Expectations Of Power Capacity Additions To Opportunities For Steel Players
With a growth rate of 4.8 per cent, 4.4 per cent and 4.7 per cent for the first three quarters of FY14 respectively, it has become amply clear that the Indian economy has almost bottomed out. Pressures on the economy built up in the financial year with increased import prices of key commodities, rising inflation rates, bottlenecks in infrastructural growth and crippling deficits Even though investor confidence has been at an all time low till recently, the outlook for FY15 and the years beyond is not particularly dismal. There is a growing feeling amongst corporate, economists and researchers alike that the worst may finally be over.
With elections due in the first quarter of FY15, it is being hoped that the power sector in India shall emerge as a silver lining in the coming years. The sector has unduly suffered in FY14 - like several other sectors - with capacity addition targets far exceeding the actual capacity addition on the ground. This has been on account of sluggishness in investments, issues in getting clearances as well as difficulties in coal sourcing for thermal power sector - issues that have persisted for over a long time now. Nonetheless, if removal of energy poverty becomes a top-notch priority of the new government, it shall pave way for positive developments in all related sectors as well.
Power Sector Growth - A ray of hope spurring the growth Indian economy forward
At the end of the 11th Five Year Plan (FYP), it was announced that the target for power sector capacity addition during the 12th FYP would be a record 88,537 MW (comprising of 72,340 MW Thermal, 10,897 MW Hydro and 5,300 MW Nuclear). It was widely anticipated that it is almost imporabable that this target would be achieved considering past trends of 60-70 per cent achievement of such targets. However, the first year of the 12th FYP, i.e. 2012-13, bought in high optimism through over achievement of yearly targets under the plan. As against a targeted capacity addition of 17,956 MW during the year, India added 20,622 MW of capacity reflecting an overachievement of target by 14.8 per cent. In fact, an additional capacity of 2,512 MW of capacity was added in the quarter ending June 2013 cumulating the 15 month total addition to 23,134 MW which amounts to an impressive 26.13 per cent of the 12th FYP target. It is to be noted that this has been achieved at a time when the investor confidence is said to be at an all time low.
Positive signals from the power sector have been made possible through proactive interventions of the government which have helped power projects see the light of the day. One such recent intervention has been hastening of Fuel Supply Agreements (FSA) between Coal India Limited and Power Project Developers for 78,000 MW of coal based power generation capacity being commissioned between April 2009 and March 2015. Additionally, power project monitoring committees have been constituted, having representations of Minister of State for Power, Planning Commission, Cabinet Secretariat, Secretary (Power) and Chairperson of Central Electricity Authority (CEA), to track the development of power projects. Apart from this, periodic joint reviews have also been planned to discuss issues on supply of power equipment, enlargement of vendor base for meeting Balance of Plant requirements and enhancement of indigenous capabilities for equipment such as supercritical boilers and turbine generators.
Power Sector Opportunities for the Steel Industry
As per the data availed from CEA, aided by government support, around 95.4 GW of power projects are under construction while an additional 29 GW projects have been proposed to be commissioned during the 12th FYP. This present a huge opportunity for the steel industry for steel is the major component in power equipment while also being highly utilized in construction works of power plants.
Bulk steel usage in the power sector is observed in boilers, turbines, generators, transformers, switch-gears and other critical structural components. There is also a growing requirement of special grades of steel which are specifically tailor-made to exhibit certain set of properties which result in performance improvement of power plants. One of the most characteristic examples of application of special steel is in the manufacturing of transformers, wherein CRGO or electrical steel is the critical input for manufacturing transformer cores given its properties of low hysteresis losses, high melting point and high magnetization which in turn fortifies the efficiency and performance of the transformer. Similarly, steel with high strength and corrosion resistance is required in the manufacturing of boilers while steel with electrical and magnetic property is required for manufacturing turbines. Thus, to effectively cater to a fast expanding power sector, the Indian steel industry has to gear up to augment its manufacturing and technological capabilities, especially for curbing imports of special steel products though development of indigenous capabilities.
Infraline's Initiative: A first of its kind Exclusive End Use Forecasting for Steel Demand in Power Sector
In view of the above-mentioned facts, Infraline - a premier research and consultancy company based out of New Delhi - has attempted to assess the market size for steel in the power sector, in monetary and quantitative terms, till FY17. We have ascertained the true potential for applicability of steel products in varied power projects; such as thermal, hydro and solar which are due for commissioning in the remaining part of the 12th FYP under varied scenarios; in our Business Series Report research report titled "Steel Demand in Power Sector Projects 2017: Market sizing and Opportunity Assessment" which has been launched in March 2014.
Based on Infraline's estimates, a combined steel requirement of approximately 19.5 MT is expected just from the generation and transmission segments of the Indian power sector in the remaining part of the 12th FYP reflecting a 100 per cent plus growth in steel demand in comparison to the 11th FYP.
