Indian Refractories Market - Steelworld

Focus
Indian Refractories Market
New Growth Opportunities
Asia Pacific region constitutes the largest and fastest growing regional market for refractories,
accounting for an estimated unit share of more than 70 percent. China and India are driving
overall growth of Asia-Pacific in the global market. Fuelled by strong industrial production,
China accounted for a major share of the global market in 2010.
Meanwhile, increasing level of industrialization is fuelling growth in the Indian steel industry,
providing ample growth opportunities for refractories. Iron and steel industry continues to
remain the major end-use market for refractories
he Indian refractory industry
started its journey with first
Tline of production in Kolkata
in 1874. Today, the industry comprises
over 100 established units, with 11
large plants, 24 medium-scale units
and the rest in the small-scale sector.
However, while the refractory industry
in India took off in the late 19th century,
the real growth came in the late 1950s
when the public sector steel plants
� 24 � NOVEMBER 2010
were set up and Tata Steel embarked
upon its expansion plans. Currently, the
Indian refractory industry has an
aggregate production capacity of 20
lakh tonnes per annum. The capacity
utilization, however, currently stands
at around 60 percent or 11.5-12 lakh
tones per annum.
About 75 per cent of the
refractories that are manufactured find
application in the steel industry, 12 per

cent in the cement industry, 5-6 per
cent in non-ferrous industries, three
per cent in the glass industry and the
b a l a n c e i n o t h e r i n d u s t r i e s .
Necessarily, refractories are used
either where high temperature or high
rate of abrasion/corrosion/erosion is
involved. Traditionally, refractories
are made of naturally-occurring
minerals, such as bauxite, kyanite,
magnesite, fireclay, chrome ore, etc.
Lately, however, the industry has been
using man-made raw materials, such as
brown-fused alumina, tabular alumina,
fused magnesia, silicon carbide,
magnesia alumina, etc.
Refractory plays a dynamic role not
only for metallurgical but also for
s h a p i n g u p c h e m i c a l a n d
petrochemical, glass, ceramic, cement
and limestone industries. Major
research work has so far been
concentrated for the development of
new refractory and also for its
reduction in consumption for steel
industries. But, the industry's efforts
have so far proved futile as no major
breakthrough has been achieved.
Indian refractory industry, meanwhile,
is required to upgrade their operations
with global technologies which need
huge investment. But, in the long run,
the investment is bound to fetch higher
returns too.
Scope for Growth
The size of the Indian refractory
industry has been pegged at Rs 2,300
crore and it is stated to be growing at
8-10 per cent per annum. Although the
specific consumption of refractories
has gone down from 30 kg per tonne of
steel about 20 years ago to 12-13 kg on
an average for the steel industry as a
whole and as low as 7-8 kg in the case
of some more efficient steel units, the
scope for growth is good in view of the
continuing growth in the Indian
economy and the government's focus
on infrastructure development.
Despite downturn in steel sector,
the domestic refractory industry that
supplies raw materials to steel plants
and industries, posted 21 percent
growth in turnover at Rs 4,480 crore in
2009-10 against Rs 3,640 crore in
2008-09, when the growth was 16
percent over 2007-08. The capacity
utilization of the industry was 65
percent.
In 2009-10, the import of
refractories was down 11 percent to Rs
1,277 crore, according to Indian
Refractory Makers Association (IRMA)
chairman, A K Chattopadhyay. This
was largely due to drop in the imports
of fireclay and high alumina bricks
mostly under OEM contracts. But, then,
the exports during the period also
declined to Rs 446 crore mainly due to
the meltdown in European and the
American markets.
Crude steel production in 2010-11
is expected to rise to 72 million tonnes
despite the slide in the first quarter. In
2009-10, the crude steel production
was 64.88 million tonne. Out of total
production of 64.88 million tonne in
2009-10, 29.33 million tonne was
produced through the oxygen route,
another 15.69 million tonne through the
EAF route, and the balance through the
induction furnace route. Cautioning
against the frenzy to sign MoUs to set
up steel plants 53 in Karnataka, 71 in
Jharkhand and several dozens each in
O r i s s a a n d W e s t B e n g a l ,
Chattopadhyay said that infrastructure
bottlenecks could throttle these
ambitious plans. The production of 100
million tonnes of crude steel would
mean transportation of 350 tonnes of
raw materials.
