Tamil Nadu steel industry scenario
India is the second-largest steel producer in the world and a major contribution to it comes from the large steel manufacturing plants based out of the southern state of Tamil Nadu.
Highlights:
- Secondary steel manufacturing units: 125
- Total production capacity: 3.85-3.95 million tonnes (mnt) per annum
- Scrap consumption: 2.65-2.7 million tonnes (mnt) per annum
- Sponge iron consumption: 0.73-0.74 million tonnes (mnt) per annum
Chennai’s secondary steel market
Chennai is the major supplying market for steel in the southern region. Units here mainly follow the secondary steel-making route using scrap and sponge iron as basic raw materials.Different industrial segments like die-casting, stamping, alloy units and white-goods, which experience healthy consumption of ferrous scrap, source their material from Chennai.
It has been observed that recycling units plays a vital role in this part of the country and their capacities are expanding to feed end-user segments.The locations housing the major mills and scrap yards in Chennai include Tondiarpet, Gummidipundi, Sriperumbudur, Sahukarpet and Mannadi etc.
Tamil Nadu’s induction furnace steel production capacity
There are around 125 steel manufacturing units in Tamil Nadu, among which 50 are secondary induction furnaces. The total production capacity of all the furnaces is around 3.85-3.95 million tonnes (mnt) per annum.
The melting scrap and sponge consumption ratio is 80:20. In this, scrap consumption is about 2.65-2.7 million tonnes (mnt) per annum while sponge consumption is at 0.73-0.74 million tonnes (mnt) per annum.
Major manufacturing plants/capacity
A few of them also have plans to expand capacity by FY23.
Charge mix ratio for steel-making in Chennai region
Scrap market in Chennai
In Chennai, melting scrap (HMS 80:20), in local parlance, is known as “godown” melting which is the basic grade material and is consumed in large volumes. There are other categories too — super melting, bazar melting and commercial melting to name a few – whose delta and grading are shown in the table below.
Furnace producers in Chennai buy 220,000-225,000 tonnes of scrap in a month.
Domestic scrap: Melting scrap is procured from cities within a 400-km radius of Chennai (from areas like Tondiarpet, Gummidipundi, Sriperumbudur, Sahukarpet, and Mannadi etc.) CR-busheling/punching and other automobile scrap are sourced from Sriperumbudur, Mahindra World City, Orgadam, and Tiruvallur.
Imported scrap: Majority of buyers prefer to purchase imported scrap (HMS1 &2, shredded) from West Africa, the UK, EU, US, and the UAE.
Sponge iron and ferro alloys:
Chennai’s steel units require 60,000-65,000 tonnes of sponge iron per month (they prefer CDRI 80%).The sponge iron is primarily obtained from Chennai, Bellary and Odisha while ferro alloys come in from Visakhapatnam, Chandrapur, Bellary and Raipur.
Freight charges
Auto industry in Tamil Nadu and scrap generation
Major of India’s car manufacturing units are located in the four cluster: I) Delhi-Gurgaon-Faridabad-Ghaziabad-Gautama Buddha Nagar in northern India; II) Mumbai-Pune-Nasik-Aurangabad-Thane in western India; III) Chennai-Bangalore-Dharampuri-Vellore-Kanchipuram-Thiruvallore in the south; and IV) Kolkata-Jamshedpur in the eastern region.
The southern cluster, consisting of Chennai, has the biggest share with 35% of revenues. The western hub near Mumbai and Pune contributes 33% of the market and the northern cluster, located around the National Capital Region, contributes 32%. Chennai, houses the India operations of Ashok Leyland, Ford, Hyundai, Renault Nissan, BMW, Hindustan Motors and Daimler. Chennai also accounts for 60% of the country’s automotive sector.
Automobile scrap in Tamil Nadu
The monthly scrap generation from all the primary automobile manufacturers located in Tamil Nadu amount to a substantial volume per month. These automakers sell these through auctions. The material generated from these units are prompt scrap (CR-HR busheling), also known as new scrap.
Scrap generation from end-of-life (ELV) vehicles
Scrap generation from end-of-life (ELV) vehicles in India is expected to increase by 64% to nearly 9 million tonnes (mnt) over the next five years, SteelMint understands. While government policy support will boost ferrous scrap generation, the challenge lies in how soon Indian units can match up to the procedure benchmarks followed in the US, UK and especially Japan.
For more details on India’s ELV scrap, please follow link..
Note: SteelMint is currently doing daily price assessments for HMS (80:20) and CR-busheling scrap for Chennai region.
For more details and to become a data partner with SteelMint, please contact below:
Article writer: S. Shankar (Manager, domestic ferrous scrap) +919329928332
SteelMint Events will be hosting the 3rd Steel & Raw Material Conference, Emerging Bangladesh, on 20-21 September, 2022 at Hotel Radisson Blu, Chittagong, Bangladesh. The conference will explore key issues like the country’s steel production and demand outlook, global scrap trade flow changes, especially post-the Russia-Ukraine war, the ship recycling scenario, key emerging sectors, price trends and a lot more.
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