Monday, September 4, 2006
" In 2005 World Crude Steel output at 1129.4 million metric tonne was 5.9% more than the previous year. (Source: IISI)
" China remained the world's largest Crude Steel producer in 2005 also (349.4 million metric tonne) followed by Japan (112.47 million metric tons) and USA (93.89 million metric tons). India occupied the 8th position (38.08 million metric tons). (Source: IISI)
The International Iron & Steel Institute (IISI) in its forecast for 2006 has confirmed the trend of recent years of an increase in steel use in-line with general economic growth and with the fastest growth occurring in the countries with the highest GDP growth such as India and China. Apparent world-wide Steel Demand is forecast to grow to between 1,040 and 1,053 million tonnes in 2006 from a total of 972 million tonnes in 2004. This is a growth of 4-5% over the two year period. However, according to IISI the cost of raw materials and energy would continue to represent a major challenge for the world steel industry.
(in million tonnes) | ||||
Category | 2003-04 | 2004-05 | 2005-06 (Prov.) | 2006-07
(April-May 06) (Prov. estimated) |
Pig Iron | 3.764 | 3.228 | 3.856 | 7.096 |
Finished Carbon Steel | 36.957 | 40.055 | 42.636 | 0.700 |
(Source: Joint Plant Committee) |
Demand - Availability Projection
Iron & Steel are freely importable as per the extant policy.
India has been importing around 1.5 Million Tonnes of steel annually.
Last three year’s import of Finished (Carbon) Steel is given below:-
Year |
Qty. (In Million Tonnes) |
2001-2002 |
1.271 |
2002-2003 |
1.510 |
2003-2004 |
1.540 |
2004-2005 |
2.109 |
2005-2006 (Prov.) |
3.765 |
2006-07 (April-May, 2006) (Prov. estimated) |
0.350 |
(Source: JPC)
Iron & Steel are freely exportable.
Advance Licensing Scheme allows duty free import of raw materials for exports.
Exports of finished carbon steel and pig iron during the last three years is as :
(Qty. in Million Tonnes)
Finished (Carbon) Steel Pig Iron
2003-2004 4.835 0.518
2004-2005 4.381 0.393
2005-2006 (Prov) 4.000 0.224
2006-2007(April-May 06) (Prov.estimated) 0.650 0.048
(Source : Joint Plant Committee)
Duties & Levies on Iron & Steel
Customs Duty
- Peak rate for non-agricultural products
reduced from 15 % to 12.5 %.
- Customs Duty on stainless steel and other alloy steel has been reduced from 10
% to 7.5 %. Duty on non- alloy steel remains unchanged at 5%.
- Duty for ferro alloys reduced from 10% to 7.5%.
- Customs Duty on primary and secondary forms of non-ferrous metals viz. Zinc
has been reduced from 10% to 7.5%.
- Duty on steel melting scrap has been raised to 5%.
- Duty on refractories reduced to 7.5 %. Duty most of the raw material for
manufacture of refractories has also been reduced to 7.5%.
- Duty on ores and concentrates reduced from 5 % to 2 %. In respect of Ministry
of Steel this would mean a reduction in duty of 3% on iron ore, manganese ore
and chrome ore.
- The Special Countervailing Duty (CVD) of 4 % to be imposed on all imports with
a few exceptions viz. ships for breaking, coal and coke etc. Full credit to be
allowed to manufacturers of excisable goods.
Service tax:
Service tax rate increased from 10% to 12%.
Direct Taxes:
No change in rates of personal income tax or corporate income tax. No new taxes are also being imposed.
SDF LEVY- This was a levy started for funding modernisation, expansion and development of steel sector.
The Fund, inter-alia, supports :
1) Capital expenditure for modernisation, rehabilitation, diversification, renewal & replacement of Integrated Steel Plants.
2) Research & Development
3) Rebates to SSI Corporations
4) Expenditure on ERU of JPC
Opportunities for growth of Iron and Steel in Private Sector
The New Industrial Policy Regime
The New Industrial policy has opened up the iron and steel sector for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.
The Growth Profile
(i) Steel
The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new/greenfield steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies.
At present, total (crude) steel making capacity is over 34 million tonnes and India, the 8th largest producer of steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. As per the ratings of the prestigious " World Steel Dynamics", Indian HR Products are classified in the Tier II category quality products – a major reason behind their acceptance in the world market. EU, Japan have qualified for the top slot, while countries like South Korea, USA share the same class as India.
(ii) Pig Iron
In pig iron also, the growth has been substantial. Prior to 1991, there was only one unit in the secondary sector. Post liberalization, the AIFIs have sanctioned 21 new projects with a total capacity of approx 3.9 million tonnes. Of these, 16 units have already been commissioned. The production of pig iron has also increased from 1.6 million tonnes in 1991-92 to 5.28 million tonnes in 2002-03. During the year 2003-04, the production of Pig Iron was 5.221 million tonnes.
Source: Ministry of Steel
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