According to Dr J.J. Irani, Director
of Tata Sons and Former Managing
Director of Tata Steel, “With the
government aiming to invest more and
more on infrastructure development,
the steel industry in the country is
slated to grow to, possibly, 120 million
� 25 � NOVEMBER 2010
Focus
Refractory plays a dynamic
role not only for metallurgical
but also for shaping up
chemical and petrochemical,
glass, ceramic, cement and
limestone industries. Major
research work has so far been
concentrated for the
development of new
refractory and also for its
reduction in consumption for
steel industries.
tonnes or even up to 150 million tonnes
by 2015. According to most reports, the
cement, aluminium and other industries
are also to grow to unprecedented
heights. This should be good news for
refractory producers in India.”
Challenges For Industry
“The Refractory Industry must
upgrade itself to take benefit of
increased business from the steel
industry,” stated R K Vijayvergia,
Executive Director-Operations, SAIL,
at a recently held conference. In his
special address, Vijayvergia said,
“Steel industry forms the major enduse
segment for refractories
consuming around 70 percent of its
total annual production. The Refractory
Industry has to keep pace with steel
industry with regard to quality and
quantity demands. Meanwhile, with the
changed business scenario more and
more customers are looking forward to
total refractory management which
encompasses creation of value added
service, responsive supply chain
network and understanding of
customers' requirement.”
The major Indian refractory
manufactures need to gear up to cater

Focus
It would also be important
for Indian refractory
manufacturers to focus on
their raw materials security.
Industry insiders do
acknowledge that raw
materials security is a concern
especially with China
imposing quantitative
restrictions on export of raw
materials and also jacking up
prices over the last year or so.
the need of steel industry. World
leaders in refractories like RHI from
Austria, Vesuvius from Belgium,
French giant Calderys, Pohang from
South Korea etc have also made their
presence in India, which is a good sign
for the industry. Recently SAIL has
taken over Bharat Refractories Ltd
which is now named as SAIL
Refractorry Unit (SRU). SAIL is in the
process of augmenting and upgrading
the facilities at SRU for higher
production to meet the quality
requirement of SAIL.
Recycling and reuse of refractory is
another area of utmost important. In
order to reduce the volume of waste
refractories, it is necessary to cut down
their consumption by prolonging life
furnace lining. In the field of refractory
major technological development in the
world have taken place in the area of
monolithic and carbon containing
refractories. Currently the share of
monolithic in India is around 25 percent
of total refractory consumption which
is less than Japan where it is more than
50 percent. Economic volatility and
risks, information and communications,
climate change, domestic reforms,
inclusiveness and low cost innovations
are the key influencing factors for the
strategic direction of the business
standards.
Refractory producers in India have
to rise to the occasion by providing
ready, regular, speedy and consistent
supplies, Irani said. It would also be
important for Indian refractory
manufacturers to focus on their raw
materials security. Industry insiders do
acknowledge that raw materials
security is a concern especially with
C h i n a i m p o s i n g q u a n t i t a t i v e
restrictions on export of raw materials
and also jacking up prices over the last
year or so. Cheaper refractory imports
from China are also putting a pressure
on the industry's margins. Hiring and
retaining skilled manpower is a major
challenge that the Indian refractory
industry has to cope with.
Phenomenal Growth in Global
Markets
With the staggering recovery from
last year's downturn in steel industry,
the global refractories market will
reach 59 million tonnes and $31 billion
by 2015. Key market drivers include
growing use in metal and non-metallic
mineral products production; emerging
markets such as China and India; and
increased preference for lighter and
stronger refractory materials.
New and advanced products, as well
as installation/repair practices, are also
expected to spur global demand for
refractories in the next few years.
