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India’s turn towards monolithic refractories

By Davide Ghilotti
Published: Friday, 02 September 2016

As the much hoped-for improvement in Chinese steel production is struggling to materialise, southern neighbour India is enjoying a stable steel output while the local industry is renovating in techniques and equipment. All in, India is seen as a shining light for refractory products manufacturers.

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 material.

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".

refractory, steel ladle, pouring 
Ladle in steelmaking process.

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 discussed.

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 product.

Looking elsewhere

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 non-ferrous metals.

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.

Aeriel view of OCL India Plant.jpg (10.4 MB)  
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 as affected."

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 high-alumina bricks.

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."

Magnesia Carbon in different shapes.jpg (815.5 KB) 
Shaped products such as magnesia carbon bricks, have been stable in India. (Source: Dalmia)

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 industry.

"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 Indian market.

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-Seven Agreement.jpg (5.8 MB)  
 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 consumer base.

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.

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 Seven's Slovenia facilities.

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 widespread turbulence.

"The [Indian] market needs everything, from basic to high-end products," said Zobec. "We have to be there."