State Wise Steel Demand in India - worldsteel.org1d8fc2cc-c0da-4ef9-a287-52f3fe8a2f56/India... ·...
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2
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
3
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.
5
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
7
▪ In the absence of steel use statistics by state, SWIP share was used to estimate state wise
steel use
GSDP Construction .
GSDP Construction × ASU, fs India × 0.62 +
VA SWIP .
VA SWIP × ASU, fs India × 0.38
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.
9
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.
10
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
GujaratChhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
handWest
Bengal
Sikkim
Goa
PunjabArunachal
PradeshAssam
Nagaland
Manipur
MizoramTripura
Meghalaya
Telang
ana
100-140 k INR
< 50 k INR
> 140 k INR
50-100 k INR
GDP per capita, 2015-16
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat Chhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Goa
PunjabArunachal
PradeshAssamNagaland
Manipur
MizoramTripura
Meghalaya
Telang
ana
6-8 %
< 4 %
> 8 %
4-6 %
GDP growth, CAGR 15-16 / 11-12
Source: Central Statistics Office, worldsteel
Crude steel production by states
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat
Chhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Delhi
Goa
Punjab
Arunachal
Pradesh
AssamNagaland
Manipur
MizoramTripura
Meghalaya
Telangan
a
0
2
4
6
8
10
12
14
16
18Mt
Crude steel production, India total: 89.8 Mt
Source: JPC, 2015-2016, million tonnes (Mt)
4-10 Mt
< 1 Mt
> 10 Mt
1-4 Mt
▪ Steel production centres: raw materials (iron ore) driven (Odisha, Chhattisgarh, Jharkhand and
Karnataka) or port based and proximity to markets (Maharashtra and Gujarat).
11
Steel use by states
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat
Chhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
hand
West
Bengal
SikkimDelhi
Goa
Punjab
Arunachal
Pradesh
AssamNagaland
Manipur
MizoramTripura
Meghalaya
Telangan
a
0,000
2,000
4,000
6,000
8,000
10,000
12,000
14,000Mt
Apparent steel use, India total: 76.4 Mt
Source: worldsteel estimation, 2014-15, million tonnes (Mt)
3-10 Mt
< 1 Mt
> 10 Mt
1-3 Mt
▪ Maharashtra and Tamil Nadu are largest steel using states, both auto hubs.
12
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.
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
GujaratChhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
handWest
Bengal
Sikkim
Goa
Punjab
Arunachal
Pradesh
AssamNagaland
Manipur
MizoramTripura
Meghalaya
Telang
ana
3-8 Mt
< 1Mt
>8 Mt
1-3 Mt
Steel production
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat
Chhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Goa
PunjabArunachal
Pradesh
AssamNagaland
Manipur
MizoramTripura
Meghalaya
Telanga
na
Source: worldsteel estimation, 2014-15
Steel use
iron ore production (major sites)
Source: Joint Plant Committee, 2015-16
13
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.
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat
Chhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Goa
Punjab
Arunachal
PradeshAssamNagaland
Manipur
MizoramTripura
Meghalaya
Telang
ana
Source: Central Statistics Office, worldsteel estimation, 2014-15
< 50 kg
> 100 kg
50-100 kg
Apparent steel use per capita
0
50
100
150
200
250
300
0
50
100
150
200
250
Uttara
kh
and
Hary
an
a
Goa
Tam
il N
ad
u
Him
. P
rad
.
Mahara
shtr
a
Ke
rala
Ka
rnata
ka
Guja
rat
Pu
nja
b
Aru
n. P
rad.
Sik
kim
Tela
ng
ana
Raja
sth
an
Miz
ora
m
An
d. P
rad.
Chha
ttis
garh
Mad. P
rad.
Jhark
ha
nd
West B
engal
Uttar
Pra
desh
Manip
ur
Jam
. &
Kash.
Orissa
Tripura
Naga
lan
d
Assa
m
Megha
laya
Bih
ar
k INRkg
ASU per capita, kg
GDP per capita, k INR
India average: 60.3 kg
14
Diverse patterns of steel use of Indian states
▪ Reflecting uneven and diverse economic growth patterns, different states shows
different tracks of S-curve.
