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India is set to become the second largest producer of crude steel by 2015, according to a Frost & Sullivan report.
In its Market Insight, the business research and consulting firm said India by expanding its construction and infrastructure sectors is set to further boost steel demand.
Venkatesan Subramanian, Director, Metals and Minerals, Frost & Sullivan, said “Currently, India is the world’s fourth largest producer of crude steel and if all planned capacity expansion projects become operational, it is expected to become the world’s second largest producer by 2015.”
China, Japan and the US produce more (in that order) than India now, according to the World Steel Association.
“Around 300 MoUs have been signed with various States for planned capacity of around 488.56 million tonnes by 2020 and major investments are planned for Odisha, Jharkhand, Karnataka, Chhattisgarh and West Bengal. The intended steel capacity build-up in the country is likely to result in an investment of approximately Rs 5,000-10,000 billion by 2020,” he added.
Steel is one of the most important industrial inputs in the country, and due to its wide application across sectors, its growth and consumption are directly proportional to the country’s GDP. The steel sector contributes to nearly 2 per cent of the country’s GDP and employs over five lakh people.
Subramanian said the per capita steel consumption had risen in India to 57 kg in 2011-12 from 38 kg in 2005-06. In 2011, overall steel consumption in India was around 67 million tonnes a year and the GDP grew by about 8 per cent, compared with 30.7 million tonnes a year consumption and GDP growth of about 3.8 per cent in 2001.
Favourable policies
Favourable government policies for this sector along with economic growth have contributed to the steel sector’s fast-paced growth.
Production of crude steel increased to 71.3 million tonnes from 27.3 million tonnes in the last 10 years at a compound annual growth rate of 10 per cent due to advancements in steelmaking.
Electric arc and induction furnaces have been the key drivers for increase in crude steel production. Indian crude steel production capacity is expected to reach 112.5 million tonnes by the financial year 2016. In 2010-11, total installed capacity stood at 78 million tonnes and capacity utilisation was in the range of 84 per cent.
Traditionally, construction and infrastructure sector together have had the highest demand for steel (more than 60 per cent) in the country. Indian finished steel production in 2011-12 stood at 70.32 million tonnes and is forecast to touch 92.29 million tonnes in 2015-16.
“Among steel intensive industries in India, construction registered the highest growth rates over the past consecutive five years. Manufacturing is the second highest steel consumer segment followed by automotive, both of which are poised to witness impressive growth over the future,” noted Subramanian.
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