Nagercoil, Tamil Nadu – November 11, 2017 – The Indian steel market witnesses positive signs of growth in the recent times. According to a report published by the World Steel Association, a 4 per cent growth in steel production has been recorded in the Indian domestic market. This is equivalent to 8.4 million tonnes of crude steel being produced during the month of August this year. This figure indicates an optimistic future for global steel production and the steel industry as a whole.
Present State of the Global Steel Market
Excess steel capacity prevalent in the EU, NAFTA and MENA markets has drastically brought down the production growth of steel in such areas. Similarly, adverse economic conditions in Latin America, CIS and SE Asia haven’t developed a favourable economic environment that stimulates steel production.
As for China, crude steel production has gone up by 5.6%, whereas in India it is 5.1% and in the US by 2.4% from January through August 2017. Countries including India, China, US, Turkey, Ukraine, Vietnam and Iran collectively encompass 77% share of the global steel production.
Global Steel Output:
On a global scale, steel production for 67 countries was 143.6 million tonnes in August, which signifies 6.2 per cent increase from the earlier 135.1 million tonnes registered in August 2016. While the crude steel production in China saw a growth of 8.7 per cent, Japan identified a decline of 2 per cent in its steel production, compared to last year.
Indian Steel Industry Revival – Contributing Factors
1. The Varanasi Smart City Project:
Varanasi receiving the green signal for a major infrastructural revamp has instilled great hopes for the Indian steel industry. Funds have already been earmarked for the Varanasi Smart City project, according to which it is estimated that India is gearing up to triple its steel production by 2030 – the future of steel is bright indeed! Tripling India’s steel production capacity would place the country on the second spot in the world’s largest steel producers list, even outdoing Japan and reviving an industry that was once dormant a year ago in the country.
To transform the city’s ageing infrastructure, execute better transportation and enhance sanitation facilities, production of steel is inevitable. In 2016, India used only about 63kg of steel per person, as opposed to 493kg used in China. With a massive production demand recently put forth by the Government, steel prices are slowly beginning to recover since 2015.
According to Sanak Mishra, Secretary general of the Indian Steel Association, India’s steel consumption could rise to as much as 240 million tonnes by 2030. He also forecasts that the country could trump the US as one amongst the leading consumers of steel by next year.
2. PM Modi’s National Steel Policy
Prime Minister Narendra Modi’s ambitious plans such as the National Steel Policy could also be a driving factor for the increased steel production. The policy requires the production capacity to grow by 6.4% annually, thereby requiring an investment to the tune of $140 billion (as per ICRA Ltd). Given the current economic climate as well as the Reserve Bank of India’s attempt to wipe off bad loans, banks however might feel unenthusiastic to lend money.
3. India’s Endeavour to become a Global Power
The increasing demand for steel is also instigated by the Government efforts to enhance urban development. Nearly $30 billion has been earmarked for the development of 90 cities so far, with contributions coming directly from both the central and state governments.
Domestic Vs. Imported Scraps
Less Import, More Production
With excess global supply, India recorded more imports of cheap steel. As increased imports coupled with weak demand for it, the profitability of Indian mills hit all-time low in the 2015-16 financial year. This couldn’t help but force the government to execute measures against imports of steel, and urge local producers to increase their outputs to record levels.
This is quite in evident from the noticeable price differences both the domestic & international markets. As of October 2017, the scrap prices for imports from UAE, US and UK dropped by $15, $5 and $4 respectively. Currently USA Shredded scrap price are at $325/Ton. UK and UAE HMS 1&2 prices are at $300 and $296/Ton. For In the domestic market scene, the HMS 1&2 price in Chennai ends at INR 19800/Ton, an increase of INR 200 since the end of September in Punjab, whereas a negligible decrease of INR 600 in Mumbai, which is likely to change in the coming days.
Scrap Imports Might Follow a Downward Trend – Forecast
The National Green Tribunal has recommended the implementation of the new Indian Metals Recycling Policy. Once the Indian government promulgates and deploys this proposed policy, leading players including Tata Steel Recycling & Mahindra Intertrade would collect and process more domestic scraps moving forward. This eventually results in the reduction of scrap imports.
At present, generation of steel scrap in India is around 28 million tons of Ferrous & 1 million tons of all grades of Non-Ferrous scrap. India currently imports nearly 5 to 6 million tonnes of Ferrous Scraps, about 2 million tonnes of Stainless steel & approximately 3 million tons of Non-Ferrous scraps annually.
Measures to organise the recycling sector are in the pipeline, with the government expecting to bring safe, clean and ethical business practises in metals recycling.
With the execution of the Metal Recycling Policy, the scrap import figures are likely to fall down the road, and huge investments & strategic partnerships from some of the World’s biggest recycling companies are anticipated. Not to mention the boom in employment opportunities this could create in the recycling sector.
Company Name: RecycleInMe
Contact Person: Guna Seelan
Phone: 04652 230 776
Address:4th Floor, Advocate Dharmaraj Complex, Court Road, Near Assisi Church
State: Tamil Nadu