Steel production in India grew at a compound annual growth rate of 7.9 per cent in the past five years, driven by a seven per cent rise in consumption and high utilisation ratio.
In the last five years, domestic crude steel production grew at a compound annual growth rate of 7.9 per cent. Such an increase in production was driven by 9.8 per cent growth in crude steel capacity, high utilisation rates and a seven per cent growth in domestic steel consumption, according to the Economic Survey 2013-14 released on Wednesday.
As a result India ranked as the fourth largest crude steel producer in the world during 2013 after China, Japan and USA. During the last fiscal, the country had produced 81.54 million tonnes of crude steel clocking a four per cent increase over 2012-13.
The capacity utilisation of steel companies during 2013-14 stood at 82 per cent. However, steel consumption during the year grew by just 0.6 per cent due to slowdown in the construction and automobile sector, the survey said.
CS Verma, chairman, Steel Authority of India, said, “The steel growth story over the medium and long term remains intact notwithstanding the recent dip in growth rate. Even a modest recovery in overall GDP growth of 6-7 per cent will increase the finished steel consumption of India to 200-225 million tonnes by 2025, from the current level of around 74 million tonnes.”
Verma said further the thrust on close monitoring of dedicated freight corridor projects, new high speed and semi-high speed projects, track renewal, development of wagon leasing business, up-gradation of stations, procurement of rolling stock, doubling and tripling of lines and gauge conversion announced on Tuesday’s Railway Budget, is likely to boost steel consumption.
However, while steel production grew mining sector output contracted for the third successive year in 2013-14, declining by 0.6 per cent. Contraction in mineral index in the past three years has been mainly on account of lower or moderate production of major minerals. Coal contributes about 41 per cent of total mining sector output and its production growth has remained below-expectation. Natural gas production has plummeted mainly due to declining production from the KG-6 basin. Output of iron ore declined in some parts following a court order. Iron ore mining has again been permitted but global prices of iron ore have declined significantly from the peak of 2011.
With iron ore supplies getting tighter due to severe shortage, JSW Steel has decided to import around six million tonnes of iron ore in the current fiscal from overseas market. Indian steel manufacturers are losing out the most comparative advantage of availability of local iron ore and are constrained to resort to imports denting the competitiveness of steel manufacturing in India.
Seshagiri Rao, joint managing director JSW Steel, said, “The recent closure of mines in Odisha, delay in opening up of mines in Karnataka and Goa had resulted in acute shortage of iron ore in the country. There has been a sharp decline to 77 per cent in capacity utilization in Indian steel industry due to shortage of iron ore in 2013-14 from 88 per cent in 2010-11.”
Iron ore production in India fell significantly during the course of past few years from a level of 218 mt (million tonnes) in 2009-10 to only 144 mt in 2013-14 which is further expected to drop to 100 mt in FY 2014-15 against the demand of 140 mt.
A majority of mines in two key iron ore producing states — Karnataka and Goa—are yet to resume normal operations despite a partial lifting of court-ordered mining bans.
According to the survey, the coal production in the first two years of the 12th Plan has been subdued with domestic production at 556 million tonne (MT) in 2012-13 and 566 MT in 2013-14. The overall domestic demand for coal during these two years was in the range of 715-720 MT.
Demand was driven by power generation sector. Demand from iron and steel and cement sectors had seen moderate growth rates.
To fill the gap between domestic demand and supply, the country imported about 146 MT during 2012-13 and about 169 MT of coal during April-January 2013-14 (provisional).
The overall long term demand for coal is linked to the performance of end-use sectors - thermal power, iron and steel and cement. Sharp deceleration in the production of natural gas in the past two-three years has further increased the energy sector’s dependence on coal.
Singareni Collieries Company (SSCL), the government coal mining company jointly owned by the Government of Telangana and Government of India on a 51:49 equity basis, has been key supplier with a production of over 50 million tonne on an annual basis.
For the year 2013-14, the production was 50.47 million tonne. In 2012-13, the production was 53.19 million tonne and the previous year it was 52.21 million tonne.
“We propose to increase the production to 55 million tonne this fiscal,” said Sutirtha Bhattacharya, chairman and managing director of SCCL, which has proven geological reserves of about 8791 million tonne.
SCCL is currently operating 15 opencast and 34 underground mines in four districts of Telangana and employees 62,805 personnel.
Source: mydigitalfc.com
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