India’s stainless steel capacity, including flats and longs, stands at around 6.5 million tonnes (mnt), out of which the share of flat products is 5 mnt. Overall, demand for stainless steel should surpass 6 mnt by 2030 from about 3.7 mnt in FY’22. Jindal Stainless Ltd. (JSL) has a capacity of 1.9 mnt in the flats segment and will add another 1 mnt in the coming 8-10 months, Vijay Sharma, Director, JSL, informed SteelMint during an exclusive interview.
Commodity boom & stainless steel
Since the last few quarters, the stainless steel industry has started recovering because of multiple internal reasons (operational efficiencies) and external reasons (commodity boom, economic recovery and inventory valuations). However, the stainless steel industry, like other commodities, is also cyclic and operates on a relatively low margin as compared with the rest of the steel industry. Therefore, it is more vulnerable to the vagaries of the marketplace.
Raw materials account for over 70% of the final product cost. Most of these raw materials are necessarily imported, as availability in India is insufficient. In an open market economy, the prices of finished products are in consonance with raw material prices; therefore, the pricing of stainless steel finished products has a direct link with raw material prices. The recent increase in prices is due to a steep increase in international raw material and finished goods prices.
Impact of Ukraine-Russia war on SS sector
Global economic dependence on Russia has been well documented in the media in recent days. This ongoing war has further fuelled commodity price rally and also global trade imbalances.
Nickel (Ni) is an important raw material for stainless steel. However, for stainless steel produced through the EAF route scrap is the major raw material, up to the extent of 70–80%. The rest is procured through FeNi and a very limited amount through pure Ni.
Russian-origin Ni, which is about 8–9% of the world’s Ni production, is primarily of class 1 category which is used for applications like EV batteries. Hence, even though the conflict has increased commodity prices, raw material availability for stainless steel manufacturers has not diminished.
Impact of cheaper Chinese imports & global trade remedies
After the suspension (and subsequent revocation) of CVD on subsidised under-invoiced imports from China, the overall imports to India practically doubled in FY’22.
About 90% of stainless steel imports from China are of the 200 series, which is primarily hitting MSME producers of stainless who are catering to the utensils and kitchenware segments. These MSME producers constitute about 30% of the country’s flat products capacity.
About 10% of Jindal Stainless’ sale is in the utensils segment; the main sales segments are ART (Automobile, Railways & Transport), process industries (nuclear power, oil and gas, pharma, energy, petrochemical, water, food, etc.), ABC (Architecture, Building and Construction) and special applications like razor blades, coin blanks etc. We are also focusing on the upcoming RE-related applications (like hydrogen, methanol), healthcare equipment, infra, defence and aerospace. JSL has also increased its share of exports.
China is the largest manufacturer and exporter of stainless-steel flat products, withsurplus capacity. Huge capacity additions in Indonesia via investments by Chinese companies in the past few years have further changed the trading dynamics. Indonesia has about 5.5 mnt of installed capacity, which is more than 25 times of their domestic consumption of just 200,000 t.
Both the countries are known to provide non-WTO compliant subsidies to their manufacturers in the range of 20% to 30%. They have destabilised all the global stainless steel markets. Most stainless steel producing countries (EU, USA, Vietnam, Korea, Brazil, Malaysia) have imposed/initiated anti-dumping/anti-subsidy and safeguard measures against China and Indonesia. In fact, China has also imposed ADD on Indonesia. However, India has no level playing field against subsidised dumped imports.
Demand analysis
Stainless steel is environment-supportive (recyclable, low maintenance), socio-friendly (production safe, inert, fire resistant, crash resistant, aesthetically appealing), and economical (longer life, lesser life cycle cost, higher returns), making it highly sustainable. It becomes more appropriate considering the nation’s long 7,500 km coastal line, which is prone to corrosion due to environmental factors.
Stainless steel also has a critical role to play in the nation’s priority areas like renewable energy (hydrogen mission, ethanol/biofuel usage), agriculture (food, dairy, fisheries agri-equipment), healthcare (medical equipment, pharma), infrastructure-related initiatives (railways, Sagarmala, logistics), and strategic areas like nuclear energy, defence and aerospace.
Indian stainless steel quality levels conform to BIS as well as international standards and are preferred in advanced economies around the world. In the very prestigious ITER (International Thermonuclear Experimental Reactor) project in France in which India is a partner country, ‘Made in India’ stainless steel by Jindal Stainless is being used.
Considering the low per capita GDP and low per capita consumption of stainless steel in India, government procurement is critical to stimulating demand. The industry appreciates the government’s efforts in reducing the costs of capital and logistics. However, the industry requests government to make lifecycle costing evaluation and value addition criteria, of melt and manufacture, mandatory for all government projects.
Jindal Stainless initiatives
Through sustained efforts, the past years have witnessed the transition of India’s stainless steel industry. Equipped with a diversified end-to-end product portfolio comprising over 120+ stainless steel grades in all series, state-of-the-art manufacturing facilities and smart automation tools, Jindal Stainless has successfully created 360-degree channels to reach out to customers from all segments around the world.
Being the leader, it is JSL’s responsibility to develop the complete stainless eco-system in the country. Jindal Stainless has curated an initiative called the Stainless Academy to advocate and popularise the usage and benefits of stainless steel under four verticals.
- Focusing on future decision makers, we have partnered with 11 leading institutes likes IITs to curate a course on stainless steel. We have signed MoUs with educational bodies like NIFTEM to promote the metal’s usage in food processing equipment, and with HSBTE for introducing the course on stainless steel in 41 polytechnics across Haryana. Similar efforts are being made in Odisha as well
- JSL has fabricated four stainless steel showcase vans that traverse the length and breadth of the country, displaying various applications of stainless steel. Equipped with fabrication tools and supported by government bodies like the Ministry of Steel under Ispati Irada and Skill India by the National Skill Development Corporation, these vans educate customers on the one hand and train fabricators on the other. About 12,000 fabricators across the nation have benefitted from these trainings
- JSL is simultaneously organising workshops for hands-on training across other avenues like production units of Indian Railways, ITIs, and for Central Jail inmates in various cities, to create a large workforce that is equipped with the skills needed to fabricate stainless steel offerings.
- JSL is also committed to enhance the skills of the downstream industries in partnership with NSDC.
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