Material substitution has been one of the toughest challenges facing the steel industry. Plastic, aluminium, wood and bamboo have been replacing steel in various application areas. For the last one-and-a-half decade, the automobile sector, which holds a 23-25% market share in global steel consumption, has been toying with the idea of increasing aluminium use to lighten weights, boost fuel efficiency and cut down emissions. Studies reveal that aluminium is increasingly finding its way into hoods, doors, fenders, deck lids, lifts, tail gates and body structures in cars and trucks. It?s use is increasing at 5% per annum. It is projected that European cars (such as Jaguar) would be using about 180 kg of aluminium by 2020 from the present level of 140 kg. Cars made in USA (such as Ford) would be using as high as 249.5 kg by 2025 from 148.3 kg in 2009. Although aluminium weighs about a third as much as conventional grades of steel, it costs three times more.
A recent report says that Volkswagen has chosen to replace aluminium with high tensile steel, which is around 6 times stronger than conventional steel and would reduce the car?s weight by 100 kg with a corresponding reduction in costs. The use of advanced high-strength steel (AHSS) has provided trucks with an outstanding crash test performance.
Around 95% cars use plastic for fuel tanks. Recent studies have shown that around 10% of steel consumption in India is accounted for by the automobile sector (amounting to 7.5 million tonne). The success of R&D programmes, such as ULCOS, would determine if this share can be maintained in the next decade with high-strength steel making inroads into the sector.
In India, the production of bake hardening steel, interstitial free steel and dual phase steel has commenced. While Nippon steel has merged with Sumitomo Metals in Japan to create a conglomerate serving the needs of predominantly the auto sector, in India, Tata steel is setting up a 0.6-million-tonne steel mill jointly with Nippon steel to produce auto grade steel. JSW and JFE are jointly setting up facilities to penetrate the auto sector. SAIL has just completed a new cold rolling mill of 0.75 million tonne (CRM-II) at Bokaro, which would also be a supplier to the auto components and the auto sectors. Bhusan Steel and Essar Steel are also catering to the needs of the auto sector for various components.
In addition, a large part of imported cold rolled coils and sheets from South Korea, Japan (under CEPA with low import duties of 2-3%) and China, totalling roughly 1.8 million tonne in this fiscal, have been consumed by the auto sector.
The envisaged growth in supply must be matched by demand growth in auto sector. Production growth in the auto sector, however, has been dismal in the first 10 months of the current year, at merely 2.76%.
The slow growth in production of commercial vehicles (particularly heavy and medium commercial vehicles) has also rubbed off on to the passenger car segment, mainly due to the high cost of credit and poor market sentiment. Unlike in other advanced countries, in India there is yet to emerge an innovative product development project by a steel major in partnership with a prominent auto major.