State Wise Steel Demand in India

ISA Steel Conclave, New Delhi, October 26, 2018

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Contents

▪ worldsteel’s India state wise steel demand study

▪ Aspects of state wise steel use in India
▪ Insights on state wise steel demand prospects
▪ Summary and conclusion

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worldsteel’s India state wise steel demand study
Motivation of the study

▪ India is known as a country of potential, but there are different views about when India’s
steel demand will start to take off.

▪ India’s growth prospects can be better understood by looking at India by states as was
the case with worldsteel’s provincial approach to China.

▪ Such disaggregated approach enables identification of uniqueness of each state and

better insight on economic and steel demand potential.

▪ The Project Team looked into characteristics of states (“White book of Indian states”)
focusing on potential for growth of steel using sectors, notably construction and
manufacturing.

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Project team

▪ The Project was conducted under Joint leadership of worldsteel and ISA since 2016 2H
▪ Key contributors

▪ External partners: Joint Plant Committee

6
Estimating state wise steel demand – worldsteel approach

▪ In the absence of steel use statistics by state, SWIP share was used to estimate state wise
steel use

GSDP Construction VA SWIP

× ASU, fs India × 0.62 + × ASU, fs India × 0.38
.

 GSDP Construction  VA SWIP

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Aspects of state wise steel use in India
White books of India States

▪ Project Team has produced a “white book” for each state which covers the following aspects:
• Macroeconomic performance and drivers.
• Key policy initiatives and business environment.
• Overview of key industries in the state.
• Identification of steel demand drivers and SWOT analysis.

▪ Through this exercise, it was possible to identify and compare growth potential of different
states and the team has produced an evaluation of steel demand growth potential for each
state.

Note. 7 North Eastern states were approached in a consolidated way, the rest of the 22 states were studied separately along with National
Capital Region of Delhi.

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States show uneven and multispeed development
▪ Regional growth has been uneven among states.
• West Bengal experienced economic decline after 1960s.
• Tamil Nadu on the other hand has grown steadily and consistently.
• Gujarat has been outperforming while northeastern states lag behind.
▪ Rich states are located in western/southern and northern India.
GDP per capita, 2015-16 GDP growth, CAGR 15-16 / 11-12
Jammu & Jammu &
Kashmir Kashmir
Himachal Pradesh Himachal Pradesh
Punjab Uttarakhand Punjab Uttarakhand
Arunachal
Haryana Haryana Arunachal
Sikkim Pradesh Sikkim Pradesh
Uttar Assam Uttar
Rajasthan Nagaland Rajasthan AssamNagaland
Pradesh Bihar Meghalaya Pradesh Bihar Meghalaya
Manipur
Jhark- WestTripura Manipur
Jhark- WestTripura
Gujarat Madhya
handBengal Mizoram Gujarat Madhya Chhattis-
PradeshChhattis- Pradesh garh handBengal Mizoram
Maharashtra garh Odisha Maharashtra Odisha
Telang < 50 k INR Telang <4%
ana ana
Goa Andhra Andhra
50-100 k INR Goa 4-6 %
KarnatakaPradesh Pradesh
Karnataka
Tamil 100-140 k INR Tamil 6-8 %
KeralaNadu Kerala
Nadu
> 140 k INR >8%
Source: Central Statistics Office, worldsteel

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Crude steel production by states
▪ Steel production centres: raw materials (iron ore) driven (Odisha, Chhattisgarh, Jharkhand and
Karnataka) or port based and proximity to markets (Maharashtra and Gujarat).

Crude steel production, Jammu &

India total: 89.8 Mt Kashmir
Mt
18 Himachal Pradesh
Punjab
16 Uttarakhand Arunachal
Haryana
Delhi Pradesh
14 Sikkim
Rajasthan Uttar AssamNagaland
12 Pradesh
Bihar MeghalayaManipur
10 Jhark- West
Gujarat Madhya Mizoram
8 Pradesh hand Bengal Tripura
Chhattis-
6 garh Odisha
Maharashtra
< 1 Mt
4
Telangan 1-4 Mt
2 a
Goa Andhra 4-10 Mt
0
Karnataka Pradesh
> 10 Mt
Tamil
Kerala Nadu

Source: JPC, 2015-2016, million tonnes (Mt)

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Steel use by states
▪ Maharashtra and Tamil Nadu are largest steel using states, both auto hubs.

