Special & Alloy Steel segment is one of the very strategic segment in steel sector. The sector is majorly catering to end users in Automobile, Engineering, Defence, Railways & Off Highway vehicles. The aggregate business volume is small but still valuable than flat steel market. Alloy steel categories like chrome manganese, chrome molybdenum, chrome nickle molybdenum which are higher in consumption within alloy steel category are typically 10 to 20 percent higher in value. The application is not only critical but very challenging in terms of engineering as specification of each customer has to be controlled very specifically taking in note end application of product. This makes it more challenging for companies trying to enter in the market as technology is one part but people behind implementation, production and Quality Control play a very important part.

Experts from the industry have witnessed and experienced difficulties in getting approvals from leading OEM’s.
Market demand of special & alloy steel in India is approximately 4.5 million tons annually which is bound to reach more than 10 million tons by 2030 post implementation of Automotive policy 2016-26. Current installed capacity for special & alloy steel in India is about 7.3 million tons whereas current utilisation of capacity is about 65 to 70%. This is also due to many steel mills are not utilizing full capacity due to financial positions, this is going to change in short term (next 3 to 5 years). Majority of steel is consumed domestically whereas export is about 18~20% of total utilized capacity – Nepal, Philippines, Thailand & Indonesia are major export buyers with few shipments to Mexico, Sri Lanka, Taiwan & USA.

Companies trying to expand their share of business in Automotive segment - Commercial Vehicles & Passenger Vehicle would become strategic markets as both these segments are likely to grow by 2 to 3 times by 2030. Special steel demand alone in CV's & PV segments would be around 3.5 million tons by 2030 whereas tractors and two- wheeler would generate demand of 1.8 million tons.

As safety demands in CV segment are increasing rapidly, demand for high quality special steel product is likely to increase, that is why we have witnessed Indian mills have installed facilities like Auto UT, Eddy Current and other quality assurance machines. Entry of global players like - Daimler, Volvo, Scania, Isuzu & premium trucks from Tata & Ashok leyland is elevating the demand in terms of quality from steel makers. Government policies like End of life vehicle, limiting life of diesel vehicle to 10 years will play significant role in pushing the total special steel market into next orbit.

Indian special steel mill have a very good future prospects for traditional ICE engine based vehicles where as one has to also see the changing scenario for EV’s. EV’s are going to be one crucial segment which will result in changing investment pattern by steel mills. Although the EV segment doesn’t seems to be affecting much of alloy steel and forged component market.