Construction steels--present status and trend with particular reference to India.

The construction market is one of the largest for steel including not only long products such as bar and sections but also flat products such as plate and sheet as well as products derived from flats such as hollow sections. In this paper, Dr Chatterjee examines current demand and production in India for such structural products.

Construction is one of the most vital activities for almost all countries in the world, particularly for expanding and developing countries. Construction needs various types of material; steel, cement, sand, bricks, stone, wood and, depending on the locality, materials such as bamboo. Amongst these steel is surely the most critical item today, particularly for any type of durable construction.

Normally, long steel products such as rounds and bars, wire rod, structural sections and maybe railway materials are used for construction. Steel plate, a 'flat product' is also used in substantial quantities in various construction activities. A major part of hot rolled (HR) coils used for pipe making of different diameters are also used ultimately in the construction sector. Galvanised corrugated and plain sheet is also a common material for construction. Practically, directly or indirectly, the construction sector is one of the largest markets for steel products in a country. The close growth relation between the iron and steel sector and the construction sector is long established.

In the 20th Century the world steel production increased from 28Mt to about 850Mt, mainly due to the large construction activities which have taken place throughout the century in almost all parts of the world, particularly in the developed countries of Europe, North and South America and in important Asian countries. According to the statistics of the International Iron & Steel Institute, production of hot rolled long products alone was 360Mt in 2003 from a total world HR steel production of 781Mt. However, if we include the share of plate, galvanised steel and a part of HR coils, which are going directly or indirectly to the construction sector, the total consumption of finished steel in the construction activities of the world will be around 50% of all steel consumption.

There is a belief that the share of steel used in the construction sector in the industrialised countries has gone down and correspondingly the share of steel used in industries has gone up significantly. Though, it may be to some extent true; even in the highly industrialised countries the share of steel consumption directly and indirectly going to the construction sector today is just below 40%.

Table 1 shows the production of HR long products vis-a-vis total HR steel products in major steel producing countries of the world and the share of long products, by country and Fig 1 the same graphically.

[FIGURE 1 OMITTED]

INDIAN SCENARIO

The finished steel production in India for both long and flat products, plant/source during the year 2004-05 is given in Table 2.

Compared to 2003-04 production of plain carbon (mild) finished steel in India was about 2.2Mt more in 2004-05 and reached 38.4Mt. Five years back in 19992000 it was only 27.2Mt.

In India presently there are six integrated steel plants, (five in the public sector). The oldest producer, TISCO is in the private sector and alone produced 3.5Mt of finished steel in 2004-05. In the past decade when the new generation steel plants such Essar Steel, Ispat Steel, JVSL and Lloyds Steel, which are non-blast furnace plants, started to produce steel production by the secondary producers (non-BF and mainly Electric Furnace based), has jumped substantially and their share of production has risen almost to 60% of total Indian production.

Over and above this finished C-steel production, India produces alloy and special steels (including stainless steel) producing about 2Mt. Other ferrous products are iron ore (estimated at 127Mt in 2004-05), ferro alloys about 1.2Mt (2003-04) and sponge iron (DRI) about 10.1Mt (2004-05). India is now the top sponge iron producer in the world.

Tables 3a & 3b indicate apparent consumption of pig iron and finished steel by product in India in the years 1999-2000 and 2004-2005.

Fig 2 shows that the steel industry in India during the past five years has increased output in almost all steel categories particularly of bar and rod, HR coils/strips, CR coils/ strips and GP/GC sheets.

[FIGURE 2 OMITTED]

Though import of steel in India has increased marginally export has gone up by about 65% within the past five years. The major increase was in the case of galvanised sheet.

IRON & STEEL IN INDIAN CONSTRUCTION

In India, about a decade ago, the share of long products (bars & rods, structurals & railway materials) was more than 55% of total finished steel consumption in the country. The secondary producers (minimills and re-rollers), were dominating the production of long products. The larger integrated producers in turn were dominating the flat product segment.

