Buoyed by strong expansion in the domestic steel sector,
India’s refractories industry has registered
impressive growth over the last decade.
Refractories demand from steelmakers has more than
compensated for recent weak consumption by the cement, glass
and non-ferrous metal sectors, but with significant government
investment planned in India’s infrastructure over
the coming years, all of the country’s
refractory-consuming segments are expected to record healthy
demand in the near-to-medium term.
India is home to 13 large and 40 medium-sized refractories
companies, with around 300 small scale players. Corporate
activity in the sector was brisk in the last Indian financial
year, which ended on 31 March 2017, with significant new
players entering the market through joint ventures (JV).
Figures from refractory companies and the Indian Refractory
Manufacturers Association (IRMA) indicate that the domestic
refractories sector grew by nearly 8% in 2016-17.
According to Anirbandip Dasgupta, senior executive officer
at IRMA, steelmaking accounts for 75% of India’s
domestic refractory consumption, while cement consumes 15% and
glass demand makes up 5%. The remaining 5% goes into other
industries, including aluminium and copper smelting and
In the Indian financial year 2015-16, sales of Indian
refractories totalled $961.7m. Export revenue stood at $213.8m,
while India imported $360m-worth of refractory products, around
33% of the amount consumed in the country that year.
Despite strong consumption growth from the steel industry,
India’s refractory production capacity far
outweighs demand and capacity utilisation in 2015-16 was just
54%. This low utilisation rate has become a major concern for
Some manufacturers are however optimistic that overall
growth in demand will neutralise the problem.
"Even though specific consumption of refractories per tonne
of product is coming down, this is outweighed by overall growth
in demand from steel and cement," Praveen Agarwal, head of
Indian operations at Slovenia-headquartered Seven Refractories,
In 2016, Seven Refractories entered an agreement with
India’s Dalmia Bharat Group to develop and supply
a range of monolithic refractories for the Indian market.
While new market entrants and JVs have helped boost the
sophistication of Indian refractory technology, they have
also increased competition, forcing down prices which are
already under pressure from excess production capacity and
declining specific consumption.
Hirdesh Sehgal, senior vice president of operations at
Indian refractories company TRL Krosaki Ltd, told
IM that steelmakers are increasingly aiming
for higher productivity and cost reductions.
"This has put huge pressure on refractory suppliers to
supply high performance products (…) Sadly, Indian
refractory manufacturers have done little in terms of
technological improvement. This has led to growth in imports
and has dented capacity utilisation of Indian refractory
Indian refractory producers are dependent on a number of
domestic and international suppliers for raw materials.
Recent volatility in prices and availability of bauxite,
alumina, zirconium, magnesite and other refractory minerals
have added to the challenges facing Indian companies, along
with adverse currency exchange effects and the inability to
pass cost increases on to customers.
Fanning the flames: Steel workers in
India. The National Steel
aims to increase Indian crude steel
capacity to 300m tonnes and production
to 225m tonnes
Revival in the Indian steel sector
India’s refractories industry has largely
been carried by the country’s booming steel
sector, which saw production grow by 10.7% year-on-year
(y-o-y) in 2016-17 to 100.7m tonnes. This was one of the
strongest annual growth figures in the last five years,
thanks largely to the implementation of protectionist
measures against Chinese steel imports.
Much of the extra production was exported, however, as
domestic steel consumption remained weak due to lacklustre
growth in sectors such as construction and white goods
According to data from the Indian
government’s Joint Plant Committee (JPC),
India’s steel exports doubled during the last
financial year to 8.2m tonnes. Imports, on the other hand,
declined by 37% to 7.4m tonnes, making India a net exporter
India’s seven largest steel producers together
produced 57.5m tonnes steel during April-March 2016-17,
representing y-o-y growth of 18.5%. Combined production by
the rest of the country’s steelmakers was down
by 1.2% over the same period, however.
Indian steel companies have broadly welcomed the
government’s import protection measures and are
hopeful that planned infrastructure spending will boost
In February this year, Prime Minister Narendra
Modi’s government announced its intention to
spend the equivalent of $59bn on building new and
modernising India’s existing railways,
airports and roads.
