Ish Mohan Garg, Managing Director, Calderys
How is the overall refractory market growing in India over the past 5 years? What is the future prospect of growth of demand? Please tell us how you segment the refractory market for analysis.
After two years of depressed market, currently refractory market has stabilised a bit and it seems that recovery is underway in 2018. About 75 per cent consumption comes from steel market hence major dependence is on steel market and our market growth is tied with ups and downs of the steel industry. Many analysts are forecasting steel growth at around 5 per cent YoY for the next three years. We may see similar growth rate in our industry.
What is the trend of imports of refractory into our country? Are we importing mostly from China or from other countries as well? Are the imports happening because of lower prices or better technology? What are your plans, if any, to substitute these imports? Are you, as an industry body, recommending any hike of import duties to protect the domestic manufacturers?
At present, imports cover around 25-30 per cent of refractory, most of this is coming from China primarily because of lower prices. Refractory is essentially a Make in India business model where we import raw materials and create value-added products in India. While import duty on RM is 5 per cent that on finished product is 2.5 per cent. This mere difference of 2.5 per cent has to increase to encourage domestic manufacturing activity.
Talking now specifically about the cement industry, how big is cement industry as a consumer of refractory, vis a vis others such steel, fertilizers/chemicals, etc., in the Indian marketplace? do you see growth in both projects and replacement demands in cement sector? How can we compare these two different demand segments, in terms of price and quality expectations of customers? What is your view about the future growth possibilities in the cement industry?
Though cement is the second largest segment in refractory industry, it is and would continue to be small when we compare it with steel. Cement market growth remains healthy however major impact is on capacity utilisation. New capacity addition is only marginal, which means we may not see growth in new projects in the next three years however maintenance demand would remain steady.
Do you observe any major shifts happening in the applications market, such as for example, castables, chrome-free, magnesia, zircon, etc.? What are the latest technology trends in cement kiln refractory in the world, and how is India keeping pace?
In the past, the major focus had been on the kiln performance, primarily productivity but with stricter environmental norm there has been major shift on the cement kiln system refractories too. Well known hexavalent chrome problem associated with Mag Chrome refractories has made them unusable in cement kiln. In the kiln burning zone, Mag Chrome bricks have been substituted by wide range of alternate spinel products, e.g. MagAl, Hercenyte and others like zirconia containing magnesia, etc. Ammonia injection, once stricter NOx and SOx norms is implemented, would put significantly more stress on the refractory in the cement kiln system. Refractory manufacturers need to gear up for these upcoming regulatory norms.
Usage of alternate fuel for cement production has been in trend in Europe and other industrialised nations for a few decades. India has caught up with this trend and in today's context pet coke is no longer is treated as alternate fuel.
Cement kilns in India are virtually being used as incinerator, where pharma and municipal wastes are common feed as fuel. This obviously has changed the kiln operating environment. This has resulted in increased coating build in kiln inlet as well as Spurrite ring formation within the kiln. In many occasions the clinker is dustier compared to the past. These changes obviously have called for refractories with different features. Incorporation of the requisite features has turned out to be much easier in monolithic, primarily castables, compared to bricks. Against this backdrop, castable in kiln inlet, tip casting, bull nose and cooler bench has become a standard practice. With the advent of shotcrete installation process, for identical castable formulations, faster installation extension of refractory life, by repair, has been possible.
India has been fairly successful in keeping pace with cement industry requirement by providing solution through monolithic refractories. The same, however, has not been the case for basic bricks for burning and transition zones, which primarily is due to non-availability of quality basic raw materials in India.
What are your new product offerings for the cement sector currently, and what are your future plans to introduce new items into the market in near future?
Our new product range consists of following product ranges:
SUPRAMON Series: Chemically-bonded castable
ACCSHOT Series: Customised shotcrete products
CALDE SUPERGUN Series: Gunning material Very soon, we plan to launch new products for precast prefired bull nose, tip casting and burner pipe blocks.
Given that application of refractory has a great impact on quality of installation, do you directly take part in application work at your customers' sites, or do you partner with other application service providers?
Installation plays a vital role in the performance of refractory; therefore, we directly take part in the installation work. We work in following models depending upon the job type, complexity, etc.
Model 1: where we hire the manpower from our certified manpower suppliers and execute the job under the supervision of our very experienced Calderys staff
Model 2: where we get the job done through our contractor* under the supervision of our very experienced Calderys staff.
Model 3: a combination of model 1 & 2
*we have a team of certified contractors who are well versed with our installation safety and execution technique.
Refractory products are a classic example where total life cycle cost or TCO should determine purchasing decisions, and not the procurement price per se. This is particularly true for the cement kilns. Do you see the Indian cement plant managers are sensitive to total cost of ownership in making these procurement calls?
That's true and we are increasingly seeing cement customers now focusing on total cost of ownership versus product price per kilogram. Given that industry is noticing healthy demand and players are seeing higher capacity utilisation, it's key for them to buy high quality products with higher product life expectation in order to make sure that kiln keeps running. We expect that more and more procurement managers would focus on total lifecycle cost of refractory, since industry is moving towards all time high capacity utilisation levels in the next three years.
If you were to recommend a few actions to be taken by our government in order to help promote growth of the refractory industry, can you please share the top three or four such recommendations with our readers.
There are multiple aspects where active role government could support domestic industry. Primary axes of support from government are in following three fronts - technology development, developing young talent and sustainability. Following is what I mean by this:
Technology development: On behalf of IRMA, we have set up Centre of Excellence at IIT BHU aimed at technological advances for making industry globally competitive. We need to accelerate such advances multiple Institute of repute.
Developing young talent: At present, we have handful of reputed science and Engineering institutes to cater to Industry of Rs 7,000 crore. We foresee significant shortage of right talent in coming years to fulfill the needs of industry. Hence, the Government needs to take steps to nurture more such institutes.
Sustainability and recycling: For decades we have been dumping used refractory in landfills however more sustainable way is to extract key RMs from the same use it again for refractory. We trust Government should work with user industry to enable reverse supply chain of used refractory.
Is the Indian refractory manufacturing industry globally competitive? Are we, as a country, able to tap into the global/regional market? More specifically, what is your company's export performance or export plans for the immediate future?
Raw materials being 60-70 per cent of the total cost of refractory makes it difficult for Indian refractory industry to become globally competitive, due to shear dependence of Indian manufactures on imported raw materials. As a country, our ability to tap into global/ regional market is very much restricted.