More gains for steel sector in the offing

Steel is the most widely used construction and engineering material and has a wide range of applications. History shows that steel consumption has a positive correlation with economic growth and, therefore, it is called a ‘growth commodity’.

China, of course, is a classic example. The Asian major is the world’s largest steel producer and consumer accounting for close to 50 per cent of world demand.

While China’s scorching growth rate in the last two decades and the ravenous appetite for steel are well-known, concerns over environment-related issues and trade friction have emerged of late. This is seen slowing the Chinese steel industry. At the same time, Chinese economic policy focus has slightly moved away from investment-led to consumption-led growth. In other words, steel consumption growth in China will begin to slow and the ominous signs are already visible.

While no country is really in a position to rival China in production and consumption volumes, India is in a position to step in to partially fill the void.

India’s steel consumption is poised for a leap with the government’s thrust on infrastructure development, housing and automobiles. Specifically, in the last Budget, an outlay of ₹4-lakh crore was provided for infrastructure expansion covering railways, roadways, airports, seaports, multi-modal transport and urban amenities as well as affordable housing to ease the shortage of dwellings.

Promotion of ‘smart cities’ is also an area that can trigger high levels of steel consumption. More recently, introduction of a new policy namely domestically manufactured iron and steel products in government procurement to facilitate value-addition is also seen as a positive step.

These initiatives have created conditions for a significant expansion in steel demand. Equally interestingly, the New Steel Policy 2017 envisages increasing the per capita steel consumption from the present 60 kg to 160 kg by 2030. This is backed by a target of 300 million tonnes steel-making capacity.

While demand is well set for a jump, there are growing concerns relating to deterioration of steel quality used in infrastructure projects. Depending on the severity of the exposed atmosphere, steel structures face the risk of rusting or corrosion to varying degrees. The costs associated with corrosion are said to be humongous. While such losses are as yet not precisely quantified, they are very real indeed.

It is critical that India reduces the indirect and largely unaccounted loss caused by corrosion of steel, and experts assert that we have the capacity. Speaking to BusinessLine , renowned metallurgist and Executive Director of India Lead Zinc Development Association, L Pugazenthy, said, “Worldwide, in order to provide a long, maintenance-free life, steel members used in a number of applications such as power transmission lines, railway electrification towers, telecom towers, crash barriers in highways, street lamp poles, high mast lighting columns and so on, are invariably hot-dip galvanised. The fabricated structures are provided a zinc coating.

“The Indian galvanising industry has established a huge production capacity,” he pointed out, adding that the country produces plenty of zinc. He argues that corrosion protection should be mandatory in order to reduce, if not eliminate, losses and thereby extend the life of steel structures.

The writer is a commodities market specialist. Views are personal.

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