India’s parliament also recently approved the
National Steel Policy 2017, which aims to increase Indian
crude steel production capacity to 300m tonnes and production
to 255m tonnes by 2030-31. The target for domestic per capita
steel consumption has been set at 158kg, up from 61kg
The policy envisages that India will meet all its domestic
needs for high grade automotive, electrical, special and
alloyed steels, through an increase in value-added steel
Cement-making is the second largest consumer of refractories
in India, but its recent performance has been underwhelming
compared to that of steel.
In 2016-17, the industry registered one of its worst
financial years on record, shrinking for the first time in 15
Raw materials availability
Raw material availability has been a key concern for
Indian refractory producers for many years. According to
IRMA’s Dasgupta, the issue is perhaps the single
largest challenge facing Indian refractory
"There is an urgent need for research and development of
domestic raw material sources, so that we have local
alternatives to imports," he told IM.
China’s crackdown on polluting industries,
which has intensified since the beginning of May this year,
with Beijing shutting down most of the bauxite mines in
Shanxi and Guizhou provinces, along with processing and
calcining plants in Shanxi and Tinzin provinces, has hit
Chinese refractory mineral exporters and reduced the
availability of raw materials to Indian
"It is a wake-up call for the refractory industry in
India," Hakimuddin Ali, managing director of Calderys India,
the refractories arm of France’s Imerys SA, told
IM. "We have reviewed our over-dependence on
China for raw materials and, for the first time, have
initiated a dialogue with the [domestic] steel and mining
industries to explore and develop alternative sources in
IRMA is also working to develop local sources of raw
materials. Having secured the support of India’s
government, the association is scouting for alternative
suppliers in Brazil and Europe and is in talks with the
Indian Institute of Technology at Varanasi about setting up a
The problem is that, due to the country’s tax
framework, refractory products and raw materials produced in
India tend to be more expensive than imports, so IRMA has
urged the government to amend the country’s
current duty structure to reverse this situation.
Headquartered in Divaca in Slovenia, Seven Refractories is
one of the latest international entrants into
India’s refractories market in recent years.
In addition to facilities in Slovenia and India, the
company started a new plant in Kazakhstan in February and
has seven international subsidiaries and numerous agencies,
serving 300 customers in 40 countries.
Erik Zobec, CEO of Seven Refractories, said that due to
the highly competitive nature of the Indian refractories
market, the company had to build up a track record of good
references in India before signing its agreement with Dalmia
Bharat Group to form a monolithics manufacturing JV in the
"We gained a thorough understanding of the specific
requirements of the market," Zobec said on signing the
Speaking to IM, head of India operations
for Seven Refractories, Praveen Agarwal, revealed that the
company will soon be opening a new refractories plant in
order to cater to the rising domestic demand: "Very soon we
will be starting a refractory production plant in the country
to cater to huge demand from the user industries", Agarwal
Earlier this year, Calderys India and Brazilian company
Magnesita formed a strategic alliance to work together in
India to expand their portfolio of products for the cement
Calderys India will be primarily responsible for selling
and marketing Magnesita’s products in India, as
well continuing to sell its own materials and Magnesita will
provide technical support to Calderys India.
Carlderys set up its third refractory production plant in
India in late 2015; its facilities are located in Katni, in
Madhya Pradesh; Nagpur, in Maharashtra; and now in Wankaner
The company opted to locate its newest plant, which has a
capacity of 50,000 tpa, in Gujarat northwest India, as the
state accounts for about 65% of the 145,000 tpa refractory
grade bauxite produced in the country.
Calderys has a capacity of over 220,000 tpa across its
Katni, Nagpur and Wankaner plants for producing dense
castable, binders, grouts, basic masses, precast shapes,
refractory bed support, taphole clay, refratherm and other
insulating bricks. The company also has the capacity to
produce 66,900 tpa dense alumina bricks, insulating bricks
and castables and mortars from its Indian franchises.
As specific consumption of refractories continues to fall
and the future of steelmaking remains uncertain in regions
like Europe, North America and South America, global
refractories companies are eyeing India as one of the few
markets with solid near term growth prospects.
While this may be good news for Indian steelmakers, which
stand to benefit from increased price competition and better
quality products, the outlook for local refractories
companies is tough, with many expecting further consolidation
and internationalisation to reshape the sector over the