Jammu &
Kashmir
Apparent steel use, PunjabHimachal Pradesh
India total: 76.4 Mt
Mt Uttarakhand Arunachal
14,000 Haryana
Delhi Pradesh
Sikkim
12,000 Rajasthan Uttar AssamNagaland
Pradesh
Bihar MeghalayaManipur
10,000
Gujarat Madhya Jhark- West Mizoram
Pradesh hand Bengal Tripura
8,000 Chhattis-
garh Odisha
Maharashtra
6,000 < 1 Mt
Telangan
4,000 1-3 Mt
a
Goa Andhra
2,000 3-10 Mt
Karnataka Pradesh
0,000 > 10 Mt
Tamil
Kerala Nadu

Source: worldsteel estimation, 2014-15, million tonnes (Mt)

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Steel geography of India is unbalanced
▪ Steel producing states in the east have not seen development of own steel markets.
▪ Therefore intra-state trade in steel has been a common feature.

Steel use Jammu & Steel production

Jammu &
Kashmir Kashmir
Himachal Pradesh Himachal Pradesh
Punjab Punjab
Uttarakhand Arunachal Uttarakhand Arunachal
Haryana Haryana
Pradesh Pradesh
Uttar Sikkim Assam Sikkim Assam
Rajasthan Rajasthan Uttar
Nagaland Nagaland
Meghalaya
Pradesh Meghalaya
Bihar Pradesh Bihar Manipur
Madhya West Manipur
Jhark- Tripura Gujarat Madhya Jhark- WestTripura
Gujarat Pradesh Bengal Chhattis-hand
Mizoram Pradesh Mizoram
Chhattis- hand Bengal
garh Odisha
Maharashtra garh Odisha Maharashtra
< 1Mt
Telanga Telang
na 1-3 Mt ana
Goa Andhra
Goa Andhra
3-8 Mt Pradesh
Pradesh Karnataka
Karnataka
Tamil >8 Mt Tamil

Kerala
Nadu Kerala Nadu
iron ore production
(major sites)
Source: worldsteel estimation, 2014-15 Source: Joint Plant Committee, 2015-16

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Steel use across states is also uneven
▪ Among rich states, only a few states show high steel use per capita, e.g. Tamil Nadu, Maharashtra,
Gujarat, Goa.
▪ North-Eastern states feature low steel use per capita, e.g. Assam, Manipur, Nagaland
▪ Some states have high steel use per capita despite low per capita income, driven by infrastructure, e.g.
Uttarakhand.
kg k INR
Apparent steel use per capita
250 300
ASU per capita, kg Jammu &
250
200 Kashmir
GDP per capita, k INR Himachal Pradesh
200 Punjab Uttarakhand
150 Haryana Arunachal
150 Uttar Sikkim Pradesh
Rajasthan Pradesh Assam Nagaland
100 Bihar Meghalaya
West Manipur
100 Madhya Jhark- Tripura
Gujarat Bengal Mizoram
Pradesh hand
50 Chhattis-
50 Odisha
Maharashtra garh
Telang
India average: 60.3 kg
0 0 ana
Haryana

Tamil Nadu

Maharashtra

Mad. Prad.

Manipur
Arun. Prad.

Assam
Uttarakhand

Goa

Kerala

Gujarat

Jharkhand

Uttar Pradesh

Orissa
Him. Prad.

Punjab

Sikkim
Telangana
Rajasthan
Mizoram
And. Prad.
Chhattisgarh

West Bengal

Jam. & Kash.

