Excess capacity in steel is a real threat perceived by the major global steel producers. In most of the forums including in G-20 meet, this particular aspect finds a place for discussion. India is planning to take the second spot surpassing Japan in crude steel production by 2017-end by adding another 7-8 million tonnes of steel from the brown field expansion by Sail, Tata (Kalinganagar, Jamshedpur), JSW, JSPL (Angul, Raipur), Essar (Hazira).All these expansions are already staggered primarily due to poor growth in domestic steel market.
Meanwhile, the spate of anti-dumping and countervailing duty measures by US, EU, Vietnam, Turkey, Malaysia, Indonesia and Brazil against Chinese exports have made a little more space available for Indian steel producers to capture a higher share in the overseas market. During the first 10 months of the current fiscal, steel exports from India has reached 6.9 MT, a growth of 74% over last year.
Thus, while export growth would be a great reliever for capacity expansion in Indian steel industry, most of the augmented production must get absorbed in the indigenous market. The current status of the critical segments for steel use and the future potential, the emergence of new application areas as the country progresses into the next decadal phase pose an interesting analysis.
The infrastructure and construction (including real estate, pipe line construction) segment accounts for around 60-62% of total steel consumption in the country. There is endless requirement of investment in this segment. Thus this year’s budget provision of R3,96,135 crore of investment for infrastructure is encouraging as the public investment in various infrastructure components provides the crowd in effect on private investment which is languishing in the recent period.
For instance, in the road sector with a budgetary provision of R64,900 crore from the government is likely to usher in private sector participation through the PPP mode. It is becoming incumbent on the part of the government to further restructure the PPP mode to attract private investment. The extension of national highways provides opportunities of more steel use in areas like ROBs, flyovers and crash barriers.
For particular stretches at critical locations, the concrete pavement or more use of Continuous Reinforced Concrete Pavement (CRCP) would make the roads maintenance free and cost effective in the long run.
Source: Financial Express