December 2021
According to India’s National Steel Policy (NSP) 2017, the country’s total crude steel capacity and total crude steel demand/production are projected to be 300Mt and 255Mt, respectively, by 2030-2031. Within the same timeframe, India’s NSP expects domestic steel consumption to reach 160kg per capita.

These ambitious targets have been delayed by the Covid-19 pandemic, but now many Indian steel companies have revisited their capacity expansion plans to achieve them. Two primary functions of India’s Ministry of Steel are to promote the development of infrastructure required for enhancing the country’s steel production and to facilitate adequate availability of raw materials for the steel industry from domestic and overseas sources. Most of India’s future steel output will be provided by its top four producers: Steel Authority of India Limited (SAIL), JSW Steel, Jindal Steel & Power Ltd (JSPL), and Tata Steel.

AME expects India’s crude steel capacity growth to accelerate until 2030 as the government provides significant investments to achieve its NSP targets. AME expects India’s crude steel production for 2021 to be 120Mt, up 19.4% year on year. Moving forward, from 2022 to 2030 AME expects India’s steel output to see an annual average growth rate of 6.5%.

In the medium term, China will remain a major contributor to the global steel supply in absolute terms due to its large population. However, its output growth is expected to slow to an annual average rate of 0.5%. Meanwhile, in the medium term, AME expects the annual growth in steel supply from the rest of the world to average 2.2%.

SAIL

SAIL's crude steel capacity for 2021 is approximately 21Mt, with a forecast capacity of 50Mt by 2030. Most of this expansion is expected to come from five of the company’s steel facilities, Bhilai, Durgapur, Roukela, Bokaro and IISCO, which will account for total crude steel capacity expansion of 28Mt. SAIL’s plan to expand to 50Mt will require total investment of US$8.35bn. The company has already completed land surveys in Rourkela and Bokaro and has land parcels available to support brownfield expansions.

SAIL’s product mix is highly diversified, with the Roukela and Bokaro steel plants producing flats and Durgapur and IISCO steel plants producing a combination of both longs and semis. The Bhilai plant produces all three.

SAIL’s current modernisation and expansion plans include replacing production via the twin-hearth furnace (THF) with production via the BOF-LD converter route. Production via the ingot teeming route will be replaced by the continuous casing production route. SAIL will also enhance its production with two new blast furnaces, one 4,060m3 and the other 4,160m3. The modernisation is expected to increase SAIL’s market share and add new products, including automotive products, universal beams/heavy beams, and wider plates in of 4,300mm.

SAIL’s ongoing capital expenditure projects currently do not have any associated timeframe. The breakdown of this allocation includes various aspects including expansion of existing capacity with planned investment of US$5.28bn. Other investments include value-added/product mix improvement, technological upgrades/modernisation, and de-bottlenecking and environmental improvements with investment of US$950m, US$474m and US$1.645bn, respectively. An additional US$1.385bn in capital expenditure is allocated for the augmentation of SAIL’s raw material facilities.

SAIL’s Rourkela Steel Plant (RSP) has finalised its capacity investment of US$690m to commence its expansion plans. New equipment includes a coke oven battery #7 with capacity of 0.78Mt, to be located adjacent to coke oven battery #6, as well as a new steel melting shop #3 with capacity of 1.2Mt and a normalising furnace with capacity of 0.3Mt to service the demand for niche products.

SAIL will invest approximately US$400m into SAIL Bokaro Steel Plant to increase the plant’s crude steel capacity by 1.5Mt. This will also enable a thin slab caster to be installed, while other investments in the plant will focus on the modernisation of the existing plant and equipment. The new capacity is expected to commission by the end of 2023.

In 2020, the top Indian producers included SAIL, JSW Steel, JSPL and Tata Steel, with steel production output of 15Mt, 17Mt, 10Mt and 17Mt, respectively. In the same year, India produced 100Mt of crude steel, with the top four producers contributing 59% of India’s total production.

JSW Steel

JSW Steel has plans to reach crude steel capacity of 45Mt by 2030. The company plans to increase capacity to 30.5Mt by March 2025. Its Vijayanagar facility will increase crude steel capacity by 5Mt with a brownfield project, expected to be complete by March 2024, with investment of US$2bn.

The company will also undertake a cold rolling mill complex capacity expansion from 0.85Mt to 1.8Mt with one of two continuous galvanising lines (CGLs) of 0.45Mt already commissioned. The second CGL of 0.2Mt capacity and a colour coating line of 0.3Mt capacity are both expected to be commissioned by September 2022.

Total capacity at Vijayanagar is expected to reach 17Mt by March 2024. The company’s Dolvi works were recently commissioned in October 2021, ramping up crude steel capacity from 5Mt to 10Mt, with investment of US$3bn. In March 2021, JSW Steel completed its takeover of Bhushan Power and Steel. In July of the same year, the Indian government announced its approval for the expansion to increase capacity from 5Mt to 15Mt with investment of approximately US$7.45bn.

The expansion at Rengali in Sambalpur is expected to create employment for 10,000 people. JSW Steel has four operational iron ore mines under lease in Odisha and is planning to invest around US$466m in mining infrastructure.

