India is set to witness an uptrend in demand for high value added steel led by
thrust on domestic production in defence, ship building, renewable energy and automobile
sectors under the government’s Make in India programme. This is also expected to turn into
a focus area of growth for domestic producers, S&P Global Platts has said in a report on
opportunities in the commodities sector under Make in India programme.
India is already selfsufficient in commercial grade steel the grade used in infrastructure construction projects. Recent facility
expansions raised India’s overall steel production capacity in 2015/16 to 118 million tonne (mt), up from about 110 mt the previous year.
However, a key imbalance in the Indian steel sector is a lack of high value added steel production capacity.
This imbalance is expected to widen as a result of the government’s “Make in India” campaign, and the expansion of India’s passenger
vehicle market. The latter is expected to reach 9.4 million units per year by 2026, up from 3.41 million passenger vehicles during fiscal
2015/16.
“The government is keen to see global auto makers set up manufacturing facilities within the country to supply both domestic and export
markets. A similar desire to expand domestic production in the defense, shipbuilding and renewable energy industries will also drive
demand for high valueadded steel, suggesting this will become a key focus of new investment for domestic steelmakers,” the report
said.
India is on the cusp of a transformation from a traditional ‘brickandmortar’ economy. Domestic consumption of steel per capita is
around 65 kg, compared with a global average of 235 kg, indicating the scope for longterm demand growth, the report added.
Both the “Make in India” initiative and expected investment in infrastructure has created expectations of a substantial increase in
domestic steel demand. CRISIL forecasts that Indian steel consumption will rise 5.3% yearonyear to 85.8 mt in fiscal 201617,
compared with subdued average annual growth of about 3.9% over the last five years. Shortterm steel demand is forecast to grow at
4.55.5%, accelerating to between 66.5% CAGR up to 202021.
Source: EconomicTimes