Tripura
Nagaland

Bihar
Karnataka

Meghalaya
Goa Andhra < 50 kg
Pradesh
Karnataka
Tamil 50-100 kg
Nadu
Kerala
Source: Central Statistics Office, worldsteel estimation, 2014-15 > 100 kg

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Diverse patterns of steel use of Indian states
▪ Reflecting uneven and diverse economic growth patterns, different states shows
different tracks of S-curve.
S-curve, 2004-05 – 2014-15
ASU/cap
300
Goa
250
Haryana
Kerala
200 Maharashtra
Orissa
150
Uttar Pradesh
100

50

0
0 50 100 150 200 250 300 GDP/cap
Source: worldsteel estimation, 2004-15

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Insights on state wise steel demand prospects
Insight 1: Uneven growth will continue, but catching-up
is taking place in some states (1/2) State GDP growth
CAGR 15-16 / 11-12 (India average: 6.7 %)

Gujarat 9.5
Himachal Pradesh 7.6
▪ Uneven economic performances of Indian states has Karnataka 7.5
Chhattisgarh 7.3
been driven by geography, natural resources and Haryana 7.1
socio-political environments. Uttarakhand 7.0
Maharashtra 6.6

▪ Political leadership and consistent policy had important Madhya Pradesh

West Bengal
6.6
6.4
Andhra Pradesh 6.4
influence on the economic performance of the Jharkhand 6.3
North East states 6.1
advanced states (e.g. Gujarat). Odisha 5.9
Tamil Nadu 5.7

▪ Central government’s focus on improving ease of doing Rajasthan

Sikkim
5.6
5.6
business has prompted pro-business reforms in Telangana 5.2
Jammu and Kashmir 5.1
various states. Uttar Pradesh 5.0
Punjab 4.7
Kerala 4.6
Bihar 4.5
Goa 1.0
Source: Central Statistics Office, worldsteel

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Insight 1: Uneven growth will continue, but catching-up is
taking place in some states (2/2)
Potential for growth,
economic development
▪ Strong growth momentum will continue in Gujarat, Haryana,
Maharashtra & Tamil Nadu. Jammu &
Kashmir
Himachal Pradesh
▪ Some middle income states shows high growth potential PunjabUttarakhand
Arunachal
Haryana
driven by renewed focus on economic development (Andhra Rajasthan
Uttar
Pradesh
Sikkim Assam
Pradesh Bihar Meghalaya Nagaland
Pradesh, Telangana). Madhya Jhark-West Manipur
handBengalTripura
Gujarat Pradesh Mizoram
Chhattis-
▪ Eastern states (Chhattisgarh, Jharkhand, Odisha) are Maharashtra
garh
Odisha
Potential for growth:
expected to catch up thanks to mining and manufacturing Telang
ana low
development. Goa Andhra
Karnataka Pradesh medium low

▪ North eastern states are expected to stay on lower growth Tamil

Kerala Nadu medium high
track limited by lack of reform and geography, but large high

infrastructure investment as announced by the government

can change overall investment environment in the long run. Source: Project Team Analysis

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Insight 2: Service sector will continue to be a growth driver
▪ Service sector has been the key growth driver for India, enabling employment generation with less capital
investment.

▪ Service sector will continue to be important due to:

• Stronger focus on generating employment for sustainable and equitable growth,
• Competitive advantage in the knowledge based service sectors

Share of services in GDP Potential for growth, services (knowledge based)

Jammu & Jammu &
Kashmir Kashmir
Himachal Pradesh Arunachal Himachal Pradesh
Punjab Uttarakhand Arunachal
Haryana Punjab Uttarakhand
Pradesh Haryana
Uttar Sikkim Assam Pradesh
Nagaland
Meghalaya Uttar SikkimAssam
Rajasthan Pradesh Nagaland
Bihar TripuraManipur Rajasthan Meghalaya
Pradesh Bihar Manipur
Madhya Jhark- West Mizoram Jhark- Tripura
Gujarat Chhattis-hand Madhya West
Pradesh Bengal Gujarat Chhattis-hand Mizoram
garh Odisha Pradesh Bengal
Maharashtra garh
Telang < 40 % MaharashtraTelan Odisha Potential for growth:
ana gana low
Goa Andhra
40-50 % Goa Andhra
Pradesh
Karnataka Pradesh
medium low
Karnataka
KeralaTamil 50-60 %
KeralaTamil medium high
Nadu Nadu
60-70 % high
Source: Central Statistics Office, 2015-16 Source: Project Team Analysis

