Infra boost and trade policies to drive steel demand growth in India

NEW DELHI (Scrap Monster): India hopes that the domestic steel demand is likely to see tremendous growth in the years to come. The policy measures announced by the government to curb imports of steel products into the country, coupled with the anticipated spending on infrastructure projects are expected to drive steel demand growth in the country during 2017 and 2018.

In an attempt to block uncontrolled steel imports into the country, India had recently extended anti-dumping duty on imports of certain steel products from China for another five years. The duty will be applicable to import of seamless tubes, pipes and hollow profiles of iron, alloy or non-alloy steel, according to Ministry of steel press release. As per estimates, the country has reported nearly 38% fall in steel imports during the initial ten-month period of the current fiscal, thanks to the various protectionist measures announced by the government. Incidentally, domestic steelmakers including Tata Steel, JSW Steel and the state-owned Steel Authority of India Limited (SAIL) has demanded more such measures in order to safeguard the country’s struggling domestic steel industry.

The country’s steel sector companies have reported positive revenue growth after a period of almost 7 long quarters. The government’s restrictions on imports have helped the companies to restore margins. The sector should continue to benefit from the reforms in the near term, noted Bank of America Merrill Lynch in a report. It noted that all companies except SAIL have managed to report significant improvement in earnings during the third quarter, it noted. All these companies had reported significant decline in profitability on account of dumping of cheap products from other countries including China and Japan.

In a recent report, Care Ratings noted that India’s steel production and consumption is likely to remain higher during 2017-’18. The country is likely to witness huge revival in steel consumption, backed by increased demand from construction and infrastructure sector. According to the report, although steel consumption is likely to remain under pressure for a few months on account of cash crunch situation caused by demonetization, the demand from all sectors are likely to strengthen in the near-term.

The draft National Steel Policy (NSP) released by the Indian Ministry of steel also predicts phenomenal rise in steel demand over the years. The report predicts that the country’s per capita steel consumption is likely to increase significantly from current level of 61 kilograms to at least 160 kilograms by 2030-’31. Also, share of steel consumption by construction and infrastructure sectors will rise from current levels of 40% to 59%. Over the next fifteen years, steel demand in the country is likely to grow three-folds to touch 212-247 million tonnes. Also, annual crude steel capacity is likely to touch 300 million tonnes by 2030-’31.

India is currently world’s third largest producer of crude steel after China and Japan. The country had produced 89.79 million tonnes of crude steel during 2015-’16.