India’s refractory minerals
industry has been buffeted over the last year by the sharp fall
in the price of steel, which has been compounded by accelerated dumping of
Chinese steel products in the Indian market.
Sector forecasters have responded by halving growth
projections for India’s domestic steel industry,
from 6% to 3% in 2016.
Indian steel companies are reportedly
booking losses of around Indian rupee (INR) 3,000-4,000/tonne
($44-$59/tonne*) of steel produced. Many are also selling steel
at below production costs, thanks largely to high input prices
for raw materials, energy, and freight and logistics costs.
High taxes and local interest rates are
also creating an uneven playing field for Indian steel
producers, industry participants complained at the
International Refractories Congress (IREFCON) 2016 in
Hyderabad, India, last week.
This situation is forcing down the level
of steel capacity utilisation in India, leaving a gap for
imported material. Last year, imports accounted for 15% of the
total steel consumed in India, with the majority coming from
China at 28%, followed by Korea, at 26%, Japan, at 22% and
Russia, at 4%.
India currently imports more than 50% of
its refractory raw material needs, including graphite, fused
and calcined alumina,
high grade clays.
According to some Indian refractories
businesses, the quality of domestically produced raw materials
do not meet the standards required by the steel industry, while
Chinese material is comparatively better for use in some
Sources at IREFCON told
IM that magnesia products are mainly imported
from China, because India does not have magnesite of high
enough purity to make refractory bricks – products
which only a handful of Indian companies make.
Similarly, the availability of high
quality refractory clays is limited, while kyanite, sillimanite
remain unobtainable from Indian suppliers.
Further, a lack of beneficiation and
processing capacity for the raw materials that are available,
such as bauxite, has compelled consumers to import their
requirements of this refractory mineral.
Refractories follow steel
India’s steel industry
consumes 75% of the country’s refractories output.
There are more than 100 refractories producers in India, out of
which only around 14 are major manufacturers and a further 33
are medium-sized, while the rest produce relatively small
volumes of materials.
Steel plants in India consume 8-10kg of
refractory per tonne of steel on average, although the figure
can be as high as 15kg per tonne, depending on the quality or
age of the steel plant.
The slump in the global steel market and a
surge in imported finished steel products has led to an
oversupply of refractories and refractory minerals in India.
Domestic producers are also having to contend with competition
from low cost raw materials, particularly from China.
According to delegates at IREFCON, Indian
refractories output saw a drop in 2013 in terms of tonnage,
which was followed by market stagnation in 2014 and slow growth
in 2015, roughly matching the pace of the steel market.
|Source: Joint Plant
Committee (JPC) Indian Steel
Nevertheless, revenues in India’s refractories
sector have increased steadily over the last six years, posting
a 7% year-on-year increase in 2015 compared to 2014 and a 98.7%
increase last year over levels recorded in 2009. This has been
attributed to the expansion if India’s domestic
steel production, which has continued to grow, albeit at a
decelerating rate, despite the wider global market decline.
If the trend towards increased imports of
steel and refractory products and raw materials continues,
however, the growth of India’s refractories market
could be sent into reverse within a short time.
In an effort to make sure this does not
happen, refractories companies in India have proposed a number
of measures to the country’s government which they
hope will enable fairer competition between Indian and
Amending the present duty structure relating to
imports of raw materials and finished goods – a system
which at present makes imported products cheaper than those
produced in India;
Encouraging domestic procurement of products by
Indian steel companies;
Making domestic products more competitive by
reducing the cost burdens on manufacturers;
Increasing exports of Indian products; and
Developing more applications for Indian raw
At present, the growth potential for
India’s refractories industry is positive, but
this outlook relies on manufacturers adopting more efficient
technologies and costs coming down, particularly as specific
consumption of refractories per unit of steel produced
continues to decline.
*Conversion made January 2016