Feb 18

India’s infrastructure investment means heady times for refractories sector

The Indian refractory industry is heading into an exciting period. It is heavily dependent on the domestic steel sector, and government plans for greatly expanded capacity for production of steel and cement in the next few years is expected to propel the refractory sector to new highs, Industrial Minerals correspondent Sunder Singh reports.

India’s refractory industry had a modest year in the financial period from April 2017 to March 2018, in terms of a moderate increase in local output of steel and cement.

While exact production figures were not available at the time of publication, refractory production registered a growth of about 3.5% on a volume basis, according to the Indian Refractory Manufacturers Association (Irma).

Growth of the sector was supported by Indian crude steel output, which rose by 4.5% to 102.34 million tonnes in the 2017-18 financial year, compared with an increase of 8.5% in 2016-17.

India’s crude steel output exceeded 100 million tonnes for the first time in 2017-18. Total production capacity increased by 5% to 134.6 million tonnes. The jump seen in 2016-17 was a result of the imposition of higher anti-dumping duties on flat steel products, which curbed imports and helped mills boost domestic sales.

Meanwhile, high volumes of refractory products imported from China created headwinds for growth among domestic refractory producers.

«Imports of refractory products from China is a key issue facing Indian refractory producers. Dumping
of cheaper products from China affects the profitability of [other market participants] and domestic
refractory growth,» Vivek Singh, general manager for marketing at Calderys India Refractories, told
Industrial Minerals. «Almost 25% of the Indian refractory market, including magnesium bricks, is
catered [for] by China.»

Healthy demand projection

There are indications that India’s steel consumption in the next few years will show robust growth
thanks to the government’s emphasis on infrastructure development, both real estate and
automotive. The national 2017-18 budget included an outlay of 4,000 billion rupees ($56 billion) for
infrastructure expansion, covering railways, roadways, airports, seaports, multi-modal transport and
urban amenities, as well as affordable housing.

This has provided a boost for the domestic steel sector. The government’s New Steel Policy 2017
envisages an increase in per capita consumption to 160kg by 2030 from the present 60kg, backed by
a target of 300 million tonnes per year of added steelmaking capacity.

Raw material worries

Raw material availability and pricing has been a major issue for Indian refractory producers since
August 2017, when strict environmental regulations in China started to affect the supply from
Chinese producers and suppliers.

India’s refractory industry has traditionally depended heavily on Chinese imports of dead burned and
fused magnesia (DBM, FM), refractory bauxite and tabular alumina. As a result, Irma has urged the
Indian government to intervene to ease the raw material situation. The government has yet to
respond to the association’s call for action.

«China has gone through a lot of changes in terms of its environmental norms. This has caused a
substantial increase in raw material prices for refractory producers. Major raw materials, such as
fused magnesia, sea water magnesia, brown fused alumina [and] tabular alumina, still must be
imported as refractory quality grades are not available in [India],» Irma secretary general Anirban
Dasgupta told Industrial Minerals.

«The Indian refractory industry has seen average refractory raw material prices increase by 23% in
April 2018, compared with the same period in 2017. There is an urgent need to enhance domestic
raw material production and the use of alternative sources of raw materials,» Dasgupta added.
Calderys’ Singh agreed. «There is scarcity in raw materials in India as well,» he said. «The dunite mines
of Salem are closed due to environmental and other administrative reasons [and the supply of] good
quality refractory-grade bauxite is fast dwindling. The only silver lining for Indian producers is that
the current situation is forcing us to work on strategies that can reduce our dependence on China.»

New investment

A joint venture between Indian refractory maker Dalmia and Slovenian counterpart Seven
Refractories has started construction of a refractory plant in India. The Dalmia-Seven factory is in
Katni in the state of Madhya Pradesh, and will be equipped with a new production line with initial
capacity for 40,000 tonnes per year of finished refractory products. The line will produce refractory
materials for casting and other applications.

With fully integrated IT process supervision and a barcode system, the line will represent one of the
most advanced production lines in the industry. Both final products and incoming raw materials will
undergo supervision in the plant’s own laboratory.

«Refractories are the heart of manufacturing, and the Indian government’s thrust on core industries
will create a requirement for advanced refractory solutions that can help to improve productivity and
optimize costs,» Sameer Nagpal, chief executive of refractories for Dalmia Bharat Group, said. «With
the Katni plant, the Dalmia-Seven joint venture has an ideally located strategic asset at the center of
its operations.»


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