But with the start-up of the major long products plant of Vizag, the position has changed significantly although the installation of new large flat product plants such as Essar Steel, JVSL and Jindal Steel have all started to play an important role in growing the flat products sector. In recent years, the production of both long and flat products in India has increased significantly.

Indicative data on industry group and product consumption of steel published in the Steel Scenario Statistical Year Book 2005 shows that 2004-05, bar & rod were consumed primarily by house builders, construction of public building/ hotels, industrial construction, railways, power sector, steel industries, local authority works (PWD/ CPWD), ports and shipyards and other government departments, as well as wiredrawing sectors.

All these sectors require steel primarily for construction activities and their share of total consumption of bar and rod is almost 90% from a total of 11.7Mt in India in 200405. A portion of bar and rod is also used by the engineering industries.

In the case of structural sections (angles, channels and joists) again the main consumers are industrial construction, building/ hotels construction, steel industries, power sector and railways. From a total consumption of about 3Mt, the construction sectors are consuming about 95% of the total.

Again in the case of plate, which is used by the construction sectors for construction of, eg bridges, fly-overs, PWD/CPWD constructions, have a major share in the total plate consumption of the country.

Another major product, HR coils and strip, do not normally go to the construction sector directly but flows indirectly as pipes and tubes which are an integral part of construction requirements, particularly in pipe line construction and housing (such as for water pipes).

Tube makers alone consume more than one third of total HR coils/strip in India. Even in the case of CR sheets/ coils, a considerable portion goes to tube makers, oil sector, pipelines and galvanised/coated sheet producers. In the case of GP/GC sheets, except for a portion consumed by furniture makers and consumer durables manufacturing, almost all the product goes to the construction sector, primarily as corrugated sheets.

Unsurprisingly, railway materials are mainly going to the railway sector for laying rail tracks but a small proportion goes to crane manufacturers.

In the case of pig iron, a large part of consumption goes for construction of cast iron pipes, drain covers and sewerage lines etc.

For an idea of the present status of the share of steel consumption in the construction sector in India, Table 4 shows total consumption of steel products in India and share of consumption (directly or indirectly) to the construction sector.

About 67% of the total domestic consumption of finished steel in India goes to the construction sector directly or indirectly. This figure is based on a study by Spark Steel & Economy Research Centre recently made on the consumption of domestic steel in India.

As there is no sectoral consumption data available from official sources, the figures given in Table 4 may be considered as an indicative present position of finished steel consumption for construction activities in India. Table 5 shows consumption of steel by market.

Except for machinery/ engineering units, auto/ tractor/ cycle units, all other groups given above are using steel directly and indirectly mainly for construction.

There is likely to be an investment in India of Rs 52 600M (US$ 1 = Approx Rs 45) in housing according to the 9th Plan Working Group. Only in urban water supply, sanitation and roads, investment requirements are about Rs 28,0350M over 10 years ending 2006. Urban transport infrastructure development where investments worth Rs 2,07,000M are expected to be made by the year 2022. The housing sector is likely to need 5M dwellings to be built every year during 2005-2010 and of 3.5M houses per year during the period 2010-2020.

It shows a big possibility and urgent need of constructional steel products in India in the coming years.

Dr. Monoj Chatterjee, Chief Editor, Steel Scenario Journal, Kolkata, India email scenario@vsnl.net

Table 1 Major countrywise production of total HR steel products
vis-a-vis HR long products in the year 2003 (kt)

Country     HR Long   Total HR     Share of
           Products   Products   Long Product
             (kt)       (kt)         (%)

Germany       12608      37174      33.9
Italy         14226      25351      56.1
Spain         10878      15734      69.1
Russia      21500 *    46827 *      45.9
Ukraine     14120 *    22529 *      62.7
USA           26832      90509      29.6
PR China     134529     225400      59.7
India         15299      35384      43.3
Japan         33692      98202      34.3
RO Korea      20396      36043      56.6
Taiwan        10524      24998      42.1
World        360231     781680      46.1

Source: Statistical Yearbook 2004 IISI * Production

Table 2 Categorywise/ Sourcewise production of iron & finished
steel in India in 2004-05 (kt)

