The performance of the refractory industry is intrinsically
correlated to the global steel markets.
This double-edge sword brought about rapid expansion and
good business for refractory suppliers for many years but, when
the tide turned, it led to sluggish demand, weak prices and
general market bleakness.
At the same time, the two giant economies of south-east
Asia, China and India, have moved in a radically different way
Steel production in India has remained broadly steady even
through the period of prolonged turbulence that has affected
other major steel-producing areas.
In Europe, UK steel output has been declining, following the
closure of main facilities due to weak markets and, crucially,
lack of profitability against aggressively-priced non-European
One of Europe’s largest steel facilities, Tata
Steel’s UK-based business was the latest company
to raise the white flag earlier this year, after suffering
losses estimated at $3.4bn. Back in March, Tata
Steel’s finance director, Koushik Chatterjee, put
the company's UK assets at a book value of "almost zero".
|Ladle in steelmaking
In Asia, largest steel producer China, which accounts for
about half of the world’s production, is having to
drastically reverse gears after years of capacity increases.
The country is preparing to host the G20 summit next week, when
the situation of its steel industry is bound to be
Beijing’s bold plan is to reduce its steel
capacity by 45m tonnes by the end of the year, in the hope of
being accorded 'market economy’ status by the EU,
whose member countries have accused it of dumping cheap
Although it is evident that the steel industry has to curb
overcapacity in order to ensure its sustainability over the
long term, any capacity cut in China directly impacts suppliers
of refractory products.
Around 60-70% of the world’s refractories
output is sold into the steelmaking sector, while the rest goes
in applications including iron, cement, glass, ceramics and
On the other hand, there are countries where the outlook is
rosier – for steel and for other industries that
employ refractories. India is one such place.
Over the last decade, the country’s steel
production has kept rising unabated.
|Dalmia's OCL India
plant. (Source: Dalmia Bharat)
Total 2015 production stood at 89m tonnes. As for this year,
production from January to July suggests last
year’s output will be met, if not exceeded.
China’s production (at 804m tonnes in 2015)
dwarfs India’s – and will continue to do
so – but what makes the difference is that the latter
is growing while the first is not.
"India’s steel industry has grown over the last
couple of decades; there has been a clear increase in
consumption," Sameer Nagpal, CEO of Dalmia Bharat Group, one of
India’s longstanding suppliers of cement and
refractories products, told IM. "The last two
or three years have been difficult for the [global] industry,
but Indian production has been consistent. India has not been
With its subsidiaries OCL Refractories and Dalmia
Refractories, the company has been active since the 1960s,
serving primarily cement and steelmakers. It has built its main
business on shaped refractories, with core product lines
including silica bricks, magnesia carbon bricks, fireclay and
A shift in the composition of demand within the Indian
market is one main trend Dalmia has seen in its years of
activity. Nagpal said: "Refractory bricks have been [the]
dominant [product range used] in India for years, but this is
changing. There is being a shift towards monolithics."
Another related factor that has transformed the sector is an
increase in the number of players active on the Indian market.
The competitors’ landscape has been widening,
Nagpal said, thus pushing companies to do more to stay ahead of
rivals: "Competition has put pressure on us to upgrade faster
than we have been upgrading before."
|Shaped products such
as magnesia carbon bricks, have been stable in India.
Amid a fast-changing outlook in the country, authorities are
making sure their views are being heard. In a three-day visit
to the UK and Luxembourg this week, India’s steel
minister Shri Birender Singh stressed that his government is
"taking steps to improve ease of doing business and facilitate
foreign investment" into the country.
"Research and development will be the key drivers for
sustainable growth of the steel industry," he said.
As Nagpal put it, "the new government in India is very
development-oriented". This is injecting confidence across the
"We see the industry is going to improve. This creates
opportunities, which essentially lie in innovation."
Supplying an evolving market
This common perception is what has driven together Dalmia
and Slovenian monolithic refractory maker Seven Refractories,
with the two signing an agreement this month to set up a joint
venture (JV) for the supply of monolithic refractories to the
Seven has a 600-strong product portfolio, its monolithics
using non-basic mineral feedstocks including silicon carbide,
bauxite, chamotte, spinel and others high-alumina blends.
Seven has had limited experience of doing business in India,
and is seeking to expand its reach. To do so, it aims to
capitalise on Dalmia’s customer base and knowledge
of the market.
| Dalmia and Seven
will set up a JV. (Source: Dalmia)
"It’s a market and technology partnership,"
Erik Zobec, managing director of Seven Refractories,
told IM. He said the partnership is
crucial for Seven to achieve higher volume sales in India,
moving away from "niche supply" and reaching out to a wider
At the heart of the uptrend in demand for monolithic
refractories in the country is a progressive evolution of the
local industry towards improved technology and performance.
Zobec cited flexibility and timing in installation and
maintenance as key factors driving unshaped refractories usage.
With the casting done on site, customers need to spend less
time planning exactly what shape and volume of bricks they need
prior to placing an order.
Monolithics are sprayed directly onto the surface, making
installation faster and more adaptable to the structure and
needs of the facility. Idle times are minimised.
Maintenance and repairs are easier to carry out, applying
new material where needed rather than having to replace the
broken bricks and creating waste. Suppliers often talk of
'endless lining’ – the continuous usage
of the same monolithic structure, repair after repair.
There are also returns in terms of performance, resistance
to temperatures and durability.
As new facilities are being built in the country, these are
key factors that local businesses take into account.
On its part, Dalmia is keen to complement its shaped product
offering with Seven’s non-basic monolithics.
"We see the market is moving in that direction, and we
wanted to ensure that our portfolio on the monolithic side is
strong enough so that we are fully equipped to serve that
market," Nagbal told IM.
| Seven's Slovenia
Through the JV, Dalmia is hoping to diversify its share of
supply by targeting promising sectors other than steelmaking,
namely iron making – with blast furnace, casthouse,
taphole applications – and petrochemical applications,
where its presence has so far been limited.
According to Zobec, India is the "only market that is truly
growing". Prior to the global crisis of 2007/08, the BRICs
countries were expected to sustain the refractory industry for
years to come. Today the situation has starkly changed. Brazil
and Latin America are going through a tough economic phase, as
are Russia and China. India has been the only constant amid the
"The [Indian] market needs everything, from basic to
high-end products," said Zobec. "We have to be there."