The Hindu Business Line : Steel: Building on Asia’s strengths

Increasing demand for stainless steel has been witnessed from users across construction, transport and several industrial sectors, and steel use is set to grow by leaps and bounds in India and China, though the latter’s per capita consumption of the metal is far higher than the former’s, says N. C. MATHUR.

The Asian region showed the strongest increase in stainless steel production, at 21 per cent of the world’s manufacture in 2006.

Despite being the metal industry’s youngest alloy in reckoning, stainless steel, or ‘speciality steel’, has charted a remarkable success story, clocking a record growth over the past quarter century.

Reports by the International Stainless Steel Forum (ISSF) further substantiate this growth at 5.20 per cent. Steel without Stainless Steel recorded only 1.38 per cent growth and so did other metals — aluminium, copper, zinc and lead within the r ange of 2.99 per cent to 1.26 per cent. Though, while this phenomenal growth is clearly reflected in the numbers, an equally remarkable increase of popularity and versatility in the use of stainless steel has been evident in the recent past.

Popularity

While stainless steel comprises only 3 per cent of the volume in the steel sector which contributes 15 per cent of the revenue, the growth graph of this green metal has been almost historic. This popularity gain has been duly reflected in the recent past, where world-wide stainless steel consumption has witnessed a record increase.

The year 2006 witnessed a record-level production of stainless steel and heat-resisting crude steel at 28,358 million tonnes, making stainless steel the fastest growing material ever. The Asian region once again showed the strongest increase in stainless steel production, at 21 per cent of the world’s manufacture in 2006, distinctly led by China. If the ISSF reports are anything to go by, stainless crude steel production in 2007 is expected be higher than the record-level of production in 2006, reaching 29.8 mt. Production of stainless steel in Asia (including India) amounted to 4.191 mt in the first quarter of 2007, recording 25.2 per cent growth year-on-year.

A basic reality check will reveal how stainless steel worldwide has gained impressive recognition and achieved quantum progress over the past decade; today it has emerged as the speciality version of common steel. The drivers for such impressive growth result from stainless steel’s sterling characteristics including corrosion and oxidation resistance (especially in coastal and weathered regions), high strength to weight ratio, excellent press formability, weldability and low temperature toughness.

HUGE DEMAND

As if to corroborate these phenomena, a story in a financial daily caught my attention, “…the youngest metal makes way in two of the youngest economies” (China and India).

A gradual yet steady leadership flow has been evident towards the giant Asian economies as they have risen to recognise the contribution of stainless steel in their respective market peripheries. While the numbers substantiate the claim that it stakes, increasing demand for stainless steel has been witnessed from users across the construction, transport and several industrial sectors.

However, the rising cost of key inputs, such as chromium and nickel, over the last few quarters have triggered substitution efforts world-wide, with low nickel content grades (Cr-Mn 200 series) and ferritic grades gaining momentum. To offset this situation further, there has been a significant change in the global stainless steel product mix as well.

China, the largest stainless steel market in Asia, has responded to the volatile input costs, with the low nickel, Cr-Mn 200 series and ferritic grades of stainless steel; in Q1 of 2007, China’s stainless steel production reached 1.63 mt against 1 mt in Q1 of 2006.

China’s stainless steel consumption increased by 9.7 per cent at 1.46 mt. The writing is clearly on the wall: China has successfully emerged as the leading Asian economy to spur stainless steel consumption and is steadily guiding the global stainless steel leadership towards potential Asian markets.

It may be an interesting yet critical point to note here that China and India share 40 per cent of the world’s population. While China has surged ahead in stainless steel per capita consumption, India, despite its huge potential and opportunities, has astainless steel consumption of 1.2 mt, and is placed seventh globally.

India’s per capita consumption of stainless steel, of 1.1 kg, is far lower than China’s (1.6 kg in 2000 to 5.3 kg in 2006) and other developed countries, that are in range of 15-20 kg. This highlights the potential for high growth, in view of higher expected growth in GDP, higher industrial production, existing low per capita consumption, availability of key natural resources, such as manganese and chrome ore and competitive manpower costs in our country.

Though Indian consumption grew over last decade at 13-14 per cent, stainless steel demand is expected to grow by 12 per cent annually, opening immense avenues for multiple applications, especially in railways; airports; public utility infrastructure; municipal /urban local bodies; Commonwealth Games 2010; malls; hospitals; tourism and hotels and construction sector.

These apart, there are numerous novel opportunities for stainless steel usage in India, both within our existing infrastructure newer ones. This would go on to transform our civic and market dynamics, making India a global destination for international events such as the Commonwealth Games.

Stainless steel production growth in Asia has reached 15 million tonnes and promises to sustain the action, with India and China leading the way forward.

(The author is Director, Jindal Stainless.)