Global demand for refractories
declined during late 2008 and into 2009
as a result of the economic crisis and
declining steel production and
consumption. Steel use contracted by
� 26 � NOVEMBER 2010
6.2 percent in 2009. Nevertheless, with
the economy gradually rebounding
from recession and global steel
production beginning to recoup,
demand for refractories is forecast to
increase starting in late 2010.
Asia-Pacific constitutes the largest
and fastest growing regional market for
refractories, accounting for an
estimated unit share of more than 70
percent, according to the report. China
and India are driving overall growth of
Asia-Pacific in the global market.
Fuelled by strong industrial production,
China accounted for a major share of
the global market in 2010.
Meanwhile, an increasing level of
industrialization is fueling growth in the
Indian steel industry, providing ample
growth opportunities for refractories.
Iron and steel remains the major enduse
market for refractories. However,
the declining steel industry usage of
refractories bodes well for the growth
of refractories in other end-use
sectors. Growth in the production of
cement, ceramics and other mineral
products is expected to complement
this growing trend in the coming years.
In addition, an upsurge in the use of
refractories in metal and non-metallic
mineral products' production is
expected to widen the market's growth
prospects.
In terms of material, clay
refractories represent the largest and
fastest growing segment. The market is
projected to grow at a CAGR of 6.6
percent over the analysis period. The
market for non-clay refractories is
projected to reach 19.6 million metric
tons by 2012. By form type, bricks and
shapes represent the leading segment,
while monolithics and others are
projected to surpass $10.34 billion by
2012.
Growth prospects are high for
monolithic castables and preformed
shapes that feature higher performance
and flexibility than other refractory
forms. Significant growth potential is
expected in zircon/zirconia, silicon
carbide extra-high alumina, and other
more specialized refractory materials
that offer strong performance in
specific applications. In addition, an

Focus
above average growth is foreseen in
the case of cost-effective refractory
materials, including silica, highalumina,
ceramic fibers, and insulating
types.
Recovery In Global Demand
Global demand for refractories
declined during late 2008 and in 2009,
as a result of the economic crisis, and
declining production and consumption
of steel, the largest end-use market for
refractories. Steel use contracted by
6.2 per cent in 2009. Nevertheless,
with the economy gradually rebounding
from recession and the global steel
production beginning to recoup,
demand for refractories is forecast to
increase starting from late 2010.
Asia pacific constitutes the largest
and fastest growing regional market for
refractories, accounting for an
estimated unit share of more than 70
percent. China and India are driving
overall growth of Asia-Pacific in the
global market. Fuelled by strong
industrial production, China accounted
for a major share of the global market in
2010.
Growth Opportunities
Meanwhile, increasing level of
industrialization is fuelling growth in
the Indian steel industry, providing
ample growth opportunities for
refractories. Iron and steel remains the
major end-use market for refractories.
However, the declining steel industry
usage of refractories of late bodes well
for the growth of refractories in other
end-use sectors. Growth in production
of cement, ceramics, as well as other
mineral products is expected to
complement this growing trend in the
coming years. In addition, an upsurge in
the use of refractories in metal and
non-metallic mineral products
production is expected to widen the
market's growth prospects.
In terms of material, clay
refractories represent the largest and
fastest growing segment. The market is
projected to grow at a CAGR of 6.6
percent over the next two years. The
market of non-clay refractories is
projected to reach 19.6 million tonnes
by 2012. By form type, bricks and
shapes represent the leading segment,
while monolithics and others are
projected to cross $10.34 billion by
2012. Growth prospects are high for
monolithic castables and preformed
shapes that feature high performance
and flexibility than other refractory
forms. Significant growth potential is
witnessed in zircon/zirconia, silicon
carbide extra-high alumina, and other
� 28 �
NOVEMBER 2010
Asia Pacific constitutes the
largest and fastest growing
regional market for refractories,
accounting for an estimated
unit share of more than 70
percent. China and India are
driving overall growth of
Asia-Pacific in the global
market. Fuelled by strong
industrial production, China
accounted for a major share
of the global market in 2010.
more specialised refractory materials
that offer strong performance in
specific applications. Besides, an above
average growth is foreseen in the case
of cost-effective refractory materials,
including silica, high-alumina, ceramic
fibres, and insulating types.