Refractory Concept VALUE CHAIN Refractory is a class of materials which are produced from non-metallic minerals.

. They are the primary materials used in the internal lining of industrial furnaces and possess capability to withstand heat and pressure, and are used in steel, aluminum, glass, cement, petrochemicals, non-ferrous metals, thermal power plants and ceramic industries. These are produced in Special Shapes and are Custom made to suit the requirements of the various industries. Refractories are classified on the basis of their chemical composition, end use, and manufacturing method. They can be classified as acidic, basic, and neutral refractories. A small range of high melting point materials like magnesia, bauxite, fireclay, and silica are used to produce refractories.

Sources of Raw materials available India imports most of its raw materials from China, as India does not produce sufficient quantities of equivalent quality of brown fused alumina4

Refractory Industry in India An Overview The Refractory industry is fragmented with more Output Usage than 150 players, of which, 15 to 16 are major players while the remaining are small private players. Production capacity of refractories in India currently around 2 million tons (mt).Production stood at 1.3 mt in 2007-08, against 1.08 mt in 2006-07, up around 17 percent. The organized refractory industry had recorded turnover of Rs 3,000 crore ($ 625 million) in 2007-08, against Rs 2,370 crore ($494 million) in the last fiscal . Growth in sales was driven by growing demand from sectors like steel, cement, aluminum, sponge iron and others. Currently the companies in this industry operating at around 60 - 80% capacity utilization. Exports during 2007-08 were Rs 452 crore ($ 94.2 million), up from Rs 314 crore ($65.4 million) in the previous fiscal. India currently exports around 10 percent of its production. SWOT Analysis for Refractory Industry in India STRENGTHS o Introduction of the concept Total Refractory Management (TRM) to ensure quality and proper imports service, and also to decrease the cost. o India is having superior engineering skill, high quality technology and equipment from Germany and Italy,access to superior quality raw materials and all these factors is resulting in superior quality refractory output. o Increasing credibility of Indians in the global market, where price realization is relatively better. WEAKNESS o India has to depened heavily on China for raw-material imports. o Scarcity of raw materials across the globe. o Technological changes in Steel industry resulting in lowering consumption of refractories per tonnes of steel.

o The growth of Indian Steel industry is extremely crucial to analyze the future status of Indian Refractoryindustry. OPPORTUNITIES o Refractories still have many areas in various sectors to enter in such as monolithic and special. o Growing demand from other sectors like sponge iron and cement. o Indian products are sailing all across the globe primarily to EU, Middle East, South Africa and Far East including Malaysia and Indonesia. o Expansion of Steel industry in India. THREATS o With the increasingprice of crude oil and otherpetroleum products, the coal is also increasinghaving a direct impact on the input cost o China dumping sub-standard quality outputs in India at very low prices (China export integrated pricing, strategy) o Payment delays price of by the manufacturers o Slowdown in Chinese refractories market. Business Concerns & Future outlook Business concerns Industry dependent on raw material imports from China. Use of synthetic raw materials is driving prices higher. In the event of continued high prices for crude oil and other petroleum products, hardening of the coal prices the prices of the inputs of refractory industry are increasing. Raw material prices have moved up 80 to 85 % but prices of finished products have just appreciated 18 to 30 % resulting in erosion of bottom lines of the refractory companies. Affected by slowdown in the economy.

 In industries like steel - trend towards lower refractories consumption per tonne of steel. Usage of new technology processes leads to reduction in refractories consumption The industry is going through an exciting and complex phase. On one hand, refractory makers are adding capacities with the hope that demand from the steel sector will rise at a fast pace. On the other hand, none of the major announced Greenfield steel projects are yet to get off the ground. Future Outlook While overall market for refractories may decline, a shift is foreseen towards usage of specialised refractories. Raw material imports to continue. Demand from other sectors like sponge iron and cement, will rise. Monolithic (powder) are projected to grow at an above-average pace than bricks and shapes. Clay refractories are expected to outperform Non-clay refractories through 2012.

INDIAN REFRACTORIES - CHALLENGES AHEAD

Unavailability of adequate qualified and competent workforce

CHALLENGES AHEAD

China, with its cheap production cost

Negotiation power of refractories makers is poor, who are squeezed between raw material suppliers and steel makers

Raw material and fuel prices on fire

Marketing and packaging tailor-made products for their clients

Demand-Supply mismatch