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Insight 3: Manufacturing is slowly gaining momentum (1/2)
▪ The share of manufacturing in India’s GDP stayed within 14-16% in the last 40
years, only recently rising to 18%.
▪ Some states have strong presence of manufacturing due to:
Share of manufacturing in GDP
• Unfavorable climate for agriculture (e.g. Gujarat, Jammu &
Maharashtra and Tamil Nadu). Kashmir
Himachal Pradesh
• Mineral deposits leading to heavy industries base (e.g. Punjab
Uttarakhand Arunachal
Haryana Pradesh
Goa, Odisha, Chhattisgarh and Jharkhand). Rajasthan Uttar Sikkim Assam
Nagaland
Pradesh Bihar Meghalaya
• Special tax benefits (e.g. Uttarakhand, Himachal Pradesh Madhya Jhark- West
Tripura
Manipur
Gujarat Bengal
and Sikkim). Pradesh Chhattis- hand Mizoram
Maharashtra garh Odisha

▪ “Make in India” provides vision for enhancing manufacturing Telanga < 10 %

na
activities across states, aiming to raise share of manufacturing Goa Andhra 10-20 %
Pradesh
to 25% of GDP. Karnataka
20-40 %
Tamil
Kerala
Nadu > 40 %
Source: Central Statistics Office, 2015-16

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Insight 3: Manufacturing is slowly gaining momentum (2/2)
▪ Some states will have stronger focus on manufacturing: Potential for growth, manufacturing
• Maharashtra, Uttarakhand, Tamil Nadu, Gujarat, and (steel intensive)

Haryana have made significant progress in implementing Jammu &

Kashmir
business reforms and suitable infrastructure. Himachal Pradesh
Punjab
• States like Andhra Pradesh, Madhya Pradesh and Haryana
Uttarakhand Arunachal
Pradesh
Sikkim Assam
Punjab have renewed thrust on manufacturing, especially Rajasthan Uttar Nagaland
Meghalaya
Pradesh Bihar
in auto and ancillary sector. Manipur
Madhya Jhark- Tripura
Gujarat Chhattis- hand West
▪ Within the manufacturing sector the focus is more on Pradesh
garh Bengal
Mizoram

Odisha
relatively labour intensive ones like food processing and Maharashtra

Telanga
textiles. na
Potential for growth:
Goa
▪ Mechanical machinery and shipbuilding sectors are less Andhra
Pradesh low
Karnataka
prominent across states with a few exceptions (e.g. Punjab Tamil medium low
Kerala
and Gujarat). Nadu
medium high
high

Source: Project Team Analysis

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Insight 4: India’s auto manufacturing hub will expand
Automotive industry in India
▪ India’s auto industry has shown a strong growth driven
by domestic demand and FDI inductive policies.

▪ India aims to be a global auto hub for small cars with

huge focus on exports.

▪ The existing automotive hubs in Haryana, Tamil Nadu,

Maharashtra will continue to strengthen.
• Haryana is the largest production hub and geared to
domestic market.

▪ New auto hubs are emerging in Andhra Pradesh, Gujarat

mainly driven by FDI.

▪ The sector is also poised for continued strong growth.

