How would the industry behave and look like in the Short Term (1 year), Medium Term (3-5

years) and Long Term (8-10 years) In the short-term, the steel industry in India shows promising growth, after the slowdown in 2011, according to reports released by the World Steel Association recently. According to the April 2012 Short Term Outlook released by WSA, Indian steel production is projected to grow by 6.9% to 72.5 million tones. It should be noted that this predicted growth will be nearly twice of the projected global rate of 3.6%. Further, there are projections that this could increase to 9.4% in 2013 riding on the back of urbanization and rapid infrastructural investment. This prediction takes into cognizance the fact that the projected investment in infrastructure in India during the 12th Plan Period has been pegged at $1trillion. The short term outlook for the global steel industry also looks promising with the global steel production predicted to increase by 3.6% to 1422 million tones and by 4.5% to around 1486mt in 2013.Juxtaposing this with the past, the growth last year was 5.6%.In contrast the Steel production in China will rise by only 4% to 648.8 million tonnes in 2012.

In the Medium Term, the growth of the Steel Industry looks promising. India is projected to become the second largest steel producer by 2013, during which its installed capacity is expected to rise to 120 tonnes from the present 80 tonnes. The Steel Ministry of India has also decided to formulate a new National Policy and vision document to guide the steel industry in India. The medium term horizon in the same is 10 years while the long term horizon of 25 years. The panel which will comprise luminaries from the industry will submit a whitepaper on the road map to be followed in the case. A large number of steel projects are currently in the pipeline. Notable among them include the expansions of SAIL, RINL, Tata, Essar, JSW and JSPL. The Greenfield projects in the pipeline include POSCO & Arcelor Mittal though both seem to have run aground recently. The Land Acquisition problems are a major hurdle in the growth story of Indias Steel Industry. India being a thickly populated country, land is much valued and culturally people hold a deep attachment to their ancestral land as well. In light of this, the Land Acquisition and Rehabilitation Bill that the government proposes will be a major step. It is hoped that this will solve the issue of acquisition of land without proper compensation, rehabilitation and/or employment which has already played a major role in the massive protests again the proposed Greenfield steel projects in India. Globally the Steel Industry is expected to gradually recover over the next five years as overcapacity is addressed and the pressure from rising raw material costs reduces. The Global Steel industry in the last few years has been burdened by overcapacity and rising raw material costs. However developing countries like India and China have been relatively insulated from this because of a strong internal demand driven economy. The global demand for steel is almost led only by China and this is expected to grow at over 5% a year to 2016 . The long term outlook for Steel Industry seems promising as India aspires to become a global economic superpower by 2020. The industry outlook is that there will be an increase of atleast 70 to 100MT by 2020, which will make India the worlds second largest Steelmaker after China. For this India needs to reach a per capita consumption of at least 100kgs by 2020. With population estimated to reach 1.4 billion in 2020, this means a steel requirement of at least 140 million tonnes per year which gels well

with the fact that China increased its steel production by 70mT in 4 years from 2000 to 2003. For India this entails an investment of about 300,000 crores in 16 years. As per the Indian Bureau of Mines, which cites information based on the revised National Steel Policy, Indias steel production has been pegged at 180 million tonnes to meet demand. However this requires an iron ore requirement of atleast 500 million tonnes annually. The present production is 220 million tonnes annually. To be able to reach this, apart from conventional mining, beneficiation followed by agglomeration of Iron Ore fines needs to be followed in a large scale. India has a huge potential in low grade ores in the states of Goa, Odisha, Jharkhand, et al. It should be brought into notice that currently such low grade ores is mostly treated as waste and only Essar has a facility to beneficiate and process such ores on a large scale. How has the industry evolved over time The Indian Steel Industry has evolved over the past 100 years. The Tata Iron & Steel Company was the first integrated steel plant to be set up in 1907. It was incidentally also the first steel company to be freed from the stifling licensing regime in 1990-91 and the pricing and distribution controls. Indias steel industry mainly rides on the exceptionally high demand generated by its internal economy as well as that of its neighbor China. The New Industrial Policy drafted by the Government of India, opened up the iron and steel sector for private sector by removing it from the exclusivity of the Public Sector companies and exempting it from compulsory licensing. Both foreign investment as well as the import of foreign technology are freely permitted upto a certain limit by GOI. Soaring demand by sectors such as automobiles, infrastructure, real estate, et al both at home and abroad has put India on the world map. Tata Steel dominates the Indian Steel landscape and with its acquisition of the global steel giant Corus, created the countrys biggest buyout. In the meantime LN Mittal owned Mittal steel company acquired Arcelor to create the worlds biggest steel company Arcelor-Mittal. POSCO is also pumping huge investments into Odisha to create the countrys biggest single location facility, a record which is currently held by Essar. The following chart illustrates the past and the present states of the steel industry in India:

Indian steel industry : Production for Sale (in million tonnes) Category Pig Iron Sponge Iron Total Finished Steel (alloy + non alloy) 2007-08 2008-09 2009-10 2010-11 2011-12* 5.28 20.37 56.07 6.21 21.09 57.16 5.88 24.33 60.62 5.68 25.08 68.62 5.78 20.37 73.42

Source: Joint Plant Committee; *provisional