in the building’s construction. Emirates Steel in the UAE is taking part in an innovative and ambitious project whose aim is to capture, use and store 800,000 tonnes of carbon dioxide (CO2) per annum from its steel plant. The project is scheduled to be completed by 2016 and the very goal is to produce steel with a lower carbon dioxide emission to the atmosphere by capturing the CO2 produced in the iron and steel making process, injecting it into existing oil fields for enhanced oil recovery (EOR) and storing it at the same time.

Going Around

Chi’s steel consumption is roughly half the global total - peaked in 2013, and ebbed as the country’s frenzied building slowed. The forecast is that Chi’s annual demand for steel will continue falling until 2017 and will settle at about 10 percent below its high-water mark. With so much excess capacity, Chi is likely to ship more of the metal abroad this year than Japan [the world’s second-biggest producer] could make if its steel mills were running at full capacity.

India and South Korea, the world’s fourth and fifth-biggest producers, have imposed anti-dumping duties to repel Chinese imports.

However, Chi’s seemingly bottomless appetite for steel has sustained Australian growth over the past decade. With Chinese investment now slowing, those fat years are virtually over. Australia, the world’s biggest exporter of iron ore [the main ingredient in steel] and its miners had assumed that Chi would sustain its ultra-fast growth. Instead, iron ore prices are nearly two-thirds lower than two years ago. Clearly, Australian miners have less to fret about than do steelmakers in Japan, India and South Korea.

Actually, as steel prices fall, Australia’s biggest miners are using their high-quality, low-cost iron ore to take a bigger slice of the global market.

Demand for steel in India and South-East Asia has started to improve, but is far from enough to replace the Chinese shortfall. Clearly, the declining value of Australia’s exports has become a drag on growth as mining companies cut costs and cancel projects, the eventual impact on the economy could be even worse.

Actually, worldwide growth of economies and population caused an immense increase in demand for energy. Energy prices have always been volatile, a trend that is expected to continue and perhaps even worsen in the years ahead - this is creating pressure but also opportunities for the steel industry. It encourages the creation of new conservation technologies, substitution of fuels, and ultimately the development of new steelmaking processes that are more environmentally friendly, in order to reduce the industry’s reliance on energy sources.

Back Home

India was the fourth largest steel producer in the world only after Chi, Japan and the US, as against its 8th position in 2003. India continues to maintain its lead position as the world’s largest producer of Direct Reduced Iron (DRI) or Sponge Iron.

Now, the steel sector contributes nearly 2 percent of the country’s GDP and employs over 6 lakh people. Going by the current estimate of Rs. 4000 crore investment per million ton of additiol capacity, the steel sector is expected to witness an estimated investment of Rs. 870640 crore by 2020.

Side by side, it has been the fact that India continues to be a low steel consuming country at just 60 kg per capita compared to the world average of 216 kg. Though the per capita consumption of total finished steel in the country has risen from 51 kg in 2009-10 to around 60 kg in 2013-14, yet the low consumption, in turn, indicates huge growth potential for the Indian steel industry.

Latest is that India’s import of iron and steel rose 58 percent during April-June 2015, making it the country’s sixth-largest import during this period. The sector’s contribution to stressed advances, however, stood at 10.2 percent of the total advances at end-December 2014 and is among the top five sectors with stressed loans in the system.

The Reserve Bank of India in its latest fincial stability report highlighted that five out of the top 10 private steel producing companies are under severe stress. These companies are struggling with delayed implementation of projects due to delays in land acquisition and environmental clearances among other factors.

Tata Steel and Sajjan Jindal-led JSW Steel are among the steel producers that saw a large hit on profitability as the steelmakers were forced to cut costs to compete with Chinese, Korean and Japanese steel imports.

In the very recent past, India Ratings and Research opined that the proposed 20 percent safeguard duty by the Indian government on imported steel to be a welcome relief for the domestic steel sector, which is struggling due to cheap imports from Chi and countries with which India has free trade agreements.

With the proposed safeguard duty the rating agency expects that the landed price of hot rolled coil steel imported from Chi would become more expensive than domestic steel prices by Rs. 2000 per ton. This, in turn, will also provide headroom to domestic steel producers to increase their prices and volumes, provided Chinese players do not reduce their prices further. Capacity utilization could also improve as dependence on import reduces, accordingly.

The rating agency also expects higher capacity utilization would result in better fixed cost absorption and increase the earnings before interest, tax, depreciation, amortization per ton for integrated steel producers. However, safeguard duty would benefit only in the short-term as it is likely to be applicable for only 200 days.

It is good to note that responding to stark realities SAIL and tiol Skill Development Corporation (NSDC) signed a MoU for skill development in steel sector. The MoU focus on three areas that includes - skilling of on-roll employees of SAIL, skilling of off-roll manpower working in SAIL and skilling of local youth for future employability and income generation.

However, on this score, the O E C D alyses must be taken very seriously in as much as it has cautioned of growing risks to the intertiol steel market. The indication clearly states that while world demand for steel would continue to expand favourably, growing economic risks associated with housing market and associated other problems cloud the outlook at least partially. Continued capacity expansions as observed in many parts of the world could well impact on the price - front if demand growth slows down significantly. As capacity expansion continues to be there, abrupt slowdown in global demand have the potentialities to create trade friction to the detriment of the long term health of the steel industry.

The future success of the steel industry obviously depends on the ability to mage the entire supply chain – right from backward integration to forward linkages. The importance of downstream products are also no less – ball bearing rings, alloy steel bearings [ used in two wheelers, fans and motor pumps ], ferro-manganese and ferro- chrome, cold rolled steel products, galvanized steel sheets, etc.

Steel is and will be in much demand in the sectors like the aerospace, construction, automotive, railways as well as in consumer products – which is a fact!

(The Writer, a noted Magement Economist, and an Intertiol Commentator on Business and Economic Affairs, attached to the West Bengal State University, can be reached at

Next Story