Source: SIAM, IBEF, public domain

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Insight 5: Construction will be a common demand driver
▪ Growth in the construction sector will be a pan-India phenomenon driven both by infrastructure spending
and housing demand, especially affordable housing.
▪ Construction has gained significant share in Tamil Nadu, Uttar Pradesh, Chhattisgarh, etc.
▪ Majority of states are expected to have strong infrastructure development, especially along major corridors.
▪ In some states, like Jammu & Kashmir and Bihar, steel demand will be driven almost entirely by
infrastructure development.
Share of construction in GDP Potential for growth, infrastructure
Jammu &
Jammu &
Kashmir
Kashmir
Himachal Pradesh
Punjab Himachal Pradesh Arunachal Punjab
Uttarakhand Uttarakhand Arunachal
Haryana Haryana
Uttar Sikkim Pradesh Sikkim
Pradesh
Uttar
Rajasthan Pradesh Assam Nagaland Rajasthan Assam Nagaland
Bihar Meghalaya Pradesh BiharMeghalayaManipur
Madhya Jhark- West Manipur
Mizoram Madhya Jhark- West
Gujarat Tripura
hand Bengal Gujarat Chhattis- Tripura Mizoram
Pradesh Pradesh handBengal
Chhattis- garh
Maharashtra Odisha Maharashtra Potential for growth:
garh Odisha
Telan <6% Telan
gana gana
low
Goa Andhra 6-8 % Goa Andhra
medium low
Pradesh
Karnataka Karnataka Pradesh
Tamil 8-10 % Tamil medium high
Nadu Kerala Nadu
Kerala
Source: Central Statistics Office
> 10 % Source: Project Team Analysis
high

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Insight 6: Steel geography of India will remain unbalanced
▪ Gujarat, Maharashtra and Haryana are likely to experience strongest growth in steel demand. Tamil
Nadu also has good potential.
▪ The unbalanced steel geography will continue: capacity expansion have been mostly brownfield and
new steel production facilities most likely to be built around raw materials.
▪ With decreased transportation cost, intra-state trade steel trade will continue to prevail.
Potential for steel demand growth Increase in annual crude steel production
(from 2010/11 to 2015/16)
Jammu &
Kashmir Jammu &
Kashmir
Himachal Pradesh
Punjab Himachal Pradesh
Uttarakhand Arunachal Punjab
Haryana Uttarakhand Arunachal
Pradesh
Sikkim Assam Haryana
Rajasthan Uttar Nagaland Rajasthan Uttar Sikkim Pradesh
Bihar Meghalaya AssamNagaland
Pradesh Pradesh Bihar Meghalaya
Jhark- Manipur
WestTripura Jhark- Manipur
Gujarat Madhya hand Mizoram Gujarat Madhya West Tripura
PradeshChhattis- Bengal Chhattis-hand Mizoram
Pradesh Bengal
Maharashtra garh Odisha Potential for growth: garh
Maharashtra Odisha
Telang Telang
ana low ana
Goa Andhra Andhra
Goa
KarnatakaPradesh
medium low Pradesh
Karnataka
Tamil Tamil
medium high Kerala
KeralaNadu Nadu
Source: Project Team Analysis high Source: JPC
Increase of >1 Mt

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Summary and conclusion
Summary of state potential
Gujarat, Haryana,
H
Steel demand potential
Maharashtra
Andhra Pradesh,
Chhattisgarh,
Jharkhand,
MH Karnataka, Odisha, Tamil Nadu
Telangana,
Uttar Pradesh,
Uttarakhand
Bihar, Jammu and
Assam, Goa,
North East ex Kashmir, Kerala,
ML Assam Madhya Pradesh,
Himachal Pradesh,
West Bengal
Punjab, Rajasthan

Sikkim
L
L ML MH H

Economic growth potential

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Geography of economic vs steel demand potential
▪ Eastern states are expected to catch up in economic development.
▪ Infrastructure will be a pan-India steel demand driver, driven by various government initiatives.
▪ Strong manufacturing potential are shown in a limited number of states.
▪ Gujarat, Maharashtra, Haryana show strongest, balanced potential.

Potential for economic growth Potential for steel demand Potential for steel demand
growth, infrastructure driven growth, manufacturing driven

Potential for growth:

low
medium low
medium high
Source: Project Team Analysis
high

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When will India’s demand take off?
India 2018 to 2030

350
China 2008
Steel demand per capita, kg/ person

300
India Inflection imminent
250 2005

200
Inflection later

150
Status quo continued
100 1993
2000

50 2014 2018
1990

2000
0
0 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000

GDP per capita, USD/ person

Source: IHS Markit, worldsteel, Project Team Analysis

Thank you for your attention.
For further information contact:

Dr Nae Hee Han | Director, Economic Studies and Statistics

World Steel Association
han@worldsteel.org | T: +32 (0)2 702 8913 | worldsteel.org

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