0
50
100
150
200
250
300
0 50 100 150 200 250 300
ASU/cap
GDP/cap
Goa
Haryana
Kerala
Maharashtra
Orissa
Uttar Pradesh
Source: worldsteel estimation, 2004-15
S-curve, 2004-05 – 2014-15
15
Insight 1: Uneven growth will continue, but catching-up
is taking place in some states (1/2)
▪ Uneven economic performances of Indian states has
been driven by geography, natural resources and
socio-political environments.
▪ Political leadership and consistent policy had important
influence on the economic performance of the
advanced states (e.g. Gujarat).
▪ Central government’s focus on improving ease of doing
business has prompted pro-business reforms in
various states.
Source: Central Statistics Office, worldsteel
State GDP growthCAGR 15-16 / 11-12 (India average: 6.7 %)
Gujarat 9.5
Himachal Pradesh 7.6
Karnataka 7.5
Chhattisgarh 7.3
Haryana 7.1
Uttarakhand 7.0
Maharashtra 6.6
Madhya Pradesh 6.6
West Bengal 6.4
Andhra Pradesh 6.4
Jharkhand 6.3
North East states 6.1
Odisha 5.9
Tamil Nadu 5.7
Rajasthan 5.6
Sikkim 5.6
Telangana 5.2
Jammu and Kashmir 5.1
Uttar Pradesh 5.0
Punjab 4.7
Kerala 4.6
Bihar 4.5
Goa 1.0
17
Insight 1: Uneven growth will continue, but catching-up is
taking place in some states (2/2)
▪ Strong growth momentum will continue in Gujarat, Haryana,
Maharashtra & Tamil Nadu.
▪ Some middle income states shows high growth potential
driven by renewed focus on economic development (Andhra
Pradesh, Telangana).
▪ Eastern states (Chhattisgarh, Jharkhand, Odisha) are
expected to catch up thanks to mining and manufacturing
development.
▪ North eastern states are expected to stay on lower growth
track limited by lack of reform and geography, but large
infrastructure investment as announced by the government
can change overall investment environment in the long run.
Potential for growth,
economic development
Source: Project Team Analysis
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
GujaratChhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Goa
PunjabArunachal
PradeshAssam
Nagaland
Manipur
MizoramTripura
Meghalaya
Telang
ana
medium high
low
high
Potential for growth:
medium low
18
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
Source: Project Team Analysis
Potential for growth, services (knowledge based)Share of services in GDP
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat Chhattis-
garh
UttarakhandHimachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Goa
Punjab Arunachal
PradeshAssam
Nagaland
Manipur
Mizoram
Tripura
Meghalaya
Telang
ana
50-60 %
< 40 %
60-70 %
40-50 %
Source: Central Statistics Office, 2015-16
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
GujaratChhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
handWest
Bengal
Sikkim
Goa
Punjab Arunachal
PradeshAssam
Nagaland
Manipur
MizoramTripura
Meghalaya
Telan
gana
medium high
low
high
Potential for growth:
medium low
19
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:
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat
Chhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Goa
Punjab Arunachal
Pradesh
AssamNagaland
Manipur
MizoramTripura
Meghalaya
Telanga
na
20-40 %
< 10 %
> 40 %
10-20 %
Share of manufacturing in GDP
Source: Central Statistics Office, 2015-16
• Unfavorable climate for agriculture (e.g. Gujarat,
Maharashtra and Tamil Nadu).
• Mineral deposits leading to heavy industries base (e.g.
Goa, Odisha, Chhattisgarh and Jharkhand).
• Special tax benefits (e.g. Uttarakhand, Himachal Pradesh
and Sikkim).
▪ “Make in India” provides vision for enhancing manufacturing
activities across states, aiming to raise share of manufacturing
to 25% of GDP.