Product                                  Sources

                   Bhilai    Durgapur    Rourkela    Bokaro
                    RINL      Tisco     Sec Prod *    IISCO   All India

Pig Iron                10         52            9       74
                       273         --         2550      186        3175

Finished Steel        3200        701         1540     3441
                      2886       3505        22825      272       38370

Rounds/Bars            210        315           --       --
                      1598        294         4356      104        6877

Wire Rods              549         --           --       --
                      1014        412         2904       --        4879

Structurals            438        157           --       --
                       274         --         1950      155        2974

Rly Materials          871         28           --       --
                        --         --           90       13        1002

Plates                1132         --          553      478
                        --         88          300       --        2551

HR Coils/Strips         --        201          605     1812
                        --       1135         5565       --        9318

HR Sheets               --         --           --      168
                        --        131          790       --        1084

CR Sheets/Coils         --         --          127      796
                        --        920         3875       --        5718

GP/GC Sheets            --         --          110      169
                        --        525         2330       --        3134

Elec Steel Sheet        --         --           57       --
                        --         --           80       --         137

TP/TMBP                 --         --           35       18          --
                        --         --          100       --         153

Pipe (large dia)        --         --           53       --          --
                        --         --          485       --         538

* Including Essar Steel, JVSL, Ispat Steel, Lloyds etc. of
New Generation  Steel Plan

Table 3a Apparent consumption of pig iron and finished steel (mild) in
India 1999-2000 by product (kt)

 Category Production    Production   Import   Export    Apparent
                                                       Consumption

Pig Iron                    3191         2      285         2910
Finished Steel             27176      1600     2670        26106
Bars & Rods                 8703        45      341         8407
Structural                  2543        85       23         2605
Rly. Materials               484        80       --          564
Plates                      1697        75      328         1444
HR Coils / Strip            7314       600     1468         6446
HR Sheets                    520        12       --          532
CR Sheets / Coils           3930       288      161         4057
GP/GC Sheets                1431        75      320         1186
Elec. Steel Sheets           117        70       --          187
Tin Plates (incl. W/W        129       138       17          250
Others                       308       132       12          428

Table 3b Apparent consumption of pig iron and finished steel by
product in India 2004-05 (kt)

 Category                Production   Import   Export     Apparent
                                                        Consumption

Pig Iron                      3175       8      177        3006
Finished Steel               38870    2119     4376       36113
Bars & Rods                  11756     129      179       11706
Structural                    2974      66       61        2979
Rly. Materials                1002       2       --        1004
Plates                        2551     423      162        2812
HR Coils / Strip              4318     817     1242        8893
HR Sheets                     1089      62       --        1151
CR Sheets / Coils             5718     287     1270        4735
GP/GC Sheets                  3134     106     1260        1980
Elec. Steel Sheets             137     111       23         225
Tin Plates (incl. W/W)         135      55       29         161
Others                         556      61      150         467

Table 4 Product wise consumption of finished steel in 2004-05 in
India and estimated share of steel consumed in construction sector

                    Consumption
                    of finished      Est. share       Finished steel
                       steel          of steel          consumed
Category             (Domestic)     in Construction     (estimated)
                    in India (kt)     Sector (%)       in Construction

Bars & rods            11706             90                10535
Structural              2979             95                 2830
Plates                  2812             60                 1687
HR coils/strips         8893             50                 4446
CR Sheets/coils         4735             30                 1420
GP./G C sheets          1980             90                 1782
Railway material        1004             90                  903
Others                  2004             25                  501
Total Consumption      36113             67                24195

Table 5 Consumption of steel in India by the major steel consuming
groups 2004-05 (kt)

Category                                    Consumption

Railway                                        9167
Steel industries                               1256
Oil sector                                     1359
House builders                                 2439
Public building, hotel                         2812
Industrial construction                        1790
Tube makers                                    3184
Galvanised / coated sheets mfg                 1438
PWD/CPWD (govt TPT const)                      1444
Auto / tractors / cycles industries            1629
Wire drawing units                              922
Drum/ barrel & container manufacturer           835
Machinery manfg. / other eng units             3875