|
Feature - Steel
Steel Swings!
Greater awareness of its advantages has led to greater use
of steel in construction and infrastructure projects. For
their part, major Indian players are riding the wave, discovers
CW.
Sometimes numbers say it all. The global average per capita
consum-ption of steel is 150 kg - India's is a meagre 39 kg
per head. Now, that spells potential - literally, tonnes of
it. The construction sector has woken up and taken note. Earthquake-resistant,
eco-friendly, aesthetically superb, option of prefabrication
and assembly on site…the advantages of steel in construction
are many. Moreover, steel structures can be refurbished, streng-thened
and remodelled when required.
Dramatic growth
With greater awareness of the advantages of steel, its use
has risen dramatically in the construction sector. Steel is
being used in infrastructure projects, construction equip-ment,
and residential and commercial comp-lexes. "Growth in
steel consumption in the past three years was to the order
of 10 per cent," says Dr RKP Singh, Director General,
INSDAG. "This is much higher than the figure of 7.3 per
cent conceived under the National Steel Policy." According
to Singh, for this year, expected production is 50-51 million
tonne (mt) and consumption is about 46-47 mt.
"Stainless steel consumption is globally growing at a
rate of 16.5 per cent, with main drivers being developing
Asian economies, namely China and India," says NC Mathur,
Director, Corporate Affairs, Jindal Steel Ltd (JSL). The flagship
company of the Jindal Group, JSL is India's largest producer
of international quality stainless steel flat products in
Austenitic, Ferritic, and Martensitic grades with a strong
export market, while being the leader in the domestic market.
"The global demand of stainless steel was projected to
rise by 8.4 per cent in 2006 according to the May 2006 report
of the International Stainless Steel Forum. The estimates
were later revised in October 2006 to 14.3 per cent. Finally,
the industry worldwide achieved a growth of 16.6 per cent
with Asian markets propelling the growth. Both India and China
are effecting huge consumption. The growth is visible not
only in manufacturing and industrial sectors but in ABC (architecture,
building and construction). Our present share of ABC in stainless
steel consumption is barely 1 per cent whereas in developed
economies it goes up to 25 per cent, so this segment is bound
to grow further. Similarly ART (automobiles, railways and
transport) is an emerging segment with the development of
the metro and new airports and the overall focus on infrastructure
development."
Forging ahead
Major steel players are riding this wave and there can be
no better example than JSL. The gross sales of this ISO 9001
& 14001 company have jumped from Rs 3,500 crore in 2005-06
to Rs 5,400 crore in 2006-07. "The main emphasis today
for the company is integrated expansion," explains Mathur.
"Our Greenfield project that will eventually produce
1.6 mt of stainless steel is backed by a 500-mw captive power
plant. As part of a Brownfield expansion, existing capacity
at Hisar is also being expanded. In the front end, the company
is creating value addition by producing precision strips and
also has a line to produce coin blanks for government mints
[the company recently bagged orders of 14,000 mt from the
Government of India for coin blanks."
Indeed, JSL has been busy. In 2004, it took over Maspion Stainless
in Indonesia, a standalone cold rolling mill that produced
15,000 tonne of cold-rolled stainless steel. In a complete
turnaround, the plant today produces 65,000 tonne! It has
also helped the company to send hot rolled coils from India
to Indonesia, undertake cold rolling there and meet the market
needs of countries in Southeast Asia. The company attributes
its success to its "competence in flexible operation".
"Our products are based on in-house R&D with international
technical collaborations and conclusive market research,"
elaborates Mathur. "With a steep rise in the prices of
nickel, demand is shifting towards no-nickel or low-nickel
grades. JSL has been a pioneer in developing 200 series grades
(chrome-manganese Austenetic stainless steel) with low-nickel
and is today the world leader. The diverse product mix allows
the company to shift focus according to market needs."
Compared to China
With our major players enjoying such success, how, then, do
we compare to China, our most significant competitor in the
region?
"While India has benefits of availa-bility of iron ore,
lower labour cost, advantage of location and fast-growing
domestic demand, China is better placed with better labour
productivity, higher industrial production, simpler land laws,
faster growth rates and lower production costs," concedes
Singh. "Total steel production in China is almost 10
times higher than that of India."
India doesn't lack for quality and cost-efficiency though.
"JSL is one of the most cost-efficient producers in the
world," avers Mathur. "Our integrated operations
with input linkages (captive mining and power will ensure
further efficiencies). Improved productivity parameters have
helped us improve our performance consistently and we have
also invested heavily in pollution-control measures."
Innovation imperative
In the long run, innovation is essential to stay competitive
and relevant in the vibrant global marketplace. As Singh says,
"Innovation in the Indian steel industry should be targeted
towards new product development, energy conservation, cost
control and pollution control. Although newer grades of steel
are being developed and produced in India, it is time to develop
more efficient new sections for structural use in construction.
This will reduce cost of consumption and will make steel buildings
more competitive." According to him, it is a good sign
that the production of parallel flange sections (H-beams)
has been started by Jindal Steel & Power Ltd, and other
main producers are also going to install a universal mill
for the manufacture of such beams. "The production of
plain and embossed profiled sheets has started in India by
many manufacturers, facilitating the best practice of composite
decking," he adds. "This will make for faster building
construction."
"Innovation will surely drive the market," agrees
Mathur. "We were the pioneers in developing and marketing
the 200 series and today we are the global leaders in this
grade."
Obstacle course
Despite the evident upswing in the use of steel, though, there
are still several factors that hold back Indian steel companies
from realising their full potential. According to Singh, poor
infrastructure for transport, power and gas supply (including
ports, railways and roads connectivity); limited availability
and higher cost of coking coal; poor efficiency parameters
like low labour productivity, higher energy consumption and
lower yields; difficult land laws and bureaucratic control;
and high capital cost of projects, including high depreciation
and interest costs all act to limit the industry.
For his part, Mathur says, "In India, around 30 per cent
of the market is still unorganised but is gradually becoming
structured. To meet global competition, the industry had asked
government to reduce duty on nickel imports. The duty has
been reduced from 5 per cent to 2 per cent this year but the
industry is still pursuing zero duty and reduction of import
duty on scrap, which is the basic raw material to become globally
competitive.
The domestic industry also faces a crunch on ferro chrome
supplies and is asking the government to curb exports of ore
and preserve it for future domestic use."
Is the government listening?
Builderspeak
Dr BP Dhaka, COO, MP and Corporate Governance, Parsvnath
Developers Ltd, gives his take on steel in construction.
As a thumb rule, quantity of reinforcement steel used in
high-rise residential buildings comes to around 5-6 kg per
sq ft. Commercial complexes use more steel than residential
ones at around 6-7 kg per sq ft. This is because commercial
buildings are designed to take more live load than residential
ones and have larger spans resulting in heavier sections of
columns, beams, slabs, etc. These figures would, however,
increase with greater height of structures and in case of
lower bearing capacity of soil.
TMT or thermo-mechanically treated bars conform to ISO: 1786.
The tensile strength of TMT bars is greater and bonding in
concrete is higher than normal steel bars. TMT steel costs
approximately 1.5-2 per cent more than normal bars. Generally,
reinforcement steel costs Rs 200-220 per sq ft of construction
area, which is around 20-25 per cent of the cost of buildings
for residential complexes.
| |