JSPL

India’s High Level Clearance Authority (HLCA) approved Angul steel plant phase one expansion plans in November 2020. Jindal Steel & Power Ltd (JSPL) announced plans to invest US$2.43bn to increase its capacity over the next six years to meet the rising demand from customers. JSPL Angul steel plant is expected to increase crude steel capacity from 6Mt to approximately 16Mt by March 2025, followed by a further expansion to reach 25.2Mt by 2030.

The capital expenditure also includes plans to more than double pellet production capacity to 21Mt by 2024. Key projects at Angul include a 4.25Mt BF/BOF and 2.7Mt DRI plant with expected commissioning by December 2023 and February 2025, respectively. JSPL is also planning to construct a 6.3Mt melt shop and 5.5Mt hot strip mill in order to improve its product mix. The company suggests an additional US$3.327bn is required to increase its capacity to 25.2Mt.

Tata Steel

Tata Steel has ambitions to reach crude steel capacity of 40Mt by 2030 and has announced capital expenditure of US$1.08bn to develop its operations in fiscal year 2022 (March end 2022). Tata Steel plans to invest up to US$8.09bn over the next five years to achieve the target of 40Mt capacity by 2030.

The total investment is expected in increase capacity at various operations, including increasing crude steel capacity to 8Mt at Kalinganagar plant (phase two expansion) securing iron ore capacity of 50Mtpa and increasing cold rolling capacity from 4.3Mt to 6.5Mt. The company plans to make 5Mt of steel via the EAF route, with a recycling plant of 0.5Mt already established at Rohtak in Haryana. If Tata steel decides to go ahead with this option, it would only require 0.4km2 of land rather than the approximately 12km2 required for a traditional BF/BOF steelmaking operation.

In the next three years, the company plans to invest US$405m into operational activities for its coal, iron ore, and downstream value-added steel portfolios. In particular, the Kalinganagar phase two expansion will include a new cold rolling mill and galvanising lines with rolling capacity of 2.2Mt and 1Mt, respectively. Commissioning is expected in early 2022, and new products will diversify the site’s steel portfolio. 

In 2030 the top Indian producers, including SAIL, JSW Steel, JSPL, and Tata Steel, are expected to dominate steel production with output of 45Mt, 40Mt, 30Mt, and 22Mt, respectively. AME expects India to produce 211Mt of crude steel in 2030, with the top four producers contributing 65% of the country’s total production.

Other Projects

ArcelorMittal and Nippon Steel (AM/NS) India plans to increase crude steel capacity at its Hazira complex to 18Mt from the current 10Mt. Capacity at Hazira will increase to 14Mt by 2025, with phase one investment of US$1.62bn to expand value-added steel capacity and to eliminate bottlenecks in the existing plant. New equipment to be constructed includes a coke oven, sinter plant, blast furnace, basic oxygen furnace and hot strip mill.

The downstream units will include a new cold rolling mill, galvanising plant, coated products, and a continuous annealing line, with expected commissioning by the end of 2023. The phase two expansion will require investment of US$3.2bn, with construction expected to start in 2025. AM/NS India is planning to produce renewable energy at the site, with an initial 500MW planned to ramp up to 5,000MW in several phases in the future. The AM/NS India pellet expansion is now complete, with 20Mt capacity.

The Indian government is undertaking disinvestment of Neelachal Ispat Nigam Ltd (NINL), NMDC steel plant in Nagarnar, and Rashtriya Ispat Nigam Ltd (RINL), or Vizag Steel, to be sold off in stages. These steel plants will be closely watched by the big players for the possibility to add to their portfolios.

Robust Demand

Steel demand in India is strongly supported by many government initiatives to maintain economic activity in the long term. The National Monetisation Pipeline (NMP), in consultation with infrastructure line ministries, has been mandated for ‘Asset Monetisation’ and is expected to invest US$8tn over fiscal years 2022 to 2025. The power transmission and power generation sectors, for example, have been allocated US$6.1bn and US$5.4bn, respectively, during the four-year period.

The “Gati Shakti” plan has been launched, with coordination across 16 ministries, to create a digital platform for integrated planning and coordinated execution regarding government departments like railways, roads, buildings, and other infrastructure projects. In the past, inefficiencies were caused by uncoordinated infrastructure building, such as recently completed road construction being dug up simply to lay down underground facilities such as telephone lines or gas pipelines.   

The National Infrastructure Pipeline (NIP) has total investment of US$1.48tn allocated for building world-class infrastructure in fiscal years 2019 to 2025. Major areas in infrastructure investment include transport, logistics, energy, and social infrastructure, to name a few. The NIP currently has more than 9,000 projects, with 2,488 projects under development covering 34 sub-sectors.

The country’s Production Linked Incentive (PLI) schemes have total investment of US$26.589tn across 13 key sectors with the aim of boosting local manufacturing. Some specific industries include automotive, automotive components, metals and mining, renewable energy, and white goods. In July 2021, the Union Cabinet approved the production-linked incentive (PLI) scheme for special steel.

The scheme is expected to attract investment of US$5.37bn and expand specialty steel capacity by 25Mt to 42Mt in fiscal year 2027 from 18Mt in fiscal year 2021. Given the government support for steel demand and recent approval and announcements of capacity expansions, AME expects India to meet its 2030 capacity target.