20
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat Chhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
handWest
Bengal
Sikkim
Goa
Punjab Arunachal
Pradesh
AssamNagaland
Manipur
Mizoram
Tripura
Meghalaya
Telanga
na
medium high
low
high
Potential for growth:
medium low
Potential for growth, manufacturing
(steel intensive)
Source: Project Team Analysis
▪ Some states will have stronger focus on manufacturing:
• Maharashtra, Uttarakhand, Tamil Nadu, Gujarat, and
Haryana have made significant progress in implementing
business reforms and suitable infrastructure.
• States like Andhra Pradesh, Madhya Pradesh and
Punjab have renewed thrust on manufacturing, especially
in auto and ancillary sector.
▪ Within the manufacturing sector the focus is more on
relatively labour intensive ones like food processing and
textiles.
▪ Mechanical machinery and shipbuilding sectors are less
prominent across states with a few exceptions (e.g. Punjab
and Gujarat).
Insight 3: Manufacturing is slowly gaining momentum (2/2)
21
Insight 4: India’s auto manufacturing hub will expand
▪ 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.
Automotive industry in India
Source: SIAM, IBEF, public domain
22
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.
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat
Chhattis-
garh
UttarakhandHimachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Goa
Punjab Arunachal
Pradesh
AssamNagaland
ManipurMizoram
Tripura
Meghalaya
Telan
gana
8-10 %
< 6 %
> 10 %
6-8 %
Source: Central Statistics Office
Share of construction in GDP
Source: Project Team Analysis
Potential for growth, infrastructure
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
Gujarat Chhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
hand
West
Bengal
Sikkim
Goa
Punjab Arunachal
Pradesh
AssamNagalandManipur
MizoramTripura
Meghalaya
Telan
gana
medium high
low
high
Potential for growth:
medium low
23
▪ 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.
Insight 6: Steel geography of India will remain unbalanced
Source: Project Team Analysis
Potential for steel demand growth
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
GujaratChhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
handWest
Bengal
Sikkim
Goa
PunjabArunachal
PradeshAssam
Nagaland
Manipur
MizoramTripura
Meghalaya
Telang
ana
medium high
low
high
Potential for growth:
medium low
Uttar
Pradesh
Jammu &
Kashmir
Tamil
Nadu
Andhra
Pradesh
Kerala
Maharashtra
Madhya
Pradesh
Bihar
Odisha
Karnataka
Rajasthan
GujaratChhattis-
garh
Uttarakhand
Himachal Pradesh
Haryana
Jhark-
handWest
Bengal
Sikkim
Goa
PunjabArunachal
Pradesh
AssamNagaland
Manipur
MizoramTripura
Meghalaya
Telang
ana
Increase of >1 Mt
Increase in annual crude steel production(from 2010/11 to 2015/16)
Source: JPC
24
Summary of state potential
Ste
el d
em
an
d p
ote
nti
al
Economic growth potential
L
H
L
ML H
Gujarat, Haryana,
Maharashtra
Andhra Pradesh,
Chhattisgarh,
Jharkhand,
Karnataka, Odisha,
Telangana,
Uttar Pradesh,
Uttarakhand
Tamil Nadu
North East ex
Assam
Bihar, Jammu and
Kashmir, Kerala,
Madhya Pradesh,
Punjab, Rajasthan
Assam, Goa,
Himachal Pradesh,
West Bengal
Sikkim
MH
MH
ML
26
Geography of economic vs steel demand potential
Source: Project Team Analysis
▪ 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.
medium high
low
high
Potential for growth:
medium low
Potential for economic growth Potential for steel demand
growth, infrastructure drivenPotential for steel demand
growth, manufacturing driven
27
When will India’s demand take off?
Source: IHS Markit, worldsteel, Project Team Analysis
0
50
100
150
200
250
300
350
0 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000
Ste
el d
em
an
d p
er
cap
ita, kg
/ p
ers
on
GDP per capita, USD/ person
China
India
2008
2005
19932000
19902018
2000
2014
Inflection imminent
Inflection later
Status quo continued
India 2018 to 2030
Thank you for your attention.
29
For further information contact:
Dr Nae Hee Han | Director, Economic Studies and Statistics
World Steel [email protected] | T: +32 (0)2 702 8913 | worldsteel.org