The refractory industry is looking for a favourable mining policy to reduce import dependency, even as it is skeptical about the quality of domestic raw materials.
India is majorly dependent on imports for finished and unfinished refractories. Steel, chemical, cement and glass are the primary consumers of refractory materials. The total size of the Indian industry is estimated to be anywhere between Rs 6,500-Rs 8,000 crore. And cement industry accounts for 10 per cent of the total. Refractory materials are used for refractory lining in furnaces, kilns, incinerators, and reactors. Refractories are materials that have a high melting point (greater than 1,520 degree Celsius). The two major products of refractories that are commonly used are non-clay refractory and clay refractory. Steel, chemicals, cement, ceramic are glass are the major end-users of refractories. Refractory materials can be made from both, natural and synthetic materials that are generally non-metallic, or combinations of compounds and minerals like alumina, bauxite, fireclays, dolomite, chromite, silicon carbide, magnesite and zirconia.
Market Research Future (MRFR), a market research firm, in its recent report says, "The global refractories market is poised to touch $30,820 million by 2025 at an impressive 4.08 per cent CAGR during the period 2018-2025.
The report continues, "The steep ascension in demand for non-ferrous metals used to manufacture castings for different industries is one of the primary factors contributing to upscaling of the global refractories market. Another vital factor pushing the global refractories market is the extensive use of refractory materials in cement production. Further, augmenting infrastructural developments across the globe is also encouraging the global refractory materials market to capture new heights on the growth chart."
Mordor Intelligence, one of the research analysis firms, says, "The market for refractories is anticipated to register a CAGR of 4.94 per cent during 2019-2024. The growing production of non-ferrous materials, increasing construction activities in emerging markets, and demand coming from the glass industry are the factors driving the market growth."
Mordor Intelligence report also cautions about the hurdles that can hinder the growth. "The increasing environmental awareness, government agencies, and environmental agencies, across the world, are laying down the guidelines regarding the usage and disposal of refractories. This is likely to hinder the market growth."
In terms of consumption, Asia-Pacific is currently the largest consumer of refractories in the iron and steel industry, followed by Europe and North America. China dominates the refractories market in terms of consumption and production, due to the local availability of raw materials, such as magnesite and alumni. Additionally, they are available at cheaper costs, as compared to other producers.
However, another research firm, TechNavio’s analysts, forecasted the Refractory Material market in India to grow at a CAGR of 9.85 per cent over the period 2013-2018.
The industry more or less achieved the forecasted numbers in growth rate. The domestic industry experts expect that in the coming year, India may touch double-digit in growth in the refractory segment. The annual refractory capacity of India is pegged at 1.5 million tonne.
India setting the goal of being a $5 trillion economy clearly indicated that the growth would remain strong for the next few years. Apart from this, the Steel Ministry has increased the production target to 300 million tonne by 2030, and the Cement industry is expected to grow to 700 million tonne.
With government through its Budget 2019 announcements have to give major thrust on infrastructure development. The roadmap till 2022 is laid down with much clarity and significant allocations. The government over the next five years has earmarked allocation of Rs 1 lakh core for infrastructure. The spiralling effect would be seen in steel, cement and allied industries.
Unavailability of raw materials in India and undercutting by Chinese manufacturers are the two main reasons why India imported refractories from China. India is majorly dependent on imports to meets its refractory material demands. China dominates in supplying refractories to India. While the steel industry being the primary consumer, takes 70 per cent of the refractories. Cement accounts for around 10 per cent of the refractories consumption in India.
Sameer Nagpal, CEO, Dalmia OCL said, "Refractory is a critical input with high-temperature application in the manufacturing of iron and steel, cement, glass and non-ferrous metals. Iron and steel account for roughly 70 per cent of the market. The total market size for of refractories in India is estimated to be around 8,000 Cr and cement accounts for around 10 per cent of that."
Impediments
The import from China was impacted when the country revised its mining policy with stricter green norms. The impact was that the import cost of refractories shot up in no time.
Nagpal continued,"Refractories based on magnesia accounts for a lot of imports, as the raw material sources are located outside India. However, as India’s growth ramps up, domestic manufacturers like us are putting up infrastructure to make those also in India."
Mohammed Ismail, DGM Process, Bharathi Cement, said, "the lead time is higher when we are importing from any other country. This could be anywhere between four to six months. The domestic supply can bring down this time to 2-3 weeks." That is not all, he added, "The quality of supplies in the domestic market is yet to come to the level of imported ones. Sure of the quality, the cement players still prefer importing."
Domestic Market
In 2017-18, the refractory industry had seen imports jumped sharply by 40 per cent to Rs 25.29 billion. This is against Rs 18.04 billion registered in 2016-17. This was due to the unavailability of domestic raw materials. However, the sudden development in China has triggered the necessity of developing a domestic supply market for refractories. The price, according to the market experts have seen a spiralling of 30 to 50 per cent, while the raw material cost has escalated by up to 150 per cent. The domestic refractory industry is looking for policy-level interventions and support to grow: import duty exemption, funds for research and development. At the policy level, the industry feels that concerns like uncertain environmental regulations, regulatory duplication, a confusing legal and taxation regime and trade barriers need attention on priority.
Way Forward
Indian refractory industry definitely hopes for a favourable mining policy that will encourage mining in India. This eventually will reduce dependence on China for raw materials. As Nagpal pointed out "A favourable mining policy and revision in duty structure for refractory raw materials can help reduce dependence on imports and build a robust refractory industry in India which can support aggressive growth targets of the Government."
Ease of environmental clearance, land rights simplification and clarity on major and minor minerals for scientific and ecologically sustainable mining is what the refractory industry is looking for co-develop a suitable industry.
– LIZA V