In this research report, our endeavor has been to provide a detailed equipment wise breakup of the steel requirement for various power projects expected to be commissioned till FY17 and subsequently analyze the same to bring out different facets of opportunity in the offing for Steel Producers, Power Project Developers and Power Equipment Manufacturers. The study has been well received by Indian steel companies and equipment manufacturers equally, for it also provides strategically relevant insights on opportunity in local production of electrical steel and outlook on sustainable steel usage for the power sector. Importance of seamless steel pipes and tubes for the growth of sector has also revealed interesting outcomes.
With elections due in the first quarter of FY15, it is being hoped that the power sector in India shall emerge as a silver lining in the coming years. The sector has unduly suffered in FY14 - like several other sectors - with capacity addition targets far exceeding the actual capacity addition on the ground. This has been on account of sluggishness in investments, issues in getting clearances as well as difficulties in coal sourcing for thermal power sector - issues that have persisted for over a long time now. Nonetheless, if removal of energy poverty becomes a top-notch priority of the new government, it shall pave way for positive developments in all related sectors as well.
Power Sector Growth - A ray of hope spurring the growth Indian economy forward
At the end of the 11th Five Year Plan (FYP), it was announced that the target for power sector capacity addition during the 12th FYP would be a record 88,537 MW (comprising of 72,340 MW Thermal, 10,897 MW Hydro and 5,300 MW Nuclear). It was widely anticipated that it is almost imporabable that this target would be achieved considering past trends of 60-70 per cent achievement of such targets. However, the first year of the 12th FYP, i.e. 2012-13, bought in high optimism through over achievement of yearly targets under the plan. As against a targeted capacity addition of 17,956 MW during the year, India added 20,622 MW of capacity reflecting an overachievement of target by 14.8 per cent. In fact, an additional capacity of 2,512 MW of capacity was added in the quarter ending June 2013 cumulating the 15 month total addition to 23,134 MW which amounts to an impressive 26.13 per cent of the 12th FYP target. It is to be noted that this has been achieved at a time when the investor confidence is said to be at an all time low.
Positive signals from the power sector have been made possible through proactive interventions of the government which have helped power projects see the light of the day. One such recent intervention has been hastening of Fuel Supply Agreements (FSA) between Coal India Limited and Power Project Developers for 78,000 MW of coal based power generation capacity being commissioned between April 2009 and March 2015. Additionally, power project monitoring committees have been constituted, having representations of Minister of State for Power, Planning Commission, Cabinet Secretariat, Secretary (Power) and Chairperson of Central Electricity Authority (CEA), to track the development of power projects. Apart from this, periodic joint reviews have also been planned to discuss issues on supply of power equipment, enlargement of vendor base for meeting Balance of Plant requirements and enhancement of indigenous capabilities for equipment such as supercritical boilers and turbine generators.
Power Sector Opportunities for the Steel Industry
As per the data availed from CEA, aided by government support, around 95.4 GW of power projects are under construction while an additional 29 GW projects have been proposed to be commissioned during the 12th FYP. This present a huge opportunity for the steel industry for steel is the major component in power equipment while also being highly utilized in construction works of power plants.
Bulk steel usage in the power sector is observed in boilers, turbines, generators, transformers, switch-gears and other critical structural components. There is also a growing requirement of special grades of steel which are specifically tailor-made to exhibit certain set of properties which result in performance improvement of power plants. One of the most characteristic examples of application of special steel is in the manufacturing of transformers, wherein CRGO or electrical steel is the critical input for manufacturing transformer cores given its properties of low hysteresis losses, high melting point and high magnetization which in turn fortifies the efficiency and performance of the transformer. Similarly, steel with high strength and corrosion resistance is required in the manufacturing of boilers while steel with electrical and magnetic property is required for manufacturing turbines. Thus, to effectively cater to a fast expanding power sector, the Indian steel industry has to gear up to augment its manufacturing and technological capabilities, especially for curbing imports of special steel products though development of indigenous capabilities.
Infraline's Initiative: A first of its kind Exclusive End Use Forecasting for Steel Demand in Power Sector
In view of the above-mentioned facts, Infraline - a premier research and consultancy company based out of New Delhi - has attempted to assess the market size for steel in the power sector, in monetary and quantitative terms, till FY17. We have ascertained the true potential for applicability of steel products in varied power projects; such as thermal, hydro and solar which are due for commissioning in the remaining part of the 12th FYP under varied scenarios; in our Business Series Report research report titled "Steel Demand in Power Sector Projects 2017: Market sizing and Opportunity Assessment" which has been launched in March 2014.
Based on Infraline's estimates, a combined steel requirement of approximately 19.5 MT is expected just from the generation and transmission segments of the Indian power sector in the remaining part of the 12th FYP reflecting a 100 per cent plus growth in steel demand in comparison to the 11th FYP.
In this research report, our endeavor has been to provide a detailed equipment wise breakup of the steel requirement for various power projects expected to be commissioned till FY17 and subsequently analyze the same to bring out different facets of opportunity in the offing for Steel Producers, Power Project Developers and Power Equipment Manufacturers. The study has been well received by Indian steel companies and equipment manufacturers equally, for it also provides strategically relevant insights on opportunity in local production of electrical steel and outlook on sustainable steel usage for the power sector. Importance of seamless steel pipes and tubes for the growth of sector has also revealed interesting outcomes.
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