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Construction Steel -Market Perspective

Construction Steel -Market Perspective. Indian Steel Markets 2011 15-16 th March 2011 Gurgaon. V K Mehta Executive Director Long products & International Trade. Construction. Construction as a sector can broadly be divided into three major categories:. CONSTRUCTION. Infrastructure .

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Construction Steel -Market Perspective

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  1. Construction Steel-Market Perspective Indian Steel Markets 2011 15-16th March 2011 Gurgaon V K Mehta Executive Director Long products & International Trade

  2. Construction • Construction as a sector can broadly be divided into three major categories: CONSTRUCTION Infrastructure Real Estate Industrial Metal Refineries Fertilizers, Petrochemicals, Cement, Oil & Gas Roads, Railways, Bridges, Ports, Airports, Power, Irrigation Commercial, Retail, Housing

  3. Indian Construction Dominant Steel Consuming Sector Still predominantly Cement based Indian Construction Double digit growth ~10.5% in FY 11-12 “Ready to use raw materials, prefab construction gaining momentum Distinct shift towards quality & quality raw materials

  4. Steel Consuming sectors Source: CRISIL Research Construction & infrastructure contribute to >60% of steel consumption

  5. Investment in Infrastructure In $ billion Source: Indian Economy, SAIL Research Expected to cross $100 billion from FY 2011-12 onward

  6. Investment in Infrastructure (% of GDP) Source: Juggernaut is starting to roll…., India: Construction: Infrastructure, Goldman Sachs via Thomson Research, 11.10.10 Investment as % of GDP constantly rising

  7. Opportunities across infrastructure sector

  8. Power Sector Installed Capacity (,000MW) POWER WORLD AVERAGE PER CAPITA CONSUMPTION AT 2500 kwh / YEAR INDIA - INSTALLED CAPACITY DISTRIBUTION THERMAL : 65% HYDRO-POWER : 25% NUCLEAR : 2.9% OTHERS (RES) : 7.7% Source. : MoP PER CAPITA COMSUMPTION (Kwh/Year) Source. : MoP Opportunity for steel use in power generation, transmission and distribution Power sector is one of biggest steel user

  9. Slow Growth of Indian Railways Traffic load in million tons Source: IDFC-SSKI Research • Tardy growth of 3% in railways network in 15 yrs. • Railways’ share only 30%, despite being cheap & faster. • Container operations still insignificant at 1%.

  10. Indian Railways – Vision 2020 Source: Ministry of Railways • The vision call for around $ 310 billion of investment over next 10 years

  11. Transport – Road Network National Highway(‘000 Km) • Projects under implementation • NHDP-I & II – $14.3 billion • NHDP- III - $17.8 billion • NHDP -IV – $ 6.1 billion • NHDP –V – $ 9.1 billion • NHDP –VI – $ 3.7 billion Source. : Dept. Of Road Transport & H’ways Plan 20 Km of NH per day

  12. Growth in port traffic In million tons Source: india Transportation: sea & Land Cargo.. Nomura International Ltd Via Thomson Research GOI FY12 plan is 1 billion tons

  13. Transport – Airports At Airports in Lakhs • More & more modern & private airports • As per estimates the steel consumption in airport building likely to grow >20% • Development of Tier-II city airports will sustain consumption growth. in ‘000 tons Source: Min of Aviation Steel intensive construction

  14. Conclusions • Indian economy is estimated to grow @8.6% in 2010-11& @9.0% in 2011-12. • Construction growth is stunted @ 7-8% presently. • Distinct surplus of construction steel in India • High inflation ( expected at 9%) is a huge concern. Credit squeeze also adversely affecting construction. • High-end reality (Commercial, retail & housing) severely impacted.

  15. Thank you

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