India poised to become world's second largest crude steel producer

By Anil Mathews

NEW DELHI (Scrap Monster): The Indian Ministry of Steel has released the Year End Review of steel sector in the country, which analyzes the steel sector activity in India during the entire year 2016.

According to the review, steel has been a strategic sector for the country. The country is currently the third largest steel producer in the world. However, it is likely to emerge as the second largest steel producer in a few years from now. The steel sector contributes nearly 2% to the country’s Gross Domestic Product (GDP) and offers employment to nearly 600,000 people.

The steel prices have seen serious decline during the past several years, mainly on account of global steel glut. The downturn in global sector has had its impacts on Indian domestic steel sector, the Ministry noted. The rising imports of cheaper steel products, especially from China too have hampered the growth of steel industry in the country. However, timely intervention by government has mitigated the adverse effects of global meltdown.

The Ministry Review Report highlighted the various trade measures including imposition of anti-dumping and safeguard duties. The various policy initiatives such as Minimum Import Price (MIP) on imported steel products have protected the steel sector in the country. It must be noted that the government had recently decided to extend MIP on 19 steel products until 4th February, 2017. Also, the government has notified provisional anti-dumping duty on hot-rolled and cold-rolled flat products and wire rod imports from several countries including China, Japan, Korea, Russia, Brazil, Indonesia and Ukraine.

India has increased its crude steel production significantly during recent months. According to statistics released by the World Steel Association, the country’s crude steel output totaled 8.010 million tonnes during November this year, rising significantly by 10.7% over the previous year. India had produced 7.234 million tonnes of steel in November 2015. The cumulative crude steel output by the country surged higher by 7.1% from 81.721 million tonnes during Jan-Nov ’15 to 87.531 million tonnes during the corresponding eleven-month period this year. India’s crude steel capacity stood at 121.97 million tonnes in 2015-’16, as per estimates provided by the Joint Plant Committee (JPC) under the Ministry of Steel.

The proactive measures by the government have helped to reduce the financial stress on the sector. The various infrastructure projects announced during the year has kept the steel demand high. The overall steel production by the country registered 9% growth during the initial eight months of the current financial year, starting from April 2016, in comparison with the production during April-Nov ’15. The steel imports by the country have declined sharply by over 38% during this period. Also, exports surged higher by almost 60%.

India has managed to retain its position as the world’s third largest producer of direct reduced iron (DRI). Also, the country is all set to continue to remain as the world’s third largest consumer of finished steel in 2016. The per capita consumption of total finished steel has risen sharply from 58 kilograms in 2011-’12 to 63 kilograms in 2015-’16.

The initiatives to build large capacity mega steel projects in the country in partnership with steel majors are expected to help the country to lift its steel production capacity to 300 million tonnes by 2025. The modernization and expansion of integrated steel plants will also contribute to increased production capacity, the Year End Report noted.