India's steel growth to drive strong demand for refractory materials: Report
New Delhi, June 8
India's steel industry is set for strong growth over the next five years, creating steady demand for key consumables such as ramming mass, according to Choice Institutional Equities.
The brokerage said, "India's crude steel production is expected to increase from 168.4 MnT in FY26 to 255 MnT by FY31, with the induction furnace (IF) route remaining a key contributor to growth."
As production through induction furnaces rises from 45.8 MnT to 69.4 MnT, demand for ramming mass, used to line furnaces, is expected to grow alongside steel output. Unlike steelmakers, whose profits are affected by raw material price swings, refractory suppliers benefit from recurring, volume-driven demand.
Choice highlighted three major trends supporting the sector. These include the formalisation of the unorganised market, higher refractory consumption due to increased furnace utilisation, and logistics advantages for manufacturers located near steel-producing clusters in Eastern India.
The brokerage added that the "AI-energy nexus" and global power and cooling constraints are encouraging steelmakers to improve furnace efficiency, increasing the importance of reliable refractory products.
According to the report, refractory companies serving the induction furnace segment could benefit from improving operating leverage as steel capacity expands. Demand is expected to remain "visible and recurring" as infrastructure, construction and manufacturing continue to support domestic steel consumption.
Choice has initiated coverage on Monolith, noting that its manufacturing presence in Eastern India gives it an "ironclad logistics advantage" of Rs 800-1,200 per tonne over western competitors.
The company plans to increase installed capacity from 2,10,000 MTPA to 5,75,000 MTPA by early FY27. Sales are projected to grow from 1,71,200 MT in FY26 to 4,87,300 MT by FY29E, while revenue is expected to rise from INR 1,353 Mn to INR 4,532 Mn during the same period.
While risks include execution delays, customer concentration and working-capital pressures, Choice believes potential NSE Main Board migration and backward integration could provide additional upside.
— ANI
Reader Comments
Finally some good news for the manufacturing sector. The logistics advantage for Eastern India companies like Monolith is smart - being close to steel hubs saves costs and creates jobs locally. Let's hope the capacity expansion targets are met without too many delays.
"Ironclad logistics advantage" - love that phrase! But ₹800-1,200 per tonne savings is significant. With steel demand from infrastructure and construction, this is a smart play. Just hope working capital pressures don't derail the growth story. 📈
Interesting read. The "AI-energy nexus" angle is fascinating - steelmakers using AI to improve furnace efficiency will definitely need reliable refractories. But I wonder if global recession fears could dampen steel demand projections. Always good to have a balanced view.
As someone from the steel belt in Eastern India, this is heartening. But the report mentions formalisation of unorganised market - that might squeeze small players. Government should ensure a level playing field. Still, good for the overall industry though. 😊
The revenue jump from INR 1,353 Mn to INR 4,532 Mn for Monolith seems aggressive. Execution delays and customer concentration are real risks. I'd want to see more diversification before getting too excited. Still, the sector story is compelling.
R Rohit P